Connect with us

General

Nobel Prize-winning economist Joseph Stiglitz says it’s time for the US to update its antitrust laws – Finance – Pulselive.co.ke

Published

on

Loading...

[ad_1]

  • There is a debate over whether the United States has a monopoly problem. A monopoly is
  • The economist Joseph Stiglitz says that increased market concentration across several sectors has reduced competition and slowed economic growth.
  • The US government has countered by saying data is being misrepresented and that giant companies today are not harming consumers.
  • At a recent FTC hearing, Stiglitz called for an update of antitrust laws.
  • This article is part of Business Insider’s ongoing series on Better Capitalism.

There are plenty of companies that may feel too big to you, whether it’s trillion-dollar monoliths Apple and Amazon, or even the cable company you’re forced to deal with every day.

But the question of whether they’ve got so much power that they’re harming the economy is the subject of a debate in the spotlight once again.

For Nobel Prize-winning economist Joseph Stiglitz of Columbia University, there is indeed a monopoly and monopsony problem in the United States, and it’s high time to address it with new antitrust laws.

At a recent Federal Trade Commission hearing on the subject, Stiglitz said, “The point is, if our standard competitive analysis tools don’t show that there is a problem, it suggests something may be wrong with the tools themselves.”

Trust busting

The bedrock of America’s antitrust law was primarily built in the late 19th and early 20th century, during the democratic and reform-minded Progressive Era that followed the Gilded Age’s reign of robber barons and progression of inequality.

Even Adam Smith, the father of capitalism himself, warned in “The Wealth of Nations” against the consolidation of market power in the hands of a few. This is represented on the selling side by monopoly and on the buying side by monopsony, a term coined in the 20th century that refers to firms using their size to push down suppliers’ prices (Walmart is arguably an example).

Years of economic research has found that when market power is highly concentrated, barriers to entry prevent new competitors from building businesses, consumers have fewer options, and employees receive lower wages. This in turn slows overall economic growth.

Even before data on market power was routinely gathered, the federal government established the definition for an illegal monopoly and an illegal merger with the Sherman Act of 1890 and the Clayton Act of 1914. It also created the FTC in 1914 to enforce these rules.

Antitrust policy gradually evolved, and in 1982, the Herfindahl-Hirschman Index was adopted to mathematically measure the concentration of a market, clarifying whether it was competitive or not. The HHI, which is defined as the sum of the squares of each firm’s market share in a given market, concisely measures how monopolistic that market is.

According to FTC and Department of Justice guidelines, mergers and acquisitions that would dramatically increase the HHI in a particular market could come under further scrutiny about whether they would cause unfair market concentration. The Obama administration loosened those guidelines in 2010 in the wake of the financial crisis, allowing more freedom for mergers.

Is there a problem?

Last year, Rice University’s Gustavo Grullon, York University’s Yelena Larkin, and Cornell Tech’s Roni Michaely published a paper that used Census data to back up their finding that, “More than 75% of US industries have experienced an increase in concentration levels over the last two decades,” and that this has decreased competition.

One measure provided by the Census Bureau investigated by Grullon and his team — the market share of the four largest firms in a particular industry — suggests varying levels of concentration across industries:


nullplay

Loading...

null

(Andy Kiersz/Business Insider)

The FTC and Department of Justice responded this May by saying this paper and others like it were simply incorrect. It wrote:

“At no level is the Census data capable of demonstrating increasing concentration of ‘relevant markets’ in the antitrust sense, i.e., ranges of economic activity in which competitive processes determine price and quality, and in which the impact of agreements, mergers, and unilateral conduct are evaluated in competition law.”

That is, the federal government is arguing that antitrust law has never been applicable to a massive, broad industry like “pharmaceuticals,” but rather applies to markets for specific, competing products. The government also argued that even if there has been increased market concentration, it’s not necessarily a bad thing. “First, when success and failure are random events, markets become concentrated over time,” the government argued. “Second, when success and failure are driven by relative degrees of innovation and efficiency, markets also become more concentrated.”

The Roosevelt Institute, an economic think tank that works with Stiglitz, felt compelled to respond. Marshall Steinbaum and Adil Abdela wrote that differentiating between industries and antitrust markets is valid, but that it is inaccurate to dismiss industry concentration as irrelevant. They also were able to compile a long list of specific antitrust markets that have been further concentrated over the last 20 years, even though there is indeed less data for such markets than for entire industries.

“If the federal antitrust enforcement agencies do not make significant changes to the enforcement of antitrust policy, first by acknowledging that many markets are highly concentrated, fewer and fewer firms will continue to expand their dominance,” the authors wrote, adding that the first step has to be the government taking the data seriously.

Time for a change

Stiglitz asked the government to take this data seriously at the FTC hearing in September.

He argued that this increase in market concentration has risen simultaneously with growing inequality in the US since the 1970s, when the policies of free market economists perhaps best exemplified by the Chicago School of Economics began to take hold.

He argued that the FTC needs to rethink what types of mergers it allows, break up companies that are eliminating competition and innovation and abusing their control over employees, and increase transparency of contracts with customers.

It will be a necessary step to kickstarting relatively slow GDP growth over the last 20 years.

“Innovation isn’t showing up in GDP, but it is in market power,” Stiglitz said about the companies he deemed to have gotten too big, smiling.



[ad_2]

Loading...
Continue Reading

General

Public officers above 58 years and with pre-existing conditions told to work from home: The Standard

Published

on

Loading...

Head of Public Service Joseph Kinyua. [File, Standard]
In a document from Head of Public Service, Joseph Kinyua new measure have been outlined to curb the bulging spread of covid-19. Public officers with underlying health conditions and those who are over 58 years -a group that experts have classified as most vulnerable to the virus will be required to execute their duties from home.

Loading...

However, the new rule excluded personnel in the security sector and other critical and essential services.
“All State and public officers with pre-existing medical conditions and/or aged 58 years and above serving in CSG5 (job group ‘S’) and below or their equivalents should forthwith work from home,” read the document,” read the document.
To ensure that those working from home deliver, the Public Service directs that there be clear assignments and targets tasked for the period designated and a clear reporting line to monitor and review work done.
SEE ALSO: Thinking inside the cardboard box for post-lockdown work stations
Others measures outlined in the document include the provision of personal protective equipment to staff, provision of sanitizers and access to washing facilities fitted with soap and water, temperature checks for all staff and clients entering public offices regular fumigation of office premises and vehicles and minimizing of visitors except by prior appointments.
Officers who contract the virus and come back to work after quarantine or isolation period will be required to follow specific directives such as obtaining clearance from the isolation facility certified by the designated persons indicating that the public officer is free and safe from Covid-19. The officer will also be required to stay away from duty station for a period of seven days after the date of medical certification.
“The period a public officer spends in quarantine or isolation due to Covid-19, shall be treated as sick leave and shall be subject to the Provisions of the Human Resource Policy and procedures Manual for the Public Service(May,2016),” read the document.
The service has also made discrimination and stigmatization an offence and has guaranteed those affected with the virus to receive adequate access to mental health and psychosocial supported offered by the government.
The new directives targeting the Public Services come at a time when Kenyans have increasingly shown lack of strict observance of the issued guidelines even as the number of positive Covid-19 cases skyrocket to 13,771 and leaving 238 dead as of today.
SEE ALSO: Working from home could be blessing in disguise for persons with disabilities
Principal Secretaries/ Accounting Officers will be personally responsible for effective enforcement and compliance of the current guidelines and any future directives issued to mitigate the spread of Covid-19.

Loading...
Continue Reading

General

Uhuru convenes summit to review rising Covid-19 cases: The Standard

Published

on

Loading...

President Uhuru Kenyatta (pictured) will on Friday, July 24, meet governors following the ballooning Covid-19 infections in recent days.
The session will among other things review the efficacy of the containment measures in place and review the impact of the phased easing of the restrictions, State House said in a statement.
This story is being updated.
SEE ALSO: Sakaja resigns from Covid-19 Senate committee, in court tomorrow

Loading...
Continue Reading

General

Drastic life changes affecting mental health

Published

on

Loading...

Kenya has been ranked 6th among African countries with the highest cases of depression, this has triggered anxiety by the World Health Organization (WHO), with 1.9 million people suffering from a form of mental conditions such as depression, substance abuse.

KBC Radio_KICD Timetable

Globally, one in four people is affected by mental or neurological disorders at some point in their lives, this is according to the WHO.

Currently, around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide.

The pandemic has also been known to cause significant distress, mostly affecting the state of one’s mental well-being.

Get breaking news on your Mobile as-it-happens. SMS ‘NEWS’ to 20153

With the spread of the COVID-19 pandemic attributed to the novel Coronavirus disease, millions have been affected globally with over 14 million infections and half a million deaths as to date. This has brought about uncertainty coupled with difficult situations, including job loss and the risk of contracting the deadly virus.

In Kenya the first Coronavirus case was reported in Nairobi by the Ministry of Health on the 12th March 2020.  It was not until the government put in place precautionary measures including a curfew and lockdown (the latter having being lifted) due to an increase in the number of infections that people began feeling its effect both economically and socially.

A study by Dr. Habil Otanga,  a Lecturer at the University of Nairobi, Department of Psychology says  that such measures can in turn lead to surge in mental related illnesses including depression, feelings of confusion, anger and fear, and even substance abuse. It also brings with it a sense of boredom, loneliness, anger, isolation and frustration. In the post-quarantine/isolation period, loss of employment due to the depressed economy and the stigma around the disease are also likely to lead to mental health problems.

The Kenya National Bureau of Statistics (KNBS) states that at least 300,000 Kenyans have lost their jobs due to the Coronavirus pandemic between the period of January and March this year.

KNBC noted that the number of employed Kenyans plunged to 17.8 million as of March from 18.1 million people as compared to last year in December. The Report states that the unemployment rate in Kenya stands at 13.7 per cent as of March this year while it stood 12.4 per cent in December 2019.

Loading...

Mama T (not her real name) is among millions of Kenyans who have been affected by containment measures put in place to curb the spread of the virus, either by losing their source of income or having to work under tough guidelines put in place by the MOH.

As young mother and an event organizer, she has found it hard to explain to her children why they cannot go to school or socialize freely with their peers as before.

“Sometimes it gets difficult as they do not understand what is happening due to their age, this at times becomes hard on me as they often think I am punishing them,”

Her contract was put on hold as no event or public gatherings can take place due to the pandemic. This has brought other challenges along with it, as she has to find means of fending for her family expenditures that including rent and food.

“I often wake up in the middle of the night with worries about my next move as the pandemic does not exhibit any signs of easing up,” she says. She adds that she has been forced to sort for manual jobs to keep her family afloat.

Ms. Mary Wahome, a Counseling Psychologist and Programs Director at ‘The Reason to Hope,’ in Karen, Nairobi says that such kind of drastic life changes have an adverse effect on one’s mental status including their family members and if not addressed early can lead to depression among other issues.

“We have had cases of people indulging in substance abuse to deal with the uncertainty and stress brought about by the pandemic, this in turn leads to dependence and also domestic abuse,”

Sam Njoroge , a waiter at a local hotel in Kiambu, has found himself indulging in substance abuse due to challenges he is facing after the hotel he was working in was closed down as it has not yet met the standards required by the MOH to open.

“My day starts at 6am where I go to a local pub, here I can get a drink for as little as Sh30, It makes me suppress the frustration I feel.” he says.

Sam is among the many who have found themselves in the same predicament and resulted to substance abuse finding ways to beat strict measures put in place by the government on the sale of alcohol so as to cope.

Mary says, situations like Sam’s are dangerous and if not addressed early can lead to serious complications, including addiction and dependency, violent behavior and also early death due to health complications.

She has, however, lauded the government for encouraging mental wellness and also launching the Psychological First Aid (PFA) guide in the wake of the virus putting emphasis on the three action principal of look, listen and link. “When we follow this it will be easy to identify an individual in distress and also offer assistance”.

Mary has urged anyone feeling the weight of the virus taking a toll on them not to hesitate but look for someone to talk to.

“You should not only seek help from a specialist but also talk to a friend, let them know what you are undergoing and how you feel, this will help ease their emotional stress and also find ways of dealing with the situation they are facing,” She added

Mary continued to stress on the need to perform frequent body exercises as a form of stress relief, reading and also taking advantage of this unfortunate COVID-19 period to engage in hobbies and talent development.

“Let people take this as an opportunity to kip fit, get in touch with one’s inner self and  also engage in   reading that would  help expand their knowledge.

Loading...
Continue Reading

Trending