Editors’ Briefing: This Week in Political Economy (August 11–17)

Elizabeth Warren’s new bill seeks to radically alter US corporate governance; America’s top CEOs earned 312 times more than their average workers last year; regulators are after Facebook for discriminatory housing ads; Elon Musk faces no more than a slap on the wrist from the SEC, experts say; and what is “the biggest policy mistake of the last decade”?  

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The Foundation of Corporate Personhood: A Look at the Charles River Bridge Case of 1837

Some 130 years before Friedman could begin arguing that a corporation’s sole responsibility was to make a profit for its shareholders, Boston’s Charles River Bridge Company had to convince the Supreme Court that corporations were private entities whose interests could diverge from the public interest. While it lost that case, the partial success of the Charles River Bridge Company’s reasoning with the court laid the foundations for corporate personhood as it exists today.  

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Do Firms Use Capital and Labor Efficiently? Evidence and Implications of Resource Misallocation

Economists have for a decade or so theorized that moving productive inputs like labor and capital into the firms that make the best use of them is a prime engine of economic growth. But measuring how well this allocation is taking place across economies is a daunting empirical task. Nonetheless, a new Stigler Center working paper by Lenzu and Manaresi tries to do precisely that.  

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How Boys Become Entrepreneurs at the Dinner Table

New research from Hans K. Hvide and Paul Oyer has uncovered some interesting facts about men who start businesses: most of them do it in the same or related industries as their fathers work in, although entrepreneurs with higher IQs are less likely to follow their dads. Ones who do pick their fathers’ industries, however, outperform competing entrepreneurs. Here, the authors examine why.  

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