Does the IMF help or hinder?

Much ink and indignation has been expended in recent weeks in Western newspapers about the moral hazard of the International Monetary Fund's US$100 billion intervention in the currency- inspired rout of Asia's economies. By continuing to come to the rescue of every floundering economy in the world, this line of thought goes, the IMF is merely encouraging governments and international bankers to engage in ever-riskier business. Those who hold such a view note that Asia's financial crisis is the work of corrupt business and political elites and thus, they assert, the obligations of charity do not apply.

It is difficult to disagree with the basic tenet of the argument that without risk, capitalism simply does not work and that those who erred should pay the price of their mistakes. To do otherwise is to allow dangerous economic bubbles to form as money pours into unproductive projects and vanity schemes.

But as with all good populist rhetoric, this argument overlooks some real-world points. Punishing Thailand is not the same thing as punishing the people who caused this mess. If the world decided to abandon Thailand, who would suffer? The ruling elite? Last week's disclosures of the wealth of the former Chavalit Cabinet suggests not. Instead, it would probably help them maintain their grip on power.

The 10-year-long boom that has come to an end made some people in Thailand fabulously, even obscenely, wealthy. Some of these people made their money dishonestly, others through speculative business practices, but most by simply working hard at a time when money was easy.

But for every person who did strike it rich, even modestly, during that decade, there were another 10 whose lives changed little. Life for the majority of people who live in the provinces or Bangkok's sprawling slums remains a day-to-day struggle.

There is no question about the need for political and economic reform. The avenging gods of the market, however, are not the answer. Real change will have to come through political reform, and an active, progressive and growing middle class remains the best agent to achieve this.

-- The Nation, Bangkok