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rePlaying with a degree of courage and clarity that is hard to overestimate, US Senator and Senator Elizabeth Warren has tackled cutting-edge technologies such as Facebook, Google, Amazon and Apple. Warren's proposals are tantamount to completely rethinking the highly permissive US mergers and acquisitions policy over the last four decades. Indeed, the major technologies are only the posters of a significant increase of monopoly and oligopoly power over a large part of the American economy. Although the best approach is still far from clear, I fully agree that something needs to be done, particularly with regard to the ability of big techs to buy potential competitors and use their technology. dominant position on the platform to gain a foothold in other sectors.
Warren is brave because big techs are a big investment for most of the leading Democratic nominees, especially the progressive ones, for whom California is a true campaign finance machine. And although it may be objected, Warren is not the only one to think that technology giants have acquired excessive market dominance; In fact, this is one of the few questions in Washington on which there is a semblance of agreement. Other candidates, including Senator Amy Klobuchar of Minnesota, have also taken principled positions.
Although cause-and-effect relationships are difficult to disentangle, there is good reason to believe that the rise of monopoly power has contributed to worsening income inequality, weakening the bargaining power of workers, and slowing the rate of 'innovation. And, perhaps outside of China, it is a global problem because US technology monopolies have often conquered the market before local regulators and politicians know what is going on. Has pbaded. The EU, in particular, has tried to follow its own path in regulating technology. Recently, the United Kingdom commissioned a panel of experts, chaired by former chief economist Barack Obama (and now my colleague), Jason Furman, to produce a very useful report on approaches to the technology sector.
The debate on how to regulate the sector strangely recalls the debate over financial regulation in the early 2000s. Proponents of light regulation argued that finances were too complicated for regulators to be able to follow the regulatory agenda. and that derivative transactions allow banks to change their risk profiles in a flash. And the financial sector has put its money where it was, paying salaries so much higher than those in the public sector that any research badistant trained by the US Federal Reserve to work on financial issues would be seduced by offers superior to those of his own. boss.
Similar problems will arise for the technical regulatory offices and the antitrust legal divisions if the pressure for tighter regulation gains ground. To succeed, political leaders must be focused and determined, and difficult to buy. Just remember the 2008 financial crisis and its painful consequences to understand what can happen when a sector becomes too influential politically. And the US and global economy is even more vulnerable to advanced technologies than to the financial sectors, due to cyber-aggression and social media vulnerabilities that can pervert the political debate.
Another parallel with the financial sector is the disproportionate role of US regulators. As with US foreign policy, when they sneeze, the whole world can catch a cold. The 2008 financial crisis was triggered by vulnerabilities in the United States and the United Kingdom, but quickly became globalized. A cyber crisis based in the United States could easily do the same thing. This creates an "externality", or global common problem, because US regulators allow the risks to accumulate in the system without adequately taking into account the international implications.
It is a problem that can not be solved without addressing fundamental questions regarding the role of the state, the protection of privacy and the way in which US companies can compete with the company. 39, world scale against China. The government is using national technology companies to collect data on its citizens at an exponential rate. And yet, many would prefer to avoid them.
This is why Warren was strongly criticized for daring to suggest that even though many services appeared to be provided for free, something might not be going well. Fifteen years ago, the financial sector and the railroads of the late nineteenth century experienced the same type of setbacks. Henry Demarest Lloyd, a progressive activist, wrote in the March 1881 issue of the Atlantic:
Our treatment of the "railway problem" will show the quality and caliber of our political sense. It will go far in the perspective of the future lines of our social and political growth. This may indicate if American democracy, like all the democratic experiments that preceded it, will extinguish because the people did not have enough spirit and virtue to prioritize to the common good.
Lloyd's words are still ringing just today. At this point, the ideas for regulating big technologies are just sketches and, of course, a more serious badysis is warranted. An open and informed discussion that is not spoiled by lobbying efforts is a national imperative. The debate in which Warren participated does not concern the establishment of socialism. It is about making capitalist competition fairer and, ultimately, stronger.
Kenneth Rogoff is Professor of Economics and Public Policy at Harvard University. He was the chief economist of the IMF from 2001 to 2003.
© Syndicate Project
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