The Pandemic’s Economic Carnage Looks Worse Than Expected

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If you thought the economic toll wrought by the COVID-19 pandemic was only going to be horrendous, you may have been overly optimistic. A combination of voluntary behavior changes and government-imposed lockdowns that choked-off social and economic activity are now projected to have even worse consequences than economists initially feared. Life may start returning to normal sometime next year, but there will be lasting pain even if we avoid another wave of the virus.

“Global output is projected to decline by 4.9 percent in 2020, 1.9 percentage points below our April forecast, followed by a partial recovery, with growth at 5.4 percent in 2021,” Gita Gopinath, Director of the Research Department at the International Monetary Fund (IMF), wrote this week.

As depressing as the IMF’s numbers are, the Organization for Economic Cooperation and Development (OECD) is actually more pessimistic. The OECD predicts that, if we’re hit by only one wave of COVID-19, global economic activity will fall by 6 percent this year, with five years of income growth lost. A second wave of infections would drive world economic output down by 7.6 percent in 2020.

Despite the high number of infections in the United States, our economy may get off relatively lightly compared to some other countries. The IMF sees American economic activity dropping by 8 percent this year, compared to 10.2 percent for the Euro Area and the UK. Brazil’s economic activity is projected to drop 9.1 percent, Canada’s by 8.4 percent, Russia’s by 6.6 percent, and India’s by 4.5 percent. Japan is expected to take a 5.8 percent hit.

China, where the outbreak started, could actually eke out 1 percent of growth.

OECD projections, though more downbeat, largely bracket the IMF numbers depending on whether the world is hit once by the virus or suffers a second wave.

The reason for the grim and worsening economic outlook is both the virus and the tradeoffs inherent in shutting down economies in an attempt to stem infection.

“The COVID-19 pandemic pushed economies into a Great Lockdown, which helped contain the virus and save lives, but also triggered the worst recession since the Great Depression,” writes Gopinath.

“The lockdown measures brought in by most governments have succeeded in slowing the spread of the virus and in reducing the death toll but they have also frozen business activity in many sectors, widened inequality, disrupted education and undermined confidence in the future,” agrees the OECD.

There’s a recognition from both organizations that ordering stores and offices closed and people to stay at home may slow the spread of disease, but it comes at a cost in terms of the physical and mental well-being that depend on prosperity. Protecting good health requires not just efforts against a new virus, but also making a living so we can afford food, clothing, shelter, medicine, and the other necessities of life.

That’s not to say that lifting lockdown orders necessarily stems all of the economic carnage. We saw evidence last month that people started sheltering from the virus before they were ever told to do so, and that they started emerging from their homes before government officials gave the go-ahead. That is, people make their own decisions and aren’t just tools of government policy.

“We find that COVID-19 induced high-income households to self-isolate and sharply reduce spending in sectors that require physical interaction,” concludes a new paper from a Harvard University economic research team led by Raj Chetty. “This spending shock in turn led to losses in business revenue and layoffs of low-income workers at firms that cater to high-income consumers, ultimately reducing their own consumption levels.”

The same paper finds that government stimulus programs intended to offset pandemic-related losses are largely ineffective.

“Stimulus checks increase spending  particularly among low-income households, but very little of the additional spending flows to the businesses most affected by the COVID shock; and loans to small businesses have little impact on employment rates,” write the paper’s authors (that’s without mentioning that $1.4 billion went to hard-to-stimulate dead people).

So, government officials might have the power to worsen the economic impact of the pandemic by ordering businesses closed and populations confined to their homes and by punishing those they catch in violation, but they can’t just flip prosperity back on like a light switch. People will start spending and investing when they feel confident and not because they’ve been told to do so or been handed a sum of magic money created by politicians out of thin air.

That’s unpleasant news for the many governments that have spent heavily in response to COVID-19 during a period of shrinking revenue. “Public debt is projected to reach this year the highest level in recorded history in relation to GDP, in both advanced and emerging market and developing economies,” notes the IMF’s Gopinath.

The OECD predicts a 24.49 percent increase in public debt for the United States – with another 6.83 percent in case of a second wave of the virus. That level of debt will have lasting effects on government finances, not to mention the burdens placed on taxpayers.

“Countries will need sound fiscal frameworks for medium-term consolidation, through cutting back on wasteful spending, widening the tax base, minimizing tax avoidance, and greater progressivity in taxation in some countries,” adds Gopinath.

For years to come, that is likely to look an awful lot like an accelerated game of whack-a-mole between tax collectors and a public that gets less than ever for its forcibly extracted money.

Given the realities of voluntary responses to the global pandemic, some of this pain was unavoidable. Many people were going to choose to self-isolate, reduce spending, and generally hunker down to weather COVID-19. But there’s no doubt that governments exacerbated the pain with lockdown orders that curtailed economic activity against the wishes of those who prefer to make their own decisions. Those orders made the world poorer, and less free, than it otherwise would have been.

So, hold on tight. The pandemic isn’t over, and neither is the pain caused by the virus itself as well as by the policies that are intended to hold it in check.

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New York Arrests and Charges First Cop for Breaking a New Ban on Chokeholds

Screen Shot 2020-06-26 at 7.21.57 AM

Former New York City Police Department (NYPD) officer David Afanador has been arrested and charged with strangulation and attempted strangulation, after violating the city’s brand new ban on police choking suspects. That law—the Eric Garner Anti-Chokehold Act, named after the man killed by police in 2014 for selling black-market cigarettes—was passed by state lawmakers on June 8. It “establishes the crime of aggravated strangulation for police officers or peace officers where such officer commits the crime of criminal obstruction or breathing or blood circulation, or uses a chokehold or similar restraint, and causes serious physical injury or death.”

This past Sunday, Afanador used a chokehold on Ricky Bellevue, a 35-year-old black man he was arresting on a Far Rockaway, Queens, boardwalk, after cops were summoned there about someone shouting things in a way that scared someone passing by. Afanador had his arm around Bellevue’s neck until Bellevue appeared to pass out.

Video of the arrest and illegal restraint was first shared on Facebook, and then the NYPD released body camera footage of the whole encounter. The body-cam video shows Bellevue and two friends walking on a boardwalk, talking with and periodically yelling things at some police officers. An NYPD spokesperson told BuzzFeed that officers were there because someone had called about a man being disorderly.

In the body-cam footage, a friend of Bellevue—who was charged and tackled to the ground after reaching toward a public trash can—can be heard repeatedly shouting “Yo, stop choking him! He’s choking him! Let him go!”

The officer eventually stops. After a little bit, cops pull the handcuffed man up and march him toward their vehicle. As he’s handcuffed, the man who was choked tells police he is bipolar and asthmatic.

“My whole body hurts,” Bellevue tells the police at one point.

On Thursday, the Queens District Attorney’s Office announced that Afanador had been “charged with attempted aggravated strangulation and strangulation in the second degree” and faces up to 7 years in prison if convicted. It also said that Afanador was “suspended without pay by the New York City Police Department hours after a video of the incident went viral online.”

Here’s how the D.A.’s office describes the incident:

Afanador was responding to a call of someone screaming and yelling at people on the Boardwalk shortly after 8 a.m., Sunday, June 21, 2020. Afanador and several other police officers encountered 3 men who proceeded to taunt and heckle the officers as a couple of them simultaneously video recorded the police on their cell phones. At one point, 35-year-old Ricky Bellevue asked the police officers if they were scared and appeared to retrieve a can from a trash receptacle. That’s when 4 police officers grabbed Bellevue, including Afanador, who allegedly wrapped his arm around the man’s neck as he was pinned to the ground.

Also on Thursday, police officer Jordy Yanes Martel of Miami Gardens, Florida, was arrested after having knelt on the neck of a pregnant woman and tased her in the stomach multiple times. This abuse, which took place in January—and preceded the woman miscarrying—was caught on video. The video contradicted Martel’s claims that the woman was resisting arrest.

But Martel was not fired until last week—and not for the abuse of the pregnant woman, but for a separate “excessive force complaint in a March incident at a RaceTrac gas station,” reports Forbes. The Miami-Dade State Attorney announced yesterday that Martel had been arrested and charged with battery and official misconduct.


FREE MARKETS

Last week saw 1.48 million new unemployment claims filed in the U.S. That number, announced Thursday, is higher than had been predicted—”economists surveyed by Dow Jones had been expecting 1.35 million claims,” notes CNBC. But “those receiving benefits fell below 20 million for the first time in two months.”

“New jobless claims have topped 1 million for 14 straight weeks,” ABC points out. “Prior to the coronavirus pandemic, the record for weekly unemployment filings was 695,000 in 1982.”


FREE MINDS

The New York Times criticizes fireworks conspiracy theories (which had been promoted by one of the paper’s star reporters, Nikole Hannah-Jones, on Twitter). The “far-fetched theories,” as the Times describes them, suggest that the recent surge in amateur neighborhood fireworks isn’t simply stay-at-home summertime revelry but some sort of covert government operation to terrorize poor neighborhoods and people of color—”a form of psychological warfare, with the light and noise meant to desensitize people to potentially escalating levels of force.”

While the Times can’t definitively disprove it, the paper throws water on some of the supporting “evidence” for theses theories, which mostly revolves around people feeling neighborhood fireworks displays are too large and professional-looking. As the Times points out:

Fireworks are being sold legally just over state lines in neighboring states like Pennsylvania. They are on sale in huge quantities at bargain prices as businesses, only recently reopened because of the pandemic, meet consumers eager for a flashy diversion or illegal resale opportunity, particularly as the weather warms and Independence Day nears.

In calling for investigations of these fireworks being brought into NYC, people worried about police brutality may inadvertently endanger those just trying to have a little harmless fun in a way city authorities don’t approve of.


QUICK HITS

• The Supreme Court gives a green light to part of the Trump administration’s immigration crackdown. “In a 7–2 vote, the court said people who fail to make a valid case for asylum in their initial screenings, by credibly claiming that they fear persecution at home, can be fast-tracked for deportation and cannot challenge that decision in federal court,” NBC explains.

• “De-militarizing our police should not only be about taking away gear that is too often used to conduct violent raids on nonviolent suspects,” writes Cato Institute research fellow Trevor Burrus. “It should also be about reforming the mindset, held by too many officers, that they are soldiers going to war against their fellow citizens.”

• Former Senate Majority Leader Harry Reid continues trying to rewrite the history of the 2016 election:

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New York Arrests and Charges First Cop for Breaking a New Ban on Chokeholds

Screen Shot 2020-06-26 at 7.21.57 AM

Former New York City Police Department (NYPD) officer David Afanador has been arrested and charged with strangulation and attempted strangulation, after violating the city’s brand new ban on police choking suspects. That law—the Eric Garner Anti-Chokehold Act, named after the man killed by police in 2014 for selling black-market cigarettes—was passed by state lawmakers on June 8. It “establishes the crime of aggravated strangulation for police officers or peace officers where such officer commits the crime of criminal obstruction or breathing or blood circulation, or uses a chokehold or similar restraint, and causes serious physical injury or death.”

This past Sunday, Afanador used a chokehold on Ricky Bellevue, a 35-year-old black man he was arresting on a Far Rockaway, Queens, boardwalk, after cops were summoned there about someone shouting things in a way that scared someone passing by. Afanador had his arm around Bellevue’s neck until Bellevue appeared to pass out.

Video of the arrest and illegal restraint was first shared on Facebook, and then the NYPD released body camera footage of the whole encounter. The body-cam video shows Bellevue and two friends walking on a boardwalk, talking with and periodically yelling things at some police officers. An NYPD spokesperson told BuzzFeed that officers were there because someone had called about a man being disorderly.

In the body-cam footage, a friend of Bellevue—who was charged and tackled to the ground after reaching toward a public trash can—can be heard repeatedly shouting “Yo, stop choking him! He’s choking him! Let him go!”

The officer eventually stops. After a little bit, cops pull the handcuffed man up and march him toward their vehicle. As he’s handcuffed, the man who was choked tells police he is bipolar and asthmatic.

“My whole body hurts,” Bellevue tells the police at one point.

On Thursday, the Queens District Attorney’s Office announced that Afanador had been “charged with attempted aggravated strangulation and strangulation in the second degree” and faces up to 7 years in prison if convicted. It also said that Afanador was “suspended without pay by the New York City Police Department hours after a video of the incident went viral online.”

Here’s how the D.A.’s office describes the incident:

Afanador was responding to a call of someone screaming and yelling at people on the Boardwalk shortly after 8 a.m., Sunday, June 21, 2020. Afanador and several other police officers encountered 3 men who proceeded to taunt and heckle the officers as a couple of them simultaneously video recorded the police on their cell phones. At one point, 35-year-old Ricky Bellevue asked the police officers if they were scared and appeared to retrieve a can from a trash receptacle. That’s when 4 police officers grabbed Bellevue, including Afanador, who allegedly wrapped his arm around the man’s neck as he was pinned to the ground.

Also on Thursday, police officer Jordy Yanes Martel of Miami Gardens, Florida, was arrested after having knelt on the neck of a pregnant woman and tased her in the stomach multiple times. This abuse, which took place in January—and preceded the woman miscarrying—was caught on video. The video contradicted Martel’s claims that the woman was resisting arrest.

But Martel was not fired until last week—and not for the abuse of the pregnant woman, but for a separate “excessive force complaint in a March incident at a RaceTrac gas station,” reports Forbes. The Miami-Dade State Attorney announced yesterday that Martel had been arrested and charged with battery and official misconduct.


FREE MARKETS

Last week saw 1.48 million new unemployment claims filed in the U.S. That number, announced Thursday, is higher than had been predicted—”economists surveyed by Dow Jones had been expecting 1.35 million claims,” notes CNBC. But “those receiving benefits fell below 20 million for the first time in two months.”

“New jobless claims have topped 1 million for 14 straight weeks,” ABC points out. “Prior to the coronavirus pandemic, the record for weekly unemployment filings was 695,000 in 1982.”


FREE MINDS

The New York Times criticizes fireworks conspiracy theories (which had been promoted by one of the paper’s star reporters, Nikole Hannah-Jones, on Twitter). The “far-fetched theories,” as the Times describes them, suggest that the recent surge in amateur neighborhood fireworks isn’t simply stay-at-home summertime revelry but some sort of covert government operation to terrorize poor neighborhoods and people of color—”a form of psychological warfare, with the light and noise meant to desensitize people to potentially escalating levels of force.”

While the Times can’t definitively disprove it, the paper throws water on some of the supporting “evidence” for theses theories, which mostly revolves around people feeling neighborhood fireworks displays are too large and professional-looking. As the Times points out:

Fireworks are being sold legally just over state lines in neighboring states like Pennsylvania. They are on sale in huge quantities at bargain prices as businesses, only recently reopened because of the pandemic, meet consumers eager for a flashy diversion or illegal resale opportunity, particularly as the weather warms and Independence Day nears.

In calling for investigations of these fireworks being brought into NYC, people worried about police brutality may inadvertently endanger those just trying to have a little harmless fun in a way city authorities don’t approve of.


QUICK HITS

• The Supreme Court gives a green light to part of the Trump administration’s immigration crackdown. “In a 7–2 vote, the court said people who fail to make a valid case for asylum in their initial screenings, by credibly claiming that they fear persecution at home, can be fast-tracked for deportation and cannot challenge that decision in federal court,” NBC explains.

• “De-militarizing our police should not only be about taking away gear that is too often used to conduct violent raids on nonviolent suspects,” writes Cato Institute research fellow Trevor Burrus. “It should also be about reforming the mindset, held by too many officers, that they are soldiers going to war against their fellow citizens.”

• Former Senate Majority Leader Harry Reid continues trying to rewrite the history of the 2016 election:

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Rhetoric, Polarities, and Trump

Farnsworth

This week I’ve been posting about principles of style that made the writing of Lincoln, Churchill, and Holmes so potent. The posts are all taken from this new book that I hope you will check out if you’ve found the discussions interesting. (Otherwise I just thank you for your patience.)

The examples this week have all involved the choice between different kinds of words: Latinate vs. Saxon, simple vs. complex, abstract vs. visual. The book also talks about many other issues: the lengths of sentences, active vs. passive voice, cadences, etc. It shows how great writers have made use of contrast in working with those variables, and how the contrasts have lent power to their words.

Those examples are part of a general argument that I mentioned on Monday and to which I’ll return here in brief. It is that our culture of advice about good writing is inadequate. Don’t get me wrong: usually being clear and concise is the best thing a writer can do, and sometimes it’s the only thing a writer should worry about. But if you want your words to do more than just convey information—if you want to move others to action, or even just hold their attention—there is more to know. The “more” is the study of rhetoric.

To put it differently: conventional books about writing often talk as though you get better by pushing as far as you can in one direction: toward more simplicity. But rhetorical force requires two things, not one. The two things might be plain and fancy words, long and short sentences, high or rich substance and low or simple style (or vice versa), the concrete and the abstract, the formal and the informal, or other pairs. If you want your writing to cook, learn how to play with those polarities.

You might wonder what relevance rhetoric can have in the age of Trump. But Trump confirms the importance of all this. He is a user of polarities. Put dignified language into his mouth and he amounts to nothing; put his undignified language into the mouth of someone with ordinary status, and he too would amount to nothing. But such a casual lack of dignity in a tycoon, television star, and presidential candidate—this was something! A more vivid collision of high and low would be hard to devise, and many people have found it compelling or refreshing or amusing enough to make all objections seem trivial.

My book isn’t quite about that sort of rhetorical polarity—not principally, anyway. It’s about other polarities that have been effective in the hands of talented writers and talkers. The methods of earlier eras may not be working as well as the methods of Trump under current conditions (but don’t jump to conclusions; Trump hasn’t been challenged by a Lincoln). Even if so, however, the comings and goings of such appeals run in cycles. The principles of rhetorical power are always worthy of study—or, failing that, fun to know about—no matter what shape they’re taking at the moment.

If you’re interested in these themes, here’s a last link to the book that goes into detail about them; it’s part of a series on rhetoric that also includes this one and this one.

I’m very grateful to Eugene and his crew for letting me visit their great blog and talk about all this. I’ve posted about other books here before—one about thinking like a lawyer, another about the law of restitution, another about Stoic philosophy—and have made good friends among those who found them here. Keep up the good work, Eugene!

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via IFTTT

Why Is California Targeting the Tech Firms That Drive Its Economy?

ibpremium897877

During a house-shopping visit to a small industrial city in Ohio where I had taken my first newspaper job, I asked a local, “What’s that smell?” His answer: “What smell?” Residents there had become so accustomed to the industrial scents from the city’s massive chemical plant and oil refinery that they didn’t notice them anymore. When out-of-town visitors would ask me the same question, I’d say: “It’s the smell of money and jobs.”

After the refinery announced plans to shut down, local and state officials desperately tried to convince the company to stay put—and finally intervened to help find a buyer. I don’t believe in such government meddling, but viewed the reaction as understandable. Officials rarely want to lose companies—even old, smelly ones—that fund their budgets and employ their residents.

California, however, is a different animal. Democratic leaders have long lived up to one of Ronald Reagan’s best quotations: “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Lately though, they have taken this further by singling out the innovative tech sector for torment—as if they’re purposely trying to drive these companies to Texas or Arizona. Unlike in Rust Belt states, that industry provides jobs and money without the air-polluting stench. In fact, these are among the most environmentally friendly industries imaginable.

California officials are constantly bleating about our status as the world’s fifth-largest economy. Its $2.7 trillion Gross Domestic Product has surpassed Great Britain—putting California behind the United States as whole, China, Japan, and Germany. The biggest economic driver here is the tech economy.

Officials should not provide tech firms with special favors—nor should they hobble them. The most obvious example of the latter is Assembly Bill 5, which codifies the California Supreme Court’s 2018 Dynamex decision. The court created a strict new “ABC Test” for determining when a company can use contractors as workers. Simply put, they can never use them to fulfill core company functions (e.g., drivers for a delivery company).

Lawmakers carved out myriad exemptions for traditional businesses (lawyers, engineers, insurance brokers, etc.)—and have agreed to carve out more (musicians) after the law’s implementation led to widespread job losses. But the measure specifically targeted Transportation Network Companies (TNCs) such as Uber and Lyft, and app-based delivery services such as DoorDash and Amazon. The state refuses to relent, even though AB 5 undermines these companies’ business model.

This month, the California Public Utilities Commission, which regulates these businesses, announced that these “drivers are presumed to be employees and the commission must ensure that TNCs comply with those requirements that are applicable to the employees of an entity subject to the commission’s jurisdiction.” The agency will not wait until lawsuits and a November ballot initiative resolve matters.

Meanwhile, Attorney General Xavier Becerra and city attorneys from Los Angeles, San Diego and San Francisco last month filed a controversial lawsuit against Uber and Lyft. They alleged that, “the illicit cost savings defendants have reaped as a result of avoiding employer contributions to state and local unemployment and social insurance programs totals well into the hundreds of millions of dollars.” Gov. Gavin Newsom included $20 million to fund enforcement actions.

In a separate matter, the California Department of Tax and Fee Administration last year sent letters to small businesses across the country that sell products to Californians on online platforms such as Fulfillment by Amazon. The department told them they owe eight years of back taxes. It considers these mostly mom-and-pop firms to have a “physical presence” in California if they distributed products through a third-party warehouse. It was a troubling attack on small businesses, but also on the tech-based firms that drive California’s economy.

During the coronavirus shutdowns, Tesla CEO Elon Musk became so frustrated with California officials that he threatened to move his Palo Alto headquarters to Texas. He announced plans to defy stay-at-home orders and even sued Alameda County, where his Fremont factory is located, but later dropped the suit after working out a deal with the county. The issue was resolved, but it’s telling when a prominent business leader has to threaten to move to get regulatory relief.

In recent years, local governments haven’t been particularly friendly to their hometown companies, either. San Francisco officials have been blaming tech firms for growing income inequality and soaring home prices—even though such problems are largely the fault of the city’s tax and regulatory policies. They’ve proposed hefty taxes that target—and punish—tech companies and they sometimes direct vitriol toward them.

There’s no need to pity successful companies or grant them special deals. It’s strange, however, when state officials are so blinded by their anti-corporate ideology that they become immune to the smell of jobs and money.

This column was first published in the Orange County Register.

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via IFTTT

Rhetoric, Polarities, and Trump

Farnsworth

This week I’ve been posting about principles of style that made the writing of Lincoln, Churchill, and Holmes so potent. The posts are all taken from this new book that I hope you will check out if you’ve found the discussions interesting. (Otherwise I just thank you for your patience.)

The examples this week have all involved the choice between different kinds of words: Latinate vs. Saxon, simple vs. complex, abstract vs. visual. The book also talks about many other issues: the lengths of sentences, active vs. passive voice, cadences, etc. It shows how great writers have made use of contrast in working with those variables, and how the contrasts have lent power to their words.

Those examples are part of a general argument that I mentioned on Monday and to which I’ll return here in brief. It is that our culture of advice about good writing is inadequate. Don’t get me wrong: usually being clear and concise is the best thing a writer can do, and sometimes it’s the only thing a writer should worry about. But if you want your words to do more than just convey information—if you want to move others to action, or even just hold their attention—there is more to know. The “more” is the study of rhetoric.

To put it differently: conventional books about writing often talk as though you get better by pushing as far as you can in one direction: toward more simplicity. But rhetorical force requires two things, not one. The two things might be plain and fancy words, long and short sentences, high or rich substance and low or simple style (or vice versa), the concrete and the abstract, the formal and the informal, or other pairs. If you want your writing to cook, learn how to play with those polarities.

You might wonder what relevance rhetoric can have in the age of Trump. But Trump confirms the importance of all this. He is a user of polarities. Put dignified language into his mouth and he amounts to nothing; put his undignified language into the mouth of someone with ordinary status, and he too would amount to nothing. But such a casual lack of dignity in a tycoon, television star, and presidential candidate—this was something! A more vivid collision of high and low would be hard to devise, and many people have found it compelling or refreshing or amusing enough to make all objections seem trivial.

My book isn’t quite about that sort of rhetorical polarity—not principally, anyway. It’s about other polarities that have been effective in the hands of talented writers and talkers. The methods of earlier eras may not be working as well as the methods of Trump under current conditions (but don’t jump to conclusions; Trump hasn’t been challenged by a Lincoln). Even if so, however, the comings and goings of such appeals run in cycles. The principles of rhetorical power are always worthy of study—or, failing that, fun to know about—no matter what shape they’re taking at the moment.

If you’re interested in these themes, here’s a last link to the book that goes into detail about them; it’s part of a series on rhetoric that also includes this one and this one.

I’m very grateful to Eugene and his crew for letting me visit their great blog and talk about all this. I’ve posted about other books here before—one about thinking like a lawyer, another about the law of restitution, another about Stoic philosophy—and have made good friends among those who found them here. Keep up the good work, Eugene!

from Latest – Reason.com https://ift.tt/3i0Cpwx
via IFTTT

Why Is California Targeting the Tech Firms That Drive Its Economy?

ibpremium897877

During a house-shopping visit to a small industrial city in Ohio where I had taken my first newspaper job, I asked a local, “What’s that smell?” His answer: “What smell?” Residents there had become so accustomed to the industrial scents from the city’s massive chemical plant and oil refinery that they didn’t notice them anymore. When out-of-town visitors would ask me the same question, I’d say: “It’s the smell of money and jobs.”

After the refinery announced plans to shut down, local and state officials desperately tried to convince the company to stay put—and finally intervened to help find a buyer. I don’t believe in such government meddling, but viewed the reaction as understandable. Officials rarely want to lose companies—even old, smelly ones—that fund their budgets and employ their residents.

California, however, is a different animal. Democratic leaders have long lived up to one of Ronald Reagan’s best quotations: “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Lately though, they have taken this further by singling out the innovative tech sector for torment—as if they’re purposely trying to drive these companies to Texas or Arizona. Unlike in Rust Belt states, that industry provides jobs and money without the air-polluting stench. In fact, these are among the most environmentally friendly industries imaginable.

California officials are constantly bleating about our status as the world’s fifth-largest economy. Its $2.7 trillion Gross Domestic Product has surpassed Great Britain—putting California behind the United States as whole, China, Japan, and Germany. The biggest economic driver here is the tech economy.

Officials should not provide tech firms with special favors—nor should they hobble them. The most obvious example of the latter is Assembly Bill 5, which codifies the California Supreme Court’s 2018 Dynamex decision. The court created a strict new “ABC Test” for determining when a company can use contractors as workers. Simply put, they can never use them to fulfill core company functions (e.g., drivers for a delivery company).

Lawmakers carved out myriad exemptions for traditional businesses (lawyers, engineers, insurance brokers, etc.)—and have agreed to carve out more (musicians) after the law’s implementation led to widespread job losses. But the measure specifically targeted Transportation Network Companies (TNCs) such as Uber and Lyft, and app-based delivery services such as DoorDash and Amazon. The state refuses to relent, even though AB 5 undermines these companies’ business model.

This month, the California Public Utilities Commission, which regulates these businesses, announced that these “drivers are presumed to be employees and the commission must ensure that TNCs comply with those requirements that are applicable to the employees of an entity subject to the commission’s jurisdiction.” The agency will not wait until lawsuits and a November ballot initiative resolve matters.

Meanwhile, Attorney General Xavier Becerra and city attorneys from Los Angeles, San Diego and San Francisco last month filed a controversial lawsuit against Uber and Lyft. They alleged that, “the illicit cost savings defendants have reaped as a result of avoiding employer contributions to state and local unemployment and social insurance programs totals well into the hundreds of millions of dollars.” Gov. Gavin Newsom included $20 million to fund enforcement actions.

In a separate matter, the California Department of Tax and Fee Administration last year sent letters to small businesses across the country that sell products to Californians on online platforms such as Fulfillment by Amazon. The department told them they owe eight years of back taxes. It considers these mostly mom-and-pop firms to have a “physical presence” in California if they distributed products through a third-party warehouse. It was a troubling attack on small businesses, but also on the tech-based firms that drive California’s economy.

During the coronavirus shutdowns, Tesla CEO Elon Musk became so frustrated with California officials that he threatened to move his Palo Alto headquarters to Texas. He announced plans to defy stay-at-home orders and even sued Alameda County, where his Fremont factory is located, but later dropped the suit after working out a deal with the county. The issue was resolved, but it’s telling when a prominent business leader has to threaten to move to get regulatory relief.

In recent years, local governments haven’t been particularly friendly to their hometown companies, either. San Francisco officials have been blaming tech firms for growing income inequality and soaring home prices—even though such problems are largely the fault of the city’s tax and regulatory policies. They’ve proposed hefty taxes that target—and punish—tech companies and they sometimes direct vitriol toward them.

There’s no need to pity successful companies or grant them special deals. It’s strange, however, when state officials are so blinded by their anti-corporate ideology that they become immune to the smell of jobs and money.

This column was first published in the Orange County Register.

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Today in Supreme Court History: June 26, 2003, June 26, 2013, and June 26, 2015

6/26/2003: Justice Kennedy writes the majority opinion in Lawrence v. Texas.

6/26/2013: Justice Kennedy writes the majority opinion in U.S. v. Windsor.

6/26/2015: Justice Kennedy writes the majority opinion in Obergefell v. Hodges.

Justice Anthony Kennedy

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Today in Supreme Court History: June 26, 2003, June 26, 2013, and June 26, 2015

6/26/2003: Justice Kennedy writes the majority opinion in Lawrence v. Texas.

6/26/2013: Justice Kennedy writes the majority opinion in U.S. v. Windsor.

6/26/2015: Justice Kennedy writes the majority opinion in Obergefell v. Hodges.

Justice Anthony Kennedy

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Inhuman Conditions

minisinhumanconditions

Inhuman Conditions is a new board game loosely based on the idea of the Turing test—a way to evaluate a machine’s ability to exhibit intelligent behavior, devised by codebreaker and mathematician Alan Turing in 1950.

In the game, one player is assigned the role of either robot or human. The other is an investigator attempting to figure out whether his or her opponent is a robot through conversation. The result is a surprisingly goofy romp in which humans pretend to be robots pretending to be humans.

As with many of the entrants in today’s tabletop gaming renaissance, making it to the initial round of play requires some upfront investment of time and brainpower. But once you get into the groove, the natural logic of the game’s structure emerges, and there are just enough gimmicks—including actual inked stamps with which the investigators make their final pronouncements—to keep play light.

The robots in the game are so quirky (and even violent) that a deadpan affect won’t do you much good. The best strategy to appear human, it seems, is to be emotionally volatile, deeply awkward, and occasionally irrational.

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