In an era of technological progress and facilities for communication, it would be reasonable to assume that working people around the world have never had it so good nor enjoyed such good conditions as today's. But, the reality is that wages are frozen and prices are rising, resulting in everything being dearer, from a bottle of beer to a hip replacement.
The economist, Jan Eeckhout, ICREA research professor at the UPF Department of Economics and Business, shows in The Profit Paradox. How Thriving Forms Threaten the Future of Work how this situation is caused by a small number of companies that exploit an unbridled increase in market power: the ability to set higher prices than could be permitted in a competitive market that functioned properly.
Jan Eeckhout shows how market power has stifled the work environment, and how without better mechanisms to ensure competition, this situation could lead to disastrous market corrections and political upheaval.
In the book, to be published by Princeton University Press on 1 June, Jan Eeckhout, based on his own innovative research and telling the stories of workers around the world, shows how market power has stifled the work environment, and how without better mechanisms to ensure competition, this situation could lead to disastrous market corrections and political upheaval.
Jan Eeckhout presents his book on Wednesday June 2 at 7.00 pm in the Auditorium at UPF Ciutadella Campus. There will be a conversation between Andreu Mas-Colell (UPF) and Mar Reguant (Northwestern) followed by the presentation of the book. The presentation will be streamed on the University's website.
Huge consequences and proposed solutions
The Profit Paradox describes how over the past forty years, a handful of companies have obtained the greatest gains brought about by advances in technology, obtaining huge profits and creating drastically unequal outcomes for workers.
"Instead of transmitting the advantages of the best technologies to consumers, these 'superstar' companies take advantage of new technologies to achieve even higher profit margins", Jan Eeckhout affirms.
According to the ICREA-UPF research professor in his work, "the consequences are already huge, from unnecessarily high prices for almost everything, to the existence of fewer emerging companies to compete, through increased inequality and frozen wages for most workers and highly limited social mobility".
Besides presenting the causes and consequences of increased market power, the work combines an in-depth economic vision with examples from everyday life: it reflects on monopolies and competition, links macroeconomic trends with the lives of workers and consumers, and also offers concrete solutions on how to solve this serious problem, to restore and revive the economy.
An expert on the relationship between market power and macroeconomics
Jan Eeckhout holds a PhD in Economics from the London School of Economics (1998). He was a professor at the University of Pennsylvania for nine years and in 2008 he returned to Barcelona as an ICREA research professor at the UPF Department of Economics and Business. He was also a professor at University College London and a visiting lecturer at the universities of New York, Princeton (Louis A. Simpson Visiting Professor) and at the MIT.
Throughout his career he has received three grants from the European Research Council (ERC), the latest one for "Market Power and Secular Macroeconomic Trends". In this project, which runs until 2025, he analyses the relationship between market power and macroeconomic trends, the backbone for the book he is now presenting.
His work has been widely disseminated in the media, including The New York Times, The Wall Street Journal, The Economist and The Financial Times.