Solutions to regulatory competition in the EU?

In an op-ed piece in yesterday's Financial Times, a Belgian economics professor argues that "a flaw in the design of the eurozone" that leaves wages policies to be determined by the member states of the EU, rather than centrally, produces an unhealthy competition among the states. He cites the example of German wage restraints, which "improve Germany's competitive position at the expense of the other eurozone countries."

To stop "the downward spiral on wage increases set in motion by Germany," he sees two basic alternatives: either centralize policy in the EU or "further liberalize [EU states'] labour markets so wages are set by demand and supply instead of being dictated by government-sponsored cartels of trade uions and employers' associations."

An historian can't help noticing that the dynamic he depicts looks very "American" -- that is, it resembles the economic competition among the American states that first emerged in the 1850s and reached full force by the 1890s, producing what some scholars call a "race to the bottom" in state regulation. (The competition continues because so much economic policy remains in the hands of the American states. No one really disputes the existence of the dynamic, though assessments of it--good or bad?-- differ sharply.) In the U.S., the outcome of this dynamic was de facto liberalization of labor (and other) markets.

From this standpoint, the available solutions to the EU situation appear slightly differently: either centralize wage policymaking or let state-level competition do its work in liberalizing labor markets. But however one arrives at liberalized labor markets, the U.S. experience suggests that they won't prevent a downward spiral in wages, especially in the 21st-century context of global, inter-nation competition.

Paul De Grauwe, "Germany's pay policy points to a eurozone design flaw," Financial Times, 5 May 2006, 13.

Antitrust in the Noughties

Current antitrust policy, Stephen Labaton argues in the New York Times, harkens back to the late 1980s--and one might even say, to the 1890s: it takes a dim view of cartels and price-fixing, but generally regards mergers with equanimity.

Much of the article, however, is actually about signs of impending conflict between the Justice Department and the FTC over the latter's effort to combat what appears (to the legal amateur) to be cartel-like behavior--inter-firm agreements in which name-brand drug manufacturers pay generic manufacturers to delay the introduction of rival products.

Stephen Labaton, "New View of Antitrust Law: See No Evil, Hear No Evil," New York Times, 5 May 2006, C5.

What next? Mashups

Combining data with Google Maps -- a new Internet phenomenon, it seems. I'm a big fan of mapping historical data, especially for lectures. But I'm not really versed enough to do it effortlessly, so I often just can't find the time. Now here's a new twist.

Jane Gordon, "Mapping the Invisible City Outside Their Walls," New York Times, 3 May 2006, A25.

Early computers and national security

Yesterday's New York Times carried an obituary for Henriette D. Avram, whose career exemplifies both the role of national security in the genesis of the American computer industry and the spill-over effects from that early collaboration. After studying mathematics in the early 1950s at GW while her husband worked for the National Security Agency, she, too, "went to work for the N.S.A., where she learned computer programming." After a hiatus at a software company, she moved to the Library of Congress in the mid-1960s, where she led the project that produced Machine Readable Cataloging, or Marc. In the 1970s, Marc became the national, and then the international standard for electronic library catalogs. It remains the basis for the newest iteration, Marc 21.

Margalit Fox, "Henriette D. Avram, Modernizer of Libraries, Dies at 86," New York Times, 3 May 2006, C15.

Competing social conceptions of the corporation

Because of the striking differences in their styles of corporate governance, I've been following rather closely the news reports on the efforts of Netherlands-registered Mittal to take over Luxembourg-registered Arcelor. Two recent reports, including a long one on Mittal's governance structure:

Peter Marsh, "Arcelor investors expected to take issue with E4bn loan," Financial Times, U.S. edition, 27 April 2006, 21.

John Plender, "Mittal kingdom: why governance may be an impediment in the pursuit of Arcelor," Financial Times, U.S. edition, 28 April 2006, 9.

In a paper that I presented last month at a conference at Washington and Lee University's School of Law, I used the Mittal-Arcelor case briefly to illustrate competing social conceptions of the corporation today -- will post a link to the article manuscript when I'm finished revising it. Meanwhile, I am delighted to hear that historian Philippe Mioche at the Université de Provence, Aix-en-Provence, is writing an article on the history of the two firms.

For news reports on Arcelor's annual shareholder meeting, held on Friday, click here.

The political creation of uniform markets

In a preliminary ruling, the European Court of Justice has declared "quite patently discriminatory" the French practice of levying higher taxes on dividends paid to non-residents.

Quoted in Vanessa Houlder, "Decision on withholding taxes set to spur reform," Financial Times, U.S. edition, 28 April 2006, 3.

Principles for Responsible Investment

An international consortium of pension funds, holding assets of more than $2 trillion, has pledged to adhere to six "principles for responsible investment" that address environmental, social, and corporate governance issues. The underlying assumption is that these issues affect the long-term performance of their investment portfolios.

Mark Turner, "Pensions funds sign pact to ensure ethical investment," Financial Times, U.S. edition, 27 April 2006, 6.