The Important Work Of International Agencies: Keeping The Poor Poor

With so much craziness going on around Washington, the Manhattan Contrarian has had barely any time lately to keep up with the efforts of the international and UN bureaucracies in their never-ending fight to keep the poor poor.  In the case of the IMF, there hasn't been a good Manhattan Contrarian take-down since an April 2013 post titled "The Dopes At The IMF Continue Their Advocacy For Bigger Government."  

But Dan Mitchell at his International Liberty blog helpfully reminds in a post last week ("More Economic Malpractice From The IMF") that the incompetent bureaucrats at the IMF are very much still at it.  It seems that IMF head Christine Lagarde gave a big speech in Brussels about a week ago, misleadingly titled "Building a Virtuous Cycle."  The theme of the speech was that what the poor countries of the world need to do is increase tax rates and tax collections so as to bring more resources in their countries under the control of the government.  Why?  Because government will use the resources so much more effectively than the private sector ever could.  I'm not making this up.

Of course, when Lagarde said these things she spoke in IMF-bureaucrat-speak, a strange language bearing only passing resemblance to English, and actually much closer to the Newspeak of Orwell's 1984.  Excerpt:

[W]e are here to discuss an equally powerful tool for global growth — domestic resource mobilization. . . .  [T]axes, and the improvement of tax systems, can boost development in incredible ways. . . .  So today, allow me first to explain the IMF’s commitment to capacity development and second, to outline strategies governments can use to generate stable sources of revenue…the IMF has a third important developmentmission — capacity development. . . .  [T]he focus of our event today — enabling countries to raise public tax revenues efficiently.

Get into that new IMF vocabulary!  "Domestic resource mobilization"!  "Capacity development"!  "Strategies to generate stable sources of revenue"!  All of these, needless to say, are just alternative ways of stating the Holy Grail of the IMF, which is more taxes extracted from the citizenry and handed over to the bureaucrats.

And the proof that more taxes and bigger government will lead to better "resource mobilization" and improved economic performance?  Mitchell calls it the "triumph of anti-empiricism."  All actual evidence is to the contrary.  

However, don't forget that the famous economist Paul Samuelson, in a 1943 book chapter titled "Full Employment After the War," claimed to have discovered a mathematical proof of something called the "full employment multiplier," a system by which a government could expand its country's economy by increasing both taxes and spending in equal amounts.  Of course, that is the same book chapter in which Samuelson made the single most disastrously wrong economic prediction of all time, namely the prediction that, if the government cut spending commensurate with the huge military demobilization coming after World War II, "then there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced."  As we all know, they did cut the spending, and what happened was the greatest economic boom in the history of the world.

Seventy-four years later, Lagarde continues to advocate for increased taxation and government spending as the route to economic salvation.  How is this even possible?