June 2018 – Page 131

Seattle Now Wants to Repeal Controversial Amazon Tax

Less than a month after unanimously passing a literal tax on jobs, the Seattle City Council is looking to reverse course.

Yesterday Seattle Mayor Jenny Durkhan, along with seven of nine city councilmembers, released a statement announcing their intention to repeal the controversial employee head tax.

“It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis,” reads Monday’s statement. “This week, the City Council is moving forward with the consideration of legislation to repeal the current tax on large businesses to address the homelessness crisis.”

Had the City Council not killed its own head tax, voters might have.

Almost immediately after Durkhan signed the tax into law, an initiative campaign was launched to put the head tax on the November 2019 ballot. Within days the campaign had attracted $300,000 in funding including $25,000 a piece from Starbucks and Amazon. The effort reportedly gathered 22,000 signatures by June 7, comfortably above the 17,000 it needed before its June 14 deadline.

Rather than risk an expensive ballot campaign that public opinion polling suggested would not go its way, the council has decided to pull the tax and try again.

The initial version of the head tax—known as the “Amazon Tax” after its main rhetorical target—would have imposed a yearly $500 levy on every employee at companies grossing over $20 million. This was supposed to raise $75 million annually from 500 to 600 Seattle businesses for homeless and affordable housing services.

That proposal sparked fierce opposition from all corners of the city. Seattle-headquartered Amazon paused construction on an office tower project pending a vote on the tax. Starbucks came out publicly against the tax, as did Alaska Airlines, Expedia, and the CEOs of 129 other Seattle-area companies in an open letter.

The business community was joined in their opposition by the city’s construction unions. Chris McClean of Iron Workers Local 86 told The Seattle Times that “to reduce the jobs only increases the possibility of additional homelessness.” His union brothers shouted down pro-head tax city councilmember Kshama Sawant at one of her anti-Amazon rallies.

The head tax was even too much for former Seattle Mayor Tim Burgess, a champion of such progressive policies the city’s soda and income taxes. Burgess co-authored an op-ed in the Seattle Times calling the head tax a “terrible idea.”

All the pushback was enough to prompt Durkhan to float a compromise head tax of only $275 per employee per year, which would have raised $47 million annually. This saving measure proved ineffective at quelling the passions stirred over the tax.

As columnist Knute Berger wrote at Seattle news site Crosscut, “the mayor had forced an unsavory compromise by signing a head tax that was less than originally proposed yet still too much to win Amazon’s support or tolerance, and a spending plan that was not well-devised before the vote.”

The Amazon tax is not the first example of the Seattle city council putting the cart before the horse. The city-level progressive income tax passed last year by the council was ruled illegal in November 2017 on the grounds that Washington state law explicitly forbids cities from imposing an income tax. A city appeal of that decision is still pending.

The reaction to Monday’s about-face suggests that while the fight over the head tax is over for now, the tensions it kicked up have not dissipated.

Seattle’s hard left was positively incensed at the reversal. “Councilmembers who said they agree w/ big biz tax to fund affordable housing now want to repeal Amazon Tax coz blatant lies by big biz have impacted public opinion,” tweeted out Sawant who says she was left out of the loop on the decision to ditch the head tax.

For their part, business owners stressed that the city needed to spend the money it has more effectively before it goes around asking for more. “I strongly believe that there is a better way forward, one that improves current spending efficiency and effectiveness all while encouraging economic growth and job creation,” said Denise Moriguchi, chief executive of Seattle grocery company Uwajimaya, to The Seattle Times.

With Monday’s press release from Durkhan and the councilmembers still emphasizing the need for “progressive revenue sources,” these battles are not likely to disappear any time soon.

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Treasury Concludes Weekly Auctions With Strong Demand For 30Y Bonds

And so this week’s accelerated Treasury auctions are over, with a $14 billion reopening of 29-year-11-month bonds pricing moments ago at a high yield of 3.100%, just barely tailing to the 3.099% When Issued – the first tail since February – but below last month’s 3.13% as the curve continues to flatten.

Internals were stronger with Bid to Cover of 2.380 identical to last month, but below the 6 month average of 2.44. More notably, Indirects took down 62.2%, just under May’s 62.7% which is also the 6 month average. And with Directs awarded 10.33%, or right on top fo the 6MMA, Dealers were left holding 27.5% of this week’s final auction ahead of tomorrow’s FOMC.

Overall, a quick and relatively painless sale of some $200BN in bill and coupon securities in just 48 hours, to a market which despite rising rates, continues to be quite receptive to all the issuance the US government can throw at it.

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‘The Libertarian Party Is the Right Answer, as Broken as It Is,’ Says Larry Sharpe: New at Reason

The New York governor’s race this fall has garnered outsized national attention partly because a well-known actress is mounting a left-wing challenge to the two-term Democratic incumbent, who just happens to be the son of a past governor, a one-time Kennedy family in-law, and a cabinet secretary during the Bill Clinton administration.

Cynthia Nixon, who played Miranda on the long-running show Sex and the City, is an unrepentant progressive who has been attacking Andrew Cuomo hard from the left. She’s pushing for a higher minimum wage, state-wide rent subsidies, and massive tax funding for New York City’s failing subway system. Her stances have won her the endorsement of The Nation, which credits her with pushing Cuomo to the left.

But there’s another candidate running for governor who’s worth a longer look than either Nixon or Cuomo. Libertarian Party candidate Larry Sharpe is a New York City native, former Marine, and an entrepreneur who came within 32 votes of being Gary Johnson’s vice-presidential candidate for the 2016 election. When Reason asked his rival Bill Weld how the LP could become more successful, Weld replied, “You want to get out more candidates like Larry Sharpe.”

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The Real Reason Trump Lost It With Trudeau?

Authored by Patrick Buchanan via Buchanan.org,

At the G-7 summit in Canada, President Donald Trump described America as “the piggy bank that everybody is robbing.”

After he left Quebec, his director of Trade and Industrial Policy, Peter Navarro, added a few parting words for Prime Minister Justin Trudeau:

“There’s a special place in hell for any foreign leader that engages in bad faith diplomacy with President Donald J. Trump and then tries to stab him in the back on the way out the door. … And that’s … what weak, dishonest Justin Trudeau did. And that comes right from Air Force One.”

In Singapore, Trump tweeted more about that piggy bank.

“Why should I, as President of the United States, allow countries to continue to make Massive Trade Surpluses, as they have for decades … (while) the U.S. pays close to the entire cost of NATO-protecting many of these same countries that rip us off on Trade?”

To understand what drives Trump, and explains his exasperation and anger, these remarks are a good place to begin.

Our elites see America as an “indispensable nation,” the premier world power whose ordained duty it is to defend democracy, stand up to dictators and aggressors, and uphold a liberal world order.

They see U.S. wealth and power as splendid tools that fate has given them to shape the future of the planet.

Trump sees America as a nation being milked by allies who free ride on our defense effort, as they engage in trade practices that prosper their own peoples at America’s expense.

Where our elites live to play masters of the universe, Trump sees a world laughing behind America’s back, while allies exploit our magnanimity and idealism for their own national ends.

The numbers are impossible to refute and hard to explain.

Last year, the EU had a $151 billion trade surplus with the U.S. China ran a $376 billion trade surplus with the U.S., the largest in history. The world sold us $796 billion more in goods than we sold to the world.

A nation that spends more than it takes in from taxes, and consumes more of the world’s goods than it produces itself for export, year in and year out, is a nation on the way down.

We are emulating our British cousins of the 19th century.

Trump understands that this situation is not sustainable. His strength is that the people are still with him on putting America first.

Yet he faces some serious obstacles.

What is his strategy for turning a $796 billion trade deficit into a surplus? Is he prepared to impose the tariffs and import restrictions that would be required to turn America from the greatest trade-deficit nation in history to a trade-surplus nation, as we were up until the mid-1970s?

Americans are indeed carrying the lion’s share of the load of the defense of the West, and of fighting the terrorists and radical Islamists of the Middle East, and of protecting South Korea and Japan.

But if our NATO and Asian allies refuse to make the increases in defense he demands, is Trump really willing to cancel our treaty commitments, walk away from our war guarantees, and let these nations face Russia and China on their own? Could he cut that umbilical cord?

Ike’s Secretary of State John Foster Dulles spoke of conducting an “agonizing reappraisal” of U.S. commitments to defend NATO allies, if they did not contribute more money and troops.

Dulles died in 1959, and that reappraisal, threatened 60 years ago, never happened. Indeed, when the Cold War ended, out NATO allies cut defense spending again. Yet we are still subsidizing NATO in Europe and have taken on new allies since the Soviet Empire fell.

If Europe refuses to invest the money in defense Trump demands, or accept the tariffs America needs to reduce and erase its trade deficits, what does he do? Is he prepared to shut U.S. bases and pull U.S. troops out of the Baltic republics, Poland and Germany, and let the Europeans face Vladimir Putin and Russia themselves?

This is not an academic question. For the crunch that was inevitable when Trump was elected seems at hand.

He promised to negotiate with Putin and improve relations with Russia. He promised to force our NATO allies to undertake more of their own defense. He pledged to get out and stay out of Mideast wars, and begin to slash the trade deficits that we have run with the world.

And that’s what America voted for.

Now, after 500 days, he faces formidable opposition to these defining goals of his campaign, even within his own party.

Putin remains a pariah on Capitol Hill. Our allies are rejecting the tariffs Trump has imposed and threatening retaliation. Free trade Republicans reject tariffs that might raise the cost of the items U.S. companies makes abroad and then ships back to the United States.

The decisive battles between Trumpian nationalism and globalism remain ahead of us. Trump’s critical tests have yet to come.

And our exasperated president senses this.

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Maine’s Primary a Pioneering Experiment in Ranked-Choice Voting

Ranked vote Keep an eye on Maine’s gubernatorial primary today not to see who wins (because we might not actually have a winner declared this evening) but to see how the winners are selected.

Today’s primary marks the launch of Maine’s use of ranked-choice voting for determining the winners of several state-level elected offices. It will be used to decide which Democrat and which Republican will face off in November (along with several independent and third-party candidates).

In ranked-choice voting, rather than just picking a single winner, voters can rank their preferences. In order to win a ranked-choice vote, the top candidate must get a majority of the vote among all the candidates. Getting a plurality is not enough—it has to be more than 50 percent. If no candidate gets a majority, the candidate with the least votes is ejected. Then the votes are tallied again, but the votes from those who went to the ejected candidate now go to their second-ranked choice. And so it goes until one candidate claims more than 50 percent of the vote. That candidate is the winner.

There are four Republicans and seven Democrats duking it out for the governor’s race (incumbent Republican Gov. Paul LePage is getting term-limited out), so determining the outcome may get pretty complex.

A handful of cities use ranked-choice voting for local elections (San Francisco just used it to determine its mayor). Maine is the first place to implement it for state races. In addition to the governor’s race, one congressional primary on the Democratic side and one state lawmaker race on the Republican side have enough candidates to call for ranked-choice voting.

Voters approved ranked-choice voting in a ballot initiative in 2016, but there’s been a fight with state Republicans over implementing it (LePage didn’t get a majority vote in either of his elections). The state Constitution specifically requires only a plurality of the vote to determine the winner. The state’s Supreme Judicial Court warned in an advisory opinion that a constitutional amendment would be necessary or the outcomes of ranked-choice voting could potentially lose a court challenge. There have been both legal and legislative fights. A judge ruled in March to allow ranked-choice voting for this primary, but its future in Maine is still muddled. To try to resolve the conflict, also on the ballot today in Maine is an initiative that would overrule a lawmaker’s attempt to delay implementation of ranked-choice voting and potentially repeal it if the state’s constitution is not amended. So essentially Maine voters today have to also approve ranked-choice voting again or potentially lose it.

The case for ranked-choice voting is that it’s an alternative to our more common winner-takes-all system that sometimes pushes voters to feel like they have no choice but to support the two major parties or discourages them from voting entirely. It encourages third-party and independent votes because you’re no longer “throwing your vote away” by voting Libertarian, or Green, or any other party. You can rank a Libertarian Party candidate first, then pick a Democrat or a Republican that comes closest to your belief system as your second choice. If the Libertarian Party candidate performs poorly, your vote wasn’t a wasted effort. It also means that if lots of people rank a Libertarian candidate as their second choice behind a Democrat or a Republican but the major party candidate doesn’t get a majority of the vote, the Libertarian has a better chance of coming out on top than he or she would ever have had in a traditional election.

So ranked-choice voting is popular among those who want to encourage alternatives in races and to break the stranglehold by the two major parties and by those with the most party influence. The Washington Post interviewed a taxi driver in Maine who thinks LePage would never have been elected governor in the first place if the state had ranked-choice voting.

The Washington Post notes that the Republican candidates are still resisting ranked-choice while the Democrats are embracing it (two Democratic candidates are collaborating and encouraging voters to select them both, similar to what happened in San Francisco’s mayoral race). The Republican Party in Maine says it thinks ranked-choice voting is “confusing” and will lead to lower voter turnout.

The data doesn’t back them up there. FairVote, an organization devoted to pushing ranked-choice voting, observes:

Voter turnout in cities that have adopted RCV is comparable to, and often higher than, turnout in other cities. In elections using RCV in the Bay Area in 2014, voter turnout decline was less than in other parts of the state and voter turnout was generally higher than past non-RCV elections.

Professor David Kimball, at the University of Missouri-St. Louis, has studied voter turnout under RCV. His study finds that RCV in American local elections has a limited impact on turnout, with more important influences on turnout including a competitive mayoral election, other races on the ballot (including initiatives) and the use of even year elections. However, Professor Kimball’s study shows that, when compared to the primary and runoff elections they replace, RCV general elections are associated with a 10 point increase in voter turnout.

California’s overall voter turnout in last week’s primary election was miserable. It’s not finalized as yet, but the current participation rate based on county reporting is a mere 27 percent of all registered voters. But in San Francisco County, the participation rate jumps all the way up to 48 percent. Only a couple of other counties had a higher participation rate, and some of them are lightly populated areas like Sierra County that have a tiny pool of voters.

Ultimately, once Maine votes today, the question will be whether voters turn up and whether they’re satisfied with the outcome, even if their preferred initial candidate lost.

An update on the ranked-choice mayoral race in San Francisco: Last week it appeared that ranked-choice voting may lead to the candidate who came in second in the first round of votes, Mark Leno, overtaking frontrunner London Breed as the lower-ranking candidates were eliminated. Now that more votes have been tallied, however, Breed has retaken the lead from Leno. But her lead is only 1,600 votes and there are still more than 17,000 ballots to tally.

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Senate Adds ZTE-Deal-Killing Amendment To “Must Pass” Defense Bill

As was widely expected, a group of senators have successfully attached an amendment that would effectively kill the Trump administration’s deal with Chinese telecoms firm ZTE to a “must-pass” defense authorization bill, according to Axios– the latest sign that the movement to kill the deal is gaining momentum, even among Republicans who rarely oppose the president. The measure has found support among a bipartisan group of Senators who claim that the ZTE deal poses potential national security problems, according to Democratic Sen. Chris Van Hollen, who introduced the amendment alongside Republican Sen. Tom Cotton. In addition, Van Hollen maintains that the ZTE deal is “genuinely a bad deal” that must be overturned.

The amendment to kill the deal, which was first unveiled last Thursday shortly after Commerce Secretary Wilbur Ross announced the administration had worked out a deal to save ZTE, would reimpose the White House’s original ban on ZTE buying components from US firms (what some have described as a “death sentence” for the company). Still, the bill as amendment has a long way to go to make it out of the Senate, let alone the House, where it will likely face more intense opposition.

The White House announced the initial ban on ZTE buying parts from US firms in April, after the company was found to have violated a settlement originally imposed over ZTE’s sales to Iran in defiance of US sanctions. As part of the original settlement, ZTE had agreed to fire certain senior managers and withhold bonuses from others. But the company didn’t follow through with either promise.

Van Hollen told Axios that the administration has resisted Congress’s push to make the ZTE penalty permanent almost since the beginning. After discovering that Van Hollen and others were planning a bill to make ZTE’s punishment permanent, the administration “wanted to flout Congress’s intent and decided to put its foot down on the accelerator” and announced its deal before the original amendment could be brought to a vote. President Trump first declared his intention to help save ZTE late last month with a tweet about “too many jobs in China lost.” Still, since Trump’s inauguration, only a handful of Republicans have voted against his agenda.

President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!

— Donald J. Trump (@realDonaldTrump) May 13, 2018

But lawmakers aren’t the only ones who are skeptical of ZTE. For years, defense officials have accused the telecoms giant and other Chinese firms of manufacturing equipment that could be used to spy on Americans, according to the Wall Street Journal.

“China is using its telecommunications companies as means to conduct espionage,” said Sen. John Cornyn (R., Texas). “We need to solve the larger puzzle of trade and national security in addition to the enforcement action for the violation of sanctions.”

Meanwhile, Commerce Secretary Wilbur Ross insisted the Trump administration’s treatment of ZTE isn’t part of a broader quid pro quo meant to achieve a better trade deal with China. Instead, Trump and his allies have insisted it was a gesture of goodwill to thank China for helping organize the Singapore summit with North Korea. Peter Navarro, a White House trade advisor, described the ZTE deal as a tough deal that would allow the company a last chance – but not without substantial cost.

“The president did this as a personal favor to the president of China as a way of showing some goodwill for bigger efforts, such as the one here in Singapore,” Mr. Navarro said on Fox News Sunday. “But it will be three strikes you’re out for ZTE. And everybody understands that within this administration. So they’re on notice.”

Per terms of the settlement, ZTE would pay a penalty of $1.3 billion (plus place another $400 million in escrow to be seized should the company again fail to hold up its end of the bargain). The company would also be forced to accept – and pay for – a team of compliance officers that will be led by a “special independent compliance coordinator” who will report jointly to ZTE’s CEO, its board and the Commerce Department. The company will be forced to pay for the monitors for ten years. The company will also be required replace its entire board of directors and senior leadership team. In exchange, ZTE will resume buying products from US firms.

But if the measure does pass, we imagine it will set back the behind-the-scenes trade negotiations with China, despite Ross’s insistence that the ZTE deal was “quite separate” from all that. Meanwhile, ZTE shares are set to begin trading in Hong Kong on Wednesday after a nearly two-month suspension, according to WSJ.

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Is Russia Bailing On The OPEC Deal?

Authored by Tim Daiss via OilPrice.com,

For the first week of June, Russia, the world’s largest oil producer, exceeded the amount it agreed to produce as part of the January 2017, OPEC/non-OPEC supply cut deal.

For the first week of June, Russia produced some 11.1 million barrels per day (bpd), far exceeding production limits outlined in the deal, Interfax news agency said on Saturday, citing a source familiar with the matter.

As part of the oil production cut, Russia agreed to trim its production by 300,000 bpd from 11.247 million bpd. The output cut deal called for its members to remove some 1.8 million bpd of oil from global markets.

That deal was orchestrated to stop the bloodletting in global oil markets at the time due to a ramp up in U.S. shale production and Saudi Arabia’s late 2014 strategy of trying to drive U.S. shale producers out of business by opening the production flood gates and sending prices to multi-year lows.

However, the Saudi’s plan backfired. Global oil prices tumbled from more than $100 per barrel in mid-2014 to under $30 per barrel by the start of January 2016, throwing global markets into a historic supply overhang, and causing financial chaos for the Saudis who had to start issuing international bonds to offset record budget deficits – a development that is still ongoing as the Kingdom shores up its finances from that low oil price period.

Now that OECD oil inventory levels have reached the OPEC/non-OPEC members’ goal of five-year averages, there is talk and speculation among not only media but oil producing countries asking if it’s time to ramp up production. Also, geopolitical factors are coming into play as renewed U.S. sanctions against Iran will remove as many as 500,000 bpd from global markets, perhaps more according to other forecasts. In addition, OPEC member Venezuela’s oil production is coming apart at the seams, also removing more barrels from the market.

Moreover, the production overage the first week in June could indicate Russia’s strategic thinking that it’s time to increase production.

Alexander Dyukov, head of Russian energy firm Gazprom said on Saturday that his company is ready to hike crude oil production if the global deal on oil production cuts is modified.

“It is obvious now that the (production) quotas should be revised, the quotas should be increased, this will be beneficial both for producers and consumers,” Dyukov said after an annual general meeting.

“We believe that the time has come that it makes sense to keep the deal in place but be more flexible on quotas,” Dyukov said.

Saudi Arabia, for its part, is also poised to increase oil output amid reports that President Trump put pressure on The Saudis to reign in higher oil prices that hit the $80 mark last month.

A perfect storm

Saudi Arabia, which has been OPEC’s de facto leader for decades, has also caused a rift in the oil exporting cartel recently by speaking on behalf of OPEC without the consent of all of its 14 members.

Regional rival Iran has taken Saudi Arabia to task over this overture. Last week, Iranian oil minister Bijan Zanganeh said OPEC ministers “have implicitly or unwittingly spoken for the organization, expressing views that might be perceived as the official position of the OPEC.” This is obviously a reference to Saudi Arabia’s comments over the situation.

The obvious tension being felt by Iran over upcoming sanctions ratcheted up yet another level on Friday when the Islamic Republic said that a request from the U.S. to Saudi Arabia to pump more oil to cover a drop in its own oil output was “crazy and astonishing.” It added that OPEC would not heed that appeal.

However, it’s likely, given the sway Washington still has with Riyadh and both U.S. and Saudi Arabia falling on the same side of trying to prevent further Iranian influence in the region, that Trump’s request will be granted.

U.S. oil production, on the back of shale output is also still increasing, though infrastructure bottle necks will restrain more U.S. oil coming out of the Permian basin until at least some time next year, a development that is also creating a wide divergence between global oil benchmark Brent and NYMEX-traded West Texas Intermediate (WTI) crude. The price divergence as of June 8 stood at neatly $11 per barrel, creating arbitrate opportunities for U.S. producers and traders, particularly in Asia.

The U.S., which bypassed Saudi Arabia recently to become the world’s second largest oil producer is poised to overtake Russia either later this year or the start of next year when U.S. output will reach around 11 million bpd. However, if the OPEC/non-OPEC deal is modified in June, allowing more Russian production, the time frame for the U.S. becoming the top global oil producer will be modified.

OPEC and other leading oil producers including Russia will meet in Vienna on June 22-23 to discuss the future of the deal, which is valid until the end of this year.

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Trump’s Totally Free Trade Idea Is Really Smart

TrumpG7 At the G-7 summit meeting in Quebec, President Donald Trump reportedly suggested the idea of totally free trade to the leaders of Canada, Germany, Britain, France, Italy, and Japan. “Ultimately that’s what you want, you want tariff free, no barriers, and you want no subsides because you have some countries subsidizing industries and that’s not fair,” Trump said. “So you go tariff free, you go barrier free, you go subsidy free, that’s the way you learned at the Wharton School of Finance.” Let’s call that insight waging trade peace.

Well, hooray! Tariffs and other trade barriers are taxes on consumers and protections for the profits of uncompetitive corporations. So how high are tariffs now? According to the World Bank, U.S. tariffs applied to all products average about 1.6 percent. That happens to be the identical rate for Germany, France, Italy, and the United Kingdom. Japan’s average is 1.3 percent and Canada’s is the lowest at 0.8 percent. In other words, we and our allies are well down the path toward totally free trade.

Trump’s salutary sentiment in favor of totally free trade was, however, swept away in a fit of Twitter pique at Canadian Prime Minister Justin Trudeau who rather mildly suggested that Canadians would retaliate against Trump’s new tariffs on Canadian steel and aluminum. Miffed at the pushback from Trudeau, Trump tweeted, “Our Tariffs are in response to his of 270% on dairy!” As my Reason colleague Eric Boehm astutely points out, this tweet undermines the president’s specious national security rationale for steel and aluminum tariffs.

The president’s smart call to eliminate not only tariffs but also subsidies complicates his complaint about Canada’s tariffs on American dairy products because the U.S. dairy sector is massively subsidized by the federal government. Americans for Tax Reform reported in 2012 that as a result of the federal government’s system of dairy price supports the “U.S. prices for butter are twice that of world market prices, while cheese prices were 50 percent higher, and nonfat dry milk prices were 30% than world averages.” Despite this distortion of market prices, U.S. dairy exports to Canada amount to about $300 million annually, or just under 0.09 percent of $341 billion in U.S. goods and services exported to Canada. Overall, the U.S. ran a trade surplus of $8.4 billion with our northern neighbor last year.

Eliminating tariffs, quotas, and subsidies would hugely benefit consumers not only in the U.S. but around the world. For example, a 2010 study by European economists estimating the effect of totally eliminating all trade barriers between the United States and the European Union found that that would boost incomes in the E.U. by as much as $86 billion and incomes in the U.S. by as much $82 billion annually. A 2016 study on the economic effects of broader free trade under the Trans-Pacific Partnership agreement (rejected by Trump) found that its adoption would have resulted in an increase in annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and an increase in annual exports by $357 billion, or 9.1 percent of exports, over baseline projections by 2030.

On the other hand, a 2017 World Bank study on the costs of protectionism estimated what would happen if countries around the world all increased their tariffs to the legal limits allowed under the World Trade Organization’s rules. If that happened, global average tariff rates would more than triple from 2.7 percent to 10.2 percent. That increase would result in real income losses of 0.8 percent or more than $634 billion relative to baseline estimates after three years. In addition, global trade would fall by 9 percent or more than $2.6 trillion relative to baseline estimates by 2020. Overall, average incomes in the U.S. would be 0.4 percent lower in 2020 than they would otherwise have been.

During the 2016 presidential campaign, Trump threatened to impose a 45 percent tariff on foreign goods. In order to raise tariffs that high, the U.S. would have to withdraw entirely from the World Trade Organizaiton. In a 2017 study, Chinese economists modeled how such a huge across-the board-increase in tariffs would impact the U.S. economy. The results are not pretty. “The U.S. experiences the biggest welfare loss, and its real wages will drop by 2.2 percent,” they estimated. In contrast, the real wages in China would fall a negligible 0.03 percent.

The evidence is conclusive that the U.S. loses hugely if the president launches a trade war and wins big if he chooses instead to wage trade peace.

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Fired Tesla Former Safety Director Claims Unreported Workplace Injuries In New Lawsuit

A new lawsuit accuses Tesla of “unsafe and unhealthy working conditions and work practices,” including chemical and oil spills, chemical fires, workplace injury rate discrepancies and inaccuracies, and a failure to report or document workplace injuries.”

Questions and concerns about workplace safety incidents at Tesla continue, with the latest chapter in the story coming from the company’s former safety director who is suing the company. In a lawsuit that was first reported by Jalopnik, the company’s former safety director alleges that he was fired in retaliation for bringing up concerns about safety and incident reporting – the same types of concerns that were detailed in a Reveal expose that was published in April. The Reveal expose prompted a safety investigation from California regulators.

According to Jalopnik, Director of Environmental Health, Safety and Sustainability Carlos Ramirez – who had previously worked as Vice President of Safety for SolarCity – was fired in June 2017. Allegedly, in order to embrace his new job as director of safety at Tesla, he needed to audit the company’s incident reporting system, which is essentially a database of accidents and injuries.

As he details in the lawsuit, once he looked into this incident reporting system that he found “numerous instances of lack of treatment of Tesla employees that suffered workplace injuries, recordkeeping violations, and improper classification of workplace injuries to avoid treating and reporting workplace injuries.”

He then reported all this to Tesla, who subsequently fired him weeks later in order to shut him up. He also alleges in the lawsuit that Tesla simply made untrue statements to the state and the public regarding safety at their Fremont plant.

As Jalopnik adds, workplace safety issues came to light after Reveal’s expose in April:

Issues surrounding Tesla’s workplace records came to light in April, after the nonprofit Center for Investigative Reporting’s publication Reveal put out a story that said Tesla improperly classifies injuries on the OSHA 300 report—paperwork by the government required to log serious work-related injuries and illnesses—which effectively bolstered its safety record.

California regulators launched an investigation the next day, without saying whether it was in response to Reveal’s report. Tesla vehemently denied the allegations and insisted its workplace injury rate is better than the auto industry’s average. (Incredibly, the automaker went so far as to label Reveal, a Pulitzer Prize-winning nonprofit news outlet, of being an “extremist organization.”)

Among other things, the Reveal article questioned the lack of the color yellow – used to mark risky areas or hazards in a factory setting. Reveal was told that this was because “Elon does not like the color yellow.” Photos in the Reveal expose show plenty of red…

…but no little yellow.

The new Jalopnik article notes that Ramirez seemed to be front and center in noticing these very same issues, as well as questionable incident reporting standards. For instance, it was reported that during May he attended a workplace meeting where he reported unsafe working conditions. Weeks after that, according to the lawsuit, he was fired:

At a May 19, 2017, workplace meeting, Ramirez alleges he reported “unsafe and unhealthy working conditions and practices” and “disclosed information he had reasonable cause to believe disclosed a violation” of state or federal laws, including “allegedly inaccurate Tesla OSHA 300 records, incident rate numbers, and improper classification of workplace injuries.”

Weeks later, the suit says, Tesla fired him.

“Among other adverse employment actions, Tesla wrongfully accused Plaintiff of bullying, brought unfounded complaints against him, and terminated Plaintiff’s employment on June 8, 2017,” the lawsuit alleges.

Ramirez’s suit lays out a litany of issues that he said he raised to Tesla about “unsafe and unhealthy working conditions and work practices,” including chemical and oil spills, chemical fires, workplace injury rate discrepancies and inaccuracies, and a failure to report or document workplace injuries.

He also claims he was the target of racial discrimination:

Around the time of the May 2017 meeting, Ramirez alleges he also complained to his boss about two Tesla employees being “racially biased” toward him. (Ramirez identifies as a Mexican-American Hispanic in the suit.)

Ramirez says his supervisor asked him if he “really needed to send” an email “that contained a complaint and report of such lawful conduct,” according to the suit. “He told Plaintiff that his complaint would just create problems.”

Tesla released a statement in response, accusing Ramirez of bullying and harrassment:

Mr. Ramirez was employed by Tesla for less than four months after joining from SolarCity, and during his short time at Tesla, it was his job to identify ways to enhance our safety program, and he certainly was not terminated for doing so. That would make no sense.

Mr. Ramirez was terminated because after an extensive investigation, it was clear that he had engaged over and over again in harassing workplace behavior and used extremely inappropriate language that violated any reasonable standard. We conducted our investigation after we received an onslaught of complaints about Mr. Ramirez’s behavior, with nearly a dozen different employees stating that he engaged in clear bullying, sought to intimidate his colleagues, and repeatedly made inappropriate comments about women. Importantly, this was not a case of he said/she said. There were literally almost a dozen people who came forward to complain about Mr. Ramirez – notably, from a wide variety of different locations and departments within the company, some of whom were Mr. Ramirez’s direct reports and others who were his peers in other departments. Among the evidence that was provided:

One employee said that Mr. Ramirez commented on a fellow employee by saying ‘she’s got some big old [expletive].’ This obviously made the employee very uncomfortable.

One of Mr. Ramirez’s direct reports said that he made inappropriate comments towards women, calling them names like ‘hun’, and that he regularly tried to intimidate others.

Another employee told her manager that because of the abrasive language that Mr. Ramirez repeatedly used against her, she never wanted to interact with him again.

One of Mr. Ramirez’s direct reports said that he regularly mistreated his team, and that she felt he bullied team members and others with abusive remarks.

Multiple employees said that they were fearful of coming forward because they had witnessed Mr. Ramirez engage in intimidation and they were scared of being retaliated against by him.

Bullying and harassment have no place at Tesla.

You can read the full lawsuit here.

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The Most Important Fact About the Singapore Summit

The most important fact about the Trump-Kim summit is that less than a year ago both of these men sounded like they were ready to launch a nuclear war. For anyone who gives a rat’s ass about the millions of people who would die in such a conflict, the difference between then and now is as welcome as it is stark. If you’re not pleased with that shift—if you’re firing off tweets about what a “propaganda victory” it is for Kim to share a stage with a U.S. president (as if such trivial status games are what’s important here) or why Donald Trump is supposedly Neville Chamberlain (because Munich is one of the two or three moments in diplomatic history that you’re vaguely aware of)—then your priorities are desperately askew. The deescalation we’re seeing now is infinitely preferable to the needless escalation we witnessed last summer.

Is it gross for a president to flatter a vile dictator? Yes. But let’s be clear: Presidents flatter vile dictators all the time. (Google “Saudi Arabia.”) At least in this case there’s the hope of cooling off those nuclear tensions, and of boosting rather than undermining South Korea’s push for peace. Trump is even skylarking about perhaps one day pulling America’s troops out of the peninsula. I’ll believe that when I see it, but it’s surely better to have it on the rhetorical table than to have it be as unthinkable to the president as it is to the foreign-policy Blob.

Yes, the Bolton-Pence sabotage caucus could still crash this in countless ways. None of this is irreversible, and we may reach a day when the Korean peace process is as depleted as the diplomatic initiatives Trump smothered in Iran and Cuba. But for now the trajectory is in the right direction. The issue that last year looked like it could turn into the worst legacy of the Trump presidency now has a chance to be the bright spot. If nothing else, there is at least one way that life in June of 2018 is better than life in August of 2017.

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