There’s lazy reporting and then there’s lazy Sunday analysis

Over the past few years, the Boston Globe Ideas section has generally been considered one of the best treats of theirs or any Sunday paper. Which is why I was surprised when I read this Matt Steinglass article on the intellectual trendiness among economists of preaching capital controls: When the Shanghai stock index dropped 9 percent on Feb. 27, touching off sharp slides in markets across the globe, many were quick to recall the Asian financial crisis of 1997. That crisis was triggered not by a drop in stock prices, but by a collapse in the value of the Thai baht, brought on by currency speculators. But the reason the crash of '97 spread from one country to the next, savaging the economies of Indonesia, South Korea, the Philippines, and ultimately non-Asian countries like Russia, was a broad loss of investor confidence in such so-called "emerging markets." Investors were excited by these economies' high growth rates, but suspicious of regulatory environments that were far from transparent and governments prone to corruption. As they lost confidence in the countries' currencies and securities, investors pulled their money out en masse. Last week, there were concerns that a dramatic drop in Asian stock values might provoke a similar loss of confidence and capital flight.... [Unlike the Wall Street Journal editorial page,] many economists drew precisely the opposite lessons [from the Asian financial crisis]: That open capital markets sometimes behave like irrational mobs, and that government-imposed capital controls can be essential tools for developing countries to preserve stability. The most famous exponent of this view is the Nobel Prize-winner Joseph Stiglitz, former chairman of President Bill Clinton's Council of Economic Advisors, who was the World Bank's chief economist during the crisis. Interviewed last week on the risks to Asian markets today, Stiglitz said capital controls are widespread in emerging markets, and in many cases, that's a good thing.... [D]espite the persistence of these laissez-faire views, a quiet shift may be taking place. Economists and financial analysts today are more likely than they were 10 years ago to accept the need for certain capital controls. Some are even willing to admit it. (emphasis added)Now, the bolded sentence is clearly supposed to be the takeaway point of the piece, so I was curious which economist or economists Steinglass found to echo Stiglitz's views on capital controls. It turns out that the economist Steinglass found was.... Joe Stiglitz: In the decade since the crisis, many economists have come to share these views -- including some within the IMF itself. "In 2003 their chief economist came to the conclusion that the empirical evidence did not show that capital market liberalization worked," Stiglitz says. "It did not lead to more growth, it did not lead to more stability. They still believe it's true, but what they now say is they can't prove it." In some cases, the IMF is actually telling countries that "soft" capital controls, such as tax measures and banking regulations, may be a good idea. Stiglitz might be correct in his assertion, although in 2003 at least one chief IMF economist was pretty disparaging of capital controls. Still, that's not the point. If Steinglass' assertion is correct, one should expect to see a quote from at least one other economist. Hell, Steinglass probably could have raided Brad DeLong's archives and probably found something useful. We don't get either of those things, however. Instead, we get Stiglitz and more Stiglitz. This is insufficient for the assertion that's made in the essay. Bad Ideas section. Bad, bad, bad.