This week in political economy.
- ProPublica has created a searchable database of 2,475 political appointees by the Trump administration, the result of “a year spent filing hundreds of Freedom of Information Act requests; collecting and organizing staffing lists; and compiling, sifting through and publishing thousands of financial disclosure reports.” The story, by Derek Kravitz, Al Shaw and Isaac Arnsdorf, reveals that at least 187 of the administration’s political appointees have been federal lobbyists, and many are now overseeing the industries they once lobbied for.
- On that note, AP reports on one such political appointee, a top aide of Environmental Protection Agency head Scott Pruitt, who has been granted permission by the agency’s ethics lawyer to make some extra money “moonlighting for private clients whose identities are being kept secret.”
- Next week, the Senate is expected to vote on the Economic Growth, Regulatory Relief and Consumer Protection Act, a bipartisan overhaul of the Dodd-Frank Act that will partially dismantle some safeguards included in Dodd-Frank. The bill, also known as the “Crapo bill” (after its chief sponsor, Senate Banking Committee chairman Mike Crapo [R-Idaho]), has inspired much controversy after 10 Democrats (among them Indiana’s Joe Donnelly, North Dakota’s Heidi Heitkamp, Montana’s Jon Tester, and Missouri’s Claire McCaskill) co-sponsored it. Elizabeth Warren (D-Mass.) railed against the bill and the Democratic support for it: “The Senate just voted to increase the chances your money will be used to bail out big banks again,” she wrote after the Senate voted to advance the bill. In the New York Times, Mike Konczal provided an analysis of the bill and wondered why Democrats would agree to help undo one of President Obama’s major legislative achievements. In The Week, Jeff Spross wrote that “Senate Democrats rolled over and played dead for Wall Street.”
- In Fortune, Moran Cerf, Sandra Matz, and Guy Rolnik [one of the editors of this blog] argue that it’s not too late to restrain tech monopolies. “Whereas it took more than six decades to regulate the tobacco industry, the threats posed by the digital monopolies call for a much faster and coordinated response,” they write.
- In an interview with the Financial Times, Ireland’s Data Protection Commissioner Helen Dixon warned social media giants that she is prepared to hand them big fines if they do not comply with the EU’s General Data Protection Regulation.
- Facebook ad costs spiked higher after its revamp of the News Feed algorithm, reports ReCode.
- In the Journal of European Competition Law & Practice, Lina Khan of the Open Markets Institute provides an overview of the “New Brandeis Movement” that is reshaping the national debate about antitrust and monopoly power in the past two years.
- The reality of high drug prices: a New York Times and ProPublica collaboration has yielded a wide-ranging story about ordinary Americans who suffer from chronic illnesses and can’t afford the medicine they need due to high drugs costs. “The burden of high drug costs weighs most heavily on the sickest Americans,” write Katie Thomas and Charles Ornstein in the Times, “Drug makers have raised prices on treatments for life-threatening or chronic conditions like multiple sclerosis, diabetes and cancer. In turn, insurers have shifted more of those costs onto consumers. Saddled with high deductibles and other out-of-pocket costs that expose them to a drug’s rising list price, many people are paying thousands of dollars a month merely to survive.”
- On a related note, Martin Shkreli, notorious for raising the price of toxoplasmosis drug Daraprim by more than 5,000 percent when he was CEO of Turing Pharmaceuticals, has been sentenced to seven years in prison for federal fraud charges related to his former company.
- From the Wall Street Journal: Cigna agrees to buy Express Scripts for more than $50 billion.
- Also in the WSJ: a New York bankruptcy judge ruled that Lehman Bros caused damages worth $2.4 billion to investors holding its securities—a fraction of the $11.4 billion in damages the investors had sought.
Chatter from the Ivory Tower
- From Harvard Business Review: a new study by Alex Edmans, Vivian Fang, and Katharina Lewellen on the long-term consequences of short-term incentives finds that when CEOs’ equity is about to vest, they cut investment to boost their firms’ stock prices.
- In a follow-up to their December paper about labor market concentration in the US (which we have covered here), Ioana Marinescu, Jose Azar and Marshall Steinbaum use a dataset from the online labor market data company Burning Glass to confirm their original findings about the proliferation of monopsony power. In a blog post at the Roosevelt Institute’s site, Steinbaum outlines their main findings.
- In this week’s cover story, Science magazine took on fake news, which it describes as an “information disorder.” The issue included a paper by Vosoughi et al., who analyzed Twitter rumor cascades and found that false stories spread six times faster than true ones. From the abstract: “Whereas false stories inspired fear, disgust, and surprise in replies, true stories inspired anticipation, sadness, joy, and trust. Contrary to conventional wisdom, robots accelerated the spread of true and false news at the same rate, implying that false news spreads more than the truth because humans, not robots, are more likely to spread it.”
Stigler Center Goings-on
- David Finer’s Stigler Center working paper “What Insights Do Taxi Rides Offer into Federal Reserve Leakage?” makes waves: read coverage by The Economist, Politico, and the Wall Street Journal, and also catch-up on Finer’s own ProMarket write-up of his study.
- Listen to the newest episode of Capitalisn’t! This time, Luigi Zingales and Kate Waldock ask whether doctors and pharma companies are to blame for the opioid epidemic, and discuss the regulatory ramifications for medical marijuana.
Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.