Joseph Stiglitz is an American economist best known for explaining why markets don’t always work as neatly as textbook models suggest. He’s a Columbia University professor, a former World Bank chief economist, and a former chair of the U.S. president’s Council of Economic Advisers.
He shared the 2001 Nobel Memorial Prize in Economics for work on asymmetric information: situations where one party knows more than another. Think of a lender who can’t fully assess a borrower’s risk, or an insurance customer who knows more about their health than the insurer does. His work helped show how these information gaps can cause markets to produce inefficient outcomes.
Why take him seriously?
His research changed economics. It supplied rigorous reasons why competition alone doesn’t always deliver the best result.
He has substantial policy experience. He’s worked inside institutions he later criticized, especially on globalization and economic development.
He’s particularly worth reading on inequality, financial markets, and the role of government. He connects technical economics to questions about who benefits from economic policy.
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Textbook economics teaches us that ever-present competition drives profits down to zero, and that it is through these lower competitive prices that society benefits from innovation. The reality is often otherwise. Google and Facebook have had sustained profits for years. Economists have explained why, without effective antitrust enforcement, that is no surprise. .
From: Joseph Stiglitz’s ‘progressive AI agenda’ for the economy.
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In their fascinating paper on “The Data Economy: Market Size and Global Trade” for the Economic Statistics Centre of Excellence (part of the UK’s National Institute of Economic and Social Research), Diane Coyle and Wendy Li talk about the growing “data gap” between global Big Tech and potential competitors, disruptors and innovators. They argue (convincingly) that this data gap is a a barrier to entry that affects not only businesses but also aggregate innovation, investment and trade:
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Large data holdings, rich in volume and variety, thus give large online platforms a significant competitive advantage, powered by network effects and the virtuous cycle between data and the AI algorithms improving the services and increasing revenues.
This advantage means that the platforms obtain insights about adjacent sectors and can then enter them more easily.
From: Scrooge McData.
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Data is the new gold and these companies have more data than anyone else, which gives them a competitive advantage. They have also figured out how to leverage this natural competitive advantage by engaging in sometimes hard-to-detect anti-competitive practices, even if doing so violates people’s privacy.
From: Joseph Stiglitz’s ‘progressive AI agenda’ for the economy.
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Snippings 