Larry Elliott, economics editor of The Guardian, gets carried away today with attacking a straw man. In reference to the chiefs of the IMF, World Bank, World Trade Organization, and European Central Bank, he writes:

Together, they embody a distinct world view; growth is good, inflation is bad, free trade is good, protection is bad; free movement of money is good; capital controls are bad; the market is good, the public sector is bad.

Okay until the last phrase. Please refer me to a single document where any official of any of these public-sector agencies has said that the public sector is bad.

Elliot continues:

Not entirely coincidentally, this also happens to be the world view of the rich and powerful around the world. It is the agenda of the multi-national corporation and the City of London; it is the agenda of the media mogul and the hedge fund.

This is the classic argumentum ad hominem: a view must be wrong because the wrong people support it. But in this case the premise is false. The rich and powerful, and the media moguls, do not in fact consistently support a free-market agenda. We could only wish.

Later Elliot pulls out all the stops will a silly analogy:

Take financial liberalisation. The case for removing all the shackles from capital was that the constraints imposed after the second world war not only led to inefficiency but were also an intolerable attack on freedom. Everything would move a bit faster and a bit more smoothly if these constraints were removed.

All sounds entirely sensible, doesn't it? By the same token, though, it is an intolerable attack on liberty to force a teenager to pass a driving test before being allowed out on to a public road. What's more, traffic would move more smoothly if we abolished speed limits. Get right down to it, and government has no part in this process at all. We should let people sit behind the wheel of a car whenever they want. We should leave it to the self-regulation of the motor manufacturers to restrict the speed of the vehicles put on the road. And we should rely on the common sense of motorists to know just how safe it is to drive.

Well, there might be some libertarian ultras who would support such an idea, but most of us can tell the difference between freedom to drive and licence to kill. Any period of self-restraint would be short-lived and before long we would all be driving like Mr Toad. There would be an almighty car crash, after which there would be urgent calls for the old controls to be brought back.

An untrained teenage driver, or a reckless speeder, endangers those around him. For that reason nobody objects when the owner of a road sets rules against its unsafe use. Likewise, the owners of the New York Stock Exchange set rules against its unsafe use. The constraints imposed by government against capital flows had nothing to do with safety and everything to do with rent-seeking, protectionism, and masking the effects of bad monetary policy.

Two final comments: (1) Elliot is a credit snob:

Now take a look at the financial system. It is easier than ever to get credit. People who really should not be allowed to borrow are being bombarded with offers of loans.

Who decides “who really should not be allowed to borrow”? Can’t we leave that decision to lenders, who are staking their own money on each loan approval?

(2) Elliot misrepresents rate-of-return arbitrage:

Free movement of capital internationally means speculators can borrow money where interest rates are low and invest in riskier assets somewhere else in the world.

Speculators do want to borrow at low rates, but they want to invest where they can earn high risk-adjusted returns. Other things equal, they want to avoid riskier assets. Free movement of capital internationally in fact means that speculators can borrow money where interest rates are low and invest wherever rates of return are high. Just as we should want them to do.