But that idea is wrong: if capital can roam as it will then a state cannot control its currency if it has one. Nor can it be in control of its interest rates. Or its tax revenues. Free roaming capital challenges the right of the state to manage its economy in the interests of those who democratically elected it.
And those who do vote undoubtedly lose out from the impact of free-roaming capital. When capital roams and by and large people don’t the rate of return to capital increases and the rate of return to labour falls. If you want a simple explanation as to why the real wage rate has been frozen, near enough, for more than thirty years (the precise era of capital market freedom) whilst that of bankers, free-riding on the back of capital, has sky-rocketed that is it.
Capital controls are then to be welcomed. They are an essential control on the destructive power of capital.
If there had been capital controls there would have been no Cypriot crisis.
There would have been no banking crisis in 2008.
There would be, at most, a very small tax haven problem.
And I argue the world would be better off because much of the supposed growth in the world that capital freedom gave rise to has benefited a few and not the many, and more than that, it’s helped destroy our environment on the way as anything and everything that can be traded has been.
The markets will say capital controls are a threat. They are right. Capital controls are a threat to the abuse permitted by unregulated markets, but for everyone else today might be a cautious step towards a fairer, more sustainable world.
Because, you see, if you can move your money out of Ritchie\’s control then Ritchie cannot just take as much of it as Ritchie thinks he should be able to take. Substitute the Curajus State for Ritchie if you prefer.
He really is a fascist: everything in the State and nothing outside the State. And worse, he\’s a nationalist about it too.
He seriously wants to bring back the idea that you have to ask the Bank of England before you take more than £25 out of the country.