This week in political economy.
- Is the US economy being strangled by a lack of competition? In the Harvard Business Review, David Wessel provides an overview of the evidence that economic concentration is leading to higher prices and harms innovation and calls for tougher antitrust enforcement to bolster competition. In The Nation, Stacy Mitchell outlines six ways to rein in toxic monopolies, among them increasing the transparency of federal antitrust agencies, setting a higher bar for mergers, cracking down on anticompetitive conduct and breaking up Big Tech.
- In The Intercept, Lee Fang writes about the efforts of Oxycontin manufacturer Purdue Pharma to weaken a legal doctrine that can be used by federal prosecutors to target senior executives and board members for their role in fueling the opioid epidemic.
- From the New Yorker: the NRA lobbyist behind Florida’s pro-gun policies.
- Techlash news: “If you love Google, you should hope the government sues it for antitrust offenses,” argues Charles Duhigg in the New York Times. “There is no better method for keeping the marketplace constructive and creative than a legal system that intervenes whenever a company, no matter how beloved, grows so large as to blot out the sun,” he writes. In US News & World Report, James Warren summarizes the debate between Luigi Zingales [Director of the Stigler Center and one of the editors of this blog] and Tyler Cowen over whether Facebook and Google should be considered monopolies.
- Meanwhile, The Next Web reports on a new research that shows Facebook is holding the sensitive personal information of 40 percent of the EU’s population—data that could possibly used by third-parties to determine the identities of up to 205 million Europeans and endanger their privacy, exposing them to things like phishing attacks.
- CNN’s Lydia DePillis explores how Amazon’s takeover of Whole Foods impacts small farmers and food producers. With fees for prominent shelf placement going up and a more centralized management purchasing system, local suppliers are finding it harder to find a place on Whole Foods’ shelves, she finds.
- In New York, according to new indictments filed by District Attorney Cyrus R. Vance Jr., 10 local towing companies are illegally controlled by a single enterprise, creating what Vance calls “a violent, corrupt and nearly complete monopoly.” The New York Times reports.
- From Mic: “Why the case for a Universal Basic Income is getting stronger.”
- In a speech titled “Competition in Changing Times,” EU Competition Commissioner Margrethe Vestager tackled the issue of common ownership: “It’s becoming more common for the same investors to hold shares in different companies in the same industry. And for those investors, fierce competition might not seem so appealing.”
Also, read Einer Elhauge’s recent ProMarket post on the anticompetitive effects of horizontal shareholding and listen to the common ownership episode of the Capitalisn’t podcast.
- From Vice: a viral video showing a West Virginia resident being dragged out of a public Judiciary Committee hearing revealed Big Energy’s stranglehold on the state’s politics.
- “What does a true populism look like?” asks Harvard professor Dani Rodrik in the New York Times. The answer: it looks a lot like the New Deal.
Chatter from the Ivory Tower
- Adrien Auclert and Matthew Rognlie have a new NBER paper out examining how income inequality affects aggregate demand: Does it tamp down on consumption? Does it increase savings and investment and boost output? Which effect predominates has much to do with real interest rates and monetary policy. In a nontechnical writeup at the Washington Center for Equitable Growth, they report their effort to disentangle these effects.
- Aggregate demand may be precisely the channel that keeps UBI from hurting employment, say Damon Jones of UChicago and Ioana Marinescu of UPenn. Their new research on the unconditional cash transfers to Alaskans over the past 25 years finds it hasn’t hurt employment though it has bumped up part-time work. “Possible reductions in employment seem to be offset by increases in spending that in turn increase the demand for more workers,” they say.
- OpenDemocracy turns its attention to The Guardian’s recent call for a “Reformation” in econ and the ensuing #WhatEconomistsReallyDo backlash.
- At The Economist, Ryan Avent makes the case that economists must start taking ethics more seriously, though he admits this “is something close to professional heresy.” Nonetheless, he argues, “those who wish to say what society should be doing cannot dodge questions of values.”
- On Wednesday night Bloomberg View blogger Noah Smith tweeted—then deleted—a comment opining that economists have nothing to learn from the humanities. A day later an Economist review of Marilynne Robinson’s new What Are We Doing Here summarized her defense of the humanities. She has harsh words for deterministic schools of thought and those who wish to “‘minimize radically everything human’ about human nature.”
Stigler Center Goings-on
- On February 26, Booth professor Guy Rolnik and Sharon Bowen, former commissioner of the Commodity Futures Trading Commission (CFTC), will discuss the challenges and opportunities facing regulators in the financial sector and beyond. Details here.
- In the latest episode of Capitalisn’t, author Duff McDonald tries to convince Luigi Zingales and Kate Waldock that conflicts of interest and flawed case studies amount to an unethical education that harms society.
Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.
