While useful proposals to reform International Financial Institutions (IFIs) have been widely discussed, the lack of meaningful financial accountability has received little attention. Considering the substantial damage done by IFIs, this is surprising both from an ethical and an economist's point of view. In a market economy anyone must face the economic consequences of their actions and decisions. If consultants give advice negligently or without obeying minimal professional standards, they have to pay compensation for the damage they have caused. National (...) liability and tort laws serve the purpose of compensating those suffering unlawful damages and of deterring such behavior. By contrast, tortious damage caused by IFIs must be paid by IFIs' borrowers, including many of the world's poorest people. IFIs may even gain financially from their own negligence by extending new loans necessary to repair damages done by their prior loans. One failed adjustment program calls for the next. This mechanism makes IFI-flops generate IFI-jobs and additional income. This perverted incentive system rewarding errors, negligence, and even violations of the very constitutions of IFIs is absolutely at odds with the principles on which Western market economies rest. It must be brought to an end. This essay presents the idea of financial accountability, showing how easily reforms making IFIs financially accountable could be implemented. Moreover, embracing financial accountability would bring IFI operations closer to the intentions of their founders, who wanted IFIs subject to the basic legal and economic concepts of financial accountability not exempt from it. The market mechanism and its beneficial incentive system must finally be brought to IFIs. (shrink)

This essay analyzes why risk and liability are necessary mechanisms of well-functioning markets, and discusses how risk can be handled. In the U.S., inappropriate regulatory norms hindered providing against risk in the case of sovereign debt. The absence of liability has produced debts no decent legal system would recognize as legitimate domestic debt.

Machine generated contents note: 1. Introduction Juliette Kennedy and Roman Kossak; 2. Historical remarks on Suslin's problem Akihiro Kanamori; 3. The continuum hypothesis, the generic-multiverse of sets, and the [OMEGA] conjecture W. Hugh Woodin; 4. [omega]-Models of finite set theory Ali Enayat, James H. Schmerl and Albert Visser; 5. Tennenbaum's theorem for models of arithmetic Richard Kaye; 6. Hierarchies of subsystems of weak arithmetic Shahram Mohsenipour; 7. Diophantine correct open induction Sidney Raffer; 8. Tennenbaum's theorem and recursive reducts James (...) H. Schmerl; 9. History of constructivism in the 20th century A. S. Troelstra; 10. A very short history of ultrafinitism Rose M. Cherubin and Mirco A. Mannucci; 11. Sue Toledo's notes of her conversations with Gödel in 1972-1975 Sue Toledo; 12. Stanley Tennenbaum's Socrates Curtis Franks; 13. Tennenbaum's proof of the irrationality of [the square root of] 2́. (shrink)