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1. Tesla as a Global Competitor: Strategic Control in the EV Transition

Author:
Matt Hopkins and William Lazonick
Publication Date:
09-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In this paper, we assess the implications of Elon Musk’s strategic control over Tesla, the pioneering company that has become central to the electric vehicle transition. We document how, as Tesla’s CEO for 16 years, Musk has exercised strategic control to direct the transformation of the company from an uncertain startup to a global leader. Now that Tesla is profitable corporate predators (aka hedge-fund activists) may challenge Musk’s strategic control—a possibility of which the CEO is well aware. To retain his control over Tesla as a publicly listed company, Musk depends on holding a sufficient proportion of Tesla’s shares outstanding to possess the voting power to fend off predatory value extractors. In addition to accumulating Tesla shares by investing $291.2 million at early stages of the company’s evolution, Musk has relied upon massive stock-option grants from the Tesla board, under the guise of “compensation”, in 2009, 2012, and 2018, to boost his shareholding and, with it, his voting power. Hence the Delaware Court of Chancery’s decision in January 2024 to rescind Musk’s 2018 stock-option package—by far the largest ever granted to a corporate executive—poses a threat to Musk’s strategic control at Tesla. As the “Technoking” of Tesla strategizes to maintain his control over the company’s decision-making, anyone concerned with the role that Tesla will play in the evolving EV transition should be asking how CEO Musk might use, or abuse, his powerful position.
Topic:
Science and Technology, Economic Competition, Electric Vehicles, Tesla, and Energy Transition
Political Geography:
Global Focus and United States of America

2. Net International Investment Position Surplus: A Key to Reconciling Financial Stability and Internationalization

Author:
Young Sik Jeong and Yena Song
Publication Date:
08-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study examines the influence of net international investment position (IIP) on financial stability and financial internationalization. We find a strong correlation between creditor status (IIP surplus) and resilience to financial crises. Net creditor countries appear to act as buffers, with foreign assets returning to the home country during potential crises, thus preventing deterioration in external sector soundness. Furthermore, our analysis reveals that external financial assets positively affect the revealed comparative advantage (RCA) of financial service. Specifically, the positive relationship between external financial assets and financial service RCA is more pronounced during periods of net IIP surplus compared to net IIP deficit periods. Our findings suggest that a net IIP surplus is beneficial for both financial stability and international competitiveness.
Topic:
Economics, Investment, Financial Stability, Internationalization, and Economic Competition
Political Geography:
Global Focus

3. Plurilateral Controls and a New Export Control Regime are Needed to Make Export Controls More Effective and Less Counterproductive

Author:
Kevin Wolf
Publication Date:
12-2023
Content Type:
Journal Article
Journal:
Fletcher Security Review
Institution:
The Fletcher School, Tufts University
Abstract:
If the first rule of export control regulation is to define clearly the problem to be solved, the second, with some exceptions, is to ensure that the rule is both effective and not counterproductive. By “effective,” I mean that the rule actually stops or hinders the end users of concern from getting the items at issue from any source. My reference to “not counterproductive” means ensuring that foreign competitors of U.S. companies do not gain outsized advantages in markets to which U.S. firms no longer have access thanks to export controls. The income gained in these instances could allow the foreign competitors to out-innovate, out-compete, or even displace entirely the U.S. company. The exceptions pertain to situations where the U.S. should impose a unilateral control to express objection to and not otherwise support human rights violations or move quickly when the issue to be addressed is urgent, particularly if there is a threat to the warfighter. In both cases, the point remains that the eventual adoption of multilateral or plurilateral controls will make them more effective.
Topic:
Regulation, Exports, Unilateralism, and Economic Competition
Political Geography:
North America, Global Focus, and United States of America

4. The Conquest of Worldwide Inflation: Currency Competition and Its Implications for Interest Rates and the Yield Curve

Author:
Randall S. Kroszner
Publication Date:
07-2007
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In the United States and in virtually every country around the world, inflation has declined, and in most countries dramatically so. In addition, the volatility of inflation and expectations of future inflation have also fallen significantly. I will call these changes experienced around the globe the conquest of worldwide inflation. I will begin by providing a few facts about the substantial improvement of inflation during roughly the past decade compared with the quarter century that preceded it. I will then try to understand why this remarkable decline in inflation has taken place. In particular, I argue that globalization, deregulation, and financial innovation, in part spurred by experiences of high inflation in the 1980s, have fostered currency competition that has led to improved central bank performance and, hence, the recent conquest of worldwide inflation. Friedrich Hayek (1976) had long ago advocated permitting greater competition among currencies, arguing that there would be a race to the top rather than a race to the bottom. Regardless of what one might think of Hayek’s policy proposals, technological change in a globalized and competitive marketplace, I believe, has increased competition among currencies issued by central banks.
Topic:
Economy, Inflation, Interest Rates, Currency, and Economic Competition
Political Geography:
Global Focus