Much of the socio-economic damage linked to the COVID-19 pandemic resulted from poor regulation: the coronavirus would certainly have caused much less damage in contexts more respectful of the principle of individual responsibility. Unfortunately, poorly conceived regulation continues to lead to more and more state intervention, in a spiral that produces unsatisfactory results and constrains individual freedoms.
Companies & Regulation
The recent paper “Fifty Shades of QE: Conflicts of Interest in Economic Research” by Fabo et al. investigates the possible biases of economic research when analysing QE effectiveness. Part of the research efforts on this subject is led by economists who work at the very central banks that design and put into operation unconventional monetary policies. Comparing their results to those obtained by academic economists may shed some light on the drivers of scientific consensus.
The term meritocracy describes a social and political context in which merit is the key criterion to evaluate the distribution of rewards. If such distribution reflects individual merit, it is fair. It is unfair in the opposite case. The term was coined in 1958 by British sociologist Michael Young, according to whom meritocracy describes a dystopia, not something necessarily desirable. Young was affiliated to the labor party. In fact, the term maintained a negative connotation for a long time within the leftist culture. Since the 90s of the last century, however, the world of politics took at different view, possibly encouraged by egalitarian theories that sought to combine egalitarianism and personal responsibilities.
Vivian in Pretty Woman, Tralala in Last Exit to Brooklyn, Fantine in Les Misérables – sex workers are commonly featured in popular culture. Social perceptions of a sex worker’s daily life are inevitably influenced by how sex work is portrayed in fiction. Some of these perceptions turn into stereotypes that are also reflected in policymaking, which often frames sex workers as either vulnerable victims of human trafficking or as drug-addicted survival sex workers. A UK Conservative Party Human Rights Commission’s report, published in 2019, calls for implementation of the so-called ‘Nordic Model’, which makes buying (but not selling) sexual services illegal. In fact, according to leading sex work researchers, occupational reality is a lot more diverse than the report suggests, with many sex workers exercising more economic agency than commonly expected.
Google, Apple, Amazon, Facebook, Uber, Airbnb: these are only few of the numerous companies which have fundamentally changed our lives with new technologies in recent years. While their business models differ, none of the stars come from Europe. Apart from the serial entrepreneurs at Rocket Internet in Berlin, SAP is the only big digital corporation in Germany. Is there a role to play for the EU in the attempts to change this? Yes, there is. However, not by means of new subsidies and detailed regulation, but by keeping markets open.
Edward Altman is professor emeritus at NYU’s Stern School of Business and director of credit and debt market research at the NYU Salomon Center. He is also the creator of the Z-score: a heuristic index to assess the credit worthiness (and likeliness to default) of companies. The Z-score is built as a weighted sum of commonly available corporate indexes of liquidity, reinvested resources, profitability, and market capitalisation vs liabilities (here the formula). As a scoring system, it does not originate from a precise theory. Rather, it is rooted in common sense, and parameters are calibrated until they generate some useful statistical regularity. For example, for public manufacturing companies, if Z scores higher than 2.99 then the company is not likely to default; if Z scores lower than 1.81 then the risk of default is considerable.
Five years ago, a US American hedge fund bought the distribution rights for Daraprim, a drug to cure AIDS. Overnight, the price went from $13.50 to $750.00. This price increase caused huge public outrage. Yet, high prices for pharmaceuticals are rather common in the US. No other healthcare system around the world spends as much on drugs. Partly responsible for this is the seldom used bargaining power of public insurance programmes on the one hand and, on the other hand, the market power of pharmaceutical firms caused by patents and licensing procedures.
N26, Celonis and Biontech are the most recent success stories of the German start-up scene. All three enterprises have collected higher sums of venture capital in the past year. As good as this news may be, however, the overall picture of the German venture capital scene is rather problematic. Young German enterprises receive comparatively little risk capital.
The recent decision of the German Bundestag against the introduction of an opt out solution for organ donation has surprised many people. After all, the two leading health politicians of the coalition, CDU Health Minister Jens Spahn and SPD Health politician Karl Lauterbach, had publicly supported the opt out solution. In the vote on organ donation, however, the usual party discipline did not apply.
According to Article 38 of the German Constitution, the members of parliament “… are not bound to orders and instructions and are only subject to their conscience.” In practice, however, before a decision is made in the Bundestag, votes are taken in the respective parliamentary groups, and MPs usually follow this result. Parliamentary group discipline is also laid down in coalition agreements.
What influences the voting behaviour of members of parliament? Do they follow their own preferences, the party’s line, the whispers of interest groups or do they listen to their voters? In the latest IREF Working Paper, David Stadelmann of the University of Bayreuth and Gustavo Torrens of Indiana University examine the question of how strong the influence of different groups on political decisions is, exploiting unique data from Switzerland