Martin Hellwig is the co-author (with Prof. Anat Admati) of the book Banker’s New Clothes, a book about finance that the Financial Times’ chief economics commentator Martin Wolf described as “the most important to emerge from the crisis.” Hellwig is also Executive Director of the Max Planck Institute for Research on Collective Goods and, among other things, a former head of the German Monopolkomission (Monopolies Commission).
The Monopolkomission in 2003 published a report entitled Competition Policy under Shadow of “National Champions” which is a most useful document from our perspective. It argues, as we have, that the pursuit of what we at FG call the Competitiveness Agenda tends to lead to restrictions on market competition. It also argued against creating a German “banking champion” – a position that earned it a dismissive rebuke from the government of Gerhard Schröder, which basically said all was safe and well regulated.
A couple of short excerpts from that document provide flavour and context, and the interview with Hellwig is below.
One our core arguments is that if you shower wealthy people and large corporations with goodies, two things happen.
First, you may help them and you may be able to demonstrate some benefits, somewhere in the economy: such as improved performance for the stock options held by the executives at the multinationals concerned.
Second, though, there is the annoying snag that those benefits entail costs elsewhere in your economy.
Someone has to pay for these goodies! Who will it be?