Another nail in the coffin of unfettered capital flows?
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.
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.
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