The recent financial crisis exposed some serious flaws in our economic thinking. It has highlighted the need to look at economic policy with more critical, fresh approaches. It has also revealed the limitations of existing tools for structural analysis in factoring in key linkages, feedbacks and trade-offs — for example between growth, inequality and the environment.
Antitrust: It’s tanned and ready. A century ago, the progressive movement, reacting against the monopolies of the oil barons, established antitrust law as the government’s chief tool for restoring competition. But from the Reagan era on, we’ve defanged antitrust enforcement, and that allowed a new generation of monopolists to take hold (The Atlantic). The rate of new-business formation has dropped in each decade since. Despite our cultural infatuation with startups, markets are actually concentrating, and competition is evaporating. That’s why leaders like Sen. Elizabeth Warren (D-Mass.) advocate that the government brush off its antitrust arsenal. But today’s tech giants, like Apple and Alphabet/Google, are admired and beloved by consumers. Any newly invigorated antitrust enforcement that goes after them is likely to run into political resistance and face philosophical objections, too. Hasn’t the era of Big Tech also brought new efficiencies and lower prices? As one observer puts it in The Atlantic: “Where do we draw the line between ‘good’ bigness and ‘bad’ bigness?” Tough to say — but it’s useful to try.
It’s all Spotify’s fault. The global economy has behaved in confounding ways since the economic crisis of 2007–8: We have historically low interest rates and we’re awash in cash, but inflation remains vanishingly low, which is exactly the opposite of what conventional economics says should happen. Maybe our whole picture is askew because we’re failing to account for the production of “virtual goods,” like Spotify subscriptions (Business Insider). “What if deflation is not a sign of recession but rather a product of the relentless efficiency of tech services like Uber, Airbnb and Spotify?” In other words: Are we stuck in “a no-growth world” — or do we simply have a “measurement issue”? Sweden, Spotify’s native land, embodies this dilemma: With high growth and no inflation, it’s either an economic utopia or a bubble waiting to bust. A lot hangs on the answer, and no one really knows.
I thought long and hard about how best to respond to the thousands of emails I’ve received since publishing Throwing Rocks at the Google Bus. People, companies, mayors, cooperatives, towns and big corporations, all looking for ways to distribute prosperity more widely, start local currencies, build platform cooperatives, convert to employee ownership, offer dividends instead of capital gains, or crowdfund a bookstore. I’ve answered more than half — or about 20,000 of them — individually. But I realized that it’s really not me who has the answers; it’s you.
The US government is famously slow and bureaucratic, but when it comes to digital transformation, the Feds have outdone themselves. Case in point is healthcare.gov — the original government solution for identity management cost $200 million to build and would have cost $70 million to run each year. Of course, it failed spectacularly — until a small group of Valley engineers recruited by the President re-built the site for just $4mm.
But while it’s easy to poke fun at our government, it’s also the single most impactful organization in our economy — with millions of employees and services that directly and sometimes dramatically impact hundreds of millions of Americans.
New President Brad Smith on a Renewed Mission, a Major Culture Shift, and the Role of a Corporation in Society
This week’s column introduces the Shift Dialogs, NewCo’s new video series featuring in-depth conversations with the leaders driving significant change across business, culture, and society. Our first episode features Brad Smith, President and Chief Legal Officer of Microsoft. We’ve also released the second episode, featuring Max Ventilla, founder and CEO of AltSchool.
Back in 1993, when an early thirty-something lawyer named Brad Smith joined Microsoft, his new employer was a fearsome amalgam of every badass tech company on the planet today. It had the ubiquitous reach of Google, the scary omnipotence of Facebook, the arrogant presumption of Apple, and the heartless calculation of Amazon. Its ruthless business practices were the subject of intense debate — was Microsoft too powerful? What could be done about it?
There was plenty for the new Associate General Counsel to do. His company was a magnet for legal trouble, locking horns with regulators and competitors around the globe. As the dot-com boom swelled in the late 1990s, Microsoft dominated the Internet with its Explorer web browser, and Wall Street crowned it the undisputed king of tech — in 1997, Microsoft’s market capitalization stood at more than seventy times that of its struggling rival Apple Computer.
Rana Foroohar’s deeply reported new book takes direct aim at the financial industry and calls for a new compact between business and society.
Every so often a book comes along that works its way into a majority of the interesting conversations you have with both friends and colleagues. Such is the case with Rana Foroohar’s Makers and Takers: The Rise of Finance and The Fall of American Business. Foroohar was kind enough to send me an early draft to read several months ago, and I found myself quoting from it in nearly everything I subsequently wrote, in every talk I gave, and even in various Slack channels at work. Makers and Takers is that rare work of journalism that both appears at a fortuitous moment in history, and captures the essence of that moment’s core narrative.
Foroohar chronicles the rise of the financial industry and its destructive impact on the global economy. And she has the credibility and the chops to pull it off — over the past 15 years she’s covered the financial industry for Newsweek and Time. She’s been the global economic analyst for CNN for the past three years as well. Foroohar is not only passionate and opinionated about her field of work, she’s a lucid and compelling spokesperson for change in not only finance, but also in the purpose-driving business, and the social compact that binds us all as citizens in a global economy.