Ritchie\’s capital controls

Man\’s badly misinformed:

The measures suggested in this chapter are forms of capital control: they are intended to make sure that capital is accountable wherever it is. This is essential if the inevitable increase in the rate of return to capital that has been a characteristic of the last thirty years, and which has been so harmful to the world economy, is to be corrected.

Increase in the rate of return to capital? Where?

There\’s been an increase in the rate of return to human capital, education, most certainly. But capital as capital?

Thirty years of the free flow of capital has resulted in at least 5% of world GDP shifting from labour to capital.

This just isn\’t true.

He\’s making the mistake of actually believing research from the TUC.

Has the labour share of income fallen? Yes, it most certainly has? Has the capital share of income risen over the past 30 years? No, actually, it hasn\’t.

What has risen is the amount of tax governments are taking off people. And, given the way that GDP is measured using the income approach, this is what explains the falling labour share. Specifically, there\’s been a significant rise in both employer paid social security taxes and in taxation on consumption: specifically, VAT. Those two are what explains the falling labour share. Must be, as the capital share hasn\’t budged.

It\’s not just that his solutions are wrong, it\’s that his basic facts about the real world are.

Payments for investment purposes, whether for direct investment or portfolio investment will all require prior consent for payment.
Payments for speculation will be subject to quota allocation, which could be withdrawn at any time.

And his solution is entirely fascist. You only get to send your money where The State thinks it appropriate that you do. Quite apart from anything else he\’s entirely missed that the past 30 years of the free movement of capital have at the very least coincided with, although I would insist caused, the greatest reduction in human poverty in the history of our species. He would undo all of that just so that he could tell rich people what to do with their money.

5 thoughts on “Ritchie\’s capital controls”

  1. I recall this passage being one of the weakest In the entire book (If it’s possible to single out ‘a weak’ point in such a flawed work) but several items stand out (Your HTML seems to have been sabotaged, possibly by Murphy or one of his minions, so apologies for use of spaced quotes instead)

    ‘In that case, given the threat such abusive activities pose to the stability of the world economy and to the well-being of the people of the world the Courageous State will have no choice but to suggest sanctions on those states and those companies that refuse to cooperate with the process of transparent accountability which will assist the process of making capital accountable to people once more.’

    Good luck with that – I think most multinationals will sooner shut down their activities (if they possess any) within the borders of ‘The Courageous State’ and tell them to do their worst. The end result would seem to be that the country pursuing such a policy would be left snarling at the rest of the world and protesting impotently on the sidelines. Rather like we see today with the country closest in Spirit to Murphy’s Vision, the Korea DPR.

    Tim, Re: your last paragraph, I am reminded of Lady Thatcher’s last appearance at the Dispatch box in 1990 – a rejoinder to Liberal Democrat Simon Hughes.

    ‘The hon. Gentleman is saying that he would rather that the poor were poorer, provided that the rich were less rich. That way one will never create the wealth for better social services, as we have. What a policy. Yes, he would rather have the poor poorer, provided that the rich were less rich. That is the Liberal policy. ‘

    How much truer that is of Richard Murphy….

  2. Surreptitious Evil

    He’s making the mistake of actually believing research from the TUC.

    Why shouldn’t he? He probably did it?

    He would undo all of that just so that he could tell rich people what to do with their money

    He would do far, far more than that. He says so himself.

  3. Now that Cyprus has become de facto the Courageous State, I’m looking forward to seeing what sanctions it imposes on Germany (and perhaps Russia).

  4. “He would do far, far more than that. He says so himself.”

    The supreme irony is he genuinelly believes he would. However, as Pasternak showed us, the true owners of the Courageous State would wander along to Tim and his fellows at the ASI and offer them really plum jobs. Ritchie would stay at liberty for just about as long as he kept his stupid mouth shut.

Leave a Reply

Your email address will not be published. Required fields are marked *