Stigler Center In the News 2020
The debate over markets versus the state is silly, obsolete and harmful to solving today’s challenges
December 18, 2021 | MarketWatch
“The return of the state” is a phrase seemingly on almost everyone’s lips nowadays. Given the global challenges posed by the COVID-19 pandemic and climate change, the argument goes, it is governments, not markets, that should be responsible for allocating resources.
Burying the Laissez-Faire Zombie
December 15, 2021 | Project Syndicate
The long-standing dichotomy between the state and the market is misleading, and poses a major obstacle to understanding and addressing today’s policy challenges. We should instead aim to improve both, and to contain each within its respective sphere.
Meta May Face SEC Investigation Over Instagram Complaints
December 10, 2021 | Barron's
Meta Platforms, formerly known as Facebook, could face an investigation by one of the federal government's top regulatory bodies for misleading investors on what it knew about the potentially harmful effects on teen girls caused by content on its social media platform Instagram.
Corporate Italy must enter the 21st century
December 1, 2021 | Financial Times
Under the benign gaze of the Draghi government, the US private equity group KKR is bidding for Telecom Italia, one of the last large firms in Italian hands. Italy, the eighth largest economy in the world, has only six companies in the Fortune Global 500, three of which are controlled by the state. This compares with seven for Spain, whose economy is ranked 14th in the world by gross domestic product, and 26 for France, which is seventh.
Charlie Penner, the Investor Reshaping Exxon From the Inside
December 1, 2021 | Bloomberg Businessweek
In May the tiny investment fund Penner worked for, Engine No. 1, landed three independent directors on the board of Exxon Mobil, one of the most stunning upsets for a shareholder vote.
Responsibility to protect democracy
October 31, 2021 | Gulf Times
Amid growing concerns about climate change and social unrest, institutional investors are increasingly applying environmental, social, and governance (ESG) criteria in their portfolio decisions. Yet while ESG factors are important for investors to consider, the new focus risks obscuring an even bigger issue: the role that corporations play in the democratic process.
Stakeholder Maximization vs the Friedman Rule: What should business schools teach?
October 31, 2021 | Business World
Milton Friedman's view (1971) that the social responsibility of business is to maximize shareholder value has guided business behavior over the last 50 years. With the dividends or capital gains, shareholders can dump the stocks of firms that violate their ethical standards; and can consume goods productive of externality of their choice.
Democracy Before ESG
October 28, 2021 | Project Syndicate
Institutional investors are increasingly applying environmental, social, and governance criteria in their portfolio decisions. Yet as important as these factors are, they pale in comparison to the question of whether a business is engaged in the dirty business of dark-money political influence.
Is the economy going stag(flation)?
October 28, 2021 | NPR
This morning the Bureau of Economic Analysis dropped GDP numbers for the third quarter and they were... not awesome. 2% growth in the before times would have been pretty solid, but now it's kind of measly compared to last quarter's 6.7% growth.
Capitalisn’t: Is Evergrande Really China’s Lehman Moment?
October 27, 2021 | Chicago Booth Review
In September China’s second-largest real-estate developer, Evergrande, missed an $83.5 million debt payment. Critics of China’s economy have long said that its property market, which makes up some 30 percent of GDP, is over-leveraged and overheated. Evergrande’s missed payment and big debt obligations have prompted some to ask whether this could be China’s equivalent to the collapse of Lehman Brothers.
‘Social media’, market power and the health of democracy
October 19, 2021 | Social Europe
According to its former employee Frances Haugen, Facebook algorithms consciously amplify dangerous misinformation and privilege the most divisive content posted on the network. Such content is more frequently shared by users and foregrounding it maximises traffic on the platform—and so turnover.
CEA K V Subramanian to step down, return to academia
October 8, 2021 | Deccan Herald
Chief Economic Advisor (CEA) K V Subramanian will be leaving the finance ministry and returning to academia on completion of his three-year term.
Interview with Luigi Zingales: Social Media and Antitrust
September 24, 2021 | BBN Times
Allison Schrager has a conversation with Luigi Zingales on the subject “Break Up Big Tech? A conversation about the future of the industry” (City Journal website, September 21, 2021).
Don't Break Up Social Media, Bifurcate It
August 31, 2021 | Project Syndicate
Having broken up an incumbent media oligarchy and augmented people’s freedom of expression, social media is as transformational as the printing press was 500 years ago. But to ensure that the technology does more good than harm, its core functions should be separated from each other.
Assessing Stigler’s Economic Theory of Regulation
August 23, 2021 | The Regulatory Review
George Stigler’s article “The Theory of Economic Regulation”—which celebrates its 50th anniversary this year—is one of the most influential political economy accounts of regulation. More than perhaps any other article, it shifted the prevailing explanation for regulation from a public interest model to a rational choice model.
Business can stop the ESG backlash by proving it’s making a difference
August 22, 2021 | Financial Times
The momentum behind environmental, social and governance-themed investing has seemed unstoppable for the past few years. Trillions of dollars have poured into ESG funds and countless executives have renounced Milton Friedman’s shareholder primacy dictum, in a once-in-a-generation shift in the business consensus.
The Political Lessons of COVID-19
August 6, 2021 | Project Syndicate
Even if the world can muddle through this pandemic without an effective system of global governance, it cannot necessarily muddle through the next one – or through other problems like climate change that also require global solutions. If we do not learn this lesson, our species deserves to become extinct.
America’s top CEOs didn’t live up to their promises in Business Roundtable letter, researchers find
August 5, 2021 | Fortune
Did the CEOs who signed the Business Roundtable’s celebrated Statement on the Purpose of a Corporation mean what they said? As the statement’s second anniversary (August 19) approaches, new research concludes that they did not. “Our findings support the view that the BRT Statement did not represent a meaningful commitment,” write the researchers, Lucian A. Bebchuk and Roberto Tallarita of the Harvard Law School’s Program on Corporate Governance. Instead, they say, the statement was “mostly for show.”
The New Brandeis Movement Has Its Moment
July 21, 2021 | The American Prospect
In 2017, at the end of the first annual Stigler Center conference put on at the University of Chicago about monopolies and economic concentration, a handful of attendees sat at a lone table in the back of the room. They were the backbone of what came to be known as the “New Brandeis” movement, a collection of think tankers, lawyers, academics, and analysts who wanted to restore the anti-monopoly tradition to America, and begin to reverse the mindset that they believed had led to a narrowing consolidation across the majority of the nation’s industries.
The C-suite job of the future: Chief purpose officer
July 21, 2021 | Axios
To appease employees, customers and shareholders alike, companies are spending time and money grappling with huge social problems like systemic racism, income inequality and climate change.
In Tech We Antitrust: Indicators of The Week
July 16, 2021 | NPR
So to talk Big Tech, regulation and monopolies, we brought in a couple of our favorite economists - Luigi Zingales of the Chicago Booth School of Business and host of the podcast "Capitalisn't," and Carl Shapiro, an economist at the University of California Berkeley.
US Consumer Prices Surge in June by the Most Since 2008
July 13, 2021 | WTTW
Edward Stuart of Northeastern University; Luigi Zingales of the University of Chicago; and Rachel Greszler of the Heritage Foundation join “Chicago Tonight” to discuss inflation and its impact on the economy.
Attack of the COVID Zombies
July 1, 2021 | Project Syndicate
All too often, entrepreneurs and managers use the threat of massive layoffs to extract large unwarranted subsidies. After the COVID-19 pandemic, workers should get to decide whether such assistance is justified.
The Little Hedge Fund Taking Down Big Oil
June 23, 2021 | New York Times
He was influenced by a 2017 paper by the economists Oliver Hart and Luigi Zingales that rejected Milton Friedman’s canonical argument, published in 1970 in this magazine, that companies should focus exclusively on making money; they instead posited that shareholder welfare includes more than just market worth.
Surveillance: G-7 Summit With Bremmer (Podcast)
June 9, 2021 | Bloomberg Surveillance
Luigi Zingales, University of Chicago Booth School Finance Professor, says there is the long-term risk for conflict between the U.S. and the EU over China policy.
How should companies decide on their ESG goals?
May 30, 2021 | Financial Times
Not a day goes by without companies being pressured to take a stance in political debates. Long gone are the days when chief executives could echo the economist Milton Friedman in saying the only social responsibility of business was to increase its profits. In the fourth-quarter earnings calls for 2020, more than one in four S&P 500 companies discussed environmental, social and governance (ESG) objectives. But should companies be involved in ESG and, if so, how should they decide the type and the level of their involvement?
Why Italy's Economy Stopped Growing
May 20, 2021 | Smith Brain Trust
For the past quarter-century, Italy’s economy has been nearly stagnant – not because of trade shocks, bad government, labor market problems, or lack of technology advancements, but because of a management style that is holding the country back, finds research from Maryland Smith’s Bruno Pellegrino. Pellegrino, a finance professor, and Luigi Zingales of the University of Chicago study Italy’s productivity problem in a working paper for the National Bureau of Economic Research.
Meritocracy, Not Democracy, Is the Golden Ticket to Growth
May 16, 2021 | Bloomberg Opinion
Bruno Pellegrino of the University of Maryland’s Robert H. Smith School of Business and Luigi Zingales of the Booth School have constructed a measure of countries’ levels of meritocracy based on data from the World Economic Forum’s survey of expert opinion on who holds senior management positions.
A Most Admired Diplomat, Gone Corporate
May 5, 2021 | The American Prospect
But the potential for future earnings means that someone like Burns has incentives to not upset corporations. “It is a structural problem,” said Luigi Zingales, a professor of entrepreneurship and finance at the University of Chicago. “It’s not because they are corrupt, bad people; it’s because the incentives are there. The real problem is that they don’t understand they are captured in a more subtle way.”
Column: Congress Does an End Run Around Insider Trading Rules
May 1, 2021 | The Pilot
The Journal of Financial and Quantitative Analysis answered that question. From 1993 to 1998, Senators’ and House members’ stock trades outperformed the market by 12 and 6 percent, respectively, an almost impossible feat. Luigi Zingales, of the University of Chicago, said they “either are better than hedge-fund managers, or they benefit from privileged information.”
Stigler's Economic Theory of Regulation: The Semicentennial
April 26, 2021 | BBN Times
For those who would like a thorough review of the arguments for and against this theory, the Stigler Center for the Study of the Economy and the State at the University of Chicago held a webinar on the occasion of the 50th anniversary of Stigler's essay this last week, and four hours of video of the discussions are available. Several of the participants have also published short essays available at the link. Here, I'll offer a brief sketch of the state of the argument.
Google’s Secret ‘Project Bernanke’ Revealed in Texas Antitrust Case
April 11, 2021 | Wall Street Journal
Google for years operated a secret program that used data from past bids in the company’s digital advertising exchange to allegedly give its own ad-buying system an advantage over competitors, according to court documents filed in a Texas antitrust lawsuit.
Live: How to rescue capitalism from capitalists?
April 7, 2021 | CGTN
The China-U.S. relationship shall see opportunities to collaborate on platform economy and supervision in a digital world. CGTN's Kate Kui will speak to three top economists on the topic this Thursday at 1 a.m. GMT – Luigi Zingales, professor and director at Stigler Center of University of Chicago
More Defenders of Campus Speech
March 9, 2021 | Wall Street Journal
The group, announced Monday, says on its website that “our members will defend faculty members’ freedom of thought and expression in their work as researchers and writers or in their lives as citizens.” Some of the 200 members have written for these pages, such as political scientists Keith Whittington and Carol Swain and economist Luigi Zingales.
How the woke brigade unknowingly plays into the hands of big business
February 23, 2021 | The Telegraph
This was brilliantly first described by Luigi Zingales in his book A Capitalism for the People: Recapturing the Lost Genius of American Prosperity.
Corporate America Brings The Hammer Down After Capitol Insurrection
February 15, 2021 | NPR - KRWG
Are companies doing a better job of holding our elected officials accountable than our elected officials are? Last week, our guest host, Sacha Pfeiffer, talked to Professor Luigi Zingales. He teaches about capitalism at the University of Chicago.
UK listings review is about more than the stock market
January 30, 2021 | Financial Times
At a time of perplexingly exuberant stock indices, with flash mobs prowling the internet seeking to squeeze short-selling hedge funds, it might seem an odd moment to focus on loosening stock market regulation. But Britain has just done Brexit without much of a deal for financial services. So with an eye to boosting City activity, the chancellor, Rishi Sunak, is casting about for a “Big Bang 2.0” to make amends.
Diversity in economics
January 21, 2021 | UK Foreign, Commonwealth & Development Office
The Next Generation Economics Competition aims to make economics more diverse. Greater diversity will lead to better economists and smarter policy decisions. An important aim of this competition is to improve diversity in the economics profession. Greater diversity not only provides new opportunities for people from different backgrounds, it generates new ideas for tackling major economic challenges. This makes improving diversity an important government objective.