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The PJ Tatler

by
Stephen Green

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March 25, 2013 - 8:36 am
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I know, I know — it shouldn’t surprise me when I wake up in the morning to find Paul Krugman selling his Nod Along New York Audience on the benefits of more and more controls. But what he’s done today is so sly, I just can’t let it pass. Today, it’s capital controls:

It wasn’t always thus. In the first couple of decades after World War II, limits on cross-border money flows were widely considered good policy; they were more or less universal in poorer nations, and present in a majority of richer countries too. Britain, for example, limited overseas investments by its residents until 1979; other advanced countries maintained restrictions into the 1980s. Even the United States briefly limited capital outflows during the 1960s.

Great Britain in the post-WWII years was hardly thriving. In fact, many wondered if Britain had become the new “sick man of Europe.” Then Margaret Thatcher came along and freed up the economy from Labor’s ruinous policies. But Paul Krugman doesn’t want you to know that.

But there’s more:

It’s hard to imagine now, but for more than three decades after World War II financial crises of the kind we’ve lately become so familiar with hardly ever happened. Since 1980, however, the roster has been impressive: Mexico, Brazil, Argentina and Chile in 1982. Sweden and Finland in 1991. Mexico again in 1995. Thailand, Malaysia, Indonesia and Korea in 1998. Argentina again in 2002. And, of course, the more recent run of disasters: Iceland, Ireland, Greece, Portugal, Spain, Italy, Cyprus.

What’s the common theme in these episodes? Conventional wisdom blames fiscal profligacy — but in this whole list, that story fits only one country, Greece. Runaway bankers are a better story; they played a role in a number of these crises, from Chile to Sweden to Cyprus. But the best predictor of crisis is large inflows of foreign money: in all but a couple of the cases I just mentioned, the foundation for crisis was laid by a rush of foreign investors into a country, followed by a sudden rush out.

This is a neat trick Krugman has pulled here, so I’m afraid most people won’t spot it. Certainly most of his people won’t.

Comments are closed.

Top Rated Comments   
I have a better question.

Which economy that relied on hard leftism...has NOT collapsed?

Answer: None.

I am now believing that the hard leftists want to collapse the world economy, so they can build One World Socialism. OWS is to be brought about by hoax (global warming "necessitating redistribution"), or by stripping Constitutional and inheritance rights, the direct "taking" of money, or by government takeover...in Marxist led countries.

America is the last peg on the board.
1 year ago
1 year ago Link To Comment
All Comments   (9)
All Comments   (9)
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May I say a word on behalf of Sweden and Finland. Both countries that got hold of their unsustainable tendencies and made things right, for the time being at least. And Thailand, a country that really is trying for breakout, but is hampered by a roiled political economy. Some sympathy for the good guys caught up in the maelstrom.
1 year ago
1 year ago Link To Comment
One point ignored by Mr. Krugman (among many), and Mr. Greene, is that for the first decade and a half following WW-2, the world operated on The Gold Standard as modified by Breton-Woods.
Thank You, RMN, for allowing that bit of stability to collapse.
1 year ago
1 year ago Link To Comment
Capital flows to where is treated best. That happens between US states and national states. Krugman want to put capital in jail so it will have to take what the state gives it. Somehow, though, I doubt Krugman would accept that kind of jail for himself.

I find that most leftists advocate something that will help them or something they expect to be exempt from. Never does a leftist advocate for something that will harm him, but be better for the general population. See ObamaCare and the legislature exempting themselves from it for a good example.
1 year ago
1 year ago Link To Comment
Why is Krugman so racist against foreigners?
1 year ago
1 year ago Link To Comment
Once again, Krugman argues in an Oped piece for policies he specifically discredited in his own academic work.

One wonders if its dementia or an incompetent ghost writer.
1 year ago
1 year ago Link To Comment
I have a better question.

Which economy that relied on hard leftism...has NOT collapsed?

Answer: None.

I am now believing that the hard leftists want to collapse the world economy, so they can build One World Socialism. OWS is to be brought about by hoax (global warming "necessitating redistribution"), or by stripping Constitutional and inheritance rights, the direct "taking" of money, or by government takeover...in Marxist led countries.

America is the last peg on the board.
1 year ago
1 year ago Link To Comment
Which economy that relied on hard leftism...has NOT collapsed?

Communist China
Sweden
Norway
Finland
Germany (West)

1 year ago
1 year ago Link To Comment
The ChiComs are practicing authoritarian crony capitalism (the cynic would say they are the leading Fascist State in today's world); Sweden has, to some extent, de-Socialized; Norway has oil whose income papers-over a lot of deficiencies; neither Finland or Germany would be considered "Hard Leftist".
1 year ago
1 year ago Link To Comment
The hard leftism of the ChiCom Cultural Revolution DID collapse that economy.

As for Mr. Shootist's claim that Sweden, Norway, Finland, and West Germany "relied on hard leftism", it's phony. Leftists have spent a generation trying to shout down anyone who tries to apply the label "socialist" to those countries.
1 year ago
1 year ago Link To Comment
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