Fri, October 22, 2021


John Williamson, economist who devised 'Washington Consensus' model of reform, dies at 83

John Williamson, a British-born economist for the World Bank and other institutions and think tanks, who was best known for coining the term "Washington Consensus" to describe a set of reforms aimed at reinvigorating struggling economies in Latin America and other countries, died April 11 at his home in Chevy Chase, Md. He was 83.

He had multiple system atrophy, said his daughter, Theresa Williamson.

Dr. Williamson began his career as a college professor and had stints working for the British government, the International Monetary Fund and the World Bank, developing policies to help bolster economies of countries around the globe.

After teaching in Brazil, he joined the Washington-based Institute for International Economics - later renamed the Peterson Institute for International Economics (PIIE)- in 1981, where he developed ideas to strengthen global economies and markets.

In 1989, after consulting economists at the IMF, World Bank, Treasury Department and Federal Reserve, Williamson suggested a list of 10 ideas to spur and safeguard economic development. His prescription became known as the Washington Consensus, which was subject to mistrust and misinterpretation from the beginning.

In its original form, the Washington Consensus presented several basic macroeconomic ideas to restore stability in countries with shaky economies. The first and perhaps most important requisite was fiscal discipline. Others included directing public expenditures toward health care, education and infrastructure; lowering tax rates; privatizing state-run businesses to improve efficiency and reduce corruption; and securing private property rights.

"The three big ideas here are macroeconomic discipline, a market economy and openness to the world," Williamson said at the time.

The policy goals were meant to be applied to Latin America, but quickly became seen as a template for global economic reform in the wake of the collapse of communism across Eastern Europe.

"Initially there was a lot of criticism from Latin America calling it the 'Washington Consensus,' " Williamson said in a 2006 oral history interview with the World Bank, "because this suggested that there were some people sitting in Washington deciding what Latin America needed to do. And the critics thought that these reforms were being imposed, which wasn't my perception of how things were in fact happening, and certainly not how they should have happened."

His ideas, however well-intentioned, immediately ran into the roadblocks of reality. Left-wing populists such as Hugo Chávez in Venezuela centralized many aspects of the national economy, and other reforms ran aground because of labor opposition, corruption and other deep-rooted institutional problems.

"The Washington Consensus had escaped my control and it had become whatever people meant by it," Williamson said in a 2018 interview with the Center for Financial Stability.

Nobel Prize-winning economist Joseph Stiglitz wrote in his 2002 book "Globalization and Its Discontents" that fiscal conservatism, privatization and higher interest simply weren't effective in economically underdeveloped countries. The Washington Consensus, he concluded, had left some countries worse off than they were before, with stagnant economic growth and weakened social safety nets.

But later studies by economists Kevin Grier and Robin Grier showed that countries that had maintained their long-term policies of economic reform had increased growth, income and other economic conditions.

"There's no question that Latin America is doing much better than East Europe," Williamson said in 2009 during another worldwide economic downturn. "There's been much more restraint this time around in most of the countries. That's what Latin America is benefiting from."

John Williamson was born June 7, 1937, in Hereford, England. His father ran a plant nursery business, and his mother was a homemaker.

Williamson graduated from the London School of Economics in 1958, served two years in the British air force, then received a doctorate in economics from Princeton University in 1963. While teaching at the University of York in England in the mid-1960s, he developed the "crawling peg" theory, an economic model to maintain currency stability by limiting volatility in exchange rates.

Williamson worked for the British treasury department in the late 1960s, taught at the University of Warwick in England and had a two-year assignment with the IMF in Washington in the early 1970s. He taught at the Pontifical Catholic University from 1978 to 1981. During the 1990s, he spent three years working for the World Bank. He published more than a dozen books and wrote scores of scholarly articles before his retirement in 2012. His most recent books, "Growth-Linked Securities," appeared in 2017.

Survivors include his wife of 47 years, the former Denise de Souza of Chevy Chase; three children, Andre Williamson of Silver Spring, Md., Daniel Williamson of Chevy Chase and Theresa Williamson of Rio de Janeiro; two sisters; and seven grandchildren.

DWilliamson was a dedicated conservationist and birdwatcher who had sightings of more than 4,000 species of birds in the 104 countries he had visited.

Partly for environmental reasons, he believed governments should impose stiff taxes on carbon emissions. He also saw another industry that he thought should be heavily taxed for the public good: advertising.

"One could easily envisage a 20 or 30 percent tax on advertising," he said in a PIIE publication in 2012, "which would bring in a lot of money and would have beneficial effects in limiting the extent to which we are bombarded with these unnecessary things at the present time."

Published : April 15, 2021

By : Matt Schudel The Washington Post