Inequality and Secular Stagnation:

Industrial Organization, Intellectual Property, and Global Governance
Thursday, 15 March 2018 - 12:00 pm to 1:30 pm
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What explains the slowdown in global (and especially rich OECD) growth rates after 1990? The change in corporate profit strategy and industrial structure from the control over physical capital embedded in vertically integrated firms towards profits strategies based on control over intellectual property rights (patent, copyright and brand) embedded in a small number of vertically disintegrated firms has caused a massive concentration of profit into a shrinking number of firms. Profit inequality in turn causes income inequality while hampering productive investment. US and other countries’ efforts to reinforce intellectual property rights in trade negotiations after 1986 have contributed to rising profit inequality. The inability to create an international regime to regulate tax havens in turn inhibits active government fiscal policy, which also slows growth.