IMF Conference: Debate on Equity Invites Diverse Perspectives, Generates Pragmatic Prescriptions
| Author | Sheila Meehan |
| Position | Senior Editor, IMF Survey |
| Pages | 189-193 |
Page 189
Revisiting a topic that drew chiefly on academic discussion in 1995, the IMF's Fiscal Affairs Department on June 8-9 hosted a conference on "Economic Policy and Equity." Organized by Vito Tanzi, Director of the Fiscal Affairs Department, the sessions spotlighted the practitioners' perspective and reflected an increasing concern within the IMF on how its policies could be better designed and implemented to promote and sustain equitable growth. With the participation of policymakers, clergy, and labor leaders as well as academics, the wide-ranging discussions underscored the importance of, and the synergy between, sound policies and good governance. The panels also highlighted the increasingly critical role that popular support plays in the successful implemention of major reforms.
In welcoming remarks, IMF First Deputy Managing Director Stanley Fischer noted that the conference represented another step in the organization's efforts to better understand equity and to integrate equity considerations into its operational work. The IMF has tried, he said, to translate the lessons from the 1995 conference into several concrete steps, notably greater attention to the design of effective social safety nets and the elimination of unproductive spending, an increased emphasis on "second generation" reforms, improved data collection on social expenditures, and the monitoring of social output indicators. The conference offered the IMF a rare opportunity to step back from its day-to-day work and listen to ideas about what more the IMF could do and what values it should bring to its daily business, Fischer said, and the IMF looked forward to drawing further practical implications for its operations from the discussions.
Equity, cautioned Amartya Sen of Trinity College, Cambridge, and Harvard University is a multidimensional concept encompassing equality of opportunity and access as well as the distribution of consumption and wealth. The key to addressing inequality is thus not simply redistribution but empowerment. Improvements in health, education, nutrition, and land ownership can enable individuals to participate more fully, and more productively, in the economy. Given the multidimensional nature of equity and the great variety of cultural and political factors, he warned against reliance on a single aggregate index or policy prescription. The IMF may not be central to the quest for equality of opportunity, he added, Amartya Sen but it is vital that the IMF develop a broader understanding of it.
Commenting on Sen's paper, Nicolas Barr of the London School of Page 190 Economics said that any equity checklist should also include security. The dramatic decline in life expectancy in some transition economies attested to the real, and very high, cost of unemployment and dislocation. Monsignor Diarmuid Martin of the Vatican argued that the only sustainable growth is equitable growth. He also suggested that the best interests of the market were served by empowering the poor. Alicia Munnell of Boston College reminded participants that wide income disparities are more readily tolerated if wealth is perceived as the product of talent and effort and if opportunity affords economic mobility.
Who gains and who loses was, and will remain, a central question of economic policymaking, maintained Anthony Atkinson of Nuffield College, Oxford. Looking specifically at the Group of Seven industrial countries, Atkinson found considerable national diversity, which he attributed to differences in government policy and social institutions. He called attention to the impact of social norms, arguing that the interaction of social norms and demand shifts appears to have led to increased wage dispersion in the Group of Seven countries.
Atkinson also challenged the common perception that governments are powerless in the face of globalization and questioned evidence linking greater social protection and greater labor market inflexibility to lower growth. Social security, he said, may...
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