Paul Romer was once Silicon Valley’s favourite economist. The theory that helped him win a Nobel Prize — that ideas are the turbocharged fuel of the modern economy — resonated deeply in the global capital of wealth-generating ideas. In the 1990s, Wired magazine called him “an economist for the technological age.” The Wall Street Journal said the tech industry treated him “like a rock star.”
Not anymore.
Paul Romer has become a fierce critic of the tech industry’s largest companies.CREDIT:AP
Today, Romer, 65, remains a believer in science and technology as engines of progress. But he has also become a fierce critic of the tech industry’s largest companies, saying that they stifle the flow of new ideas. He has championed new state taxes on the digital ads sold by companies like Facebook and Google, an idea that Maryland adopted this year.
And he is hard on economists, including himself, for long supplying the intellectual cover for hands-off policies and court rulings that have led to what he calls the “collapse of competition” in tech and other industries.
“Economists taught, ‘It’s the market. There’s nothing we can do,’” Romer said. “That’s really just so wrong.”
Romer’s current call for government activism, he said, reflects “a profound change in my thinking” in recent years. It also fits into a broader re-evaluation about the tech industry and government regulation among prominent economists.
They see markets — search, social networks, online advertising, e-commerce — not behaving according to free-market theory. Monopoly or oligopoly seems to be the order of the day.
The relentless rise of the digital giants, they say, requires new thinking and new rules. Some were members of the tech-friendly Obama administration. In congressional testimony and research reports, they are contributing ideas and credibility to policymakers who want to rein in the Big Tech companies.