Category Archives: Media

Updates from Chicago Booth

Why fake news is bad for business
By Rose Jacobs – Many social-media websites struggle to maximize user engagement while minimizing the amount of misinformation shared and re-shared. The stakes are high for Facebook, Twitter, and their rivals, which generate most of their revenue from advertising. Viral content leads to higher user engagement, which in turn leads to more advertising revenue.

But content-management algorithms designed to maximize user engagement may inadvertently promote content of dubious quality—including fake news.

The researchers’ models assume platform operators can tell the difference between factual and fictitious posts. They demonstrate that engagement levels fall when users aren’t warned of posts that contain misinformation—to levels lower than when users are discouraged from clicking on the dubious material.

A limitation of the research is the models’ assumption that the people using social networks and the algorithms running them know whether posts are true, false, or shaded somewhere in between. more>



Europe’s Poor Need More Than Jobs

By Ive Marx – The idea that – to use a ubiquitous political slogan – “the best protection against poverty is a job” remains the mantra in the corridors of power right across Europe and indeed in Brussels. It is, alas, more tenet of faith than a statement of fact.

Unfortunately, things are not as simple. Employment growth never yielded the hoped-for reductions in poverty in the past (see here). There is no reason to expect that things will turn out any different this time.

First, many of the poor live in households where no adult has a job. Such “jobless households” often face severe financial hardship, including any children. In the past, employment growth never produced anywhere near commensurate drops in household jobless rates. Instead it tended to boost the number of double- or multi-earner households.

A second reason why more people in work does not automatically bring less poverty is that getting a job may not be enough for a household to escape poverty. Long considered a typically American phenomenon, there is now ample evidence that the “working poor” are to be found in significant numbers in every European country.

In conclusion: it is time to remind Europe’s politicians of the promises they made to bring poverty down. They seem to think that Europe’s buoyant labor markets will do the job. They will not. more>


How to Build an Autocracy


How To Build An Autocracy, Author: The Atlantic.

By David Frum – Fortunately for him, he did not need to campaign hard for reelection. His has been a popular presidency: Big tax cuts, big spending, and big deficits have worked their familiar expansive magic. Wages have grown strongly in the Trump years, especially for men without a college degree, even if rising inflation is beginning to bite into the gains. The president’s supporters credit his restrictive immigration policies and his TrumpWorks infrastructure program.

Allegations of fraud and self-dealing in the TrumpWorks program, and elsewhere, have likewise been shrugged off. The president regularly tweets out news of factory openings and big hiring announcements: “I’m bringing back your jobs,” he has said over and over. Voters seem to have believed him—and are grateful.

Most Americans intuit that their president and his relatives have become vastly wealthier over the past four years. But rumors of graft are easy to dismiss. Because Trump has never released his tax returns, no one really knows.

Anyway, doesn’t everybody do it? On the eve of the 2018 congressional elections, WikiLeaks released years of investment statements by prominent congressional Democrats indicating that they had long earned above-market returns. As the air filled with allegations of insider trading and crony capitalism, the public subsided into weary cynicism. The Republicans held both houses of Congress that November, and Trump loyalists shouldered aside the pre-Trump leadership.

The business community learned its lesson early. “You work for me, you don’t criticize me,” the president was reported to have told one major federal contractor, after knocking billions off his company’s stock-market valuation with an angry tweet.

In an 1888 lecture, James Russell Lowell, a founder of this magazine, challenged the happy assumption that the Constitution was a “machine that would go of itself.” Lowell was right. Checks and balances is a metaphor, not a mechanism.

The American system is also perforated by vulnerabilities no less dangerous for being so familiar. Supreme among those vulnerabilities is reliance on the personal qualities of the man or woman who wields the awesome powers of the presidency. A British prime minister can lose power in minutes if he or she forfeits the confidence of the majority in Parliament. The president of the United States, on the other hand, is restrained first and foremost by his own ethics and public spirit.

What happens if somebody comes to the high office lacking those qualities? more>


Why Amartya Sen remains the century’s great critic of capitalism


The Moral Economists: R H Tawney, Karl Polanyi, E P Thompson and the Critique of Capitalism, Author: Tim Rogan.

By Tim Rogan – Critiques of capitalism come in two varieties. First, there is the moral or spiritual critique. This critique rejects Homo economicus as the organizing heuristic of human affairs. Human beings, it says, need more than material things to prosper. Calculating power is only a small part of what makes us who we are. Moral and spiritual relationships are first-order concerns. Material fixes such as a universal basic income will make no difference to societies in which the basic relationships are felt to be unjust.

Then there is the material critique of capitalism. The economists who lead discussions of inequality now are its leading exponents. Homo economicus is the right starting point for social thought. We are poor calculators and single-minded, failing to see our advantage in the rational distribution of prosperity across societies. Hence inequality, the wages of ungoverned growth. But we are calculators all the same, and what we need above all is material plenty, thus the focus on the redress of material inequality. From good material outcomes, the rest follows.

But then there is Amartya Sen. Every major work on material inequality in the 21st century owes a debt to Sen.

But his own writings treat material inequality as though the moral frameworks and social relationships that mediate economic exchanges matter. Famine is the nadir of material deprivation.

But it seldom occurs – Sen argues – for lack of food.

To understand why a people goes hungry, look not for catastrophic crop failure; look rather for malfunctions of the moral economy that moderates competing demands upon a scarce commodity. Material inequality of the most egregious kind is the problem here. more>


Tech Vs. Democracy

By Guy Verhofstadt – In an age when most people get their news from social media, mafia states have had little trouble censoring social-media content that their leaders deem harmful to their interests. But for liberal democracies, regulating social media is not so straightforward, because it requires governments to strike a balance between competing principles.

After all, social-media platforms not only play a crucial role as conduits for the free flow of information; they have also faced strong criticism for failing to police illegal or abusive content, particularly hate speech and extremist propaganda.

These failings have prompted action from many European governments and the European Union itself. The EU has now issued guidelines for Internet companies, and has threatened to follow up with formal legislation if companies do not comply. As Robert Hannigan, the former director of the British intelligence agency GCHQ, recently observed, the window for tech companies to reform themselves voluntarily is quickly closing.

In fact, Germany has already enacted a law that will impose severe fines on platforms that do not remove illegal user content in a timely fashion. more>


How capitalism without growth could build a more stable economy

By Adam Barrett – On a finite planet, endless economic growth is impossible. There is also plenty of evidence that in the developed world, a continued increase of GDP does not increase happiness.

Back in 1930 the economist John Maynard Keynes predicted that growth would end within a century – but he was unclear whether a post-growth capitalism was really possible.

Today, mainstream economic thinking still considers growth to be a vital policy objective – essential to the health of a capitalist economy. There remains a concern that ultimately, a capitalist economy will collapse without growth.

I recently published new research that suggests a different view – that a post-growth economy could actually be more stable and even bring higher wages. It begins with an acceptance that capitalism is unstable and prone to crisis even during a period of strong and stable growth – as the great financial crash of 2007-08 demonstrated.

I found that an end to growth reduces profits for business owners.

Therefore, if it remains relatively easy for money to flow across borders, then investors might abandon a post-growth country for a fast-growing developing country. Also, businesses are beholden to shareholders keen on growth as a means to rapid profit accumulation.

Some mainstream commentators and economists are now predicting a transition to a post-growth era, whatever our environmental policy – which means the study of post-growth economics is a field which itself will grow. more>


A Government That Looks Like Trump

By Robert Schlesinger – Trump’s personal pilot and his son-in-law-cum-senior adviser, Jared Kushner which bloomed brightly before being eclipsed; they serve as a reminder of the number, degree and reach of the ethical challenges and possible corruption which has become the background music in front of which the other Trump dramas unfold.

We have to a depressing extent become benumbed to the fact that we are living in an age aptly dubbed one of “American kakistrocracy” (government by the worst of us), in part because of its pervasiveness and almost mind-boggling scope.

So it’s useful to periodically step back and catalogue the extent to which Trumpism is corrupting our governance. The Washington Post reported last month that 9 of 22 of Trump’s initial picks for Cabinet-level jobs, 40 percent, “have found themselves facing scrutiny over their actions.” While the examples below range from unseemly to potentially illegal they bespeak a cavalier attitude towards government ethics and taxpayer dollars that is illustrative of the Trump era in America.

Another aspect of the Trumpian corrosion of our governmental standards is the death of qualifications as a prerequisite for high public service. Trump of course was, on paper, the least-prepared of any president in history. Naturally he views this as a plus.

So reports that Trump is considering nominating John Dunkin, his long-time personal pilot, to head the Federal Aviation Administration, should not surprise at this point. “My pilot, he’s a smart guy, and he knows what’s going on,” Trump told airline executives last year.

Well there you go; he sounds like a perfect fit for the top job in the $16 billion, 47,000-employee agency. Somewhere George W. Bush and Harriet Miers are having a good chuckle. more>


Beware the Trump Trade Trap

By Liz Mair – Not everyone in the U.S. feels that they’ve personally benefited from free trade. But the odds are, they have – they just don’t recognize it. The trend toward globalization is irreversible and tariffs designed to try will only cause pain for consumers in the form of lost jobs and higher prices for basic goods.

Remember that Trump sees an incomplete picture of free trade. He sees only people who have overwhelmingly lost thanks to free trade, instead of the more accurate picture of an America that has overwhelmingly won thanks to trade deals. And anyone who has studied Trump’s public pronouncements regarding policy over many decades knows that Trump really is anti-free trade at his core – and has been for a long, long time now.

Though his natural tendencies can be temporarily parked by persuasive arguments by people he trusts on economic policy topics.

Within the administration, the only people who seem to fit that bill, where trade is concerned, are economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin, who are committed to reminding Trump especially of the link between free trade and a robust stock market, and how moderation on trade protectionism ties into stock market resilience.

Basically everyone else is protectionist, neutral, or their opinion on financial matters doesn’t carry that much weight with Trump. more>


Negotiating With Power?

By Santosh Desai – In most cases, the nature of the intervention was either to ensure that the rules that already existed were followed, or to step in and help break the rules using one’s privileged position.

The legislative and administrative systems in India are subservient to the social ecosystem, and work within its ambit. Power thus becomes a social instrument that needs to be brokered keeping the dominant interests in mind.

The disinterested application of the law is not possible in a context where these interests take priority. Hierarchies are respected, networks are nurtured, money speaks loudly, and settlements are negotiated.

The idea of the ‘settlement’ which finds a measure of mutual self-interest being catered to is only thinly related to abstract notions of justice. The poor and weak ‘accept’ an unfair resolution because the alternative is much worse.

What are otherwise their rights become favors that they seek from the powerful for a price. The powerful build constituencies by creating a cumbersome system and then offering a way to navigate the same.

The ability to negotiate a solution to mutual advantage is a mark of a functioning social system, but when the same occurs under the threat of the use of power, it serves often to perpetuate a skewed and unjust arrangement.

A system of governance must provide instruments of continuity and change. Currently, there is too much of the former and too little of the latter. more>


Freedom And Equality In Democracies: There Is No Trade-off!

By Heiko Giebler and Wolfgang Merkel – There is little disagreement among political philosophers, democratic theorists or empirical researchers that freedom and equality are the two core principles of liberal democracy.

What is highly disputed, however, is the meaning of these two democratic principles and the proper relation between them that makes for a good political order.

Tocqueville’s book Democracy in America is the most obvious example of a work in democratic theory that identifies a trade-off between freedom and equality. Tocqueville sees a fundamental tension between freedom and equality in general and between majoritarian democracy and individual freedom in particular.

In his opinion the relentless drive towards political and social equality in democracies raises the threat of a tyranny of the majority, confronting the people with the choice between democratic freedom and democratic tyranny.

The problem of America’s democracy, in particular, is the unrestricted power of the majority. Too much political equality in politics, society and economy weakens the institutional guarantees for individual and minority rights.

Rousseau’s work On the Social Contract constitutes the antipode to the trade-off argument in classical political philosophy. His argument is that people can only be free if they remain politically equal. Political equality, in turn, can only be achieved if social inequality is as meager as possible.

Men are essentially free and equal in the ‘state of nature’, but the progress of civilization and the inequality arising from private property destroyed both – first equality and then freedom.

Here, we also find a clear distinction between two types of equality: political equality, in the form of direct democracy incorporating all citizens, and socio-economic equality, which is endangered by private property. more>