Fernando Fernández. Professor. IE Business School
13 September 2011
The IMF has given us a lesson in transparency by publishing the contract with its new director, Christine Lagarde. It has set an example that our public employees would do well to follow.
I received an unusual email which deserves comment and analysis, given that it contained Christine Lagarde´s contract as chair of the International Monetary Fund. It hadn’t been leaked by a gossipy friend, and it wasn’t spam from anonymous groups of supposedly outraged people. It was an official communiqué from the IMF in a display of information transparency which is commendable.
A lesson in what the Anglo-Saxons called ‘accountability’ in the thick of the battle about the murky goings-on at the SGAE. The contract features the new chair’s full remuneration which includes travel expenses, personal expenses and pension rights. This therefore complies with good governmental directives which so many applaud, and yet so few are able to fulfil – very few in the private sector and none in the public sector. I´d like to have a document like that, a copy of the contracts belonging to the chairmen of Spanish public companies for example. I know it lends itself to all kinds of propaganda, but this can be overcome with information, education and political values.
The one catch is the fact that Lagarde´s salary is inflation-related rather than productivity-related, and this directly contradicts the economic policies recommended by the IMF itself. This wasn’t a very clever move on their part, because I suppose it would upset any acquired rights and established practices and would require negotiations with internal unions of professionals. But it would seem logical, because what is good for the Greek authorities must also be good for the IMF.
I wasn’t in favour of the former French minister being appointed. I think, and I have confirmed this in writing, that her appointment is a mistake for many reasons. She is a politician and the three previous chairmen haven’t been particularly effective at the helm of such an international organisation.
Her appointment is another step towards the politicisation of the institution which thereby distances it from its essentially technical role. She is not an economist and although it may sound like corporatism on my part, I could never imagine a Nobel Prize in Economics overseeing the International Criminal Court. And to make matters worse, she is European. I´m sorry. I´m not nationalist or anything like that, but Europe is precisely the main creditor of that particular body. It’s as if Bankia had appointed the head of the real estate employers’ association as its chairman. That said, the contract and the publicity surrounding her are impeccable and a lesson for many.
People will doubtless get worked up about her huge salary, but this is admirable at the IMF. The principle is simple. If you want competent officials, you must pay them properly. Lagarde is losing money by taking on this job. She is doing it because she is happy to provide a public service, but she is also ambitious and that is acceptable too. This should be emulated by all public administrative bodies. As austerity is the order of the day, it must be done rationally and without jeopardizing the effectiveness of the authorities or increasing their reliance on the private sector. A small number of well-paid, highly-educated employees, who, in the main, undertake specialised posts, improve the quality of public services and best meet the needs of a government in a market economy. It is doubtless a more efficient alternative to populist strategies such as a pay freeze and the stigmatization of staff just because there is not the political courage to pick up the scissors and cut unnecessary posts, usually low-skilled ones. Hopefully this has set an example.