Capital Flight and Freedom

As freedoms are compromised and even eliminated, those who desire freedom act to offset the depredations imposed upon them. Capital, both human and wealth, attempt to right the wrongs imposed. Once that alternative is seen as fruitless, both will flee.

As Joel Bowman describes it:

Perhaps it is useful here to consider freedom as a concept, not an institution or a political or geographical location. Certainly one cannot point to freedom on a map, nor is it defined - regardless of laws attempting to render it otherwise - by the color of one's passport or skin. It resides neither in the wooden speeches of politicians nor in the empty promises of their sophistry, where it is prone to being debased, corrupted and molested. Instead, it lives and thrives in the impenetrable safekeeping of those who seek to achieve it. As such, it is only natural that the torchbearers of mankind's greatest attribute should seek a home in which they can live their lives unencumbered by the coercion of others.

Bowman discusses the increasing rate of citizens renouncing US citizenship and permanent residency status in an article at The Daily Reckoning. Leaving your country of birth to spend life in a foreign culture is not a decision that most make easily. It involves a discontinuation of life amongst friends and community.

What causes such a life-changing decision? It is likely that these expatriates are viewing a bleak future for the US. Indeed, government spending is out of control with no end in sight. The larger the government, the smaller the freedoms of its citizens.

Where as government expenses began the 20th century at a relatively modest 7% of the nation's entire economic activity, they today account for almost 45% of the whole. Until as recently as 1950, total government expenses - including pensions, health care, education, national defense, welfare and all other spending - were still in the vicinity of $70 billion, or roughly 25% of the nation's GDP. Just two decades later, that number had more than tripled (in nominal terms) to $322 billion, or around one third of the nation's GDP. We doubt if the number ‘trillion' had ever even been uttered in the halls of Congress at that time, but by 1990 the government's expense figure had reached just over $2 trillion, edging its way toward 35% of GDP. Today, it weighs in at over $6.5 trillion and is projected to top $8.6 trillion by 2015.

It is likely that the data Bowman references is both early and increasing. Whether right or wrong in their view of the future, those renouncing citizenship are anticipating a better life somewhere else than here.

Actual capital is not subject to emotional ties like human capital. Can anyone doubt that it is flowing out of the country rather than in.

A "brain drain" and capital flight dooms any country to mediocrity and second-class status. That is where we are headed unless policies change. There is little time left for this change to occur.

Monty Pelerin at and