Business Insider’s Sara Silverstein talks with University of Chicago Booth School of Business professor
Luigi Zingales. Zingales discusses the difference between being pro-business and pro-market. Following is a transcript of the video.
Sara Silverstein: And it seems that a lot of people are excited about [President Trump] being pro-business and that’s something that you talk about too — that he is pro-business. But what’s the difference between being pro-business and pro-market?
Luigi Zingales: So all business people are pro-market when they enter in a new line of business. Once they are in, they want a, sort of, bias to entry to increase profits. So, as an economist, I care about markets being competitive when everybody enters, not just at the beginning and after. And in a lot of situations, business people care, especially the incumbent, the most influential ones like Trump is now, they care about protecting their own turf rather than creating the situation for everybody to succeed.
Now the interesting thing is to be fair, Trump did not run a pro-business campaign. In fact, all the CEOs of S&P 500 were not in his favour. They endorsed or donated money to Hillary Clinton. And he was even flirting with some populist fringes and he, for example, said he will not let the merger of AT&T go through. And he was like pretty aggressive on that front. That’s the side that he dropped completely once he got elected. He appointed the influential business people and billionaires in all the key positions. But more importantly — I think — he completely abandoned his so-called populist side and became a very strong pro-business administration. And I think the stock market celebrated in the short-term and we’ll see the outcome in the long-term.
Silverstein: And is pro-business better for the economy or is pro-market with more entrance and more competition?
Zingales: Again, it depends on what is the … your objective function. If you look at the profits of companies that are listed as part of the S&P 500 today, I think that being pro-business is basically being pro-them is great and that’s part of the reason why you have the rally. If you think about growth, and innovation, new entry, and welfare of people, I think the pro-market is the right position.
Business Insider Emails & Alerts
Site highlights each day to your inbox.