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Washington Consensus

Washington Consensus. Basic Definition.

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Washington Consensus

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  1. Washington Consensus

  2. Basic Definition • The Washington Consensus is a set of 10 economic policy “prescriptions” considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.–based institutions such as the International Monetary Fund (IMF), World Bank, and the US Treasury Department. 2008

  3. Williamson’s 10 points • Fiscal discipline • A redirection of public expenditure priorities toward fields offering both high economic returns and the potential to improve income distribution, such as primary health care, primary education, and infrastructure • Tax reform (to lower marginal rates and broaden the tax base) • Interest rate liberalization • A competitive exchange rate • Trade liberalization • Liberalization of inflows of foreign direct investment • Privatization • Deregulation (to abolish barriers to entry and exit) • Secure property rights

  4. Summarized as • Macro economic stability (pt. 1,2,3,4) • Floating Exchange rates (pt. 5) • Free trade (pt. 6 & 7) • Free Markets (pt. 8,9,10) From TejvanPettinger, 2013

  5. Macro • Fiscal discipline • A redirection of public expenditure priorities toward fields offering both high economic returns and the potential to improve income distribution, such as primary health care, primary education, and infrastructure • Tax reform (to lower marginal rates and broaden the tax base) • Interest rate liberalization

  6. Floating Exchange Rates 5 A competitive exchange rate

  7. Free Trade 6 Trade liberalization 7 Liberalization of inflows of foreign direct investment

  8. Free Markets 8 Privatization 9 Deregulation (to abolish barriers to entry and exit) 10 Secure property rights

  9. Videos The Washington Consensus (14 min) Lecture by Prof. Noah Zerbe, Humboldt State University https://www.youtube.com/watch?v=X_uuIGfm-Wo Criticism on Washington consensus (1:30 min) https://www.youtube.com/watch?v=QKvig0cFQJc Pro-Washington Consensus (46 sec) The consumer needs to learn how to best manage this new vehicle for economic growth and invest in their own futures. But banks and financial institutions need to use the language, idiom, and images of the people they are trying to help. With edFin, citizens from all around the Western Hemisphere will:- learn how to manage and save money - learn how to use credit to improve their lives - learn how to invest in their families- contribute to the sustainable development of their countries- realize the right of self-determination https://www.youtube.com/watch?v=meT6huTds4E

  10. Very Good overview in 12 minutesBE SURE TO WATCH THIS https://www.youtube.com/watch?v=X_uuIGfm-Wo

  11. Does it work??? • On inspection, there appears nothing wrong with these wonderful tenets. • However, this is just on the surface, but if you take a peek under the hood and ask questions and investigate - you will realize that it very much depends on how these tenets are interpreted and applied. • These so-called tenets were incorporated very quickly - much to the glee of the US Treasury and without any voting or "consensus" at all - into other US economic agency tentacles such as the WTO, IMF and World Bank. And these tenets were not just simple mission statements - suddenly they had become the rules.Read more: http://www.digitaljournal.com/article/266389#ixzz3xKkFBu9b

  12. Williamson Defends against Neo-Liberals • It is often used interchangeably with the phrase “neoliberal policies.” • Williamson’s response “I of course never intended my term to imply policies like capital account liberalization...monetarism, supply-side economics, or a minimal state (getting the state out of welfare provision and income redistribution)”

  13. Monetarism • Monetarism is an economic theory that says the money supply is the most important driver of economic growth. As the money supply increases, people demand more. Factories produce more, creating new jobs.  • Monetarists warn that increasing the money supply only provides a temporary boost to economic growth and job creation. Over the long run, it will increase inflation. 

  14. Supply-side economics • Supply-side economics is better known to some as "Reaganomics," or the "trickle-down" policy espoused by 40th U.S. President Ronald Reagan. ... However, the single idea behind all three pillars is that production (i.e. the "supply" of goods and services) is most important in determining economic growth.

  15. Minimal state • Minimal state refers to a state with the least possible amount of powers. It is a term used in political philosophy where the state's duties are so minimal that they cannot be reduced much further without becoming a form of anarchy.

  16. Three Current Issues regrading WA Con. • Not an ideology, need also to avoid crises • Incomplete or Neglected: Need to fully address things continuously first and second generation • Too narrow – need to concentrate more on poverty reduction and distribution & less on just higher GDP

  17. Little broader review of Washington Consensus Op-Ed: The Washington Consensus: Sharks Feasting By Bill Jencks     Feb 5, 2009 in World On inspection, there appears nothing wrong with these wonderful tenets. However, this is just on the surface, but if you take a peek under the hood and ask questions and investigate - you will realize that it very much depends on how these tenets are interpreted and applied. Readmore:http://www.digitaljournal.com/article/266389#ixzz4WWVwd3zu

  18. Consensus 2.0??? Dani Rodrik argues that there now exists an “Augmented” Washington Consensus, which in addition to the items listed above, adds: • Corporate governance • Anti-corruption • Flexible labor markets • WTO agreements • Financial codes and standards • “Prudent” capital-account opening • Non-intermediate exchange rate regimes • Independent central banks/inflation targeting • Social safety nets • Targeted poverty reduction

  19. Leftist Critique in Kerala State of India

  20. "The Comic Strip of Neoliberalism" is a series of informational comics which you can read by clickingby searching under this name at Wilson Library Web site

  21. Impacts???

  22. Very Good overview in 12 minutes https://www.youtube.com/watch?v=X_uuIGfm-Wo

  23. INS 200 The Washington Consensus https://www.youtube.com/watch?v=zDNWC5SlSsc 20 minutes – Pretty good but no Images

  24. Good Audio Review of Washington Consensus but quite long https://www.youtube.com/watch?v=zOCUraWzf2Y

  25. The opposition • I thought these US agencies were meant to help under-developed countries? So how come China and India have done so well and so quickly virtually on their own? • There is only one answer to this. BILL JENCKS     FEB 5, 2009Read more: http://www.digitaljournal.com/article/266389#ixzz4WWXSaL8t

  26. Equador Today https://www.aljazeera.com/news/2019/10/ecuador-unrest-led-mass-protests-191010193825529.html

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