Mme. Lagarde’s IMF: Courage more than Heuristics


Our last posting suggested that the IMF exhibit courage in their next selection of a Managing Director. Although we had shown reservations towards a European selection, we confess that the appointment of Mme. Christine Madelaine Odette Lagarde to a five-year term by the IMF Executive Board must have involved great discernment and caution.  The IMF certainly demonstrated great courage by dismissing gender issues; and provoked some irony in selecting a neo-liberal/conservative successor to a socialist Mr. Strauss-Kahn. Moreover, no one can now doubt that the IMF did not seriously consider the possibilities and respective consequences that adverse disclosures from the investigation in the Tapie Affair could have on the new Managing Director, the Directorships and overall image of the institution.  That Rubicon is no longer a blindside-whatever the outcome.  

Mme. Lagarde has enjoyed firsts for most of her life. Her trek from the law firm Baker Mackenzie to France’s Minister of Economic Affairs is convincing. Commanding excellent English, she had an early stint in Washington DC as a congressional assistant to William Cohen, practiced law in Chicago to return to France and oversee three key French Ministries. Although her stay at Finance was largely polemical because she was considered by most as an executor of Sarkozy’s monetarism, it finally became controversial with the Tapie-Credit Lyonnais settlement. Notwithstanding, Mme. Lagarde is still considered by most critics as a very credible administrator. Some critics wonder whether her alleged monetarism and recent support of the ECB position on debt restructuring presents an intellectual hurdle in her new role. That’s somewhat doubtful. It may have been problematic for a despondent pundit, but it is actually a non-sequitur for a seasoned professional like Mme. Lagarde.  Although her recent record relating to the European debt-strapped sovereigns may be an affront presented by her critics, her more recent announcement since taking over the helm of the IMF indicate that Mme. Chairman may actually be suiting up for a transformative leadership of the institution:

… the IMF must be relevant, responsive, effective, and legitimate, to achieve stronger and sustainable growth, macroeconomic stability, and a better future for all.

The governance issues, and not necessarily internal, apparently take some precedence on Mme. Lagarde’ s agenda, There are facets pertaining to the IMF’s cohesiveness and overall effectiveness towards their membership that must be addressed immediately and there are incongruities that must be rectified in order to level the playing field. These ‘…issues cannot wait for yet another summer holiday.’ Structurally, the IMF is confronted by an unbalanced membership that is witnessing a proactive effort to realign expectations on the part of emerging economies and a responsive tacit gradualism on the part of the advanced economies. Organizationally, the IMF is experiencing institutional fatigue, and there are very few qualified professionals around since the inception of the Great  Recession in 2007 that have any stamina remaining and vision to assume the requisite leadership and ensure the appropriate continuity to an institution that is crucial to the ongoing stability of the global economic system.  Mme. Lagarde admits that

We are facing a landscape… with an uneven process of recovery and specific issues of a divided nature,…,between the advanced economies on the one hand, the emerging markets on the other, and the least developed countries, or low-income countries… with specific issues and yet a path to recovery that is obviously pronounced.

For Mme. Lagarde, who is a keen observer of Realpolitik, a refined diplomat of European mores and an ardent tenant of neo-liberal values, the signals voiced by the Many and les Autres are a clear indication that the institution must shed some of its theoretical armour- and modify its modus vivendi and operandi in favour of more proactive determinants of social responsibility.

…we cannot only analyze the economy by looking at some of the traditional standard criteria…by the hope to reduce fiscal deficits and organize fiscal consolidation in a big way, reduce debt and make it sustainable…

Knowing how to read the writing on the wall involves knowing when to replenish the artist’s easel with different brushes and colors, when to revamp the orchestra’s partition  with different instruments,  and sometimes knowing when to abandon a well-versed repertoire for newer measures and sensibilities. Contrary to the unsophisticated critic who challenges Mme. Lagarde’s ability to exercise sound judgement and exert good decisions because of her so-called non-economic background, this post suggests Good Riddance for the non-economist! This cynic’s rebuff is understandable: Who put the world economy in this mess in the first place, and who has not been able to restore any credence towards a reasonable path of recovery…certain specialized economists and certain other specialized bankers.

We contend that Lagarde, if one is permitted to embellish her podium with the generic pun! will be quite the man to do the job.

Her explicit resolve to ‘include such matters as employment, social affairs, peripheral components of the traditional economic look at the situation of a country’ is not only a commendation of Mr. Strauss-Kahn’s initiative but a recognition of the underlying critical factors that ensure sustainable economic growth. This flexibility towards diverse economic ideas and options is the mark of a good pragmatist. A non-zealot is what the IMF needs at the moment-an intelligent visionary:

                       

The International Monetary Fund is here… to help restore stability where there is instability, and there is plenty of that around; to help make sure the economies of the world work better to provide a better welfare for people. And to that, clearly, employment is a key issue. Whether you look at advanced economies, or whether you look at emerging markets, or low-income countries, the issue of employment is a critical one, and one that actually determines a stable social chemistry for society. So we should not lose sight of the overall main goal of the Fund.

The challenge nuances the Fund’s traditional mission. No one is suggesting that the Fund replace the sovereign’s  responsibility over national labour and its social and human development. Mme. Lagarde is clear on the focus as well as the demarcation of independent efforts. She has no ulterior pretensions to create a surrogate for sovereigns.

I'm not suggesting that the Fund should be turned into a specialized boutique on employment and best way to reduce unemployment.

However, she is certainly aware that IMF's traditional fiscal management may not be the only suitable solution, and may not deserve the prominent role it unfortunately once held. She is insightful with regards to spillovers and contagions recognizing their structural presence at the global systemic level,  and has committed the IMF to ‘actually addressing, describing, analyzing them’, and hopefully avoid and help resolve them.

It is not pretentious or gratuitous for Mme. Lagarde to suggest that

…Greek political parties altogether either in government or in a position, can be rightly inspired by the decisions, the courageous decisions made by political parties in Ireland, the courageous decisions made by political parties in Portugal.

The allusion to courage in the context of Greece and similar sovereigns is timely and natural. Courage is not only the trademark of Greek history and Greek culture, but picking up from Aristotle in the Nicomachean Ethics and the Rhetoric, both Samuel Johnson and Winston Churchill qualify Courage as the first of all human qualities. Courage is that necessary disposition that ensures first overcoming and then moving  beyond fear to achieving confidence in one’s capacities.  Mme. Lagarde understands full well that in order for weakening economies to succeed, it is essential to subvert fear in an unknown future and prep up the confidence factor. In the case of Greece, this modern economic crossroad is reminiscent of  Thermopylae and  Salamis. The Greek polis must rise to courage.  Following Aristotle’s lesson (Book III, chap 9), Mme. Lagarde reiterates in her own qualified manner that courage involves some ‘endurance of pain’ ;  and Mme. Lagarde is certainly no newcomer to courage. Her personal achievements and professional steadfastness are reflections more of that classical virtue than exhibitions of stubbornness and misplaced pride. Her decision to assume the helm of a great but battered organization is an appropriate reflection of courage and resolve: ‘So, here I am. And, for good…’

We hope so,  lest  Tapie's  fortuna unravels another IMF debacle.

Extrapolating power rankings from FORBES, Mme. Lagarde as Chair of the IMF would now move to 5^th  most powerful woman in the world,  from the 17^th ranking woman as Finance Minister of France. She also becomes the 37th most powerful person in the world.

Jack be Nimble; Mr. Layton be Quick, Mr. Jack Layton be Classic!

Jack be Nimble; Mr. Layton be Quick.

Every child mimes a rhyme and every child’s rhyme has a moral dimension. The same with Jack and the candlestick. Although most parents would probably prefer a clever and timely child, as long as he's not a little rascal, every parent knows that a clever child is not necessarily timely; and punctual kids are not necessarily clever. In politics unfortunately, when you're not nimble and not quick, you're out of luck. And Jack can't afford snuffing out the candlestick before the term ends.   That’s why Homer’s Ulysses is such a remarkable character: he plans his interventions well and leads his trained crew well.  That’s why Homer is such a classic- whatever may be troubling or overwhelming about the political arena of gods and men, destinies are never unresolved. Classic figures, with a little help from divine friends,  always find the inner strength to either succeed or transcend their failure.  In the case of Ulysses, the underlying narrative is home and family, the values honor and love.

So, Mr. Layton, if a classic rhyme can trigger an imperative and an initiative, 'be nimble and be quick', lest fortune snuff out the candlestick! Then it's worth the following recall.

Our May 2, 2011 posting had predicted a majority Progressive Conservative Government; a Liberal oust and a Bloc rout, and recognized the NDP as Parliament’s new opposition.  By doing so, the Mr. Layton and the NDP changed Canadian Parliamentary history: it was the first time since Confederation that the NDP had assumed the role as Her Majesty's Loyal Opposition.  To say the least, the May 2, 2011 election result blindsided the leadership of the NDP party, regardless of what they contend. Had the virtue of Messrs Layton and Mulcair been premonitory, professing virtue (virtu) in the most endearing of machiavellian senses,  the selection and availability of candidates would have been more vigilantly curated. On the other hand, thank heaven that the new NDP candidates are enthusiastic and unmarred by political whines. The rejuvenation and earnestness of a young whingeless opposition may indeed mark the beginning of an unorthodox parliamentary session and help counter their leadership's caution. Yet, at some point, euphoria, wishful thinking and rationalization will dissipate, and the people and more particularly the media, will lend a serious ear to the realpolitik being deliberated on Parliament Hill.

The same May 2 posting reminded Mr. Layton of his obligations towards Canadians, and Central Canada in particular, that had opted for change, and had chosen to resend some weather-worn elected officials and a group of novice enthusiasts to represent the interests and aspirations of an opposing electorate, to check the government, and mostly act as an alternative government in waiting. I owe the latter notion to a former Conservative Rt Hon John George Diefenbaker from a speech delivered in 1949 to the Empire Club in Toronto.In view of this serious responsibility and ultimate end, the NDP must be pragmatic, and demonstrate courage and wisdom.  

More than two thousand years ago, the Greek philosopher Aristotle judged that of all governments, Democracy was the most desirable, although he also considered it as the most fragile of all the forms, as did Churchill  more than two millenia later when the latter proposed the epitaph "Many forms of Government have been tried and will be tried in this world… No one pretends that democracy is perfect or all wise. Indeed, it has been said that democracy is the worst form of Government except all those other forms that have been tried from time to time." As a result of this intrinsic frailty, it is the duty of party leaders to ensure that their respective legislators are best equipped with resources and adequately trained to exercise their rhetoric in the House of Commons and in the Committees. After all, politics in a Parliamentary Democracy takes a highly Rhetorical form, and the best at eloquence and substance ultimately win the day. It is then natural and wise to seek out the best orations by opponents to the government in Parliamentary history as a springboard for one's own preparation.  Suffice to browse, for those with some time to spare, the interventions of Messrs Pitt the elder, Pitt the younger, Peel, Disraeli and Gladstone, David Lloyd George and Churchill in the UK, Messrs Tommy Douglas, Diefenbaker, Stanfield and Broadbent in Canada, in order to evoke the voice and temperament of fearless and ferocious opposition. If one may humbly suggest, although the latter all warrant lecture, among these, there is probably no better prescription of the role of the opposition than a speech delivered by the Hon. John Diefenbaker in 1949 to the Empire Club in Toronto. It is an elegantly structured, marvellously argued and a profound historical rendition of the nature and role of Canada's Loyal Opposition. It should be a staple on the Opposition bench and visible to the Conservatives and Prime Minister Stephen Harper, although we surmise that The Prime Minister and the better of his bench have gem in memory.

If cautions can be suggested, avoid the simplistic resonance attributed to George Tierney 'oppose everything and propose nothing' or the monologous, para-filibuster undertaking of the 1993 Bouchard Official Opposition centered largely on Quebec which undermined the  ‘loyalty’ of the opposition regardless of its officialism. Notwithstanding all the effort and good faith Mr. Bouchard demonstrated, it is difficult to represent 'loyalty' when the principles dictating the postures of the Government and the Opposition are fundamentally different and diametrically opposed.  This was best articulated by Thomas Jefferson in his first inaugural speech wherein he affirmed that belief in the same principles permits differences in opinion and policy, arguing that it reflects and is the foundation of the party system, and underlines the dynamic of a healthy political opposition.

Within the difficult context of a Majority Government and an emergent inexperienced Loyal Opposition, the challenge for Mr. Layton is to ensure the soundness of his platform and credibility of his legislators. Both Mr. Layton and his executive are accountable to the Canadian people for the quality and quantity of work that the Opposition must perform. Failure on either count may entail the unravelling of the party and the demise of Layton/Mulcair as serious political figures.

Greek political thought had given enormous significance to the quality of legislative efforts and polities. Aristotle (Ethics Bk X: 1180b28ff), in particular, demanded that legislators be properly and practically trained and educated by experienced politicians before entering the political arena. This advice on the importance of a legislator's education is confirmed by figures no less outstanding than Thomas Hobbes  and Voltaire, and success in the matter entails, according to Aristotle 'no better legacy...to their state, and no greater distinction ...for themselves...' (Ethics Bk X:1181aff).

Paraphrasing Machiavelli: it’s not the titles that ennobles the person; it is the actions of a person that give value to the title. So too, it is the duty of  leadership to equip and motivate its legislators. So let the media put aside its speculations and ramblings on the causes for success or failure of this Opposition until later in the term. Only at that moment can both Media and History evaluate Messrs Layton and Mulcair on their ability and resolve to have assumed responsibility and organized a serious and respectful Loyal Opposition.

This post contends that Messrs Layton and Mulcair will succeed. This post hopes that Her Majesty's Loyal Opposition of the 41st Parliament will become one of the most inspiring displays of serious and responsible deliberation in Parliamentary History.

Jack is nimble and Mr. Layton is quick, and Mr. Jack Layton shall clear the candlestick!