Emminent economist (and Clinton-era Treasury policy guru) Brad DeLong has an essay on capital flows that was in today's Reforma.

Thus those of us who still wish to be card-carrying flag-waving advocates for international capital mobility are reduced to two and only two arguments. First, and most important, capital controls create the setting for large-scale corruption. People who badly want to move their capital across borders can't--unless they can find some complaisant bureaucrat. A well-functioning market economy needs to minimize the incentives and opportunities for corruption or it will turn into something worse.

Second, perhaps the inflow of capital into America was and is justified: perhaps there is something uniquely valuable about investments in America today. (But in that case, if these investment opportunities are so great, why aren't Americans themselves saving more--both privately and publicly--to take advantage of them?)

[snip]

It is not possible for a card-carrying neoliberal like me to wish for any but the most minor of controls to curb the most speculative of capital flows. Capital markets can get the allocation of investment badly wrong, but governments are likely to get it even worse, and the incentives to corrupt bureaucrats do need to be kept as low as possible. But the hope for a repetition of the late nineteenth-century experience, in which core investors' money gave peripheral economies the priceless gift of cutting decades off the time needed for successful economic development, has so far proved vain. And to the extent that the case for international capital mobility hinged on the third and fourth of the reasons I mentioned at the start--on how a net flow of capital to the periphery would raise the capital-output ratio and serve as a powerful carrier of technological knowledge--it has slipped through our hands.

Like the Economist's package six months ago in favor of capital controls on portfolio flows, this essay is interesting, because it comes from a staunch supporter of the neo-liberal reforms of the 1990s. Worth reading in full.