ABSTRACT
Much of the current discussion about capital outflows from the United States has focused on its allegedly detrimental effects on national economic welfare, concluding with the recommendation that long-term capital outflows, particularly of direct investment, be restricted. An explanation of U.S. policies toward long-term capital outflows should begin by considering what would be, at least to many economists, the most obvious hypothesis: that the capital control programs were a “rational” economic policy. The term is here used in the sense defined by Max Weber as “formal rationality,” or choosing the most efficient (or least cost) means to achieve a given end. 1
