The opinion page of the Financial Times is suddenly making more sense.
Seriously, one of the benefits of writing a piece like this is that it gets you lots of intelligent responses. Here is one that appeared in my e-mail box:
Are you a Kennedy Fag?
re: Int'l capital flows
First: gas tax??? Second: Send the memo to E. Asia ?? WTO ???
Why not just a global currency standard, with some flexible rigidity?
That is meant as a compliment, right?
I better stick to my blog, where comments are always civil and well-informed.
UPDATE: Martin Wolf has a comment on our oped, which includes a plug for his new book. He says he is closer to the Rodrik-Subramanian view than he was five years ago ("When the facts change, I change my mind -- what do you do, sir?") and makes three points:
First, this is a matter for individual countries to decide. Capital account liberalisation should neither be forced on countries nor should they be prevented by others. Outside advisers, including official advisers, should analyse the pros and cons against the particular circumstance of the country concerned and offer advice on the feasibility of the set of policies proposed.
Second, capital inflows are not a substitute for an adequate level of domestic savings. Promoting the latter is an important policy priority (though not to the excessive levels now seen in China).
Third, countries should normally discourage domestic borrowing in foreign currency, unless they adopt the foreign currency for domestic monetary use. Otherwise, countries should restrict capital inflow to direct investment, portfolio equity and domestic-currency-denominated lending. The fact that the US borrows in dollars makes the consequences of the crisis smaller and the ease of dealing with it far greater.
I am on board with all three.