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Commentary

The OECD Drift


     
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In June, Angel Gurria, a former Mexican politician, will become the new secretary-general of the OECD. Six candidates had applied for the job, in a heavily politicized process. One of the candidates was Alain Madelin, a French classical liberal politician, who would probably have shaken the monkey cage. But Mr. Gurria got the support of a majority of member states, including the US -- despite Mr. Madelin's reputation as a supporter of American domestic and foreign policy.

The OECD was created in 1960 as the economic counterpart of NATO. It was, in many ways, a defender of Western economic liberty. Through the 1980s, OECD studies focused on market solutions against state intervention. Then, the OECD started drifting.

Imposing "fair competition" and a "global playing field" has been one of the statist Trojan horses brought into the OECD. Consider the initiative on "harmful tax competition," launched by the Organization's Committee on Fiscal Affairs in 1998. "Competitive forces," writes the OECD, "have encouraged countries to make their tax systems more attractive to investors. However, some tax practices are anti-competitive and undermine fair competition and public confidence in tax systems." Thus, the OECD wants to achieve a "global level playing field" by requiring member states to enforce their tax laws through exchange of financial information, including banking information on individuals. In public choice terms, the taxers are forming a cartel to extract as much as possible from the taxed.

The links between the OECD and the Financial Action Task Force (FATF), an intergovernmental group fighting money laundering and promoting the related surveillance and control activities, then becomes understandable. Although both organizations say that they are independent of each other, the OECD's 2004 report entitled Getting to Grips with Globalization lists FATF among "Affiliated Agencies and Semi-autonomous Bodies." FATF's secretariat is housed at the OECD headquarters in Paris. The report states, "In many respects, the OECD's work complements that of ... the Financial Action Task Force in the fight against money laundering. The OECD promotes competition ... [b]ut it also insists that, to be truly effective, competition needs to be fair and open.

Since the 1990s, the OECD has also embraced "corporate governance" and "social responsibility." Its newly released Principles of Corporate Governance assume that insider trading must be illegal, that "stake holders" have claims against corporations, and that, in general, the state must teach ethics to corporations, by force if necessary.

Caught into the "sustainable" mantra, the OECD just published a Statistics Brief on Measuring Sustainable Development. The report admits that "the selection of indicators relating to the social dimension is a political act," and that "the sustainable development agenda is a broad one, covering virtually all aspects of life." Yet, the OECD seems intent on pursuing this agenda.

From an innocuous and rather useful free-market-oriented economic and statistical shop, the OECD has thus become a promoter of global diktats. Some of the work done by the OECD is still useful - for example, its standardized international statistics, its country surveys, or its economic research in particular fields (like health care systems). Hundreds of economists in an organization with a 200 million euro budget are bound to do some good. The question remains whether the declining benefits are worth the growing costs.

Alain Madelin believes that the OECD will be more and more carried into the world governance movement, which, he explains, is where the enemies of liberty have refocused their fight. He adds, pessimistically, "It is the end of the OECD."


Pierre Lemieux is a Research Fellow at The Independent Institute in Oakland, California, and Associate Professor of Economics at the University of Quebec at Outaouais in Canada.






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