"Things happen" in the White House

Female journalists have been the target of Donald Trump this past week—hardly for the first time. One of them dared to ask about the murder of U.S. journalist Jamal Khashoggi in front of Trump and Saudi Arabia’s strongman, Mohammed bin Salman (whom the CIA holds responsible for Khashoggi’s death). Trump called her “a terrible person, a terrible reporter.” He then added, referring to Khashoggi’s killing, that “things happen.”

Another female journalist asked about Trump’s ties to the convicted pedophile Jeffrey Epstein aboard Air Force One—and was called “piggy” in response.

All this occurred in the same week that members of Congress received death threats after stating that soldiers should not obey illegal orders. It was also the week when political scientist Daniel Treisman suggested on CNN that Trump’s Ukraine “peace proposal” is written so awkwardly that it may even be a translation from Russian.

Some adopt an analytical framing that sees Trump as part of a broader “wave of populism” or “wave of backsliding.” From this perspective, we are told not to worry too much: this is not Hitler, and no one is about to be exterminated. This, they say, is more akin to Orban, Bolsonaro, AMLO, or Maduro. Relax—it’s not the same.

Viewing Trump—especially Trump 2.0—through this lens pushes us to focus on similarities with other populists, including those on the left. These other populists certainly exist and have their own pathologies. But focusing too narrowly on this comparison obscures the class dimension of Trumpism, and the immense social and economic power behind what The Economist has called a corrupt, autocratic force.

There is another perspective, of course. Trump may be a unique figure, yet also the product of a long historical trajectory—of deep-rooted social conflicts within the United States. These may resemble dynamics elsewhere, but the American case remains distinctly singular. The U.S., after all, is the most powerful country in the world and, while its history includes bright moments such as the Progressive Era, the New Deal, its role in the Second World War, and the Marshall Plan, it also includes darker chapters: what Margaret Atwood has described as an eighteenth-century theocracy, slavery, post-slavery discrimination against Black Americans, McCarthyism, and support for dictators such as Franco—still defended today in the pages of The Wall Street Journal—and Pinochet.

The opportunity costs of violence have so far kept Trump from using overt force against the American population. But selective violence persists: abroad, and against immigrants at home. Even under Hitler, violence was selective; killings of Jews were more frequent outside Germany’s borders than within them.

There are effective populists and there are efficient politicians, but we have yet to see someone who is both an efficient politician and an effective populist. Trump is neither. Instead, he is immensely powerful, he is not alone, and he is extremely dangerous. Efforts to appease him may be understandable—after all, who does not want to avoid a third world war?—but we should not delude ourselves about the true nature of the threat.

Is the London Consensus Just Wishful Thinking?

In The London Consensus, a group of economists bring together contributions presented at an event held at the London School of Economics in 2023. Some of the contributors are affiliated with the LSE, while others come from different institutions. All share a desire to help shape a new paradigm to replace the now-obsolete Washington Consensus.

Although the contributions do not yet amount to a fully coherent paradigm, they offer a valuable set of principles and policy proposals that could form the basis of a new “consensus.” Today, however, such a consensus may seem over-ambitious, given our era of polarization and the fragmentation of public opinion. We appear far from a context in which broad majorities might embrace a shared set of economic ideas.

Still, the mainstream of the economics profession has shifted toward more egalitarian and progressive positions in recent years. The authors of The London Consensus (Aghion, Van Reenen, Rodrik, Besley, Velasco, among others) combine support for a New Industrial Policy (or “productive development policies”) with a Schumpeterian view of economic growth—one that links innovation (driven by entry and competition) with social protection.

Yet the trajectories of some of the authors illustrate the limits of the project. Many were on the intellectual front line of the failed fight against Brexit, or advised center-left politicians such as François Hollande, Michelle Bachelet, or Joe Biden, none of whom managed to build lasting coalitions. A new paradigm—like the Keynesian or neoliberal did in the past—must strive for hegemony. Today, that means having the ambition to defeat the authoritarian national-populism that seeks to dominate global politics.

Something more will be required. That includes a new vernacular, as Bowles and Carlin argue. Or a new (beyond national) dimension of the welfare state, as proposed by Morelli or Piketty. But also a strategy for forging national and international majorities and for consolidating or creating institutions for collective action—institutions that include political parties and trade unions, but also extend beyond them through think tanks and online platforms.

The London Consensus offers a reasonable set of principles and policies—a minimum standard of decency that authoritarian populism will never provide, and that may even rival well-organized authoritarian regimes (such as Xi’s China) in effectiveness. But if it is to help defeat Trumpism in the democracies we seek to preserve, it must be paired with a political strategy.

Piketty after some tough book reviews

In one of his most recent articles, Thomas Piketty states that he considers his book A Brief History of Equality the best expression of his thinking on inequality. It is shorter than his previous works, offers a broader—indeed, global—perspective, and is more optimistic and forward-looking.

In this book, the French economist argues that the past two centuries, and especially the twentieth, have been marked by overall progress in reducing income and wealth inequality. This progress has certainly not been linear, but it demonstrates that social mobilization and the power of ideas can foster policies and institutions that promote both economic and political equality. Yet this progress remains incomplete, as current levels of inequality are still morally indefensible.

Over the course of his intellectual journey—from Capital in the Twenty-First Century to A Brief History of Equality—Piketty has moved from pessimistic laws to optimistic ideas. In my habit of reading book reviews after finishing books I enjoy, I revisited the tough review written by Blume and Durlauf on Capital in the Twenty-First Century, in which they criticized Piketty’s use of macroeconomic theory—never his strongest field.

After reading A Brief History of Equality, I then turned to Paul Seabright’s review, which is perhaps even harsher than that of Blume and Durlauf. Although Piketty avoids delving into the technicalities of macroeconomic theory in this shorter work, Seabright challenges, among other things, some of Piketty’s empirical claims about slavery and colonialism.

There exists a continuum between a scientific book and a political manifesto. One could draw an analogy between Marx’s Capital and the Communist Manifesto: A Brief History of Equality stands closer to the latter. Perhaps it should even have been marketed as such—as Piketty’s political program.

The ongoing debate about Piketty’s contribution can also be followed in the chapter that John Cassidy devotes to him in Capitalism and Its Critics, which includes several interesting biographical details. Cassidy, however, does not mention the reviews by Blume and Durlauf or by Seabright.

I find myself sympathetic to many of Piketty’s political ideas, which I do not think are undermined by the reviewers’ criticisms. The French author defends a genuinely democratic and decentralized socialism—based on shared ownership—which stands in complete opposition to Soviet communism. He also advocates what he calls a “federal welfare state” rather than a “national welfare state,” arguing that pursuing social objectives solely at the national level is wholly inadequate.

The weakest part of his political platform, in my view, is his notion of “universalist sovereignism,” which sounds like an oxymoron—a rhetorical attempt to balance the pro-European and communitarian-nationalist wings of the French left. There is still work to be done on that front. Piketty reportedly collaborated some years ago with U.S. Senator Elizabeth Warren (as noted by Cassidy), and there can be little doubt about the democratic and internationalist credentials of the progressive wing of the Democratic Party. The broad progressive coalition recently endorsed by Alexandria Ocasio-Cortez, following Mamdani’s victory, might well have room for Piketty and other European intellectual activists.

The federalist proposals of Morelli and Piketty

I was recently invited to a dinner in Barcelona where I met Massimo Morelli, Professor of Economics and Political Science at Bocconi University. I was deeply impressed by his ideas on populism and federalism, and in the following days I downloaded and read several of his most recent academic papers.

In his research, Morelli analyzes both the demand and supply sides of populism. The demand side stems from public dissatisfaction with the unequal outcomes of globalization, economic crises, and technological change. The supply side arises from the strategies of political actors who seek to exploit these grievances, often combining them with established or newly constructed narratives.

The vicious circle of populism becomes reality when the economic costs of failed populist governments make it increasingly difficult for conventional parties to repair the damage (as seen with Starmer’s challenges in the UK). The scope for genuine reform is extremely limited in national democracies with little fiscal space—at least within the current context of free capital movement.

Morelli argues that Dani Rodrik’s Trilemma has been overtaken by reality: authoritarian populists have shown that protectionism, authoritarianism, and a smaller state can coexist. The prospect of a democratic nation-state that restricts globalization has effectively vanished. According to Morelli, the only real hope for Europe—his “dream”—is a federal United States of Europe that pools resources to create a common defense, coordinated policies, and a genuine European budget and fiscal policy.

He also contends that earlier work by Italian economists such as Alberto Alesina and Enrico Spolaore—who argued that small nations could thrive in a globalized world—has become obsolete. Today, only deeper European integration can offer hope to a working majority and break the vicious circle of populism.

Morelli’s originality lies in his attention to the dynamic effects of policies designed to counter populism. A strategy aimed at discrediting populist leaders may succeed in the short term, but in the long run it can also foster an anti-politics climate that benefits new populist movements.

While Morelli does not propose an ambitious progressive platform like Thomas Piketty does in A Brief History of Equality, he shares with the French economist the conviction that a federal (instead of national) welfare state is a key ingredient in building an egalitarian coalition.

Do we now know why nations like the USA fail?

Banerjee and Duflo, winners of the Nobel Prize in Economics in 2019, are leaving the United States to begin working in Switzerland. In my field, this is so far the most significant example of the brain drain that the U.S. is already experiencing as a direct consequence of the second Trump administration’s attack on science. This phenomenon is beginning to appear in many other fields as well—and it can only accelerate. The U.S. innovation engine, long powered by its research system, is grinding to a halt, with inevitable negative consequences for productivity and economic welfare.

Over the past year, we have witnessed a lively retrospective debate about the work of the 2024 Nobel laureates in Economics—Acemoglu, Robinson, and Johnson. I strongly recommend reading their three Nobel Prize lectures, as well as the many articles and critiques that have followed.

This year also coincides with Trump’s return to power and the first months of his second administration, marked by an assault on all forms of institutions—institutions we once believed strong—that sustain democracy and innovation. Acemoglu and his co-authors devoted many years to developing a theory of why nations fail (in their book of that title and in numerous articles). Their answer seemed clear: nations fail when they lack inclusive institutions. Yet the apparent clarity of this conclusion masked some ambiguity about what “inclusive” really means. Still, their work left little doubt that countries like the United States and the United Kingdom possessed such inclusive institutions. Unlike much of Latin America, the U.S. was thought to have developed inclusive institutions because its early settlers could establish systems similar to those that would enable the Industrial Revolution in England.

Some critics argued that this theory could not be universal, since the most striking economic success story of recent decades—China—was not built on the kind of inclusive institutions Acemoglu and his co-authors envisioned.

In another book, The Narrow Corridor, they argued that nations thrive when there is a balance between effective government and a vibrant civil society. Again, one might have thought that the United States—with its universities, companies, foundations, and think tanks—was a perfect example of such balance. Checks and balances were meant to protect broad-based property rights, thereby sustaining long-term prosperity.

In their most recent book, Power and Progress, Acemoglu and his co-authors, in my view, come closest to a convincing explanation of how institutions emerge or collapse: it is power struggles that define them. Institutions reflect the interests of powerful groups—especially in times of technological change—and the ability of the working majority to resist those interests determines how democratic and fair institutions become.

In an article in the Financial Times, Acemoglu warned of the possible collapse of the U.S. economy under the Trumpian assault on institutions. Yet his earlier framework could not have predicted that the supposedly resilient American institutional system would crumble under the alliance of a narcissistic, corrupt president and a powerful tech oligarchy.

A combination of moral decay, ignorance, and concentrated economic power can destroy any institutional structure—no matter how strong it once seemed.

The Federalist Utopia versus the Nationalist Dystopia

Most African languages use the same word for “guest” and “stranger” (as James Robinson notes in his Nobel Lecture). African immigrants must be deeply disheartened when they encounter a very different mindset upon arriving in many parts of Europe. In the long run, though, I don’t think it matters much—after all, we all come from Africa.

Spain expelled Jews and Muslims in 1492, at a time when these communities were making significant contributions to the Iberian Peninsula’s culture and economy. We paid a severe cultural and economic price for that expulsion. Yet a few centuries later, we are fortunately part of the European Union (imperfect, but governed by some of the most civilized rules on the planet), we again have a Jewish community, and we are receiving new waves of migrants—including many of Muslim faith.

The creation of the State of Israel was an understandable decision by the international community to provide a home for the Jewish people after the Holocaust. But a home for the Jewish people does not necessarily mean an exclusively Jewish home or a “Jewish state,” since such a definition almost inevitably leads to discrimination against those who are not Jewish, as is happening today.

Attempts to create “pure” nation-states—accompanied by ethnic cleansing, what I call the nationalist dystopia—are nothing new. On page 51 of her recent book Indignity: A Life Reimagined, in a chapter entitled “The Unmixing of Peoples,” Lea Ypi describes the feelings of a character subjected to forced displacement at the end of the Ottoman Empire:

“That poor man didn’t choose to be born speaking Turkish or Albanian… Tomorrow he is off to where he’s told he belongs, even though he’s never seen it before; he doesn’t even know if he will make it across safely. And anyway it’s a highly dangerous precedent. Now every time there is a war they will think it’s a good idea to start swapping people around, to force them to move from one side of the border to the other, all in the name of an orderly settlement. I find it frankly terrifying.”

Many—if not all—of these once “unmixed peoples” now seek to reunite within the European Union, with its free movement of people and shared European public goods.

We are not going to solve humanity’s problems one nation-state at a time. I have more faith in universal justice than in the recognition of a Palestinian state as the sole way to stop the genocide in Gaza and the apartheid in Israel–Palestine. Two states can only be a long-term solution if they cooperate within a common confederal or federal framework, as suggested by Piketty, many other intellectuals, and people on the ground (and as envisioned in the original plans of the United Nations).

A perfect federal structure may be a utopia—but a useful and reasonable one, to borrow Javier Cercas’ words. The European Union, with all its imperfections, shows how such a project can still succeed. The analogy between today’s Israel and apartheid-era South Africa is relevant and illuminating. But recall that, although some argued for it (such as the neoliberal and racist economist Murray Rothbard), the solution was not to create a separate state for Black South Africans. It was to share the land in a democratic South Africa with equal individual rights.

Free speech as part of economic and social welfare

Karen Attiah, the woman who hired Jamal Khashoggi, has been fired from The Washington Post. Khashoggi, a journalist, was brutally murdered on the orders of the Saudi dictator for speaking truth to power. She is being interviewed by Paul Krugman here.

What is happening in the United States is worse than McCarthyism because it is broader in scope and more directly driven from the top of executive power. The attack on freedom of speech is part of a wider reconstruction of institutions in a dystopian direction.

Obama’s observation that abstract issues and the price of eggs are not separate things comes to mind in trying to explain why the attack on free speech in the United States (and, by extension, in democracies more generally) is damaging not only in cultural terms but also for economic and social welfare.

Not all the economic effects of policies and public decisions are captured in GDP or other macroeconomic indicators, though these too may suffer in the long run. Freedom of speech is one of the essential capabilities required for a free life, and therefore everyone has the right to enjoy it—just as they do housing, education, or basic healthcare. Amartya Sen’s capabilities approach emphasizes what people are able to do and to be, rather than merely the resources they possess or the utility they derive.

Free speech is part of human dignity. Education, health, nutrition, and shelter up to minimally adequate levels do not exhaust the list of fundamental capabilities. The freedom to express opinions and to criticize the powerful affects individual welfare directly—not only the welfare of creators, journalists, and citizens who want to voice their views, but also the welfare of those who benefit from consuming others’ opinions. The right to irony and sarcasm is itself part of individual freedom.

Freedom of speech also affects economic and social welfare indirectly, by fostering dialogue and creativity. Its absence does not harm only elites. Without free speech, dialogue collapses and innovation dries up: ideas eventually stop circulating, as happened under Stalinism in the Soviet Union.

As historian Timothy Snyder notes in reference to youth mobilization in Serbia: a young generation sees no future in their own country without the predictability and freedoms safeguarded by the rule of law—and once lost, these could be gone for good. Free speech is a fundamental part of the rule of law. Without it, one of democracy’s key contributions to economic and social welfare disappears.

Milei's fifth dog

A sophisticated example of what Mukand and Rodrik call “changing the relevant dimension” (to distract from income inequality) by oligarchic sectors is explained by Slobodian (2025), in a book that narrates the details of what the author considers the national-populist mutation of neoliberalism. Trumpism would not be a rectification of neoliberalism, but a pathological but very elaborate evolution of it, when its most transparent objectives are difficult to achieve through conventional democratic means. 

Murray Rothbard (Murray is the name given to one of Milei’s clonned dogs, others are Milton, Robert and Lucas, and the first is Conan, after the original), is one of the economists who star in Slobodian’s book. He was in favor of the secession of white South Africans and from neoliberal positions close to Hayek he gradually evolved towards openly racist positions. For many neoliberals, the rejection of democracy (as in Chile) was not an accident. 

Milei himself considers himself a neoliberal economist, in favor of reducing the size of the state (the “chainsaw”). The German far-right party AfD was also founded by economists. 

For Hayek’s “bastard children,” as Slobodian calls them, if international trade and capital mobility work, immigration will not be necessary. Culturally and ethnically homogeneous populations are a prerequisite for the proper functioning of markets, as is the protection of property rights. The “three hards of hard money, hard borders and hardwired culture” are central to the national-populist drift of neoliberalism, as Slobodian explains. 

New strategies to promote a hard currency, however, run into contradictions when they try to promote digital assets such as “stable-coins”, theoretically linked to real-world stable assets, but which, according to many experts, can give rise to episodes of financial instability such as those that characterized the times of existence of private currencies before the establishment of the United States Federal Reserve. 

Interestingly, Slobodian (p. 149) explains:

“The three hards of hard money, hard borders, and hardwired culture were central to the paleo ideology. It was a philosophy of exclusion… the central intellectual line of connection between old conservatives and libertarians is the theme of regionalization, decentralization, including secession. They recommended individual provinces, regions, cities, towns and villages… proclaim their status as free territories to prevent from being swamped by immigrants”

Tea with Trump

In the movie "Tea with Mussolini," Lady Hester, the widow of Britain’s former ambassador to Italy, retains an admiring faith in Benito Mussolini. She visits him, receives his assurances of safety for herself, her friends, and her family, and proudly recounts her “tea with Mussolini.”

In the chapter "Tea with Hitler" from Tim Bouverie’s book "Appeasing Hitler," the author tells the story of British figures who believed that Hitler could be contained through dialogue and partial agreements.

Donald Trump has accelerated, in the seven months of his second term, the trajectory he began in his first, when he was still surrounded by adults who restrained him. This summer, he pushed even further in the march toward dictatorship that defines his administration.

There is no “Night of the Long Knives” in the United States today, and there is no Holocaust or genocide on the horizon (except the one the Trump administration is endorsing in Gaza). But if you read usually moderate commentators such as Graff, Ziblatt, or Freedland, you will find convincing arguments that comparisons with at least some of the intentions of Mussolini or Hitler are no longer exaggerations.

The United States is the oldest and wealthiest democracy, and the principal geostrategic ally and protector of Europe. It is not surprising that there is great reluctance to face this unpleasant truth.

I would argue that there are at least two types of people who attempt to have “tea with Trump.” One group consists of oligarchs who rationally believe they can benefit materially from him. The other consists of frightened people who fear punishment from a mafia boss.

As for the first group, perhaps one reason economists were surprised by the stock market’s “non-reaction” to threats against Central Bank independence (CBI) is that institutions like CBI were originally designed to “protect” policies from left-wing pressures. When the threat comes from the right, markets often accept it, calculating that they stand to gain more from deregulation and tax cuts than they might lose from inflation or policy uncertainty.

Trump is different from Mussolini and Hitler because the United States in 2025 is different from Italy and Germany in the 1930s. But he is worse than Orbán, Erdoğan, Bolsonaro, or Modi (bad enough as they are). He is more unstable, more powerful, and more unpredictable. He is also worse than Xi Jinping, who at least appears serious and organized. Trump is closer to Putin or AMLO, but likely even more erratic and vicious, with his relentless rhetoric and constant lies.

When Trump returned to the White House, European leaders seemed unsure of how to respond. Now, their strategic choice has been accommodation rather than confrontation. This will have to change if Europe is to survive. If not outright confrontation, then at least a strategy to distance the EU from the current United States is urgently needed.

The Autocrat Who Wants the Nobel Peace Prize

The Nobel Peace Prize is awarded in Oslo because Alfred Nobel, the Swedish industrialist, was an anti-nationalist who decided that the Nobel institutions should be shared between Sweden and Norway. The words displayed in the Oslo center that celebrates the Nobel Peace Prize explain that Nobel was even accused of being a traitor by some of his compatriots.

For more than a hundred years, the Nobel Peace Prize has been awarded to many individuals and institutions — among them Martin Luther King Jr., Nelson Mandela, and the European Union. Sometimes, there has been controversy about the merits of certain recipients, or about what some of them did after receiving the prize. But it has never been awarded to someone who openly campaigned for it — which is exactly what Donald Trump is now attempting to do (with the endorsement of Benjamin Netanyahu). His selfishness and childish narcissism stand in stark contrast to the values Alfred Nobel sought to promote.

Trump seems to believe he can buy the Nobel Prize. According to The Economist (which notes that Hitler was once a candidate for the Prize, and ironically suggests that European leaders could exploit Trump’s vanity by endorsing his candidacy), “A recent phone call to the Norwegian finance minister, in which the matter of the Nobel reportedly came up alongside threats of tariffs, is another clue.” If he succeeds, it will be yet another prestigious institution destroyed by Trumpism.

Trump’s Orwellian candidacy cannot hide everything that is wrong with “Trump 2.0”: the creation of a police state, relentless nativism and racism, back-room deals with Putin and Netanyahu, threats directed at Canada, Panama, and Greenland, the use of public institutions to attack political rivals, cuts to foreign aid, and the sabotage of international trade. His claim that he has solved “six wars in six months” reflects the same distortion of facts and statistics that is behind the attack on official data and scientific institutions.

The situation in the United States is deeply troubling. The world’s oldest democracy is under threat, and the repercussions reach Europe. This summer, European politicians in both government and opposition have shown sympathy for the anti-vaccine movement (in Italy, inspired by Trump’s health secretary), while racist leaders in England and Spain have targeted immigrants. The vanity of the most powerful elected politician in the world is placing democracy everywhere at risk.

The urgency and importance of a better introduction to economics

Although I’m on temporary leave from academia, I keep an eye on the initiatives to improve the teaching of economics. CORE has almost completed the second original edition of the e-textbook The Economy, and has already published the first chapters of the edition in Spanish (to which I modestly and very marginally contributed). Its adoption and diffusion is more important than ever. It is more and more difficult to find excuses not to adopt it (running the risk of signalling that you don’t have the will to adapt to the new world), given that it is the best material and that so far it is free for students and instructors. 

My now one year in government only makes me realize how important it is to teach a better introduction to economics. What’s happening in the US and the world, and how governments and citizens (especially the youth) react to it requires a critical citizenry and leadership that has the intellectual tools to react to authoritarians and demagogues. The brain of students may explode if they study a traditional textbook and at the same time read an article that was yesterday published in the Wall Street Journal (of all newspapers) comparing Trump’s economic management to Chinese President Xi’s.

Paradoxically, some of the best economists have become better resistance columnists than textbook authors. I suspect they spend more time on their Substack columns or social media posts than revising the new editions that their publishing companies keep chruning out, based on outdated syllabus that help little to navigate the contemporary economy.

Economics cannot be any longer isolated from what those clumsy guys do down the Campus (or the building, in my university’s case) in History or Political Science (or Computer Sciences and Natural Sciences). Supply and demand simple graphs with perfect competition are a very specific case, almost a theoretical curiosity in the real world, but they will be still taught as the general case to the poor first year students that in a few weeks will attend introductory courses that have not adopted CORE yet.

We need policy makers and citizens that understand the importance of data instead of data skeptics. We need a pluralistic complementarity of ideas and traditions (CORE teaches Coase, Marx and Hayek), but no conservative attachment to the rule that a new textbook can only be a small percentage different from previous textbooks, especially in times of accelerated social, technological and climatic change. It is time to respond to the critics of traditional economics teaching without lowering the standards.

Football as a mirror of the global economy

In 2018 I published a book in Spanish (thanks to Alternativas Económicas) broadly about football (soccer) and economics, as a result of a course that I was teaching on the topic: “Pan y Fútbol” (bread and football). Its subtitle was “football as a mirror of the global economy.” The book talked about game theory, referees, coaches and Sports institutions, and what I had in mind with the subtitle was that football was becoming a leading indicator of the tectonic geopolitical changes that were impacting the global economy. That was before the Qatar World Cup, where the President of FIFA Infantino, the successor of the corrupt Blatter and the friend of Donald Trump, shrugged off the implications of subsidizing a corrupt and medieval regime.

The football industry has become gradually globalized in the last decades. First it was its labour market with the almost free movement of players, then it was the globalization of demand, with TV rights of the best leagues and tournaments sold in every continent (and some “national” games such as Supercups played in other nations). More recently, it has been the globalization of ownership, whereby the owners of a local club may come from anywhere in the world. This globalization has allowed the football industry to grow and to provide audiences and spectators with better TV and sporting quality. But given the unregulated and non-democratic nature of the global economy, the price has been an industry more and more plagued by corruption and populism.

Modern football illustrates that success and corruption are compatible (look at Spain), when powerful structures and opportunistic individuals take advantage of their positions to extract rents from a very successful phenomenon (to which success these individuals contributed nothing).

The erosion of democracies and democratic values allows these leaders (many of them as populist as Trump) to show without embarrassment their deals with Qatar, Saudi Arabia or the Republic of Congo. Much of the corporate media benefits from many of these deals, and at most many of them will promote false equivalences showing different views but presenting collusion with autocracies as something legitimate. Like economist Paul Krugman says when some media outlets are confronted with flat-earthers, the headline will be: “Views differ on the shape of the Planet.” And thus we can see in a newspaper owned by a prestigious media organization in Barcelona an interview with a sports minister in Congo with a proven past of criminality (without mentioning this past).

This combination of sportswashing, populism and corruption is allowed by the model of economic globalization that expands when global democracy contracts. The consequence is irresponsible leadership, erosion of institutions and loss of human talent at the club and higher levels. In 2017 I finished my book with some optimistic calls for reform. Today I am more pessimistic. It will take longer than I thought to change the system. Meanwhile, let’s enjoy the game while we can (although perhaps we should feel more guilty for it).

Economics Nobel Prize winners and text-book authors, against Trump(ism)

Paul Krugman and Jonathan Gruber had a very interesting video conversation a few weeks ago, about the (officially) so-called Big Beautiful Bill. Krugman won an Economics Nobel Prize and is the co-author of a famous textbook on introductory economics. Jonathan Gruber participated in the design of Obama’s health care reform and is the author of an excellent undergraduate textbook on public economics. Paul Krugman’s Substack is one of the best resources of the resistance. I strongly recommend it.

The Nobel Prize Joseph Stiglitz has also written numerous op-eds criticizing the Trump adminstration and his attemps to erode democracy in the USA. He was one of seven Economics Nobel Prize winners co-authoring an article in French newspaper Le Monde arguing in favor of a wealth tax, a taboo for those supporting Trump and his tax-cutting policies. Other signatories included Daron Acemoglu (also author of an introductory economics textbook), Esther Duflo and Abhijit Banerjee.

I could listen in person to the almost desperate criticisms of Banerjee to Trump on occasion of a recent visit of his to Barcelona.

Justin Wolfers is one of the economists that has been more active in the traditional and social media denouncing the policies of the current US administration. He is also the author of another introductory economics textbook.

All these textbooks are mainstream, traditional economics textbooks. Of course, if you use more innovative materials such as those in CORE, with its focus on fairness (in addition of efficiency), climate change, inequality and other big global challenges of our time, you would not find any reason to support the crazy policies of Trump and what is left of the Republican Party.

This trend has to be put in the context of science, in this case social science, necessarily being used to resist policies that defy reason. It is true that 22 Nobel Prize winners endorsed Kamala Harris and that was of little use.

Economists have moved to the left and the right has moved further to the right (or to the autocratic and xenophobic wilderness), because reality has a well-known liberal (progressive, in Europe) bias, as Paul Krugman says.

How to connect this scientific mobilization with grassroots and political mobilization is a challenge that cannot be postponed. Climate change, tariffs, immigration… all these are areas where there is a scientific consensus in economics that defies the policies of the Trump administration (and the trumpists beyond the USA) and that aligns with the interests of the vast majority of citizens.

Strictly economic damage is not the main reason to oppose Trump, although there is a scientific consensus on the economic damage that his economic policies will cause. But good economists are not only concerned about purely economic or financial indicators, they are also concerned about wellbeing and freedom. These are lessons that one can learn from other Economics Nobel Prize winners such as Amartya Sen or Kenneth Arrow. Their ideas are today the new orthodoxy and are more important than ever.

What does it mean to be Catalan today?

The BBC program “The Travel Show” is this week-end devoted to Catalonia. The main message is that behind the touristic façade, there is a strong cultural identity.

The narrative of the program is simple: four features symbolize the Catalan identity today, the football club FC Barcelona (Barça), the human towers (castells), a food tradition (calçots), and a political desire for Independence.

Reality is more complex and richer than that. I don’t have much to say about castells and calçots except that they are great.

About Barça, I recommend that anyone interested reads the book “Barça” by Simon Kuper, especially the chapter connecting the complex political reality of Catalonia with the history of the club. It is true that there is a connection between Barça and the resistance to Francoism, although some Barça officials (as many members of the Catalan bourgeoisie and upper classes) supported General Franco’s dictatorship.

Not all football fans in Catalonia are Barça fans (I am). And not all Barça fans have the same political preferences. Barça also has many fans in the rest of Spain (and increasingly in the rest of the world).

On the desire for Independence, things are much more complex than the simplistic narrative of the program suggests. Unfortunately, the only local expert and politician to talk in The Travel Show is Rafael Ribó, a controversial politician that as regional ombudsman, failed to prevent or criticize the erosion of institutions that characterized the Independence drive between 2014 and 2017 (the years of the Scottish referendum, the Brexit referendum and the first Trump victory).

Catalonia is much more diverse than suggested in the program. The regional official statistical office (Idescat) has an excellent document called “Catalonia in figures.” It explains that our community has gained 2 million inhabitants in the last 25 years. Its today more than 8 million inhabitants include 18% of foreign people, many children of foreign people, and many people that descend from families born in other Spainsh regions. The most mentioned as “first language” is Spanish, although 80% of the population are at least bilingual (Catalan and Spanish, with an increasing proportion of people knowing English and many people speaking other languages, such as Arabic).

Another official body, the Centre d’Estudis d’Opinió, in charge of sociological studies, in its last barometer, says that 38% of the population are in favor of Independence, and 54% against. If several options are offered in addition to Independence (such as federalism, or centralism), support for Independence drops to 28%.

It’s not true, as the presenter says in the progam, that on 2017 a majority of Catalans voted in favour of Independence. There was an illegal referendum (organized by the pro-independence parties), where those against Independence largely refused to participate. This kind of referendums are illegal in all developed countries with a written Constitution. Although there was no neutral official body in charge of counting the votes, everybody accepts that participation was less than 50%.

Catalonia is a plural, diverse society. In addition to castells and calçots (and beaches, the Ramblas, Gaudí, Dalí, and many famous authors writing in Spanish such as Cercas, Mendoza or Vila-Matas), we have an open community that shares many of the problems of a developed region or country today.

I believe that a great majority are in favour of a tolerant society that wants to preserve its language (shared with other regions) in the context of an increasingly multilingual, multi-ethnic, and well connected and interdependent community. The most famous Barça players of yesterday and today (Messi, Lamine Yamal) are immigrants or children of immigrants that reflect better the complexity of our society than travel shows on TV.

The program says that Independence today has taken a back seat. This is true.

So, what does it mean to be Catalan today? As the democratically elected current President of the Catalan government, the socialist and federalist Salvador Illa said, a Catalan is anyone that lives here and wants to improve Catalonia.

Business-friendly but economy-unfriendly?

It is true that movements like MAGA or the pro-Brexit have received the support of large parts of the working class population. But they have also been financed and led by very wealthy people who thought that their interests would be protected by these movements that happen to distract majorities from their material concerns.

It is not the first time in history that business interests support movements that disrupt democratic institutions in dangerous ways. In fact, there have been worse cases, as it happened in Nazi Germany. As we know, it didn’t end up well for their societies, not even for their businesses I guess.

The Centre for European Policy Research (CEPR) has published a (freely available) book with 40 chapters analyzing the economic consequences of the second one hundred days of Donald Trump in the White House. Although of course there is a lot of uncertainty, and it is early days, the editors summarize the book by saying that the outlook is deeply concerning for social welfare, economic growth or inflation.

Tariffs are one big source of concern, but also are attacks on science or health policy, or erosion of basic provision of public goods. Still, the Republican Party and their business donors keep pushing for the Big Beautiful Bill, which is (pathetically) the true name of a legislative package that drammatically lowers taxes to the rich and most economists expect that will increase public deficit and debt, despite the harm done to many public programs.

These can be considered short-run economic concerns. In the long-run, the erosion of democratic norms and the rule of law can have an ever more costly impact on the economy and social welfare. The historical international study of movements that share similarities with MAGA all over the world in the last century shows that their cost in terms of reduced economic growth and increased inequality is large and significant.

And if something is so bad for the economy, it is difficult to understand how it could be good for business in the long run, because the larger slice of a smaller pie may be smaller than the smaller slice of a bigger pie.

 

Dystopian times and places are not that far away

I have been reading Margaret Atwood’s “The Handmaid's Tale” and watching the TV series based on it (the picture below is from Season 3). For those who have not read or watched it, it is about the democratic US becoming Gilead, a theocratic state that subjects women to slavery, including sexual slavery for a large fraction of them. In militarized Gilead, mobility is restricted, as it is access to knowledge (it is forbidden for women to read). Children born in pre-Gilead times of rebel couples are kidnapped and given to pro-regime olygarchic families. Those that escape, flee to Canada, a free country which however is tempted to appease the totalitarian neighbour. It is one of the best stories of the dystopian genre, together with George Orwell’s 1984, although it is painful to read and watch.

Margaret Atwood has a final message in my edition of her book, in which she says that “the details in The Handmaid’s Tale don’t come from far away and long ago: they are possibilities within every society, including ours.” She mentions women and girls in Afghanistan and Iran and totalitarianism in Comunist countries, but she also says that “the West did not have to look very far back in its own past to find a state of affairs in which most women were barred from higher education, property ownership, and the right to their own children.” We could give examples from the not so distant past in Argentina or Spain. Or current examples of restrictions to mobility in Palestine. The last democratic country were women obtained the right to vote was civilized Switzerland in the 1970s.

While Trump deploys the National Guard and perhaps the Marines in California, and his European allies become stronger, the attack on knowledge and other public goods in the US, the technosurveillance, the massive corruption, the attack on immigrants and international students, the violation of regulatory independence, division of powers, and human rights… All these attacks on the rule of law, the racism, the break on climate change policies, the adoption of incompetent economic policies… These are all ingredients of a dystopian novel, except that this time, it is really happening (in the mot powerful country in the world).

In the picture (from the fictitious TV series), the statue of Lincoln in Washignton DC has been destroyed. The real statue remains in place as far as I know, but the Capitol next to it was assaulted 4 years ago by a mob that wanted to hang the Vicepresident of the country, with the blessing of a President that is today sitting again in the Oval Office.

As Rachel Bitecofer has just written in the social media reacting to violence in the streets of Los Angeles, “for those of us who’ve spend the last 6 months discussing how the Trump would use deportations to create chaos is the Blue states and then use that chaos as an excuse to declare a national emergency and seize total power, things are right on schedule”

Flick, Luis Enrique and the economic literature on managers

A recent academic article summarizing the economic literature on managers distinguishes between people managers and project managers. People managers are those adapted to a technology where individual workers can be monitored and their task and outcomes can be separately measured. Then a people’s manager main tasks are the selection of individuals and setting appropriate incentives. A project manager manages teams, where it is impossible to separate the contributions of individuals. It would be counterproductive to base incentives on individual measures.

Football (soccer) managers or coaches are clearly project managers. Their main tasks are to coordinate and motivate a team of players. Their task vector also includes player selection. The main mechanism for coordination is tactical choice. Good football coaches are rare. In general, player talent contributes much more to success than managerial talent.

But, as Peeters and Van Ours explain in a contribution to an IEB Report, those very few managers that do make a difference can be decisive, especially in contexts of great equality, usually at the top of tournaments. In the economy in general, as argued by Van Reenen and others, good managerial practices contribute a lot to explaining productivity differences among firms. 

An example that coaches usually do not make a difference is that, on average, it is imposible to distinguish the change in performance of a team that sacks the manager after a bad streak (Koeman, in the example of Peeters and Van Ours), from the performance of a team that sticks to the same manager (Valverde).

It is hard to predict who will be a good football coach for a given team. A good coach in one team may be bad in another one (ask David Moyes). In a firm, a good sales worker may not be a good plant manager. A good player may not be a good coach (ask Lampard, Rooney) as a good horse does not make a good jokey, but sometimes it could (Guardiola, Zidane). Even when statistical evidence or case studies identify clear success stories, it is difficult to explain exacty why a given manager has been successful, given the multiplicity of contributing factors and the multidimensionality of managerial tasks.

Hansi Flick in FC Barcelona and Luis Enrique Martínez in PSG are recent cases of clear contributions to team success. They inherited teams with individual players of the same quality or worse than the teams of their failing predecessors, and they improved the results significantly.

Both have several features in common, like their attacking style, the pressure of their teams on the other side of the pitch, and their long, learning careers. Flick was many years number two of the managerial staff at the German national team, before winning the Champions League as the head coach of Bayern Munich, to fail later as number one of the national team. Luis Enrique started at the second team of FC Barcelona, then failed in AS Roma, went to Celta de Vigo, coached the first team of FC Barcelona to win a Champions League (with Neymar, Messi and Suarez in their best years), and had a mixture of successes and failures with the Spainsh national team.

Both have managed to coordinate and motivate a multi-national, multi-ethnic, pluri-lingual coalition of players, including some of amazingly young age. They have put the collective before the individual stars. Both have used old ideas in new forms: systematic off-side trap, free positions (individual freedom in a collective design: what is the position of Hakimi, Démbélé or Doué?),… There are also differences: they have notably different styles in front of the media.

The future will tell if they can sustain this level of excellence for several years, or will see new examples of failing to use golden years to prepare for a sustainable era of success.

The true USA and Europe

People in Africa, Latin America and Asia may look at the moral side of the discussion between Trump and his opponents in the USA and Europe with some skepticism.

Many of us feel comfortable believing that this is a battle of Trump against democracy, and that democracy is synonymous with Europe and even with the true American values, which Trump is betraying. The American Revolution was the first political application of the European-born Illustration and its protagonists were descendants of Europeans.

But the betrayal of the supposed American values of freedom and democracy took place much before the arrival of Trump. Racial discrimination, support of human rights violations, political corruption, are phenomena that did not have to wait for Trump.

What is true is that what is happening now is a serious step back in time in all fronts, and a very serious threat to democracy and public goods in general, from the quality of public servants to the promotion of science. But I think that the argument that Trump is betraying American values will not find many sympathizers beyond the USA and even among some sectors in the USA, such as the black or native American population.

Something similar could be said about “European values.” I am tempted to say that we score better on democracy and human rights, at least since the creation of the European Union and its predecessor institutions. But the economic development of Western Europe was built at least in part from colonialism and slavery. Even these days, the behavior of our leaders on issues such as immigration and refugees, or the genocide in Gaza and apartheid in the West Bank, is in contradiction with any positive moral values.

If we have to oppose the Trump administration on moral grounds, and we have to, we must be aware of our imperfections.

Where are the enlightened capitalists?

We are seeing the richest democracy in the world being subject to an attempt to transform it into an autocracy. How this will end is not clear and will depend on the opposition, the economy and the checks and balances. It is an attempt surrounded by corruption and incompetence. Although events and decisions have a random component, Trump has reached power for the second time with the support of powerful interests.

The conservative columnist of the New York Times David Brooks argued that “It’s time for Americans in universities, law, business, nonprofits and the scientific community, and civil servants and beyond to form one coordinated mass movement.’ (I miss churches in that list). But will business leaders participate in a massive uprising?

Political scientist Steve Levitsky said: “If we’re going to mobilize, it’s going to be the most prominent, the most well-endowed, the most privileged and protected of us in civil society who have to take the lead.” Levitsky believes that the biggest threat to aspiring despots may come from other elites rather than from mass protest below.

Stuat Kirk in the Financial Times says that “The silence of CEOs in the face of Donald Trump’s tariff chaos is one of the biggest failures of leadership in corporate history. Where are they when we need them? In the corner shuffling their shoes.”

But it is not only the tariffs. In the recent decades, enlightened capitalists in the US organized themselves (for example, around the Bussiness Roundtable)  to promote the idea of a responsible market economy were companies would have a social purpose, fighting extreme inequality, corruption and climate change. Trump 2.0 is built under the assumption that all this is a concession to wokism. 

Some business leaders have politely complained about tariffs, but not much about the demolition of public goods, the violation of human rights or the destruction of democratic international alliances. What is their broader view of capitalism then?

Capitalism has been compatible with very different political regimes over history. Most of Europe and America are capitalist and democratic today, but Spain under Franco or Chile under Pinochet were also capitalist. Are business leaders indifferent between these options? It is important for the other democracy participants to know, because we may wait for them or not.

Some business leaders could argue that what is happening is not their responsibility, except that it is, because many of them made it possible with their lobbying and their donations.

The worst ignorant against the best universities

One thing that truly makes America great is its universities, both public and private.

Trump threatening Harvard University to cut its financing unless it accepts to lose its independence, and Harvard saying no to authoritarianism, shows that when the current President says “Make America Great Again,” he in fact has in mind a very narrow and sectarian view of his country.

The Trump administration will freeze over $2 billion in federal funds because Harvard refused to comply with a list of demands that threatened its independence. Harvard leaders believed saying no was worth the risk. The University’s President has said it clearly: “The university will not surrender its independence or relinquish its constitutional rights.”

In Europe, we have always felt envious of the American universities –and tried to benefit from them, sending there our best future scientists and academics. And we watch amazed this act of national self-harm. Italian journalist Michele Serra has said in the Italian newspaper La Repubblica on April 17th that

"The social rancor of the ignorant who detest culture does not allow a shadow of doubt about the theory and practice of Trumpism. Culture is something that money cannot buy, not even the billions of Trump and his friends, and this makes it particularly unbearable to people who consider any human being for sale. Learning is more difficult than commanding. Destroy everything you cannot have, everything you cannot be: this is Trump."

Her colleague on the same page, Concita de Gregorio, adds: “Dictatorships write textbooks, burn books, dismiss academics.”

Although Harvard and other universities may win in Court, the Trump administration will push further for cuts in their funding. In the long run, only the electoral defeat of Trump and Maga will ensure the survival of this global public good, the US university system.

This is part of Trump’s campaign against science. The smell of Macarthism cannot be hidden behind the obsession with wokism and the hypocritical accusations of anti-semitism (mostly code for students criticizing another neo-fascist government, Netanyahu’s). In the fight against trumpism, the resistance of universities will be an important building block.

Is there a better model to explain Trump?

John E. Roemer has an old article, “Why the poor do not expropriate the rich” that, in my view, gives the best explanation of modern right-wing national-populism. In a democracy, given the distribution of income in any country, the median voter is poorer than the voter with average income: as a consequence, the median voter, the one that decides elections if there is only one dimension of voting under some assumptions, should be pro-redistribution. If the only concern of voters was material welfare, majority voting would yield strongly distributive policies, in the extreme the expropriation of the wealth of the rich. However, although at the beginning democracy was associated with the expansion of the welfare state, national democracies are today compatible with high levels of inequality.

There are several reasons for this paradox, most of them listed in a review article by Adam Bonica and others. But most of them go back to the answer that Roemer gave to the question in the title of his article: the poor do not expropriate the rich because the latter mobilize policy dimensions (cleavages) other than income and wealth, such as religion, ethnicity, "values" or scandals. In some cases, these dimensions correlate with income (South Africa) and redistribution is inevitable, but in many cases the poor majority can be divided across ethnic or religious lines, and that breaks the pro-distribution coalition. In addition, if there are winning coalitions for ethnic or religious reasons, these can be easier to mobilize because they include at least part of the rich, who have more resources to invest in politics (time, media, money). Modern right-wing national-populism is just the adaptation of this strategy to modern technologies and constraints. Here, there is no dilemma between "economic" and "cultural" explanations to populism: both are integrated in the same conceptual framework.

As Dani Rodrik has explained, when inequality increases (for example, in times of macroeconomic shocks), the incentive of economic elites to mobilize other cleavages increases: “as economic inequality increases in society, a party representing the rich is more likely to invest in strategies that appeal to identity and culture. Greater inequality means the median voter grows more distant from the rich in terms of where they stand on economic policy interests. For the party of the rich, there is now higher return from a political narrative that catalyzes identity around issues such as racial resentment, gay marriage, women’s rights, and immigration, all of which can give low-income voters a reason to vote against their purely material interests.”

Of course, reality is much more complex than a simplified model, but good models are useful because they can pose meaningful questions and test precise hypotheses. Roemer’s explanation can be enriched to incorporate irrationality (Trump’s, for example), in a world of trial and error by boundedly rational agents, where gains for particular groups are the result of selection and adaptation.

Fascism as an extreme case, when the powerful interests fail by democratic means, can be incorporated to the same model. Instead of focusing on income and wealth distribution, a sufficient part of the relatively poor focus on interethnic redistribution, and scapegoats, foreigners or ethnic minorities can be targeted. In all these cases, it is understandable that a lot of attention is paid to the political (typically pathological) leader, but there are powerful underlying forces behind his emergence.

Thinking about these theoretical issues may be seen as a luxury and a waste of time in dramatic moments. But it can also be seen as a way to think about how best to react. If the powerful compete in a multidimensional policy framework, the relatively poor majority must also become competitive in the battle for the dominant cleavages, in a way that will be different in different political contexts.

Democracy is not a spectator sport

I participated yesterday in the demonstration of the Democrats Abroad in Barcelona against Trump 2.0. It took place in Plaça Sant Jaume, the “political” square of our city, where many demonstrations take place, and where the City Hall and the main building of the Catalan government (or Generalitat) are located, one in front of the other. As an activist reminded me, not being a US citizen, I cannot join Democrats Abroad, but I could join in the chants and show my solidarity. The organizers claimed that they were more than the first time some weeks ago, and they will be even more next time. I hope that more locals join, although yesterday I was not alone in that category either. Journalists that are based in Catalonia and that are symbols of the fight for freedom were there, such as Siscu Baiges and John Carlin.

One of the demonstrators was showing a placard saying “Democracy is not a spectator sport.” This message is very important these days. Some progressives all over the world may feel some intimate satisfaction at seeing the US seeing how their democracy is attacked (what the Germans call “schadenfreude”), because many democracies have been attacked in the past by US governments and interests. But that would be unfair and unwise. Most US citizens are victims of Trump, and would not have approved of violations of human rights in other parts of the world.

It is also true that the erosion of democracy does not happen for the first time, and even in the US it didn’t start now. The concentration of power in private hands is not something new. But the acceleration of destruction under Musk and Trump 2.0 is very serious and costly: for science, for peace, for freedom. We Europeans should have been worried a long time ago (actually, many were worried already), but increased concern is totally justified.

What to do? The Supreme Court and courts in general may stop, perhaps, some of the worst steps of the autocrats. Markets are also important, and are a disciplinary device, but only of economic missteps, not necessarily of human rights violations. Federalism and the diversity of institutions in the US cannot be all destroyed at the same time. But learn from Latin America: their military dictatorships were defeated in many countries because people mobilized and made enormous sacrifices. Regime change is fought by collective action: wait and see has never been an option, in spite of the individual risks, which understandably each one should manage as well as possible.

In Europe we can do many things, to defend ourselves and to show solidarity. The example of the Colegio de México comes to my mind, the institution that was created after the Spanish Civil War in Mexico to attract intelectuals that came from exile escaping the Franco dictatorship, and that kept reminding the world of the atrocities of that dictatorship. It is not enough to attract individual scientists and academics in our existing institutions, they will miss too many things. New instituions will be needed. Trump’s is not a military dictatorship, but is demolishing democracy nonetheless. He will not be stopped if we do nothing.

Trump 2.0 as regime change

The Musk/Trump government must not be treated as a new administration, but as an attempt at regime change, internally and globally.

Serious enough things are happening as making passivity or indifference morally unacceptable. I can’t even understand how there is a debate about this in the US Democratic Party. I can’t think of any regime change that has been stopped by waiting for their authors to stumble and make mistakes.

Enough has happened, but at least it should be treated as a small probability of something (or several things) catastrophic happening, like a nuclear accident or a major public health problem.

The rich and powerful thought that politics and economics were separable, that you could lobby for lower taxation and regulation, and at the same time keep democracy stable.

It is the same mistake as in the 1930s, which does not mean that this is exactly like the 1930s. But we should not wait until we find out.

Mobilization is needed, in the US and in Europe. That’s why what happened yesterday in Rome is important.

Regulators: independent no more?

One of the victims of the Musk/Trump regime has been the Independence of regulators. By applying the authoritarian doctrine of the unitary executive, they are undermining any power that does not derive from the President. Cass Sunstein, a legal scholar and former Regulatory Czar under Obama, has explained it in the New York Times, as well as the political scientist Jan-Werner Mueller in The Guardian. 

In the UK, the Labour government has removed the head of the Competition and Markets Authority under the argument that he wasn’t contributing enough to growth objectives. However, many authorities remain with a relatively independent regulator, and the country is even creating a new independent regulator for the football industry. The situation has a more sinistre caliber in the US, in my view.

Two former independent competition regulators, John Vickers from the UK and William Kovacic from the US, defend the benefits of regulatory Independence in an article in The Economist this week.

With several distinguished colleagues (Jon Stern, Paul Levine and Miguel A. Montoya) I did research on regulatory Independence, drawing from insights about Central Bank Independence. I summarized our findings in a 2010 paper and more recently I argued in favor of a second generation of commitment devices.

Regulators were never that independent, the Independence was never absolute. The institution relocates but does not solve the commitment problem. There’s the paradox of Independence needing a strong government (and a strong legislative majority) that has the political will to respect Independence.

The institution will not die (well, we'll see in the US), but it has to adapt to a changing world.

A large scale assault on public goods

The book “A Libertarian Walks into a Bear” is the chronicle of an experiment in the creation of a libertarian colony in a small village in New Hamshire, devoted to eliminating taxation and regulation at the local level. The experiment includes cryptocurrencies and bizarre characters. The consequence is utter failure, and an increase in violence –including the violence of bears (suddenly attracted to a dirty place) against humans.

The last edition of the book finishes with an afterword explaining that the leaders of the failed experiment are now promoting the secession of New Hamshire from the United States, apparently copying the experience of Balkan countries, those that resulted from the Yugoslavian wars at the end of the XXth century that killed several tens of thousands of people. Beyond Bosnia and Slovenia, the author claims that the promoters want to imitate the independence of Catalonia as if this one had succeeded. I hasn’t: the only secessionist attempt that has been completed in the European Union is Brexit –another failure in institutional engineering.

But the leaders of that attempt in New Hamshire do not need to promote their secession from the U.S. any longer, as now the US as a whole has been taken over by leaders that are trying to develop a large scale project based on the same principle: the elimination of public goods and services. In economics, public goods are goods that are shared by everybody (non-rival and non-excludable). Many of them are provided by government. Not all of them: for example, the Pythagoras theorem was authored you know by whom. But you can sabotage the use of public goods such as good ideas and theories by reducing the public budget for education and science.

Every day we receive news from the new US administration of an assault on one type of public good or another. I’ve been keeping a non-exhaustive list: Science, Education, Payment systems, International trade, Quality of appointments, Regulators (and where regulators survive, the victim are independent regulators, to be replaced by puppets of the president or Musk), Public health, Climate change mitigation, Weather forecasting agencies, International alliances, Rules, Language and truth, Separation of powers and checks and balances…

Public goods will be replaced by public bads (like bad appointees) or just eliminated. Unless the experiment is somehow stopped, the predictable consequence is indefension in front of pandemics, natural disasters, financial fraud, violence and blatant inequalities.

We have to mobilize in solidarity with the good people of the United States (their scientists, their academics, their civil servants, their citizens including the migrants and refugees) and in defense of democracy in Europe, which means in defense of the European Union, and the idea (hated by Trump) of a federal Europe.

Competition policy and democracy

Competition policy cannot be easily separated form other objectives, such as better and fairer labour markets, environmental plans or other social and political issues. Today, a strong competition policy is also an important pre-requisite for a well-functioning democracy, because it prevents strong concentrations of private power that can undermine free societies.

Acemoglu explains in his Nobel prize lecture that “by the end of the 19th century, US industry had reached a very high level of concentration, with a few firms, such as Standard Oil, J.P. Morgan, and Carnegie Steel, dominating their sectors, and also gaining greater political power. It was not out of the question that this would lead to the consolidation of political power in the hands of these companies and a closing of the economy to new firms and ideas, for example, as Venice experienced in the 13th and 14th centuries. In that instance, increasing concentration of economic power in the hands of a few patrician families enabled them to further monopolize politics, and this undermined the institutional foundations that had previously underpinned remarkable innovativeness and prosperity in Venice. In the end, this did not happen in early 20th-century United States, in part because political power shifted away from these large corporations and their owners during the Progressive Era. New politics led to institutional reforms, enacting antitrust laws against monopolies and cartels, introducing new tools for regulation and redistribution such as the Federal Reserve and the federal income tax, and allowing greater room for collective bargaining for workers.”

Simon Kuper in a recent article in the Financial Times (which could also be interpreted as a qualification to the Draghi Report) argues that “the EU has to weaponise its greatest strength: the single market and its regulators. The European Commission is the institution on earth best placed to take on US tech. It now also has an economic “anti-coercion instrument”, known in Brussels as “the bazooka”, to fight trade wars. The EU wishes it had a serious tech industry and trillion-dollar companies, but there are upsides to not having them. As economist Joseph Stiglitz argues, trillion-dollar companies tend to be the consequences of monopoly. Without tech oligarchs of its own, the EU can confront the industry. That’s a big bargaining chip, as Trump’s chief constituency now appears to be Silicon Valley, not his voters who rendered themselves irrelevant when they elected him one final time.”

The current calls for administrative simplification and competitiveness in Europe should not be confused with deregulation. In the difficult times that now Europe and the world are living, it is imperative to strengthen the rule of law institutions which separate us from autocracies, and one of these regulatory institutions is competition policy.

Trump 2.0 as private provision of a global public bad

In economics, a public good is a good that is non-rival and non-excludabe. It could be something material (fireworks) or non material (an idea). Different people may have different preferences for a public good: some people like fireworks, other people do not. For those that do not, fireworks are a public bad.

If a public good affects people all over the world, we are in front of a global public good. If people (or a majority) dislike it, it is no longer a good, it is a bad.

Public goods (or bads) are usually provided by the public sector, as it happens with local public goods such as roads or traffic signals. But they can also be provided by individuals or by the private sector, as in some charities or with corporate social responsibility.

Using these definitions, Trump 2.0 can arguably be characterized as a privately provided global public bad. Leaving the World Health Organization, or reneging from the Paris climate agreement, or stopping international aid, are going to cause unnecessary suffering all over the world. The support of the Trump administration for extreme right wing political parties in other countries, or the threat of causing geostrategic or trade disruption, and their poisoning of political communications, go in the same direction.

A public good (or bad) can be privately provided for a variety of reasons: it could be in the interests of the individuals providing the good, or they could be altruists or believers in something. The techno-oligarchs that run the new US administration with Trump are interested in removing regulations that may threaten their business or their power. The support of these oligarchs is one of the features that distinguishes Trump 2.0 from Trump 1.0.

An early example of private provision of a winning political alternative took place in Italy in the 1990s and early 2000s with Berlusconi. Like now in the US, it was a case of political vertical integration: two usually contracting units (lobby and political party) merged in the same value chain. There are differences though. Berlusconi created a new political party, while Trump basically took over an existing one. And the Trumpian techno-oligarchy has created a truly global public bad, whereas in Italy it didn’t go beyond the national level. The corruption inherent to the alliance between Trump, Musk and the other oligarchs is without precedent.

A global public bad can only be defeated with coordinated global action, or at least action from citizens and actors from as many jurisdictions and institutions as possible. How to fight these global powers should include breaking the private provision with regulations fighting the excessive power of techno-oligarchs, overcoming the global collective action problem with new forms of organization and communication, and developing policies that strengthen democratic forces and governments.

In this context, the European Union has an enormous responsibility, and also an opportunity: more than ever, it should reinforce its institutions (with further integration) and those of global peace, and promote a balanced industrial policy, compatible with competition to fight global monopolies, and a rule-based trading and immigration system.

In a way, Trump 2.0 challenges the notion of national sovereignty. But the right challenge to the nation-state is to question the idea of the US new administration as the only sovereign state. If sovereignty is shared in peace to face our global challenges, democracy will prevail.

 

A more perfect (federal, European) Union

Joshua Livestro has written a fantastic book about the history of the idea of a federal European Union. I knew about the book  from one of the columns of Simon Kuper in the Financial Times. The volume should be read by all Europeans, and belong to the bookshelf of any European federalist.

It tells the history of a 500 year-old idea, from Machiaveli to the founding fathers of the European Union ancestor institutions, Monnet and Schuman.

The success of the nation-state after the Middle Ages was challenged very early by the ideas of many authors and philosophers, and by the pratices of leagues of cities, empires, federations and confederations. 

The twentieth century lived through the biggest explosion of a long run old battle, the battle between nationalism and shared sovereignty. The myth that nationalism and international integration could peacefull coexist was demolished by the Second World war. The idea of national self-determination, which was seen by many, including US President Wilson, as the final remedy agaist wars, provoked instead the biggest of all wars, because the self-determination of one procclaimed nation prevented the self-determination of another overlapping one.

It was only after the second World War that progressive thinkers and activists like Arendt or Spinelli reached the conclusion that national sovereignty was incompatible with peace and that the future of Europe depended instead on sharing sovereignty instead of restricting it to the national level.

An important innovation in the postwar years was that gradual strategies became key in an uncertain world: economic objectives should take priority (for example, by sharing resources such as coal and steel), and projects should start with a core of countries and expand thereafter.

We know about the difficulties of the present, with the threat of Trump and his olygarchs, of Putin and the far right. But the EU will be run in the next five years by basically a coalition of democratic leaders, with Ursula Von der Leyen and Teresa Ribera in the European Commission and Antonio Costa in the European Council. They have the Draghi Report as their guide. Romania ans Bulgaria have just joined the Schengen agreement, and the single market and single currency remain in place. Spinelli and Arendt would be proud for it, and ready to fight to defend these achievements and expand from them.

This book about the history of an idea contains the intellectual ingredients to fight for peace and union in our current difficult times.