The G20 “Stiglitz Report” Offers Critically Flawed Antitrust Recommendations

A new report prepared for the Group of 20 (G20) summit taking place this weekend in Johannesburg, South Africa, contains a series of troubling recommendations aimed at reducing economic inequality, including recommendations related to antitrust policy and corporate breakups. The report was commissioned by South African President Cyril Ramaphosa, who is chair of this year’s G20 meeting as head of state of the host country, and was undertaken by the Extraordinary Committee of Independent Experts on Global Inequality. Among the experts is Nobel Prize-winning economist Joseph Stiglitz, a perennial advocate of global economic redistribution rather than growth.

The report focuses on reducing wealth and income inequality rather than, for example, global poverty. Yet many of the adverse effects of inequality that it cites, such as inadequate nourishment and security, are attributable to poverty generally rather than to inequality per se. Furthermore, both the report and the World Bank’s 2024 Poverty, Prosperity, and Planet report show that within-country inequality, as measured by Gini coefficients, has declined in most economies since the COVID-19 pandemic. As this coincides with the recent slowing of global poverty reduction, it stands to reason that declining inequality does not necessarily have a positive impact on prosperity. Focusing on inequality rather than economic growth will not necessarily produce net desirable economic effects.

Many of the report’s policy recommendations for global coordination, particularly the breakup of corporate “monopolies” writ large, are seriously flawed. Corporate breakups are a blunt instrument for reducing inequality and may not even achieve this effect in many cases. As antitrust scholar Dan Crane notes, “the distributive consequences of antitrust violations (and, correspondingly, antitrust enforcement) are contingent on particular facts about the economic environment in which they occur.” In other words, whether an antitrust action reduces inequality is an empirical question that must be assessed in each individual case.

Moreover, inequality is not the proper focus of antitrust policy. Antitrust exists to remedy business conduct that harms competition. Shoehorning inequality into antitrust decisions would require policymakers and judges to determine outcomes in favor of the “most deserving” parties in a case—that is, against parties with higher income or wealth. Doing so would make antitrust more explicitly political, turning it into a vehicle for redistribution rather than an objective legal platform and requiring problematic intergroup utility comparisons.

The authors base their case for a general policy of corporate breakups on aggregate measures of monopoly power, such as markups and concentration. However, such metrics can rise for procompetitive reasons. Disruptive innovation can increase concentration by causing outdated competitors to fail. Concentration can also fluctuate, as in the United States, where recent evidence shows that it has been insignificant and has fallen in certain respects. Higher markups can result from efficiency-enhancing cost reductions and technological advancements that increase competition, as recent research has found.

The report underscores digital technologies, noting that “digital technologies contain much promise, but they can also reinforce and worsen existing divides in access and people’s ability to benefit from change. They have also given rise to increased market power.” This suggests that there is ongoing market failure in digital markets. However, this claim is flawed, as it neglects the fact that digital services have been highly beneficial to consumers, particularly low-income consumers, given that many services are provided at no monetary cost. Because these services are free, their benefits do not show up in official income statistics like GDP, which makes growth appear lower than it should. National income statistics also mask improvements in quality, such as the increased capabilities and dramatic price reduction of personal computers since the mid-20th century.

The report’s recommendation for government-subsidized digital services is particularly strange in light of the robust, ongoing innovation in these markets. Advancements in artificial intelligence are generating a new wave of creative destruction in areas like online search and productivity enhancement tools. Government-supplied digital services would require large capital expenditures, risk wasting taxpayer resources, and may crowd out the enormous private investments already occurring in these industries. Digital markets are dynamic, meaning competition occurs through continuous innovation races. Companies that fail to improve their digital services will quickly fall by the wayside.

Given innovation’s impact on economic growth over time and its potential to help humanity address global challenges such as extreme poverty, climate change, food insecurity, secular stagnation, and more, innovation should attract far more attention from global governments. An international panel on innovation and economic growth would be a better addition to the G20 summit’s agenda. While the United States plans to boycott the gathering this year, it is set to receive the chairmanship for next year’s summit. The U.S. should use that position to prioritize a focus on innovation as the global engine of economic growth and competitiveness.