In a paper published in June 2016 and
entitled “Neoliberalism: Oversold?” - http://www.imf.org/external/pubs/ft/fandd/2016/06/pdf/ostry.pdf - three
leading economists of the International Monetary Fund (IMF) argue that
a growing body of empirical evidence is bringing into question some of the
presumed benefits of what they are now prepared to call neoliberalism.
This is an important admission from the IMF, along with the idea that neoliberalism was first introduced by the military junta led by the dictator Augusto Pinochet in Chile in the second half of the 1970s.
They admit that "there are aspects of the neoliberal
agenda that have not delivered as expected. These specifically include the over selling the priority of reducing government debt (fiscal consolidation or austerity) when this is already fairly low and the ending of controls over the international movement of capital. They now accept that the "costs in terms of increased inequality are prominent".
They conclude by saying: "the increase in inequality engendered by financial openness and austerity
might itself undercut growth, the very thing that the neoliberal
agenda is intent on boosting. There is now strong
evidence that inequality can significantly lower both the
level and the durability of growth".
This brief paper ends with a brief, but important point. "Policymakers, and institutions like the IMF that
advise them, must be guided not by faith, but by evidence of
what has worked." This could usefully be applied to many current PFM reforms. Do we really have the evidence that accrual accounting 'works' in any meaningful sense? Where are the post-implementation studies that the significant costs of the introduction of accrual accounting in any government have actually delivered the presumed benefits?
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