This week in political economy.
- A federal appeals court voided the Department of Labor’s “fiduciary rule,” an Obama-era rule that instructed financial professionals like brokers and insurance agents to put their clients’ interests ahead of their own. The decision by the United States Court of Appeals for the Fifth Circuit to side with the plaintiffs in the case—which include the US Chamber of Commerce and such industry groups as the Financial Services Institute and Financial Services Roundtable—overturned a lower court’s ruling that upheld the rule.
- Broadcom has officially dropped its planned takeover of Qualcomm, days after President Trump issued an order that blocked the acquisition on national security grounds.
- The EU is reportedly preparing a “digital tax” aimed at tech platforms like Google, Facebook, and Apple. The new tax, possibly at 3 percent, will target revenues rather than profits, reports the Financial Times. Meanwhile, Makan Delrahim, the head of the Justice Department’s Antitrust Division, criticized the EU’s approach to digital platforms, saying the European approach ”might stifle the very innovation that has created dynamic competition for the benefit of consumers.”
- As the Cambridge Analytica-Facebook scandal unfolds, Facebook’s critics in Congress demand an investigation and call for regulation of tech platforms. “It’s clear these platforms can’t police themselves,” tweeted Senator Amy Klobuchar (D-Minn.).
- The world wide web turned 29 and its inventor, Tim Berners-Lee, took to The Guardian and Quartz to warn about the dangers of an increasingly concentrated digital landscape. “The web can be weaponised–and we can’t count on big tech to stop it,” he writes. “It’s dangerous having a handful of companies control how ideas and opinions are shared. A regulator may be needed.” The World Economic Forum issued a stern warning of its own: “fake news poses a threat to democracies across Latin America and worldwide.”
- Also from The Guardian: “I downloaded all my Facebook data – here’s what I learned.”
- From Bloomberg’s Shira Ovide: “How Amazon’s bottomless appetite became corporate America’s nightmare.”
- In a trial brief submitted by the Department of Justice, the DOJ outlines its arguments against the $85 billion AT&T-Time Warner merger, alleging that the merger would create two vertically integrated media conglomerates—AT&T/Time Warner and Comcast/NBCUniversal—that might coordinate to withhold content from digital rivals. The Washington Post also covers the “war of numbers” between the DOJ and AT&T.
- Big multinational corporations are paying significantly lower taxes than a decade ago, before the 2008 financial crisis, according to a Financial Times analysis.
- From The Nation: Brad Miller, a former congressman from North Carolina, filed a lawsuit against Ocwen, one of the country’s largest mortgage companies, in attempt to finally hold mortgage companies to account for the role they played in causing the foreclosure crisis.
- Hedge funds are reportedly amassing large bets against the world’s largest advertising companies.
Chatter from the Ivory Tower
- Hot on the heels of David Finer’s much-publicized Stigler Center working paper on taxi data and Fed leaks, Bradley, Gustafson, and Williams have also released a new paper analyzing taxi ridership between the New York Fed and the banks it supervises.
- A new working paper from Azar et al revisits an issue that ProMarket has recently covered at length: labor-market monopsony. They find that the average US labor market has the equivalent of just 2.5 recruiting employers, with 54 percent of labor markets being highly concentrated.
- On the latest episode of the Capitalisn’t podcast, Luigi Zingales and Kate Waldock also examine the effect of monopsonies in the labor market among concentrated industries like Big Tech and answer the question: Are companies colluding against workers and driving down wages?
- Gabriel Zucman has a handful of new discussion papers out this week with a wide array of coauthors, all on the relationship between tax havens and capital accumulation at the tip-top of the global wealth distribution. Breathtaking stats from the abstract of one of the papers: “The equivalent of 10 percent of world GDP is held in tax havens globally, but this average masks a great deal of heterogeneity-from a few percent of GDP in Scandinavia, to about 15 percent in Continental Europe, and 60 percent in Gulf countries and some Latin American economies.”
- UChicago development economist Chris Blattman appeared in an interesting podcast episode with Tyler Cowen covering everything from unconditional cash transfers to grand theories of violence to the rehabilitation of Colombia (where Blattman is now doing field work and enjoying the local delicacies) to the cooperative response that exposure to violence might generate.
- Brad DeLong and Paul Krugman had an amusing online run-in this week with William Shatner.
Stigler Center Goings-on
- On April 19 and 20, 2018, the Stigler Center will dedicate its annual Antitrust and Competition conference to the topic of “Digital Platforms and Concentration.” The invitation-only conference will bring together economists, law scholars, intellectuals, venture capitalists, and business people for two days of discussion, with keynote speakers Makan Delrahim, assistant attorney general of the Department of Justice’s Antitrust Division, Alvin Roth, the 2012 Nobel laureate in economics, and Jean Tirole, the 2014 Nobel laureate in economics. More details here.
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