Jack Kemp

This letter to the editor of the Wall Street Journal, written in response to the preceding selection, "Why America Needs the IMF," appeared on 3 April 1998. Jack Kemp is codirector of Empower America.

Virtually nothing Lawrence Summers cites in his 27 March [1998] editorial page piece, "Why America Needs the IMF," to demonstrate why America needs the IMF is true, and everything in the article that is true demonstrates how the IMF hurts our country and the rest of the world. It is no exaggeration to say that the IMF has over the decades since it was founded in 1944 gathered up its own kind of Evil Empire. Mr. Summers's sky-is-falling hyperbole about how important the IMF is to mankind sounds more like an applicant to succeed Managing Director Michel Camdessus than a sitting deputy secretary of the Treasury.

I'm sure that the IMF boss, Michel Camdessus, is a fine man, but his record is the worst record of a financial institution in the history of the world. People in countries that have come under the IMF's sway despise it, and they see it as an agent of the United States. For example, throughout the 1970s and 1980s, the IMF impoverished Latin America by constantly urging higher tax rates. Despite promises of reform, the IMF still urges higher tax rates rather than lower rates. Specifically, in recent months, IMF bureaucrats have been urging government officials in Bulgaria, Albania, and Russia to increase rather than decrease tax rates.

Three years ago, anyone with one eye open in Washington could see that the IMF helped engineer the peso devaluation in Mexico so its friendly supporters at the banks could cash in. The people of Mexico looked up to the United States and hoped through the NAFTA agreement that we could finally protect them from the periodic monetary devaluations that decimate entire economies and wipe out the savings of ordinary people.

But open trade without a sound international monetary arrangement can easily be destabilized by an international bureaucracy like the IMF, willing to use extortion to foster beggar-thy-neighbor currency devaluations as it has recently in Indonesia. How tragic that it takes so little effort by so few international bureaucrats to cause so much pain and suffering. No one with a firm grip on reality can doubt that the Asian currency crisis that has hit the Pacific rim so hard was at least encouraged by Michel Camdessus and his associates at the IMF.

This is why, if it were up to me, I would not give one dime, one nickel, one cent to the IMF, which is asking our taxpayers for $18 billion--until it changes its policies and top personnel, without Mr. Summers in the running to lead it.

Clearly, we have to figure out a way to improve the performance of the IMF, totally reform it, or abolish it altogether--because the people of the world do see it as our agent. What the world needs is a stable monetary regime that would prevent currency meltdowns in the first place. The greatest threat to worldwide economic stability today is the international monetary arrangement of floating currencies in which no currency is linked to a stable anchor and all countries are being encouraged to use currency devaluation as an economic policy instrument during times of economic duress. Rather than shilling for the IMF, our Treasury Department should be hard at work figuring out how to reconstitute a stable international monetary system.