Facebook under scrutiny. The practices of the world’s sixth largest company, Facebook, dominated the US media last week following the revelations of a whistleblower, Frances Haugen, a former Facebook employee. Giving evidence to Congress, Haugen accused Facebook (which owns both Instagram and WhatsApp) of knowingly harming children’s mental health and fomenting violence and extremism around the world. The company puts its “astronomical profits before people”, she said. Haugen posted the video and text of her opening statement.
Further evidence. Haugen’s evidence is the latest in a series of revelations about Facebook’s behaviour and business model, as the Washington Post and Carole Cadwalldr (the Observer journalist who broke the Cambridge Analytica story in 2018) explained.
Big tech and monopoly power. In October 2020, a House of Representatives antitrust subcommittee published a landmark report investigating Amazon, Apple, Google and Facebook. It argued that all four platforms abuse their monopoly or near-monopoly power to enhance their profits at the expense of competitor companies.
Alternatives. Mariana Mazzucato, Rainer Kattel and colleagues at UCL explain how the state can redress the problems of the major tech companies’ monopoly power. Maximising the public and social gains of technological innovation whilst minimising their harms requires a combination of legal changes, stronger antitrust/competition regulation and changes to the ownership of data and companies. Yale University organised a timely event last week on possible legal and regulatory reforms with Facebook whistleblower Frances Hagan, Tristan Harris, subject of the Netflix documentary The Social Dilemma, Shoshana Zuboff, author of Surveillance Capitalism and other experts; you can watch it here.
Rising gas prices and heavy industry. The FT reports that Chancellor Rishi Sunak is now considering a rescue plan for energy-intensive sectors to ameliorate the impact of extremely high gas prices. The Business Secretary, Kwasi Kwarteng, is believed to have proposed “loans and other support worth in the low hundreds of millions of pounds” to firms in the steel, ceramics, glass and paper industries.
Energy markets and ownership. Brooke Masters in the FT explained how the “natural gas crisis highlights the limits of free markets in decarbonisation”. We Own It’s Johnbosco Nwogbo explained why greater public ownership in the energy sector will allow for better security for the industries affected by fluctuations in commodity prices.
Learning from past mistakes and other countries. The Cambridge Bennett Institute published a report exploring the deficiencies of industrial policy in the UK since the 1970s and contrasts them with the experiences of other advanced economies. The authors, Cambridge economist Professor Diana Coyle and Adam Muhtar, recommend “embedding a more systematic mechanism of policy updating” than frequent policy reversals driven by political cycles.
PM’s vision of a new economy. Boris Johnson’s keynote speech to the Conservative Party conference pledged to “turn Britain away from the political and economic orthodoxy of the past 40 years”, characterised by “an old broken model with low wages, low growth, low skills and low productivity, all of it enabled and assisted by uncontrolled immigration.” Minus the point about immigration, the passage echoed criticism more familiar from the left: see for example the final report of the IPPR Commission on Economic Justice.
International corporation tax deal signed but watered down. A historic deal to impose a global minimum corporate tax of 15% by 136 countries was agreed at the OECD. But tax Justice Network’s (TJN) Alex Cobham explains how the deal was watered down during the negotiations:
An inflation hawk? Huw Pill, the Bank of England’s new chief economist, gave his first public remarks, indicating his “great concern about the inflation outlook”, which “looks set to prove more long-lasting than originally anticipated”. This was widely interpreted to mean that he would vote in favour of an early rise in interest rates.
Post-Brexit deregulation of financial services. Chancellor Rishi Sunak suggested a move towards more regulatory divergence with EU rules on financial services to help the City of London “boost its global competitiveness”.
Conservative MPs call for community power. A group of Conservative MPs from the 2019 intake have published a report calling for a ‘double devolution’ to councils and communities. The report, Trusting the People, includes recommendations to “remodel our economic institutions to put the values of ordinary people, rather than the abstract forces of finance, at the centre of decision making”.
Local government funding struggles. The IFS’s Green Budget chapter on local government funding examines the impact of the pandemic on councils’ ability to maintain services, finding that “English councils will likely face large funding gaps over the next two years under current spending plans, even with large council tax rises”. The IFS said that keeping services running at pre-pandemic levels and funding the government’s social care reforms could require raising council tax by as much as £220 per year by 2024/2025.
Reducing health inequality through local economic development. Professor Sir Michael Marmot’s Institute of Health Equity and Public Policy Projects have published a report outlining place-based problems and solutions to UK health inequality, arguing that “when the private, public and voluntary, community and social enterprise (VCSE) sectors and communities work together, it is possible to create more equitable and healthy societies.”