US Economic Experts Panel

 

 

How should economics be introduced to undergraduate students? Since the crisis and the Great Recession began more then a decade ago, many young people have complained that what is taught in intro courses seems to bear no relation to the pressing issues that they hoped the subject would help them to understand – poverty, inequality, globalization, environmental sustainability, financial instability, robots and the digital economy.

 

Over the course of 2018, the Trump administration imposed tariffs on approximately $283 billion of US imports, with rates ranging between 10% and 50%. In response, US trading partners, especially China, retaliated with tariffs averaging 16% on approximately $121 billion of US exports.

 

Recent nominations to join the board of governors of the Federal Reserve have raised concerns about political threats to the independence of monetary policy-making. The Economist has explained the dangers of weakened central banks, not only in the United States but also elsewhere in the world. And economists and economic journalists have questioned the economic ideas of President Trump’s latest Fed picks, both of whom have now withdrawn their names.

 

The recent scandal of rich and famous people buying places for their children at elite colleges has led to a renewed public conversation about the system of legacy preference in admissions at many top US universities. We invited our US panel to express their views on the likely effects of legacies on potentially high-achieving applicants from less advantaged backgrounds and on wider society.

 

In January this year, Senator Elizabeth Warren unveiled a proposal to tax the wealth of the richest 0.1% of Americans. The proposed legislation to tax households with a net worth of $50 million or more draws on analysis by one of our US panel of economic experts – Emmanuel Saez at Berkeley – showing that the richest 0.1% has seen its share of American wealth more than triple from 7% to 22% since the late 1970s. Saez and colleagues have also made calculations of the potential impact of Senator Warren’s proposed tax.

 

This week’s IGM Economic Experts Panel statements:

A) Forcing Amazon to divest Whole Foods now would be in the public interest.

B) Acquisitions by large tech platforms where there are risks of anti-competitive effects like those posed by Amazon’s acquisition of Whole Foods should not be permitted.

C) Large tech platforms, such as Amazon Marketplace and Google Search, should be designated as ‘platform utilities' and broken apart from any participant on that platform. 

‘Modern monetary theory’ (MMT) – the idea that a country that is able to borrow in its own currency need not worry about government deficits and debt – has been all over the economics and finance media in recent weeks. This approach to macroeconomics, which has been used to underpin calls for new public spending programs, has been debated widely in newspaper columns, blog posts and tweets – often in quite vitriolic ways.

 

This week’s IGM Economic Experts Panel statements:

A) When local governments compete by offering subsidies to a firm that is willing to relocate, and shopping across multiple alternative areas, the firm typically captures most of value that is created via the relocation.

B) A federal prohibition against states and municipalities offering tax subsidies to attract specific businesses that are shopping across multiple areas to relocate would be welfare improving for the average taxpayer.