Profits are the ultimate sign of market power. But for the past 40 years, economists and antitrust practitioners have disparaged the measurement of profit margins as unreliable. That needs to change, and new scholarship showing rising margins across the economy is leading the way.
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While increased economies of scale may offer a partial explanation for higher margins and declining dynamism in the US economy, growing market power provides a better explanation, argues Jonathan Baker.
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Congress misses an opportunity to scrutinize Google; the IRS is on life support; Johnson & Johnson reportedly knew for decades that its baby powder contained asbestos; the British Labour Party considers a break-up of the Big Four accounting firms; and will Obamacare once again be upheld by the Supreme Court?
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In an interview with ProMarket, Jonathan Tepper talks about the rise of America’s oligopoly problem, why he believes antimonopoly is not a left-right issue, and how a passionate fan of free markets came to write a book titled “The Myth of Capitalism.”
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Economic theory tells us that firms are more likely to exploit labor market power than product market power in the United States today. And it tells us that the government should devote more resources to labor market litigation than to product market litigation.
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Academic capture by donors threatens norms of independence and integrity at institutions of higher education, argue faculty members from Saint Louis University.
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Google skips Congressional hearing, potentially making a “strategic mistake of virtually incalculable proportions”; Jon Kyl’s “ethical baggage”; new research finds telecom companies are slowing Internet traffic to and from YouTube and Netflix; and where do economists stand on market concentration?
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The rising scholar of taxation and inequality talks to ProMarket about the problems excessive economic power poses for open political systems, how states can tackle profit-shifting, and critics who have dismissed his work on distributional issues as “a French economics.”
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Few economists doubt that Marx flunked economics, a judgement mostly based on his labor theory of value. But this column argues that Marx’s representation of the power relationship between capital and labor in the firm is an essential insight for understanding and improving modern capitalism. Indeed, this insight is incorporated into standard principal–agent models of labor and credit markets.
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In an interview with ProMarket, Glen Weyl, co-author of the wildly ambitious (and wildly controversial) new book Radical Markets: Uprooting Capitalism and Democracy for a Just Society, talks about antitrust, data as labor, and why he thinks the free market system is not actually free. “The entire business community has been speaking with one voice in the common interest of capital as a class,” he says.
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In an interview with ProMarket, Harvard economist Dani Rodrik explained where globalization went wrong, how trade agreements serve rent-seeking by politically well-connected firms, and why the only solution to the rise of political populism is an economic populism that reimagines the institutions of capitalism.
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Top5itis is a disease that currently affects the economics discipline. It refers to the obsession of the profession of academic economists with the so-called “top5″ journals.
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