L’affaire Strauss-Kahn

I take no pleasure at all in reading about M. Strauss-Kahn, and of course remain agnostic about the truth of the lurid allegations against him. However I have a couple of observations which are relevant to the IEA’s concerns.

First, whatever the truth of these allegations, the affair has shown very clearly that attitudes towards women amongst the French elite remain sexist and discriminatory. Yet the most widely-quoted indicator of sexual discrimination, the gender pay gap, is far smaller in France than in the UK.

The same apparent anomaly is also found in Italy, where revelations about the bunga-bunga culture around Silvio Berlusconi seem to have had limited impact on his political position. Other evidence such as Eurobarometer surveys puts Italy at the top of any international league of sexism – but, like France, it too has a much lower gender pay gap than the UK.

This reinforces a position I have argued here several times: the gender pay gap is a statistical construct which is influenced by such factors as male and female education, career and work-life balance choices on the one hand, and labour market regulation (which protects ‘insiders’ in Italy and France, keeping lower-skilled women out of the workforce) on the other. It is not a marker for sexual discrimination at work and the government should make this clear. The last government was obsessed with the pay gap and its Equality Act has led to a considerable burden of pointless reporting being placed on government offices and quasi-public bodies such as universities.

The second observation I have is that the position of Managing Director of the International Monetary Fund should not be filled on the basis of political deals amongst governments. If M. Strauss-Kahn had had to face a proper recruitment process perhaps any proclivities would have emerged into public light sooner. And our government should not be party to a new fudge to replace him with some other political appointment such as Christine Lagarde or, heaven help us, Gordon Brown.

Len Shackleton is an Editorial and Research Fellow at the IEA and Professor of Economics at the University of Buckingham. He was previously Dean of the Royal Docks Business School at the University of East London and prior to that was Dean of the Westminster Business School. He has also taught at Queen Mary, University of London and worked as an economist in the Civil Service. His research interests are primarily in the economics of labour markets. He has worked with many think tanks, most closely with the Institute of Economic Affairs, where he is an Economics Fellow. He edits the journal Economic Affairs, which is co-published by the IEA and the University of Buckingham.

5 thoughts on “L’affaire Strauss-Kahn”

  1. Posted 19/05/2011 at 11:56 | Permalink

    It is strange that only countries with huge implicit and explicit debts seem to be viewed as having suitable candidates (EU, possibly US though they normally take the World Bank job).

  2. Posted 21/05/2011 at 10:19 | Permalink

    Mr Shackleton

    You are correct to highlight that the comparison of relative pay differences between males and females must be a statistical construct, otherwise speaking of its existence would de deemed hearsay, or conjecture; by learned business people, their representative organisations, or business schools. Instead, by making comparisons using hard information it is possible to ascertain whether differences in pay rates are down to chance, or if statistical probability infers that underlying prejudice is in operation.

    Gender pay inequality, as with other relatively disadvantaged groups is but part of the argument for greater equality of distribution of resources. It has never been and should never be the only argument.
    The argument against Gordon Brown becoming the next IMF chief resonates with the political and economic standpoint espoused by the author of this piece and the IEA. The dismissal of Lagarde as a potential candidate smacks of some other underlying and negative, preconceived idea about her, based on something other than her merits, qualities and abilities, as a politician, economist and administrator.

    The adoption of a holier than thou approach and superiority complex in relations between men and women compared to Italy and France could appear hollow. The conduct of public figures such as the former UK PM John Major or a number of his cabinet colleagues, or recent allegations surrounding professional footballers and a former leading banker suggest there may be probably no room for such lofty complacency in the UK.

    The dated, tired, unreconstructed arguments espoused above may be exposed in public discussion of this topic, if only to allow their folly and underlying outlooks to become so apparent.

  3. Posted 26/05/2011 at 08:43 | Permalink

    The author of this comment believes that “resources” should be redistributed. The problem is always that economic resources have to be created and maintained by human effort, and that means, in this imperfect world, that the pattern of incentives must be appropriate to this never-ending task. Rearranging pay structures on the basis of misunderstood indicators such as the gender pay gap is unlikely to achieve the long-run benefits Anonymous is looking for.

    I have no view about the talents of Ms Lagarde, but all the discussion of the possibility of her appointment relates to political acceptability rather than technical competence. And I don’t think that heads of important international organisations should be selected on this basis.

  4. Posted 26/05/2011 at 19:59 | Permalink

    All judgements about the suitability of candidates for jobs have a degree of subjectivity about them.

    The skill in making appointments at any level is in around reducing subjectivity and defining the essential criteria of the future successful candidate for the role. Equally, it is in discarding non-essential criteria from the decision-making process, at least until such time as a number of potential candidates equally meet all the essential ones.

    The most important criteria for the next chief of the IMF is to sense the political climate amongst major member countries; sensitivity to European economic policy being the first amongst these. The next two most important are the ability to run a government department or an organisation, with a mandate for the economy and competence in economic policy.

    Lagarde has played an active role in French domestic and European economic policy since before the credit crunch and recession. France came through the period more strongly than the UK, though not as strongly as Germany. Lagarde appears to enjoy the confidence of even George Osborne.

    Unless a more objective assessment of the relative merits of all the other potential candidates for the IMF chief’s role is undertaken, based upon their achievements, qualifications and experience against those of Mme Lagarde, a summary dismissal of her candidacy in the same sentence as Gordon Brown’s could appear a best churlish and at worst more sinister as Anonymous has highlighted above.

  5. Posted 27/05/2011 at 12:31 | Permalink

    Well, Jonathan, I’m not alone in this. The Economist today talks of the allocation of the World Bank to an American and the IMF to a European as a “stitch up” and “a disgrace”. It says “international posts should be filled on merit”. Ms Lagarde may have such merit (though she has no background in economics): let her compete openly for a properly-advertised job.

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