This week in political economy.
- Yesterday’s New York Times editorial: “The terror that has gripped their elected officials … is fear of the wealthy gun lobby, to which they have let themselves be held hostage for decades.” Also worth reading: How the 1929 St. Valentine’s Day Massacre changed gun laws in America.
- The Nation dedicates a special issue to the issue of monopoly and corporate political power. Titled “Monopoly’s New Rules: How Corporate Giants Rigged the Game and Took Over Our Economy,” the issue features a story by Stacy Mitchell on Amazon as a “radically new kind of monopoly,” interviews with EU Competition Commissioner Margrethe Vestager and Senator Elizabeth Warren, and a comprehensive investigation by David Dayen into how Warren Buffett built his immense fortune on monopoly power.
- From the Washington Post: “this gutsy tactic could make or break the AT&T-Time Warner court fight.” Also, true to the maxim that mergers beget more mergers, the CEOs of CBS and Viacom reportedly met last week to a discuss possible merger.
- Dominion Energy, Virginia’s utility monopoly, suffered a rare blow this week after the state’s House of Delegates passed a sweeping overhaul of the state’s electricity regulations but removed language that would have allowed the company to double-charge consumers for investments and expensive projects. The battle over the controversial bill, which culminated in “an act of defiance” against Virginia’s most powerful corporate donor, received considerable national media coverage, most notably from The Intercept and Huff Post, as it was seen as an important test-case for the Democratic Party’s efforts to position itself as the antimonopoly party.
- Ajit Pai, the chairman of the United States Federal Communications Commission (FCC), is under investigation by the FCC’s inspector general for his ties to Sinclair Broadcasting. The investigation is related to the FCC’s gutting of media ownership rules, which paved the way for more the way for more media consolidation. A few weeks after the FCC vote, Sinclair announced a $3.9 billion deal to buy Tribune Media—a deal that would not have been possible under the old rules. Now, the agency’s top watchdog is looking into whether Pai had improperly pushed for the rule change.
Back in May, we wrote about how loosening the media ownership rules would directly benefit Sinclair.
- From the New York Times’s Eric Lipton: “How $225,000 Can Help Secure a Pollution Loophole at Trump’s E.P.A.”
- The IRS plans on closing the loophole in the new tax law that hedge-fund managers had been attempting to use to avoid paying taxes on carried-interest profits, according to Bloomberg. Also worth reading: lobbying expenditures by corporations, trade associations and special interest groups skyrocketed during the final quarter of 2017, as the new tax law was being debated.
- From STAT: As the country grapples with the opioid crisis, opioid manufacturers gave millions of dollars to patient advocacy groups and physicians in recent years in order to influence the public debate.
- In a wide-ranging piece for Wired, Nicholas Thompson and Fred Vogelstein look into Facebook’s dramatic last two years, finding a “confused, defensive” social media giant that has only just now been awakened to its responsibilities as a publisher.
- Rana Foroohar: Tech companies are the “new investment banks.”
- From The Economist: three new studies find just how rife with insider trading Wall Street really is.
Chatter from the Ivory Tower
- Tiloka de Silva of the World Bank and Silvana Tenreyro of LSE examine what’s driving the remarkable convergence in fertility rates worldwide in recent decades—on average a reduction of two children per woman globally, bringing the median of 2.2 children per woman almost equal to the world replacement fertility rate of 2.25. They find the change has resulted from the spread of family planning, with 160 governments directly supporting family planning in 2013. These population trends are of more than just academic interest: as Carvalho et al have pointed out, demographic change has concrete knock-on effects for economies, including to savings rates, real interest rates, and the conduct of monetary policy.
- Thomas Piketty is back with research on changing political cleavages in rich countries, motivated by the question of why democracy hasn’t mitigated inequality. Leftist parties that in the postwar years drew working-class voters without university degrees, he finds, have morphed into the homes of the university-educated. With the right dominated by monied elites and the left by educated ones, distributional conflict in politics appears to have fallen by the wayside, leaving the left-behind working classes increasingly susceptible to populism.
- Economic geographer Andres Rodriguez-Pose is also concerned with the spread of populism, but the cleavage he homes in on is geographic. The inhabitants of “the places that don’t matter”—victims of policies in many countries to focus state support on dynamic urban economies—have gotten their “revenge” through the electoral process around the world, and will continue to do so, he argues, until states start taking territorial inequities more seriously.
- The economics profession continues to be dogged by its own cleavage: between male and female economists. A new survey of European economists by Ann Mari May, Mary McGarvey, and David Kucera finds that women in the profession are less sanguine than their male counterparts about market solutions, more concerned about environmental protection, and more likely to see labor market opportunities as unequal.
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.
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