Re: controlling capital?

[Warren Mosler <mosler@xxxxxxxx>]

Just to make sure I am on track with the logic, exactly how is capital and
flow of capital defined?  For example, real capital flows are the movement of
real means of production, such the shipment of, say, machine tools from
the U.S. to Mexico.   If capital refers to the money only, than the term
"flow" needs to be examined.  For example, if I sell my dollars and buy
pesos, there is a counter party.  The money is changing hands.  But until
money is spent on real goods and services, there are no real effects.

Warren Mosler



At 01:12 PM 3/9/96 +0000, you wrote:
>Dear All,
>	Ok then, globalization etc. For a start I'd just like to suggest
>that this debate has been played on and on on the IPE list so those of
>you who are interested could have a look at those archives.
>
>I'll restrict myself to a couple of points on Mike's post, which I
>found interesting - particularly the explanation of the relationship
>between globalization and comparative advantage. I could go on and on as
>my Ph.D. research concerns 'Globalization, regulation and geography: the
>development of the bahamas and cayman as offshore financial centres'.
>
>My first point is really to question the idea that sovereign (a tricky
>word in itself) nations have a duty to examine and maybe prevent capital
>flows. Given the dynamic of competitive deregulation any one country is
>not necessarily going to be better off by controlling capital flows. In
>my humble opinion the nation-state as a level of analysis and policy is
>to some extent circumvented. As nation-states are tied into webs of
>interdependence it's difficult for them to tackle global problems, the
>provision of the public good of international financial stability. The
>problem - if one sees speculative capital flows as a problem, and I do -
>must be tackled at the global scale. Would anyone like to discuss the
>Tobin tax on foreign currency transactions?
>
>> Fortunately (or unfortunately, depending on your political views) it is very
>> easy to control these capital movements. It simply requires a new regulation
>> from a country's treasury department which requires any bank wishing to
>> transfer funds offshore to obtain a permit before doing so. Enforcement can
>> be accomplished easily with electronic approvals required. The benefits of
>> this regulation will be increased employment in the subject country
>> resulting from the employment at home of capital that otherwise would go
>> offshore.
>
>Secondly, OK this control of capital movements seems to be easy, but as
>capital is mobile, more mobile than political authority, such an effort
>to control movements by one country may well just push capital offshore.
>Witness the effects of the US capital controls programme (Interest
>equalization tax, Regulation Q, Voluntary Foreign Credit Restraint), and
>the resultant (partially, but importantly) development of the Eurodollar
>and offshore markets.
>
>So, it seems to me that regulation by any one nation-state, even if its
>the US, is unlikely to work. What is needed in international action or
>global governance, governance which could have a variety of different
>aims and mechanisms depending on what people (ideas of cosmopolitan
>democracy a la David Held) want.
>
>Hope that was simplistic enough to be provocative!
>
>best wishes,
>Alan
>
>PS:OK, so Mike was talking about TNCs and fixed capital, which makes
>single-state regulation slightly less problematic, but the problem
>basically remains the same.
>
>*****************************************************************************
>Alan C. Hudson,
>
>Department of Geography,		and		Fitzwilliam College,
>University of Cambridge,				Cambridge,
>CB2 3EN,						CB3 0DG,
>United Kingdom.						United Kingdom.
>
>Tel: 	+ 44 (0) 1223 333349 (Department - Direct line)
>Tel:	+44  (0) 1223 333399 (Department - General Office)
>Fax: 	+ 44 (0) 1223 333392 (Department)
>E-Mail: ach1005@xxxxxxxxx
>*****************************************************************************
>
>
>
>

Warren B. Mosler
Director of Economic Analysis
III Finance

See:

"Soft Currency Economics"
=========================
http://inca.gate.net/~mosler/softecon.html