Breaking: Countries Act In Their Own Interests In Spite Of What's Best For Everyone Else

from the now-that-that's-settled... dept

Cross-posted from

The prisoner’s dilemma, it seems, is still a profitable mine in economic academia.

A couple of researchers at the New York Fed are out with a new paper on capital controls. In it, conventional wisdom (and the aforementioned dilemma) proves right and the contrarian view, dating from the Asian financial crisis 15 years ago, wrong.

When countries simultaneously and independently engage in such interventions in the international flow of capital, not only global but individual welfare is adversely affected….

Countries decide to restrict the international flow of capital exactly when this flow is crucial to ensure cross-border risk sharing. Our findings point to the possibility of costly “capital control wars” and thus to significant gains from international policy coordination.

But here’s the really shocking revelation:

The paper does allow that restricting capital flows can make sense from the perspective of an individual nation. It’s just that in following this path, trouble is created for the broader global financial system.

NY Fed Paper Argues Against Capital Controls [WSJ Real Time Economics]

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Comments on “Breaking: Countries Act In Their Own Interests In Spite Of What's Best For Everyone Else”

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Anonymous Coward says:

Nature vs Idealists

Every living thing on Earth is self-interested.

? Eco-systems are overrun by invasive (self-interested) species
? Food chains are designed in a pyramid to ensure a large base to support more specialized (self-interested) higher life
? Human desires are based on a self-interested hierarchy

?Maslow?s Esteem Needs? breaks this down nicely – all VERY self-interested
1) Thirst, Hunger
2) Security, Protection
3) Social needs, Love
4) Self-esteem, Recognition
5) Self-Actualization

Govts are run by self-interested humans, so it always ?shocks? idealists (I call them fools) when people/Govts conduct themselves in a self-interested manner.

Tex Arcana (profile) says:

Re: Re: Re: Nature vs Idealists

Funny how an anonymous coward doesn’t have the balls to identify himself, and yet calls the guy with a real name a “nobody”. :tard:

“academics” have been wrong before; and they are usually a bunch of pompous asses who will twist everything to fit their own view of the world. At least I call it like I see it, right :tard;?

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