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IMF bristling over Nobel laureate Stiglitz, after book criticizes agency

The International Monetary Fund took aim at Nobel laureate Joseph Stiglitz, calling the economist's criticism of the fund's advice to governments ``snake oil'' that "runs against the wisdom of Planet Earth.''

In a rare personal rebuke by the fund against one of its critics, IMF Chief Economist Kenneth Rogoff and main spokesman Thomas Dawson each published rebuttals of a new book by Stiglitz, Globalization and its Discontents. While Rogoff praised Stiglitz as an academic, he labeled the former World Bank chief economist "a loose cannon" for suggesting that IMF policy advice to countries such as Thailand and South Korea deepened their recessions in 1997 and 1998.

"In the middle of a global wave of speculative attacks, that you yourself labeled a crisis of confidence, you fueled the panic by undermining confidence in the very institutions you were working for," Rogoff told Stiglitz in a debate Friday at the World Bank. "Did it ever occur to you for a moment that your actions might have hurt the poor and indigent people in Asia?" The row comes as the collapse of Argentina's economy after a decade of advice from the fund has given anti-IMF candidates new support across Latin America, from Brazil to Bolivia.

Many of them share Stiglitz's contention that the IMF's typical advice to governments of developing nations to cut budgets, raise interest rates and open capital markets often leaves countries unable to expand their economies and exposed to the whims of foreign investors.

The fight is also a rare public glimpse at the differences between the two lenders, whose headquarters are across the street from one another in Washington.

The attack by Rogoff drew the ire of World Bank economist Uri Dadush, who complained during Friday's debate of the personal nature of the comments.

Dawson said today that Stiglitz, once an economic adviser to President Bill Clinton, began the personal attacks, and he had an assistant count the references to the IMF in the book's index -- 340 -- to prove his point.

While Stiglitz focuses his criticisms on the economic policy advice of the IMF to Russia, Thailand, South Korea and Argentina in the 1990s, he has gotten personal, too. He once said the IMF attracts "third-rank students from first-rate universities." He argues that opening up to capital helped fuel the near collapse of economies from Mexico to Southeast Asia to Russia and Brazil in the last decade. The IMF's advice of budget cutting and raising rates only exacerbated the problem, he says.

"There is a great hypocrisy and inequity about the way globalization has been carried out," Stiglitz said at the World Bank.
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