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Comment by spikengineer | Hacker News Reader

Capital controls are necessary to prevent complete failure of the financial system of developing countries due to hyperinflation where the rich can extract the maximum from the economy and runaway by investing in foreign economies. This is acceptable at a small scale but can cause serious issue if scaled up. The only countries that are safe from this are developed countries with reserved currencies like USD or are resource rich like Saudi Arabia .

US doesn't need capital controls because their currency is treated as a reserve currency and the buffer to prevent hyperinflation is very high

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Unfortunately most of the audience here has no experience with the situation you're correctly describing.

I find it both funny and a bit frustrating when people try to impose standards from wealthy developed countries on the developing world without further critical thought. Just because it's not a reasonable measure for your situation doesn't mean it's not a reasonable measure in a different one.

No. Audience here just skews heavily towards personal freedom of movement and that movement happens to include movement of money. Collective HN mind, if there is such a thing, abhors restrictions that it perceives could impact its freedom.

And frankly, personally, I do not really care what my ruling class thinks is best for me. I will figure it out on my own, thank you very much. I have seen the job done so far.

> Audience here just skews heavily towards personal freedom of movement

...and said audience coincidentally happens to mostly live in places that actually have that freedom of movement. On the other hand, I, my passport that can take me basically nowhere, and the awfulness of visa acquisition know very well that "freedom of movement" is already a joke. And I remain extremely sceptical of the opinions of people from countries that are not impacted by brain and capital drain (and which, in fact, benefit from it) on situations like this.

As someone who also lives in a country heavily affected by brain drain, I put in very high regard the freedoms enjoyed in those countries you choose to ignore, because it's the lack of them that causes the brain drain.

Skilled professionals and investors are reluctant to invest their time/money in a country that taxes the crap out of them without giving much back. Excessive protectionism and high costs of living punish the people that can move the country forward just to prevent stagnant industries from suffering an inevitable blow for a little longer.

This logic is flawed.

“But if we remove the tourniquet the person will bleed out!”

....

Okay, you’re right. Perhaps we should ask instead, why do we need the tourniquet? What conditions were put in place that capital is attempting to leave?

Money goes where it’s safe and it can grow.

The Berlin Wall was the monetary equivalence of a capital control.

>Perhaps we should ask instead, why do we need the tourniquet? What conditions were put in place that capital is attempting to leave?

Being poor and/or corrupt is usually the source of the problem. Lack of capital makes it impossible to fix.

Without strict capital controls China's rise would have been impossible, for instance - much like a lot of Africa.

> “But if we remove the tourniquet the person will bleed out!”

This is an amazingly apt analogy, just not the one you think it is.

Sure, you can debate about how the person should/would never have been injured in the first place if everybody involved in the situation did everything right. But they are injured, right now, and they will die, right now, if they're not provided with first aid and further medical attention - and until the patient is stabilised, those lofty questions are useless pontifications.

Except it's not just one person at risk. It's millions and millions of people and their livelihood.

Leave a tourniquet on for far too long and you risk losing a limb. And a limbless person will have a much lower quality of life. Likewise with capital controls, it might serve to treat the problem now but it does nothing to tackle the causes and all you're doing in the end is consolidating power for an authoritarian government and crippling your economy for decades to come.

As I have already mentioned, a person that's bleeding out requires first aid [now] - which the use of a tourniquet is a part of - and further medical attention.

Emphasis on the further medical attention, because they will simply never be able to get it if first aid is not applied. This is the exact reason why first aid exists, even though it is often technically destructive (e.g. properly administering CPR runs quite a high risk of breaking the patient's ribs).

> And a limbless person will have a much lower quality of life

A person who has lost a limb is alive, and (I digress) the hand-wringing that abled people do over the quality of life of the disabled is a bit weird.

"I'm nowhere near a hospital yet but this tourniquet has been on for ages so let me take it off and continue freely bleeding out" is frankly a foolish decision for anybody to make.

Capital controls merely treat a symptom (flight of capital) instead of treating the disease (a faltering economy) and left on for any period of time only leads to further consolidation of power to the ruling class, at the expense of the rest of the populace.

Just don't hyper inflate so the capital doesn't flee?

But then how do we fund all these populist measures in our LARPing as a first world country making lavish expenditures to improve QoL? Do you hate people who can't afford XYZ?

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