Noticed by Stanley Dundee:

2020-10-07: Global Capital Is the Tail That Wags the U.S. Economic Dog, by Michael Pettis

Michael Pettis, respected China analyst and finance professor, slips the neoliberal leash and argues for restrictions on the unfettered flow of global capital:

We can and should change the fact that people can move money around in the blink of an eye. Only then can we rebalance trade in a way that is optimal for the global economy. Much of Wall Street, for obvious reasons, will be ferociously opposed to policies that limit the unfettered flow of capital around the world, but the right polices can sharply reduce the economic disruption wreaked on workers, producers, farmers, and the middle class. And as was the case for most of U.S. history, they will force large businesses around the world once again to compete for profits by investing in domestic productivity, rather than by lowering wages.

Most global capital flows are hot money: portfolio investments in stocks, bonds, and derivatives, not investments in productive assets like infrastructure, industry, and agriculture. As such, they contribute little to development and indeed the direction of capital flow is often from less to more developed economies:

International capital flows mainly take the form of portfolio flows—short-term flows into stocks and bonds—rather than direct investment in productivity-enhancing projects. Portfolio flows tend to be driven by speculation, investment fads, capital flight, reserve accumulation, index investing, or a dozen other reasons that have nothing to do with allocating capital to its most productive uses. In fact, rather than flow from advanced economies with slow investment growth, low interest rates, and excess capital to rapidly growing emerging economies with high investment needs, as the theory tells us should happen, the vast majority of international capital flows into advanced economies that are already flooded with excess savings and cheap capital.

Pettis correctly identifies unfettered global capital flow as class war weaponry:

. . . there is little to justify the fetish for unfettered capital movement. In a world already flooded with excess savings, it doesn't result in more productive investment; it encourages global savings imbalances by allowing wage suppression in trade surplus countries to be exported abroad; it forces up either unemployment or debt in trade deficit economies; and it weakens the negotiating power of workers and exacerbates income inequality everywhere. The only ones who benefit from unfettered capital flows are international bankers and the very wealthy owners of movable capital.

Remarkably, we find this editorial not on an obscure blog but in a paragon of Establishment media, Foreign Policy! Nice to see mainstream media taking note of the realities of globalization. The shine on free trade has really worn off! Delightful to have such a respected and authoritative voice taking up the class war cudgel on the side of wage earners not capital. Kudos to Pettis! I eagerly anticipate his upcoming book, purportedly titled Trade Wars Are Class Wars. I've previously reviewed Pettis' The Volatility Machine, which examines the instabilities and imbalances of capital flow beween imperial money centers and their peripheral subjects.