WEBVTT - Are Price-Gouging Consumer Giants to Blame for High Inflation? 0:00:00.160 --> 0:00:03.480 But the big question on everybody's living. The other chat lifts, 0:00:03.720 --> 0:00:07.800 they're chatly right. Think Phil going to come out and 0:00:07.880 --> 0:00:12.039 see a shadow? Phil hands right with Chuck Chuckers. It's 0:00:12.480 --> 0:00:23.120 road Hello and welcome to Stephanomics, the podcast that brings 0:00:23.160 --> 0:00:26.040 the global economy to you, and it is ground dog 0:00:26.160 --> 0:00:29.680 Day this week not just for punks Attorney Phil, but 0:00:29.840 --> 0:00:33.800 also possibly for Italy, where politics has long seemed to 0:00:33.800 --> 0:00:38.640 be stuck on a painful, repeated loop from crisis to salvation, 0:00:39.240 --> 0:00:43.080 to political argument and then back to crisis again. We 0:00:43.159 --> 0:00:46.320 thought Mario drug might be the one to break the 0:00:46.360 --> 0:00:49.520 cycle when he became Prime Minister just over a year ago, 0:00:50.280 --> 0:00:52.600 but he may now be heading for a cushier job 0:00:52.640 --> 0:00:56.760 as Italy's President, in which case Italy may be heading 0:00:56.800 --> 0:01:00.600 back to crisis and the whole cycle beginning again. Our 0:01:00.640 --> 0:01:05.200 economy reporter in Rome, Alessandra Amliaccio, will tell you everything 0:01:05.200 --> 0:01:08.120 that's happening and why it matters in just a few minutes. 0:01:08.560 --> 0:01:11.840 But first I wanted to talk about price gouging, inflation 0:01:12.360 --> 0:01:15.520 and the Biden Administration's plans to cut the price of 0:01:15.520 --> 0:01:20.160 a stake voters don't like. Inflation highest in forty years, now, 0:01:20.640 --> 0:01:23.480 and President Biden doesn't like to be seen to be 0:01:23.560 --> 0:01:27.560 doing nothing about it. He also came into office promising 0:01:27.560 --> 0:01:31.680 to be more active in breaking up monopolies boosting competition. 0:01:32.720 --> 0:01:35.639 In a few minutes, I'll talk to a distinguished former 0:01:35.680 --> 0:01:40.800 antitrust official, Bill beat about how these two political desires 0:01:40.800 --> 0:01:44.360 have come together in the administration's decision to pick a 0:01:44.440 --> 0:01:47.880 fight with America's meat packers, and what the president's new 0:01:47.880 --> 0:01:50.640 approach to competition might mean for the likes of Amazon 0:01:50.800 --> 0:01:54.880 and Facebook. But first, a brief introduction to the story 0:01:54.960 --> 0:01:57.960 from our U S Economy editor Molly Smith. In a 0:01:58.040 --> 0:02:02.360 butcher shop in New Jersey. Uh and I'm afraid that 0:02:02.440 --> 0:02:05.120 these you know, these inflation prices are going to stay. 0:02:05.600 --> 0:02:08.280 It seems like it's a little bit of greed on 0:02:08.320 --> 0:02:11.160 their part, knowing the whole situation, and they have a 0:02:11.160 --> 0:02:13.840 good excuse right now to keep the prices at that 0:02:14.080 --> 0:02:18.600 high market. That was Anthony Chiampa, owner of A and 0:02:18.680 --> 0:02:21.959 A Fine Foods in Lincoln Park, New Jersey, and he's 0:02:22.040 --> 0:02:25.000 dealing with runaway inflation in the price of meat in 0:02:25.120 --> 0:02:28.320 his shop, with some prices for cuts going for now 0:02:28.480 --> 0:02:31.800 nineteen or twenty dollars a pound up from just nine 0:02:31.880 --> 0:02:35.440 or ten last summer. His vendor said it was COVID related, 0:02:35.880 --> 0:02:39.080 as some plants were backlogged on production from being shut 0:02:39.120 --> 0:02:42.320 down for a long period of time. But Chiampa has 0:02:42.360 --> 0:02:46.320 another explanation. I sure feel that there's no need for it, 0:02:46.639 --> 0:02:50.320 but unfortunately it's you know, these big companies that are 0:02:50.880 --> 0:02:54.800 you know, dictating the pricing right. That's also what many 0:02:54.840 --> 0:02:58.080 in the Biden administration think, and they're vowing to take 0:02:58.120 --> 0:03:00.960 on food giants and force them to cut their prices. 0:03:01.639 --> 0:03:05.880 There's economics and politics at work here. Inflation is hurting 0:03:05.880 --> 0:03:09.919 President Biden's popularity, and the administration needs to show it's 0:03:09.960 --> 0:03:14.920 doing something to bring it down. Consumer prices in the 0:03:15.040 --> 0:03:19.639 US rose seven per cent in the fastest calendar ar 0:03:19.800 --> 0:03:23.160 increase in thirty nine years. It's not just at the 0:03:23.200 --> 0:03:26.280 grocery store. You've probably noticed it at the gas station 0:03:26.320 --> 0:03:29.280 as well, your energy bill or trying to buy a car. 0:03:29.960 --> 0:03:33.280 Economists largely agree this was brought on by supply demand 0:03:33.320 --> 0:03:37.080 and balances in the pandemic. Massive stimulus from governments and 0:03:37.200 --> 0:03:41.400 central banks fuel demand, while lockdowns and COVID outbreaks limited 0:03:41.440 --> 0:03:46.000 supplies of materials and labor. Many expect these dueling forces 0:03:46.040 --> 0:03:48.680 will ease up this year as supply chains get back 0:03:48.680 --> 0:03:52.320 in order and Americans spend down their pandemic savings, But 0:03:52.400 --> 0:03:55.760 dominant companies could contribute even more to the Consumer Price 0:03:55.840 --> 0:04:00.000 Index or cp I going forward. That's what Jeffrey Melly 0:04:00.040 --> 0:04:02.960 has to say, the Global head of Research at Barclay's, 0:04:03.080 --> 0:04:05.760 an author of a recent report on the impact of 0:04:05.840 --> 0:04:10.960 COVID nineteen on market power, generalized inflation as a starting 0:04:11.000 --> 0:04:14.200 point now because of supply chain distructions, but some companies 0:04:14.200 --> 0:04:16.920 can take advantage of that by raising their prices, and 0:04:16.960 --> 0:04:20.240 then that needs into CPI. But then that means there's 0:04:20.240 --> 0:04:22.920 more generalized inflation than so companies of market power have 0:04:23.000 --> 0:04:27.320 even more air cover and even more profits. Tyson Foods 0:04:27.320 --> 0:04:30.839 and JBS, some of the biggest meat processors in the country, 0:04:31.240 --> 0:04:35.719 each reported gross profit margins of around in the fourth quarter, 0:04:36.160 --> 0:04:40.040 some of the highest ever. In fact, the Biden administration 0:04:40.160 --> 0:04:42.640 is keeping a close eye on the meat packing industry, 0:04:43.040 --> 0:04:46.719 or just a handful of companies control the market. Then 0:04:46.720 --> 0:04:50.320 there's Coke and Pepsi, who announced price increases within days 0:04:50.360 --> 0:04:53.400 of each other in July and meet around three billion 0:04:53.440 --> 0:04:57.640 dollars in operating profits three months later at or near records. 0:04:58.279 --> 0:05:01.600 Some economists and the Biden Emit illustration argue that if 0:05:01.640 --> 0:05:05.719 companies were raising prices just enough to cover costs, those 0:05:05.760 --> 0:05:10.000 profit margins would be flat. In response, the meat packers 0:05:10.000 --> 0:05:13.600 say that labor shortages and strong demand are to plaim 0:05:13.600 --> 0:05:17.200 for higher costs, while a Coke representative said the company 0:05:17.200 --> 0:05:24.560 adjust its pricing to balance quote premiumization and affordability. But 0:05:24.640 --> 0:05:27.480 if you listen to recent calls that executives have had 0:05:27.480 --> 0:05:30.840 with investors, you'll find quite a few talking about their 0:05:30.839 --> 0:05:34.960 newfound pricing power. Here's Norwegian Cruise Line CEO Frank del 0:05:35.040 --> 0:05:38.440 Rio on an earnings call in November. Yes, we have 0:05:38.480 --> 0:05:42.479 inflation pressures on some online on in fuel, commodities, food, 0:05:43.080 --> 0:05:47.760 but we've got that pricing power that is translating into 0:05:48.480 --> 0:05:52.120 high yield. So we we believe that in late twenty 0:05:52.120 --> 0:05:57.840 two three forward our margins should improve. And here's Mark Klaus, 0:05:57.880 --> 0:06:01.000 CEO of Campbell's Soup at an investor or day last month. 0:06:01.520 --> 0:06:05.360 And it's really about the full impact of our pricing, 0:06:05.360 --> 0:06:08.360 which we do very much believe we have the pricing 0:06:08.440 --> 0:06:12.760 power to address inflation. The Federal Reserve hopes to check 0:06:12.800 --> 0:06:17.000 these price increases by raising interest rates this year. Meanwhile, 0:06:17.240 --> 0:06:21.640 Biden has staffed antitrust agencies with regulators who are committed 0:06:21.680 --> 0:06:25.719 to cracking down on big business. Lena Khan, who chairs 0:06:25.720 --> 0:06:29.360 the Federal Trade Commission, said last week that she intends 0:06:29.400 --> 0:06:32.840 to act with a quote fierce sense of urgency to 0:06:33.000 --> 0:06:36.800 police competition in the economy. She'll have to balance that 0:06:36.880 --> 0:06:39.279 with all the good things that come from big businesses, 0:06:39.960 --> 0:06:43.719 namely the efficiencies and economies of scale that actually keep 0:06:43.760 --> 0:06:49.040 prices down. In the end, both approaches present challenges, according 0:06:49.080 --> 0:06:53.400 to Yanda Loger, a professor at ku love In in Belgium, 0:06:53.480 --> 0:06:55.880 and it's it's not that by sort of breaking up 0:06:55.880 --> 0:07:00.880 these companies or or suddenly regulating them that you're going 0:07:00.960 --> 0:07:03.839 to solve things as well, right, because that may actually 0:07:04.000 --> 0:07:09.000 create harm for consumers down the road as well. Chiamba, 0:07:09.200 --> 0:07:12.200 the butcher shop owner, isn't holding his breath for prices 0:07:12.240 --> 0:07:14.920 to come down. His vendors are saying it will be 0:07:14.960 --> 0:07:18.400 another six to eight months before they can hopefully catch 0:07:18.480 --> 0:07:21.760 up with production, and then if they have a lot 0:07:21.760 --> 0:07:24.360 of product that's not selling due to the price that's 0:07:24.400 --> 0:07:26.760 so high to the consumer, then they'll back off and 0:07:26.760 --> 0:07:28.320 then I'll have more products and then I'll have to 0:07:28.400 --> 0:07:31.679 bring that prices down, So that eventually will happen, I hope, 0:07:31.960 --> 0:07:34.400 but I don't see it for the near future. For 0:07:34.440 --> 0:07:45.400 Bloomberg News, I'm Molly Smith. Well, Molly has set us 0:07:45.440 --> 0:07:48.120 up nicely, I think, for a conversation about pricing power 0:07:48.280 --> 0:07:51.080 and what the administration could or should do about it 0:07:51.120 --> 0:07:55.040 with Bill Bear, now a visiting fellow at the Brookings Institution, 0:07:55.360 --> 0:07:58.000 but previously I think the only person to have led 0:07:58.080 --> 0:08:02.600 antitrust enforcement at both of the U S antitrust agencies. 0:08:02.600 --> 0:08:06.080 So he was Assistant Attorney General in charge of antitrust 0:08:06.240 --> 0:08:10.679 for the Department of Justice sixteen. But he also served 0:08:10.680 --> 0:08:13.080 as a director at the Bureau of Competition at the 0:08:13.080 --> 0:08:16.360 Federal Trade Commission in the late nineties. So Bill, thank 0:08:16.400 --> 0:08:19.520 you very much for joining us. We should start with 0:08:19.520 --> 0:08:22.400 the subject of the day, meat packing. Is there a 0:08:22.440 --> 0:08:28.640 serious competition problem that for the administration to fix? Definitely, 0:08:28.720 --> 0:08:32.120 no doubt there is a serious problem here. We have 0:08:32.679 --> 0:08:41.120 in beef and pork and poultry processing unprecedented concentration. In 0:08:41.240 --> 0:08:46.960 beef they're just four players, and poultry there five. In 0:08:47.160 --> 0:08:51.880 pork there are just four, and that gives the meat 0:08:51.920 --> 0:08:56.800 packers enormous power both in dealing with the producers of 0:08:56.880 --> 0:09:00.840 the livestock but also downstream in terms of setting prices 0:09:00.880 --> 0:09:04.520 for the average consumer. There is a problem. Okay, there's 0:09:04.520 --> 0:09:08.280 a problem, but how might be trickier? How should the 0:09:08.320 --> 0:09:13.319 administration go about addressing this? There are a couple of 0:09:13.360 --> 0:09:16.240 things that can be done, and the administration is working 0:09:16.240 --> 0:09:21.320 with them under the packers and stockyards and the Department 0:09:21.320 --> 0:09:25.800 of Agriculture has regulatory authority and have some ability to 0:09:26.040 --> 0:09:32.720 force the packers too and the stockyards to uh deal 0:09:32.800 --> 0:09:38.520 more fairly with the livestock producers. And in addition, what 0:09:38.760 --> 0:09:42.320 the Biden administration is doing is providing funding to the 0:09:42.360 --> 0:09:49.200 farm agri culture for alternatives packers to develop alternative methods 0:09:49.280 --> 0:09:54.120 for livestock producers, the people who produced the cattle of 0:09:55.200 --> 0:09:59.920 the chicken that go through these stock cared alternative sources 0:10:00.080 --> 0:10:05.319 more competition, so there is more opportunity for the producer 0:10:05.559 --> 0:10:08.640 to get a fair share, and then more competition in 0:10:08.760 --> 0:10:12.400 terms of setting price downstream. They are devoting uh some 0:10:12.520 --> 0:10:18.079 hundreds of millions of dollars two funding alternative middlemen and 0:10:18.160 --> 0:10:21.680 provide more competition in a sector that I think most 0:10:21.679 --> 0:10:26.760 people believe is way too concentrate. If if these companies 0:10:26.760 --> 0:10:29.960 are just making meat too expensive, especially now when we 0:10:30.080 --> 0:10:32.280 have a lot of people are being encouraged to eat 0:10:32.360 --> 0:10:35.680 less meat anyway, and there are plenty of alternatives to meet, 0:10:37.200 --> 0:10:39.680 why is this not something that will get resolved on 0:10:39.720 --> 0:10:41.679 its own in the sense of prices go too high, 0:10:41.679 --> 0:10:44.800 consumers are just not going to buy. Well, it's there 0:10:44.920 --> 0:10:49.080 is some ability, I suppose for consumer demand to move 0:10:49.120 --> 0:10:53.760 away from meat, but at the same time, a lot 0:10:53.800 --> 0:10:56.720 of consumers, um, that's what they want, that's what they're 0:10:56.720 --> 0:10:59.600 going to buy, that's what they're used to. The demand 0:10:59.720 --> 0:11:04.240 is somewhat anelastic for these products, which gives a concentrated 0:11:04.720 --> 0:11:11.440 market with very few sellers the ability to extort prices 0:11:11.440 --> 0:11:14.920 that are higher than its competitive market would provide. In 0:11:14.960 --> 0:11:19.320 a way, the complaint about the meat packing is quite 0:11:19.320 --> 0:11:22.080 a traditional approach to antitrust that you judge by whether 0:11:22.200 --> 0:11:24.800 or not you think prices are too expensive and consumers 0:11:24.800 --> 0:11:28.920 are not being served because prices are expensive. But one 0:11:28.960 --> 0:11:30.840 of the things that seems to have changed in this 0:11:30.880 --> 0:11:34.079 administration is that we're not just thinking about the price 0:11:34.120 --> 0:11:36.360 for consumers. We might be worried about a company being 0:11:36.400 --> 0:11:39.960 really big even if it's offering all its things for free, Facebook, 0:11:40.080 --> 0:11:43.640 for example, which often comes up in these conversations, would 0:11:43.640 --> 0:11:47.280 you welcome the idea that the administration is now quite 0:11:47.320 --> 0:11:50.760 focused on size, actually is caring about the size of 0:11:50.800 --> 0:11:54.920 a company even if all its consumers seem to love 0:11:54.960 --> 0:11:58.600 its products and use it a great deal, and that's 0:11:58.640 --> 0:12:00.320 one of the reasons why it's so big. I guess 0:12:00.320 --> 0:12:04.240 Amazon is another classic example. Yeah, I think it is 0:12:04.360 --> 0:12:08.640 a legitimate focus. You have any trust lawsuits depending right 0:12:08.679 --> 0:12:13.280 now involving Facebook and involving Amazon. There are rumors of 0:12:14.160 --> 0:12:20.679 possible lawsuits against against Apple, UH and UM and others, 0:12:20.880 --> 0:12:25.360 and I think those lawsuits are focused on the fact 0:12:25.400 --> 0:12:28.800 that once you get to a certain size, you have 0:12:28.960 --> 0:12:33.600 tremendous market power, tremendous ability to limit the opportunity of 0:12:33.720 --> 0:12:37.040 rivals to grow up to compete with a Facebook or 0:12:37.080 --> 0:12:40.640 to compete with the Amazon. The case the FTC brought 0:12:40.679 --> 0:12:47.080 against Facebook involves Facebook's tact man strategy where they gobble 0:12:47.240 --> 0:12:50.440 up at anybody who looks like they could be a 0:12:50.640 --> 0:12:55.120 competitive threat. And the documents that have come out in 0:12:55.120 --> 0:12:58.320 that litigation and congressional hearings, so that was a very 0:12:58.360 --> 0:13:03.280 deliberate strategy from from the top. Let's not let Instagram 0:13:03.480 --> 0:13:07.160 or what's app go any further. Let's catch them and 0:13:07.200 --> 0:13:08.880 they can then catch them and make them part of 0:13:08.920 --> 0:13:11.480 their off ing where they can catch them and kill them. 0:13:11.520 --> 0:13:14.680 And that is a legitimate anti trust worry, and it 0:13:14.760 --> 0:13:21.880 has a significant effect on our abilities consumers to move 0:13:21.960 --> 0:13:25.920 from one platform to another. There's only one one platform 0:13:25.960 --> 0:13:30.080 that serves our needs, whether it's shopping or communication. We 0:13:30.160 --> 0:13:34.080 are subject to those platforms rules on privacy, on sharing 0:13:34.080 --> 0:13:38.439 of our information, as well as giving them enormous pricing 0:13:38.440 --> 0:13:42.480 power in terms of what we pay for the goods 0:13:42.559 --> 0:13:46.920 we buy through an Amazon platform. And to the extent 0:13:47.000 --> 0:13:52.600 we're not paying dollars and cents or or pounds sterling 0:13:52.679 --> 0:13:54.839 for the right to be on the platform, we are 0:13:54.960 --> 0:13:58.720 paying with our personal data, which is of great value 0:13:58.760 --> 0:14:02.480 not just the platform, but the people who sell products 0:14:02.480 --> 0:14:05.120 on those platform as the line I always sell my 0:14:05.120 --> 0:14:07.560 my teenage son. If you're not paying for the product, 0:14:07.600 --> 0:14:10.920 you're the product your data. And lots of people tend 0:14:10.920 --> 0:14:14.080 to be worried about the size, the sheer size of 0:14:14.120 --> 0:14:19.480 these companies, but then you see things like the testimony 0:14:19.520 --> 0:14:25.240 that and that Mark Zuckerberg gave in his appearance on 0:14:25.280 --> 0:14:27.840 the in Congress a few years ago, where it became 0:14:27.880 --> 0:14:30.640 completely obvious that the senators really didn't know anything about 0:14:30.640 --> 0:14:33.520 Facebook and didn't know anything about social media. Do we 0:14:33.600 --> 0:14:36.600 have any sense that government really is going to be 0:14:36.640 --> 0:14:40.520 able to do this better than the companies themselves? I 0:14:40.520 --> 0:14:44.280 think the any trust and worsers um at the Federal 0:14:44.280 --> 0:14:48.360 Trade Commission, the Justice Department no a lot more than 0:14:49.000 --> 0:14:52.560 than perhaps some people give them credit for knowing. You 0:14:52.640 --> 0:14:56.600 look at the Hill hearing that have been conducted NOAD 0:14:57.320 --> 0:15:02.840 eighteen months. There are a lot of people sophisticated in technology. 0:15:02.960 --> 0:15:06.280 And you see that frankly in the UK at the 0:15:06.320 --> 0:15:11.120 Central Markets Authority. You see it in in Brussels with 0:15:11.480 --> 0:15:15.560 the European Commission. These are people who they have hired, 0:15:15.600 --> 0:15:19.280 people who know a lot about technology, who know how 0:15:19.320 --> 0:15:23.120 to hire installtance that will inform them where they may 0:15:23.200 --> 0:15:25.760 lack the knowledge. I think they're up to the task. 0:15:25.840 --> 0:15:28.400 I really do. Is it fair to say that Facebook 0:15:28.600 --> 0:15:31.880 is the standard oil of our time, that great massive 0:15:31.920 --> 0:15:35.960 monopoly that Roosevelt broke up in the in the antitrust, 0:15:36.000 --> 0:15:40.240 the trust busting era of the early nineteen hundreds, well, 0:15:40.360 --> 0:15:46.840 no analogy is perfect, but I do think, uh, Facebook, Google, Amazon, 0:15:47.160 --> 0:15:52.440 Apple in their particular space, our tech platform that have 0:15:52.840 --> 0:15:56.560 enormous power, and that was what was that issue in 0:15:56.600 --> 0:16:02.160 the Standard oil case. How you address misuse of that power, 0:16:02.360 --> 0:16:08.080 how you promote competition. Maybe somewhat different in technology than 0:16:08.120 --> 0:16:11.160 it was with Standard Oil or back thirty years ago 0:16:11.520 --> 0:16:15.200 when the government broke up the A, T and T monopoly, 0:16:15.560 --> 0:16:20.800 but they are comparable in the sense that they are 0:16:21.080 --> 0:16:25.040 very powerful companies that appear to be using that power 0:16:25.320 --> 0:16:29.200 to suppress competition, and that's bad for the American economy, 0:16:29.240 --> 0:16:32.120 it's bad for consumer. The conversations I've had with people 0:16:32.120 --> 0:16:35.880 in motions about this have said that actually, there's a 0:16:35.920 --> 0:16:38.800 lot of talk about it, and the administration has kind 0:16:38.840 --> 0:16:41.720 of talked to big game, but ultimately it's going to 0:16:41.760 --> 0:16:45.040 be too hard and certainly very difficult to pass anything 0:16:45.040 --> 0:16:47.600 through Congress, and we're not going to see that kind 0:16:47.640 --> 0:16:51.600 of dramatic action against Facebook or other companies. Do you agree. 0:16:53.280 --> 0:16:55.360 I don't know what's going to happen in Congress. You know, 0:16:55.680 --> 0:16:58.800 betting on Congress, which is so divided and so many 0:16:58.800 --> 0:17:02.840 issues right now, is not money well spent. At the 0:17:02.840 --> 0:17:06.879 same time, there are these anti trust enforcement actions which 0:17:07.359 --> 0:17:10.480 are pending, are moving on and have the ability to 0:17:10.560 --> 0:17:13.440 achieve that the courts agree that there's a problem there 0:17:13.840 --> 0:17:17.520 to achieve some of the results that that Congress is 0:17:17.520 --> 0:17:21.000 considering right now, and Congress may or may not pass. 0:17:22.160 --> 0:17:24.639 Just going back to where we started, do you think 0:17:25.080 --> 0:17:28.520 they're trying to put too much onto antitrust? That it 0:17:28.560 --> 0:17:35.640 can be a policy for improving consumer outcomes in certain sectors, 0:17:35.760 --> 0:17:38.760 or helping workers get paid more in other sectors in 0:17:38.840 --> 0:17:42.359 fast food, for example, or it can be a way 0:17:42.400 --> 0:17:44.639 of tackling some of the things we don't like about 0:17:44.680 --> 0:17:47.640 Facebook or other social media platforms. But can it really 0:17:47.640 --> 0:17:51.159 do all of those things and reduce inflation? Are we 0:17:51.240 --> 0:17:55.240 just asking too much? I think we need to be 0:17:55.320 --> 0:18:01.119 careful about what we have competition policy who accomplished. I 0:18:01.160 --> 0:18:05.960 think that is a fair caution. For example, um uh, 0:18:06.359 --> 0:18:12.159 unfettered competition can produce bad outcomes externalities in the environment, 0:18:12.960 --> 0:18:17.520 in terms of social outcomes, two big companies merge, they 0:18:17.520 --> 0:18:21.600 declare redundancies and workers are out of work. Is any 0:18:21.640 --> 0:18:24.399 trust the best way to address that problem? Or do 0:18:24.440 --> 0:18:27.639 you take it on as a public policy question where 0:18:27.800 --> 0:18:32.160 companies who are emerging are required to have an extended 0:18:32.200 --> 0:18:35.639 severance period continue to in the US to cover the 0:18:35.640 --> 0:18:40.359 health benefits of workers declared redundant. So I I do 0:18:40.560 --> 0:18:46.080 think it is wrong to think of competition as the 0:18:46.160 --> 0:18:49.639 magic pill that will solve all problems. At the same time, 0:18:50.160 --> 0:18:55.480 there clearly our ways in which we can make competition 0:18:55.520 --> 0:19:00.280 policy a part of the solution to higher price is 0:19:00.320 --> 0:19:04.800 too overly concentrated industries to problems in terms of not 0:19:04.920 --> 0:19:09.200 just price, but also product quality and innovation. Nary Sumas, 0:19:09.200 --> 0:19:13.160 for example, has has talked about scarcity denial. He says 0:19:13.200 --> 0:19:16.040 that some of the administrations sort of blaming of inflation 0:19:16.240 --> 0:19:21.400 on greed and price price gouging by companies is actually 0:19:21.400 --> 0:19:24.040 just in denial that there's a shortage of some key 0:19:24.119 --> 0:19:26.280 stuff at the moment because of the pandemic. And as 0:19:26.320 --> 0:19:27.880 long as you deny that, as long as you blame 0:19:27.880 --> 0:19:31.840 it on greed, you're kind of not being serious about inflation. Well, 0:19:31.880 --> 0:19:35.119 I don't think anyone in this administration that I've heard 0:19:35.200 --> 0:19:40.879 speak or who's written something, has suggested that concentration is 0:19:41.000 --> 0:19:46.679 the soul or principle factor contributing to this recent inflationary trend. 0:19:47.160 --> 0:19:52.120 You know, fiscal policy, monetary policy, COVID shortages, the whole 0:19:52.160 --> 0:19:58.159 supply chain disruption clearly is having a driving effect on 0:19:58.400 --> 0:20:04.000 price increases. At the same time, in concentrated industries you 0:20:04.080 --> 0:20:09.680 see the dominant firms doing more than just passing on 0:20:10.040 --> 0:20:15.119 price increases. They are actually adding a expl level of 0:20:15.320 --> 0:20:21.760 profit margin to their price increases. In truly competitive markets, 0:20:21.800 --> 0:20:25.119 that would be very hard to do, but in many industries, 0:20:25.240 --> 0:20:31.359 including UH agriculture, concentration makes it possible for that to happen. Bilbert, 0:20:31.800 --> 0:20:42.159 thank you, You're welcome. It's been a pleasure. And now 0:20:42.200 --> 0:20:46.119 to road in a byzantine process to select the next 0:20:46.160 --> 0:20:49.919 Italian president, which may yet put Italy back at the 0:20:49.960 --> 0:20:52.600 top of the list of European countries most likely to 0:20:52.640 --> 0:20:56.080 have a crisis. You'll remember, last time we checked the 0:20:56.119 --> 0:20:59.080 great technocrats and savior of the euro the former head 0:20:59.119 --> 0:21:02.520 of the European Center Bank, President Mario drag was putting 0:21:02.560 --> 0:21:05.280 Italy on the road to reform and in the process 0:21:05.320 --> 0:21:07.880 putting it in line to receive billions of euros from 0:21:07.920 --> 0:21:12.120 the European Recovery Fund set up in response to COVID. Well, 0:21:12.160 --> 0:21:15.919 now it seems drug is ready for a change. But 0:21:16.000 --> 0:21:19.879 what about the rest of Italy's government. Here's Alessandra Meliaccio. 0:21:21.440 --> 0:21:24.479 Mario Drag has been touted as Italy's savior from an 0:21:24.560 --> 0:21:28.680 endless political groundhog day loop, which is seen about seventy 0:21:28.680 --> 0:21:32.280 governments taking turns in as many years. The plot is 0:21:32.320 --> 0:21:38.760 a familiar one Italy in crisis, enter savior, reforms, exit savior, 0:21:39.440 --> 0:21:44.919 enter squabbling politicians, and again Italy in crisis and repeat. 0:21:45.920 --> 0:21:48.600 But the presidential vote this week and the political frenzy 0:21:48.640 --> 0:21:51.760 around it has raised concerns about who will lead Italy 0:21:51.800 --> 0:21:55.560 if Drug leaves his post as Prime Minister, an executive role, 0:21:55.800 --> 0:21:59.000 to become the country's next president, a prestigious but less 0:21:59.040 --> 0:22:02.920 hands on role elected by the parliament. Will his legacy 0:22:02.920 --> 0:22:05.200 of changes be enough to make sure that Italy keeps 0:22:05.280 --> 0:22:08.000 up with the regular schedule of reforms promised to the 0:22:08.080 --> 0:22:11.520 European Union. If not, it could put in jeopardy more 0:22:11.560 --> 0:22:14.359 than two hundred billion euros worth of recovery fund cash 0:22:14.680 --> 0:22:19.480 coming the country's way in the next few years. Enzovans, 0:22:20.040 --> 0:22:23.520 a politician and professor at Lewis University in Rome, is 0:22:23.560 --> 0:22:27.920 familiar with what he calls Italy's recurring loop of technocratic 0:22:28.080 --> 0:22:34.920 and then political governments, considering the present European recovery plans constrained, 0:22:35.720 --> 0:22:39.080 you need an expert and respected driver to lead the 0:22:39.840 --> 0:22:45.720 Italian government. It is undoubtedly part of Mario Drugs positive 0:22:45.800 --> 0:22:50.439 legacy to have established a situation requiring the leadership figure 0:22:51.119 --> 0:22:55.760 of very high spending, whatever it happens means, served as 0:22:55.760 --> 0:22:59.280 Foreign Affairs and European Affairs Minister in three different administrations 0:22:59.720 --> 0:23:03.680 led by technocratic Premier Mario Monty and by political premiers 0:23:03.840 --> 0:23:07.840 Enrico Leta and grew Zeppe. Content He thinks Druggi has 0:23:07.920 --> 0:23:11.520 raised the bar for whoever will come next. If he 0:23:12.080 --> 0:23:16.040 becomes President of the Republic, his replacement must have the 0:23:16.119 --> 0:23:21.119 strength and the specific competence to govern Italy through struck 0:23:21.240 --> 0:23:27.360 from reform strictly monitored by the EU authorities and institution. 0:23:31.680 --> 0:23:34.399 Not that Italy isn't able to pull itself together when needed. 0:23:34.800 --> 0:23:36.760 It did so to become part of the Euro Single 0:23:36.840 --> 0:23:39.760 Currency Club, It did so to avoid catastrophe in two 0:23:39.800 --> 0:23:43.200 thousand eleven when it's financing caused sword to dangerous levels, 0:23:43.760 --> 0:23:45.919 and it did so last year when it met all 0:23:45.960 --> 0:23:48.440 of the EU criteria to unlock the first twenty four 0:23:48.440 --> 0:23:52.600 billion euro installment of EU Recovery Fund cash and in fact, 0:23:52.640 --> 0:23:55.440 meeting all the use requirements for its pandemic relief money 0:23:55.760 --> 0:23:58.520 has been a heavy burden. There were fifty one targets 0:23:58.560 --> 0:24:02.320 to me from drafting laws to setting up of tender 0:24:02.400 --> 0:24:04.960 and selecting projects, and there will be more than a 0:24:05.000 --> 0:24:09.480 hundred goals this year, including proof of actual investments, always 0:24:09.480 --> 0:24:11.320 a challenge for Italy with its red tape in a 0:24:11.440 --> 0:24:14.640 history of not using YOU funds in time, and not 0:24:14.760 --> 0:24:17.520 using the funds would mean missing out on investments that 0:24:17.560 --> 0:24:22.280 are the only way to fund growth and escape economic stagnation. Now, 0:24:22.400 --> 0:24:26.320 given Italy's ability to cram for exams but tendency to 0:24:26.400 --> 0:24:30.280 stray in between obligations, what Druggy tried working with you 0:24:30.920 --> 0:24:33.280 is to leave his country with a system that will 0:24:33.320 --> 0:24:36.760 force it to stay on track, regardless of the political squabbling. 0:24:37.640 --> 0:24:39.760 As Druggie himself put it during his end of year 0:24:39.760 --> 0:24:50.080 press conference, his presence is no longer indispensable. Hell, we 0:24:50.119 --> 0:24:53.919 have done three important things. We have turned Italy into 0:24:53.960 --> 0:24:57.080 one of the most flaccinated countries in the world. We 0:24:57.160 --> 0:25:01.639 have delivered our National Recovery and Resilient Investment plan on time, 0:25:02.080 --> 0:25:06.320 and we have achieved to use fifty one targets, and 0:25:06.359 --> 0:25:09.560 so we have created the conditions that can allow and 0:25:09.720 --> 0:25:13.760 work on the recovery plan and its targets to continue. 0:25:14.160 --> 0:25:17.920 The government has created these conditions independently from whom will 0:25:17.960 --> 0:25:20.879 be in power. Yet a luck could still go wrong, 0:25:21.359 --> 0:25:25.160 particularly with Italy notoriously querulous politicians training at the leash 0:25:25.240 --> 0:25:28.720 to take power once again. Inability to use funds and 0:25:28.720 --> 0:25:30.800 put in place long term growth could be fatal to 0:25:30.800 --> 0:25:34.280 Italy's future. And then there's always the chance of unleashing 0:25:34.480 --> 0:25:37.120 a sell off of Italian debt if markets don't trust 0:25:37.160 --> 0:25:40.560 the country's leadership. Druggy isn't stepping out of public life altogether. 0:25:41.480 --> 0:25:43.959 The Prime Minister and former head of the European Central 0:25:44.000 --> 0:25:47.720 Bank is now eyeing the presidential palace once a papal 0:25:47.760 --> 0:25:52.480 residents perched atop ROMs queerin Ali Hill. Druggy biographer Marco 0:25:52.520 --> 0:25:56.880 Cecchini thinks it's really been his plan all along. One 0:25:57.240 --> 0:26:05.119 Druggy left MTB, he uh thought that Quirinale was his 0:26:05.560 --> 0:26:10.440 natural destination, and in fact the seven Moni of Farewell 0:26:11.320 --> 0:26:16.720 in Frankfort at the end of October twenty nineteen was 0:26:16.760 --> 0:26:23.200 a sort of crowning of him as leader, an European leader, 0:26:23.680 --> 0:26:29.920 and so that UH is another another contriguration to to 0:26:30.200 --> 0:26:36.640 justify his destination UH in the Quirinale. After all, if 0:26:36.680 --> 0:26:39.760 he remains Prime Minister, drugging might get tracked down into 0:26:39.840 --> 0:26:43.000 the mire of political squabbling, has happened to Italy's previous 0:26:43.040 --> 0:26:47.520 technocratic savior, Mario Munty. If he manages to become president, however, 0:26:47.800 --> 0:26:50.399 he removes himself from the fray and becomes italy Is 0:26:50.440 --> 0:26:55.000 guaranteer and moral authority for the next seven years, possibly 0:26:55.440 --> 0:27:17.119 another way to break the ground home day cycle. And 0:27:17.240 --> 0:27:20.840 that is it for this season of Stephanomics. We're supposed 0:27:20.880 --> 0:27:23.200