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Algorithmically derived knowledge is a new source of asymmetric market power. Hal Varian noted this problem in 1995, writing in a paper called “Economic Mechanism Design for Computerized Agents” that “to function effectively, a computerized agent has to know a lot about its owner’s preferences: e.g…

Meanwhile, there is an incentive to cut income for ordinary workers. Cutting wages drives up net income and thus the price of the stock in which executives are increasingly paid. Those executives who are not motivated by cupidity are held hostage. Any CEO who doesn’t keep growing the share price or…

Since the mid-1980s, Lazonick observes, “the resource-allocation regime at many, if not most, major U.S. business corporations has transitioned from ‘retain-and-reinvest’ to ‘downsize-and-distribute.’ Under retain-and-reinvest, the corporation retains earnings and reinvests them in the productive c…

Algorithmic, market-based solutions to wages in on-demand labor markets provide a potentially interesting alternative to minimum-wage mandates as a way to increase worker incomes. Rather than cracking down on the new online gig economy businesses to make them more like twentieth-century businesses,…

[...] Economists have long recognized this phenomenon. They call wages higher than the lowest that the market would otherwise offer “efficiency wages.” That is, they represent the wage premium that an employer pays for reduced turnover, higher employee quality, lower training costs, and many other …