Joseph E. Stiglitz
Finally, Europe is taking competition seriously, as the decision to block the merger of General Electric and Honeywell demonstrates. Competition is the basis of a dynamic market economy. Yet, as Adam Smith recognized, firms inevitably seek to restrict it: more profits can be made by creating a monopoly rather than through better products. The Microsoft case in America brought home both the variety of abusive practices and the chilling effect anti-competitive behavior can have on innovation. So government must “set the rules of the game” to maintain a fair playing field, and vibrant competition. Europe’s commitment to competition comes none too soon. After a new era of vigorous anti-trust enforcement under the Clinton Administration, the Bush Administration seems to be backing off from that line. At the same time, conservative members of the US federal courts, many appointed during the Reagan era, are increasingly restricting the government’s power to oversee and curtail predatory business practices. The Clinton era anti-trust team exposed and successfully prosecuted some major price fixing conspiracies that reached across international borders and cost global consumers billions of dollars. They attacked, for example, predatory pricing by airlines, in which established airlines drove out low cost carriers not only by cutting fares, but by adding substantial capacity—at great losses; but once the low cost carriers were driven out, the big airlines raised prices and cut back on service once again. The recent spat between the United States and Europe concerning the Honeywell and GE merger brings home several points. Most importantly, it shows the virtues of strong competition in competition policy. For Europe’s competition authorities picked up the ball that the Bush administration had fumbled badly. America’s Secretary of the Treasury, perhaps the senior economic official in the world’s largest economy, is often seen as the semi-official spokesperson for global capitalism. In his old capacity as boss of Alcoa, Treasury Secretary Paul O’Neill did what any good captain of industry would do when faced with falling prices: he turned to government for a hidden bail-out in the form of a
China’s success in the next five years will depend largely on how well the government manages the tensions underlying its complex agenda. In particular, China’s leaders will need to balance a muscular Communist Party, setting standards and protecting the public interest, with an empowered market, driving the economy into the future.
The preference of some countries to isolate themselves within their borders is anachronistic and self-defeating, but it would be a serious mistake for others, fearing contagion, to respond by imposing strict isolation. Even in states that have succumbed to reductionist discourses, much of the population has not.
When the Bretton Woods Agreement was hashed out in 1944, it was agreed that countries with current-account deficits should be able to limit temporarily purchases of goods from countries running surpluses. In the ensuing 73 years, the so-called "scarce-currency clause" has been largely forgotten; but it may be time to bring it back.
Republican leaders have a choice: they can either continue to collaborate with President Donald Trump, thereby courting disaster, or they can renounce him, finally putting their country’s democracy ahead of loyalty to their party tribe. They are hardly the first politicians to face such a decision.
As the global economic recovery strengthens, and central banks move to raise interest rates, they need to improve their communication with the general public. To do that, they should follow the trail blazed by Donald Trump.
With talks on the UK's withdrawal from the EU stalled, negotiators should shift to the temporary “transition” Prime Minister Theresa May officially requested last month. Above all, the negotiators should focus immediately on the British budget contributions that will be required to make an orderly transition possible.
In recent decades, as President Vladimir Putin has entrenched his authority, Russia has seemed to be moving backward socially and economically. But while the Kremlin knows that it must reverse this trajectory, genuine reform would be incompatible with the kleptocratic character of Putin’s regime.
As a part of their efforts to roll back the 2010 Dodd-Frank Act, congressional Republicans have approved a measure that would have courts, rather than regulators, oversee megabank bankruptcies. It is now up to the Trump administration to decide if it wants to set the stage for a repeat of the Lehman Brothers collapse in 2008.