US Job Openings Unexpectedly Soar Above Highest Estimate Even As Number Of Quits Tumble

US Job Openings Unexpectedly Soar Above Highest Estimate Even As Number Of Quits Tumble

For those following the recent sharp drop in job openings, or perhaps merely fascinated by the narrative that AI will cause a margin-busting corporate revolution as millions of mid-level employees are replaced by a cheap “bullshitting” AI algorithm, then today’s latest bizarro JOLTS report will come as a shock. That’s because after three months of sharp declines, the BLS reported that in April the number of job openings soared by 358K from an upward revised 9.7 million to 10.1 million, the biggest increase since Dec 2022…

…. and printing not only above the median consensus which expected the trend to continue with 9.4 million job openings this month, but came higher than the highest Wall Street estimate! As shown in the chart below, the delta to median consensus print was a whopping 703K.

According to the BLS, the biggest increase in job openings was in retail trade (+209,000); health care and social assistance (+185,000); and transportation, warehousing, and utilities (+154,000)

The sudden, bizarre reversal in the job openings trend, meant that after falling to the lowest level since Sept 2021, in April the number of job openings was 4.446 million more than the number of unemployed workers, the highest since January.

Said otherwise, after dropping to just 1.64 job openings for every unemployed worker, the lowest since Nov 2021, in April there were 1.79 openings for every worker, a sharp spike back to levels that the Fed does not want to see.

To be sure, none of the above data are credible for reasons we have discussed before but the simplest one is because the response rate of the JOLTS survey is stuck at a record low 31%. Which means that only those who actually have job openings to report do so, while two-thirds of employers are either non-responsive or their mail is quietly lost in the mail.

Another reason why today’s data is meaningless is that even as employers allegedly put up many more job wanted signs, the number of workers actually quitting their jobs – a proxy for those who believe they can get a better-paying job elsewhere, and thus strength of the overall job market – tumbled by 129K to 3.8 million, the lowest number since May 2021.

Even the Fed’s WSJ mouthpiece Nick Timiraos ignored the stellar headline print, and instead focused on the plunge in quits, writing that the “rate of workers who are voluntarily leaving their jobs (including leisure and hospitality) is returning closer to pre-pandemic levels, a possible sign of less tight labor markets. Quits tend to rise when workers think they can receive better pay by changing jobs.”

And the biggest paradox: as pointed out by Peter Tchir of Academy Securities, the seasonally adjusted JOLTS quits rate was 2.4 (we reached a “peak” of 2.4 in July 2019), while the Hires rate (also seasonally adjusted) was 3.9% just like it was 3.9 in July 2019. So allegedly there are 3,000,000 more jobs available now than then.

So what to make of this bizarro, conflicting report?

Well, after three months of drops in job openings, at a time when it is especially critical for Biden to still maintain the illusion that at least the labor market remains strong when everything else in the senile president’s economy is crashing and burning, it appears that the BLS got a tap on the shoulder once again, especially when considering that the one category that will be most impacted by ChatGPT and which according to Indeed is seeing a collapse in job postings was also the one category that had the highest number of job openings.

Tyler Durden
Wed, 05/31/2023 – 10:35

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Five Letter Words

Five Letter Words

By Elwin de Groot, Head of Macro Strategy at Rabobank

Five Letter Words

Overnight developments in the US indicated that a bill on the debt ceiling suspension and cap on federal spending –which the nonpartisan CBO yesterday estimated would cut deficits by USD 1.5 trillion over 10 years– is yet another step closer to Congressional passage, as the influential House Rules Committee voted 7-6 in favor. The bill is now on its way to the full House of Representatives. Passage today is seen as crucial to getting this bill through the Senate before the June 5 deadline. Any further delays could still spark fresh market volatility, but an actuary take on this suggests that the more progress this bill makes, the higher its survival rate is.

So for now it appears that the market’s focus will shift further towards the weakness in global manufacturing, a notion that was given fresh impetus by weak Chinese data overnight. The manufacturing index fell to 48.8 from 49.2, instead of rising slightly as per the consensus estimate. The services sector index managed to stay well in positive territory, but nevertheless fell more than expected. That raises fears that the Chinese economy has already lost most of its post-reopening momentum. The Chinese data corroborate our overall impression that the direction of travel for the global economy is negative, even though a robust services sector is limiting the pace of deterioration.

With the huge upside surprise in UK inflation for May still fresh in memory, European inflation data –from Belgium and Spain– reminded markets of the uncertainty that surrounds these data. Belgian headline inflation fell 0.4pp to 5.2% in May, as it benefited from a sharp fall in gas and electricity prices. But, just like the UK CPI, core inflation made a surprise rebound to 8.7% y/y from 8.3% in April. Looking into the details, the timing of Easter (relatively early in April) and Ascension Day and Whit Monday (both late in May) could have played into this by temporarily pushing up prices in the holiday and recreation sector. Indeed, plane tickets, holiday rooms and holiday villages and camping sites combined were good for some 0.25% of additional price increases in that month. This may reverse come June. That said, higher price increases for private rents, car repairs and eating out in restaurants and at French fries stands, a Belgian (and Dutch!) favorite, will likely not reverse. And so this Belgian core inflation number still leaves a bit of a greasy (or sticky?) aftertaste.

The better news came from Spain, where both headline and core inflation for May fell more sharply than expected. Harmonized inflation dropped 1.1 percentage points to 2.9%, so a “two” is back before the decimal point. Core inflation also declined by a reasonable 0.5pp to 6.1%, although that is obviously still “three” times the ECB’s target! Still, it was sufficient –together with slipping European economic confidence (driven by weaker industry and trade), the weakest Dallas Fed Manufacturing index since May 2020 and a sharp drop in oil prices ($3/bbl for Brent)– to leave 10y yields some 9bp lower for German government issues, and 13bp for Italian. Their Spanish counterparts did perform a tad less, but were still down 11bp, thus showing little impact from the announcement by Spanish Prime Minister Sánchez to call snap elections on 23 July instead of December this year.

As our Spain economist, Maartje Wijffelaars, notes, that decision might just as well be an attempt to limit his party’s losses in the national parliament, and his best shot at continuing to lead the country. Sánchez evidently hopes that time will be (too) short for the PP, his main opponent, to engage with right-wing party VOX in many of the regions to form a stable center-right block. Plus, the short notice would limit the chances for new or fringe parties to splinter the votes on the left, which could hurt Sánchez’ PSOE. And even if it turns out to be the end for PSOE, there currently is no real reason to expect a better or worse performance under other logical government combinations. The European Commission has recently approved the pay-out of the third tranche of the RRF funds, which suggests Spain is making adequate progress on reforms and investment.

Back to the topic of sticky inflation, RBA’s Lowe may well need a stronger mouthwash to rinse that sticky feeling as well, as Australian data showed a sharper-than-expected rise in April inflation. The headline CPI came in at 6.8%, higher than the 6.4% expected and up from 6.3% the month before. Although the inflation rate was impacted by the end of government fuel subsidy, the consensus clearly underestimated this. In a speech before senators at Parliament House (and just before the release of these data), Mr. Lowe said that the RBA is “very much in a data dependent mode” and that further interest rate hikes would depend on unit labor costs, the global economic outlook, inflation expectations and consumer spending. Well, that seems rather evident; and housing was not mentioned even though it was one of the biggest contributors to inflation in April. But, again, it shows that central banks around the world are still struggling with the question whether (underlying) inflation has truly turned the corner and whether or not they have done enough to bring it back into line at some point in the future. Our RBA watcher, Ben Picton, believes Mr. Lowe hasn’t finished the job.

Tyler Durden
Wed, 05/31/2023 – 10:05

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Chicago PMI Unexpectedly Plummets, Longest ‘Contraction’ Streak Since Lehman

Chicago PMI Unexpectedly Plummets, Longest ‘Contraction’ Streak Since Lehman

After the unexpected resurgence in April, Chicago PMI plunged in May from 48.6 to 40.4 (against expectations of 47.3). That is the ninth straight month below 50 (in contraction)…

Source: Bloomberg

That is the longest streak of prints in ‘contraction’ since the Great Financial Crisis.

Under the hood, none of the underlying drivers were higher MoM…

  • Prices paid rose at a slower pace; signaling expansion

  • New orders fell at a faster pace; signaling contraction

  • Employment fell and the direction reversed; signaling contraction

  • Inventories fell at a faster pace; signaling contraction

  • Supplier deliveries rose at a slower pace; signaling expansion

  • Production fell at a faster pace; signaling contraction

  • Order backlogs fell at a faster pace; signaling contraction

This continues a trend of ‘soft’ survey data disappointing notably.

Tyler Durden
Wed, 05/31/2023 – 09:52

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Nvidia Does All The Heavy Lifting, Can’t Prop Up Market Forever

Nvidia Does All The Heavy Lifting, Can’t Prop Up Market Forever

By Ven Ram, Bloomberg markets live reporter and strategist

What stock trades at almost 50 times its prospective earnings, 40 times its book value and still have investors chase it higher and yet higher?

Given all the recent hullabaloo surrounding artificial intelligence, you wouldn’t quite be entitled to a prize for guessing that we are talking about Nvidia. Of course, it’s more common for sport commentators to watch for the Big Milestone Number. But when many in the markets were watching Nvidia’s seemingly inexorable ascent through the $1 trillion threshold of market capitalization on Tuesday, it made for a rather unusual, if bemusing, spectacle.

It’s no secret that the bulk of the gains in the broader market have come from just a handful of stocks of late, but regardless of how alluring some of today’s stalwarts look, you can’t forever prop up an entire market on the performance of a few.

Meanwhile, the drumbeat of Fed officials seeking yet-higher interest rates is growing by the day: we had Thomas Barkin comment Tuesday that “however I look at it, it just looks like inflation is too high.” His colleague Loretta Mester has also remarked that she doesn’t see “a compelling reason to pause.”

Over in Europe, we get a slew of inflation numbers today with North Rhine Westphalia already out of the blocks, and the German national print due later in the day. Westphalia’s data has come in much weaker than forecast, and Mark Cudmore has pointed out that Westphalia inflation hasn’t diverged from the national number by more than 45 basis points in data going back decades. And of course, we got lower-than-estimated numbers out of Spain on Tuesday. Consumer prices in France, too, rose less than forecast, so there is a pretty coherent picture that is emerging before the composite numbers for the euro zone as a whole will look tomorrow.

Even so, given the current bias among inflation traders the European Central Bank will probably keep lifting rates higher.

Tyler Durden
Wed, 05/31/2023 – 09:45

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Epstein Pal Jes Staley Throws Jamie Dimon Under The Bus, Setting Stage For Massive Legal Battle

Epstein Pal Jes Staley Throws Jamie Dimon Under The Bus, Setting Stage For Massive Legal Battle

Former JPMorgan Chase executive Jes Staley has thrown CEO Jamie Dimon under the bus over the bank’s relationship with Jeffrey Epstein – claiming in legal documents that he and Dimon communicated about the convicted sex offender.

Dimon maintains he had no such conversations, the Wall Street Journal reports, while Staley claims he knew about Epstein’s sex trafficking operation and that he regrets his friendship with Epstein.

According to the filing, Staley says that he and Dimon communicated when Epstein was arrested in 2006 and 2008 when Epstein pleaded guilty to soliciting and procuring a minor for prostitution, and served 13 months in a work-release program. Staley also claims that Dimon communicated with him several times through 2012 about whether to maintain Epstein as a client.

Jes Staley

There is no evidence that any such communications ever occurred—nothing in the voluminous number of documents reviewed and nothing in the nearly dozen depositions taken, including that of our own CEO,” said a spokeswoman for JPMorgan, adding that Dimon doesn’t believe such conversations with Staley ever happened. “The one person who claims this to be true is currently accused of horrific acts and dishonesty.”

The statements arose as part of a pair of lawsuits against the bank in a federal court in Manhattan. The government of the U.S. Virgin Islands and an unnamed woman, who said she was abused by Epstein, sued JPMorgan last year, claiming that the bank facilitated Epstein’s alleged sex trafficking. 

The bank has sought to pin the bulk of the relationship on Staley and sued him claiming he misled executives about Epstein. The bank in its lawsuit identified Staley as the “powerful financial executive” accused of sexual assault by the woman who is suing JPMorgan. Staley’s lawyers have said the allegations against him are baseless. -WSJ

Rather than mislead anyone about what was or was not said, why don’t they just agree to release the whole transcript?” said an Epstein accuser’s attorney, Brad Edwards, referring to Dimon’s deposition.

Jeffrey Epstein, front in dark jacket, pleaded guilty in 2008 to soliciting and procuring a minor for prostitution. Photo: Uma Sanghvi/The Palm Beach Post/ZUMA PRESS

Epstein died in jail following his 2019 arrest on federal sex-trafficking charges. The pedophile, who became a JPMorgan client around 1998 – bringing the bank hundreds of millions of dollars, formed a close bond with Staley, who eventually oversaw JPMorgan’s investment bank.

In August 2008, a few weeks after Epstein’s guilty plea, a JPMorgan employee sent an email that suggested Dimon would review the Epstein relationship, according to the U.S. Virgin Islands lawsuit. The email states, “I would count Epstein’s assets as a probable outflow for ’08 ($120mm or so?) as I can’t imagine it will stay (pending Dimon review).” 

The bank has said that there is no record of such a review and that Dimon doesn’t recall one. -JPMorgan

According to the Daily Mail, JPMorgan executive Mary Erdoes, who has been with the bank since 1996, continued to meet with Epstein for years after his conviction, and allowed him to stay on as a client despite the bank becoming aware of suspicious withdrawals as early as 2006.

Mary Erdoes

The bank finally severed ties with Epstein in 2013, citing him routinely withdrawing large amounts of cash. A 2006 report showed Epstein had withdrawn amounts as large as $80,000 several times, amounting to more than $750,000 in one year. -Daily Mail

Erdoes said during a deposition this week that she didn’t think it was her responsibility to flag Epstein’s accounts for review. Staley, her supervisor, allegedly asked Epstein about the allegations in person, the Washington Post reports – glazing over the fact that Staley and Epstein had a Disney princess-themed email exchange alluding to sex acts.

Tyler Durden
Wed, 05/31/2023 – 09:10

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UK Enters Worst Period Of Strikes Since Thatcher As Gov’t Calls For Price Controls

UK Enters Worst Period Of Strikes Since Thatcher As Gov’t Calls For Price Controls

The UK is headed for the second summer of strikes as the seemingly intractable cost-of-living crisis devastates household finances. British officials are so desperate to alleviate despair among Brits that they are considering drastic measures, such as implementing food price controls. 

Brits received the grim news on Tuesday as food prices remain at or near record levels. The British Retail Consortium (BRC) said annual food inflation eased from 15.7% to 15.4% this month. However, the cost of store items, known as shop price inflation, increased to 9%, a new high for the index that dates back to 2005. 

The Guardian reported the government is mulling over price caps for food, such as bread and milk, to alleviate household pain. 

In a note, Laura Suter, head of personal finance at stockbroker AJ Bell, told clients that Brits “are still wincing when their total comes up at the checkout… a weekly shop that cost £100 last year is now clocking in at £115.” 

High inflation has led to households experiencing the sharpest fall in living standards since records began. This despair has led to widespread strikes as workers demand higher wages. 

Bloomberg warned, “Britain is heading into a second consecutive summer of train strikes this week as union bosses and ministers remain at loggerheads over pay and working conditions.” 

A stunning chart by Bloomberg shows the economy has already lost 3.5 million days to strikes since last year, currently at levels not seen since the days of British Prime Minister Margaret Thatcher in the late 1980s into the early 90s. 

The next wave of strikes is expected to impact rail networks on Friday. 

 

 

Tyler Durden
Wed, 05/31/2023 – 08:50

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Childproofing the Internet


girl looking at something on her cell phone

For the past several years, lawmakers and bureaucrats around the country have been trying to solve a problem. They wanted to regulate the internet, and in particular, they wanted to censor content and undermine a variety of systems that allow for privacy and anonymity online—the systems, in other words, that allow for online individuals to conduct themselves freely and outside of the purview of politicians.

There was something like a bipartisan agreement on the necessity of these rules and regulations. Lawmakers and regulators test-drove a number of potential arguments for online speech rules, including political bias, political extremism, drug crime, or the fact some tech companies are just really big. But it turned out to be quite difficult to drum up support for wonky causes like antitrust reform or amending the internet liability law Section 230, and even harder to make the case that the sheer size of companies like Amazon was really the problem.

Their efforts tended to falter because they lacked a consensus justification. Those in power knew what they wanted to do. They just didn’t know why, or how.

But in statehouses and in Congress today, that problem appears to have been solved. Politicians looking to censor online content and more tightly regulate digital life have found their reason: child safety.

Online child safety has become an all-purpose excuse for restricting speech and interfering with private communications and business activities. In late May, Surgeon General Vivek Murthy issued an advisory on social media and youth mental health, effectively giving the White House’s blessing to the panic. And a flurry of bills have been proposed to safeguard children against the alleged evils of Big Tech.

Unlike those other failed justifications, protecting children works because protecting children from the internet has a massive built-in constituency, lending itself to truly bipartisan action.

Many people have kids old enough to use the internet, and parents are either directly concerned with what their offspring are doing and seeing online or at least susceptible to being scared about what could be done and seen.

In addition to longstanding fears surrounding kids and tech—sexual predators, namely—there’s a rising though heavily disputed belief that social media is uniquely harmful to minors’ mental health.

The resulting flurry of bills represent what one could call an attempt to childproof the internet.

It’s misguided, dangerous, and likely doomed to fail. Not only has it created a volatile situation for privacy, free expression, and other civil liberties, it also threatens to wreak havoc on any number of common online businesses and activities. And because these internet safety laws are written broadly and poorly, many could become quiet vehicles for larger expansions of state power or infringements on individual rights.

Threats to Encryption

End-to-end encryption has long been a target of government overseers. With end-to-end encryption, only the sender and recipient of a message can see it; it is scrambled as it’s transmitted between them, shielding a message’s contents from even the tech company doing the transmitting. Privacy-focused email services like Protonmail and Tutanota use it, as do direct messaging services like Signal and WhatsApp. These days, more platforms—including Google Messages and Apple’s iCloud—are beginning to offer end-to-end encryption options.

The fact that people can communicate in such ways doesn’t sit right with a certain flavor of authoritarian. But encryption also provides your average internet user with a host of benefits—not just protection from state snoops but also identity thieves and other cyber criminals, as well as prying eyes in their personal lives (parents, spouses, bosses, etc.) and at the corporations that administer these tools. Encryption is also good for national security.

An outright ban on end-to-end encryption would be politically unpopular, and probably unconstitutional, since it would effectively mandate that people communicate using tools that allow law enforcement clear and easy access, regardless of whether they are engaged in criminal activity.

So lawmakers have taken to smearing encryption as a way to aid child pornographers and terrorists, while trying to disincentivize tech companies from offering encryption tools by threatening to expose them to huge legal liabilities if they do.

That’s the gist of the Eliminating Abusive and Rampant Neglect of Interactive Technologies (EARN IT) Act, from Sen. Lindsey Graham (R–S.C.).

The heart of the measure (S. 1207) relates to Section 230, the federal communications law protecting computer services and users from civil liability for speech by other users, and what was once called child pornography but has recently been rebranded by authorities as child sexual abuse material, or CSAM. Essentially, EARN IT could make tech platforms “earn” immunity from civil liability when users upload or share such material by showing that they’re using “best practices,” as defined by a new National Commission on Online Child Sexual Exploitation Prevention, to fight its spread.

That sounds reasonable enough—until you realize that hosting child porn is already illegal, platforms are already required to report it to the National Center for Missing and Exploited Children, and tech companies already take many proactive steps to rid their sites of such images. As for civil suits, they can be brought by victims against those actually sharing said images, just not against digital entities that serve as unwitting conduits to this.

Experts believe the real target of the EARN IT Act is end-to-end encryption. While not an “independent basis for liability,” offering users encrypted messaging could be considered going against “best practices” for fighting sexual exploitation. That means companies could have to choose between offering security and privacy to their users and avoiding legal liability for anything shared by or between them.

Similar to the EARN IT Act is the Strengthening Transparency and Obligations to Protect Children Suffering from Abuse and Mistreatment (STOP CSAM) Act (S. 1199), from Sen. Dick Durbin (D–Ill.). It would also amend Section 230.

Riana Pfefferkorn of the Stanford Internet Observatory calls the bill “an anti-encryption stalking horse.” Pfefferkorn notes that “Congress has heretofore decided that if online services commit … child sex offenses, the sole enforcer should be the Department of Justice, not civil plaintiff.” But “STOP CSAM would change that.”

The bill amends Section 230 to allow civil lawsuits against interactive computer service providers (such as social media platforms) or software distribution services (such as app stores) for “conduct relating to child exploitation.” This is defined as “the intentional, knowing, or reckless promotion or facilitation of a violation” of laws against child sex trafficking, pornography, and enticement.

The big issue here is the lax and/or vague standards under which tech companies can become liable in these lawsuits. Precise legal meanings of “promote” and “facilitate” are unclear and subject to legal dispute.

Indeed, there’s an ongoing federal lawsuit over the similar language in FOSTA, the Fight Online Sex Trafficking Act, which criminalizes websites that “promote or facilitate” sex work. In that case, the challengers have argued that the language is unconstitutionally broad—an argument with which judges seemed to agree. And while it’s fairly clear what it means to act “knowingly” or “intentionally,” it’s less certain what acting “recklessly” in this circumstance would entail.

Pfefferkorn and others worry that offering encrypted communication tools could constitute acting in a “reckless” manner. As with EARN IT, this would force tech companies to choose between offering private and secure communications tools and protecting themselves from massive legal risk—a situation in which few companies would be likely to choose the latter.

Age Verification 

Threatening encryption isn’t the only way new tech bills threaten the privacy and security of everyone online. Proposals at both the state and federal level would require age verification on social media.

Age verification schemes create massive privacy and security concerns, effectively outlawing anonymity online and leaving all users vulnerable to data leaks, corporate snoops, malicious foreign actors, and domestic spying.

To verify user ages, social media companies would have to collect driver’s licenses or other state-issued ID from all users in some capacity—by having users directly submit their documentation to the platform or by relying on third-party ID services, potentially run by the government. Alternatively they may rely on biometric data, such as facial scans.

Several such proposals are currently before Congress. For instance, the Making Age-Verification Technology Uniform, Robust, and Effective (MATURE) Act (S. 419), from Sen. Josh Hawley (R–Mo.), would ban people under age 16 from social media platforms. To verify users are above age 16, platforms would have to collect full names, dates of birth, and “a scan, image, or upload of government-issued identification.” The requirement would be enforced by the Federal Trade Commission and a private right of action. (In the House, the Social Media Child Protection Act, from Utah Republican Rep. Chris Stuart, would do the same thing.)

The Protecting Kids on Social Media Act (S. 1291), from Sen. Brian Schatz (D–Hawaii), is another bill that would explicitly require social media platforms to “verify the age of their users.” This one would ban children under 13 entirely and allow 13- to 17-year-olds to join only with parental consent, in addition to prohibiting the use of “algorithmic recommendation systems” for folks under age 18.

Schatz’s bill would also launch a “digital identification credential” pilot program in the Department of Commerce, under which people could verify their ages or “their parent or guardian relationship with a minor user.” Social media platforms could choose to accept this credential instead of verifying these things on their own.

Commerce would allegedly keep no records where people used their digital identification—though considering what we know about domestic data collection, it’s hard to trust this pledge. In any event, administering the program would necessarily require obtaining and storing personal data. If widely adopted, it would essentially require people to register with the government in order to speak online.

The Kids Online Safety Act (KOSA) wouldn’t formally require age verification. But it would mandate a host of rules that social media platforms would be forced to follow for users under age 18.

The bill (S. 1409) comes from Sen. Richard Blumenthal (D–Conn.), who claims it will “stop Big Tech companies from driving toxic content at kids.” But according to Techdirt‘s Mike Masnick, it would give “more power to law enforcement, including state AGs … to effectively force websites to block information that they define as ‘harmful.'” Considering some of the things that state lawmakers are attempting to define as harmful these days—information about abortion, gender, race, etc.—that could mean a huge amount of censored content.

KOSA would also create a “duty of care” standard for social media, online video games, messaging apps, video streaming services, and any “online platform that connects to the internet and that is used, or is reasonably likely to be used, by a minor.” Covered platforms would be required to “act in the best interests” of minor users “by taking reasonable measures… to prevent and mitigate” their services from provoking a range of issues and ills. These include anxiety, depression, suicidal behavior, problematic social media use including “addiction-like behaviors,” eating disorders, bullying, harassment, sexual exploitation, drug use, tobacco use, gambling, alcohol consumption, and financial harm.

This standard would mean people can sue social media, video games, and other online digital products for failing to live up to a vague yet sprawling duty.

As with so many other similar laws, the problems arise with implementation, since the law’s language would inevitably lead to subjective interpretations. Do “like” buttons encourage “addiction-like behaviors”? Do comments encourage bullying? Does allowing any information about weight loss make a platform liable when someone develops an eating disorder? What about allowing pictures of very thin people? Or providing filters that purportedly promote unrealistic beauty standards? How do we account for the fact that what might be triggering to one young person—a personal tale of overcoming suicidal ideation, for instance—might help another young person who is struggling with the same issue?

Courts could get bogged down with answering these complicated, contentious questions. And tech companies could face a lot of time and expense defending themselves against frivolous lawsuits—unless, of course, they decide to reject speech related to any controversial issue. In which case, KOSA might encourage banning content that could actually help young people.

These bills have serious flaws, but they are also unlikely to become law.

In contrast, some state laws with similar provisions have already been codified.

In March, Utah passed a pair of laws slated to take effect in early 2024. The laws ban minors from using social media without parental approval and requires tech companies to give parents complete access to their kids’ accounts, including private messages. They also make it illegal for social media companies to show ads to minors or employ any designs or features that could spur social media “addiction”—a category that could include basically anything done to make these platforms useful, engaging, or attractive.

Utah also passed a law requiring porn platforms to verify user ages (instead of simply asking users to affirm that they are 18 or above). But the way the law is written doesn’t actually allow for compliance, the Free Speech Coalition’s Mike Stabile told Semafor. The Free Speech Coalition has filed a federal lawsuit seeking to overturn the law, arguing that it violates the First and 14th Amendments. In the meantime, Pornhub has blocked access for anyone logging on from Utah.

In Arkansas, the Social Media Safety Act—S.B. 396—emulates Utah’s law, banning kids from social media unless they get express parental consent, although it’s full of weird exceptions. It’s slated to take effect September 2023.

Meanwhile, in Louisiana, a 2022 law requires platforms where “more than thirty-three and one-third percent of total material” is “harmful to minors” to check visitor IDs. In addition to defining particular nude body parts as being de facto harmful to minors, it ropes in any “material that the average person, applying contemporary community standards” would deem to “appeal or pander” to “the prurient interest.” Porn platforms can comply by using LA Wallet, a digital driver’s license app approved by the state.

California’s Age-Appropriate Design Code Act (A.B. 2273) would effectively require platforms to institute “invasive age verification regimes—such as face-scanning or checking government-issued IDs,” as Reason‘s Emma Camp points out. The tech industry group NetChoice is suing to stop the law, which is supposed to take effect in July 2024.

The List Goes On

Those are far from the only measures—some passed, some pending—meant to protect young people from digital content.

Montana’s legislature passed a bill banning TikTok, and Montana Gov. Greg Gianforte, a Republican, signed the bill into law on May 17. In a sign of the state’s dedication to accuracy, the short title of the bill, SB 419, erroneously refers to the video-sharing app as “tik-tok.” It’s scheduled to take effect at the start of next year. The law firm Davis Wright Tremaine is already suing on behalf of five TikTok content creators, and it seems unlikely to survive a legal challenge. TikTok itself has also sued over the ban.

Back in Congress, two bills—Hawley’s No TikTok on United States Devices Act and Virginia Democrat Sen. Mark Warner’s RESTRICT Act—take aim at TikTok under the auspices of national security.

Then there’s the Cooper Davis Act (S. 1080), named after a Kansas City teenager who died after taking what he thought was a Percocet pill that he bought online. The pill was laced with fentanyl, and Cooper overdosed. Lawmakers are now using Davis’ death to push for heightened surveillance of social media chatter relating to drugs. Fentanyl is “killing our kids,” said bill co-sponsor Jeanne Shaheen (D–N.H.) in a statement. “Tragically, we’ve seen the role that social media plays in that by making it easier for young people to get their hands on these dangerous drugs.”

The bill, from Sen. Roger Marshall (R–Kansas), “would require private messaging services, social media companies, and even cloud providers to report their users to the Drug Enforcement Administration (DEA) if they find out about certain illegal drug sales,” explains the digital rights group Electronic Frontier Foundation (EFF). “This would lead to inaccurate reports and turn messaging services into government informants.”

EFF suggests the bill could be a template for lawmakers trying to force companies “to report their users to law enforcement for other unfavorable conduct or speech.”

“Demanding that anything even remotely referencing an illegal drug transaction be sent to the DEA will sweep up a ton of perfectly protected speech,” Masnick points out. “Worse, it will lead to massive overreporting of useless leads.”

The Children and Teens’ Online Privacy Protection Act (S. 1628), from Sen. Edward Markey (D–Mass.), updates the 1998 Children’s Online Privacy Protection Act (COPPA) and is being referred to by its sponsors as “COPPA 2.0.” The original bill included a range of regulations related to online data collection and marketing for platforms targeted at kids under age 13. Markey’s bill would expand some of these protections to apply to anyone under the age of 17.

It would apply some COPPA rules not just to platforms that target young people or have “actual knowledge” of their ages but to any platform “reasonably likely to be used” by minors and any users “reasonably likely to be” children. (In the House, the Kids PRIVACY Act would also expand on COPPA.)

Ultimately, this onslaught of “child protection” measures could make child and adult internet users more vulnerable to hackers, identity thieves, and snoops.

They could require the collection of even more personal information, including biometric data, and discourage the use of encrypted communication tools. They could lead social media companies to suppress a lot more legal speech. And they could shut young people out of important conversations and information, further isolating those in abusive or vulnerable situations, and subjecting young people to serious privacy violations.

Won’t somebody please actually think of the children?

The post Childproofing the Internet appeared first on Reason.com.

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Social Security and Medicare Are Ticking Time Bombs


John Stossel is seen holding a bomb

Social Security is toast.

So is Medicare.

Too many of us old people live longer, so there are not enough working people to support us.

Soon both Social Security and Medicare will be broke.

Our politicians don’t have the guts to do anything about it. Or even talk about it.

It’s easy to see why.

Recently, France’s president, trying to keep his country’s pension system from going broke, raised France’s retirement age from 62 to a measly 64.

People have been protesting ever since.

In America, politicians who even hint at such solutions get screamed at by misinformed seniors: “Don’t touch my retirement funds! You took money from my paycheck for years; that’s my money I’m getting back!”

But it’s not. It’s young people’s money. People my age rarely realize that most of us now get back triple what we paid in.

When Social Security began, a government retirement plan made financial sense. Most Americans didn’t even live until age 65. Social Security was just for the minority who did.

But now Americans live, on average, to age 76. I’m 76. Henry Kissinger is 100. Since most of us live so long, there are just not enough workers to pay for us.

Yet our vote-hungry politicians won’t say that in public.

Even former President Donald Trump cowers, saying, “No one will lay a hand on your Medicare or your Social Security.”

The most clueless, like Sen. Bernie Sanders (I–Vt.), even deny the obvious truth. He shouts: “Social Security today is not on the line going broke!”

But it just is. Reserve funds are projected to run out by 2034.

Medicare’s reserves will run out even sooner.

Of course they will. When I first got Medicare, I was surprised how no one even pays attention to costs. Everything seems free.

“Get an MRI,” says my doctor. I immediately do. I don’t ask the cost. The MRI people don’t mention it either.

Months later, I get a complex notice that says my MRI cost $2,625 and I must pay $83.65. Or sometimes, nothing. Who did pay? Blue Cross? Taxpayers? The paperwork is so complex that I don’t even know.

Old people who scour supermarkets to save a dollar on groceries never comparison shop for MRIs or heart surgery. “Why should I? Someone else pays.”

As my new video illustrates, Medicare is a bomb with a burning fuse moving closer.

“Sooner or later, it will blow up,” says economist Dan Mitchell of the Center for Freedom and Prosperity. “Politicians figure oh, well, maybe it blows up in five years or 10 years or 20 years. I won’t be in office anymore.”

Some claim raising taxes on rich people would solve the deficit, but it won’t. There just aren’t enough rich people. Even taking all the money from every billionaire wouldn’t cover our coming bankruptcy.

The only solution is cutting benefits, raising the age when benefits start (sensible, since we live longer), or, Mitchell’s preference, privatizing retirement plans, like Australia and Chile did.

America’s politicians won’t do any of those things.

So what will happen?

“The only other alternative is printing money,” says Mitchell.

“I suspect that’s what America will do,” I tell Mitchell. “We’ll be like Zimbabwe.” Zimbabwe’s president printed money to fund his deficit spending. When the currency collapsed in 2009, Zimbabwe was printing hundred trillion-dollar bills.

Yet politicians don’t learn. In the current debt ceiling deal, House Speaker Kevin McCarthy (R–Calif.) got President Joe Biden to “claw back” unused COVID relief funds and keep two years of non-defense discretionary spending roughly flat.

That’s a little progress. But Biden wants to spend a record $7 trillion next year.

McCarthy said Medicare and Social Security were “completely off the table.”

So the programs are still doomed.

“Sooner or later bad things will happen to senior citizens,” explains Mitchell. “The government will either cut their benefits or all of a sudden start rationing health care. Or reimbursement rates will be so low that you won’t be able to find a doctor or hospital to treat you.”

COPYRIGHT 2023 BY JFS PRODUCTIONS INC.

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Georgia Campus Carry Rules Upheld Against State Constitutional Separation of Powers Challenge

From today’s unanimous Georgia Supreme Court decision in Knox v. State, written by Justice Ellington:

Five University System of Georgia (“USG”) professors filed suit to block a 2017 statutory amendment that removed public colleges and other public postsecondary educational institutions from the statutory definition of “school safety zone.” Before the 2017 amendment, carrying or possessing a weapon on any real property or in any building owned by or leased to any postsecondary educational institution was a misdemeanor, and the 2017 amendment decriminalized that conduct. The professors alleged that, as a result of the 2017 amendment, the Code requires the Board of Regents, the USG, and USG institutions to permit persons to carry or possess weapons on the campuses of public postsecondary educational institutions, contrary to longstanding USG policies.

The professors sought a declaration that the statutory amendment is unconstitutional as applied because it usurps the Board’s constitutional authority to govern, control, and manage the USG and its member institutions…. In the complaint, the professors articulated in detail reasons they believe that the revised policy regarding the carrying of weapons on USG campuses, following the 2017 statutory amendments, greatly increases the risk of injury and death to themselves, their students, and other persons on USG campuses, and significantly impairs their ability to fulfill their role in the educational mission of the USG…. The professors alleged that they are injured by what they deem a “separation-of-powers violation.”

No, said the court, because the Georgia Board of Regents had itself changed its policies in response to the 2017 amendment:

[A]fter years of opposition by the Board and USG institution leaders to proposed “campus carry” legislation, the General Assembly in 2017 amended the definition of “school safety zone” to remove the criminal penalties for carrying weapons on college campuses, with several exceptions…. [But a]fter the governor approved HB 280, the Board’s chancellor provided guidance to USG institutions to “implement the law as written” and called for each institution to “review its campus conduct and weapons policies to ensure that they comply with these changes to the law.” The Board of Regents then amended its Policy Manual and adopted a weapons policy, applicable to all USG institutions, that largely mirrored the 2017 statutory amendments ….

[The professors argue] that, “[a]s a matter of law, a separation-of-powers violation is not mooted by the fact that the encroached-upon entity has acquiesced—or even affirmatively approved of—the encroachment.” …

The professors acknowledge the absence of Georgia precedent for this principle and cite as persuasive authority several United States Supreme Court cases. But even assuming we found these federal cases persuasive, they do not lead to a conclusion in this case that the professors’ claims are not moot. These federal cases share a common thread that does not run through this case. In those cases, a legislative act challenged on separation-of-powers or Tenth Amendment grounds directly caused the harm complained of, such that some indication of agreement with the legislative act by the allegedly-encroached-upon entity could not moot a challenge to the legislation. Here, in contrast, the Board formally took its own action to adopt a particular policy, and it is this policy, not any legislation, that is causing the state of affairs about which the professors complain.

In determining that this action by the Board moots the professors’ challenge to the 2017 amendment, we do not concern ourselves with why the Board took this action. We do not look behind the exercise of government power to determine the subjective reasons—legal, political, or otherwise—for a particular action, so long as the action was within the government actor’s authority. Indeed, it is difficult to conceive of a significant executive- or legislative-branch action where the knowledge of the positions of various other governmental actors will not factor into the decision.

Here, what matters is not why the Board adopted the policy in question, but merely that it did do so. Granting the only relief the professors seek—a declaration that the 2017 amendment to OCGA § 16-11-127.1 constituted a separation-of-powers violation—would not eliminate the harm of which the professors complain, because it would not eliminate the immediate source of that alleged harm—the weapons policy adopted by the Board. That this sought-after relief would not redress the professors’ stated grievance means that this case is moot….

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Dave Rubin’s ‘Centrist’ Case for DeSantis


desanits-rubin

Florida Governor Ron DeSantis said last week that he wants to lead a “great American comeback” while announcing his run for president of the United States of America on the Republican ticket. He called for tougher border controls, a crackdown on crime, and a war on “wokeness.”

DeSantis might have strong appeal to conservative voters, but how should libertarians evaluate the two-term governor who made a name for himself first by flouting the federal government’s COVID policy recommendations and later by picking fights with Disney World and declaring Florida the state where “woke goes to die”? Would a DeSantis presidency be any better for liberty than a Joe Biden or Donald Trump one?

“Everything is working here [in Florida],” said Dave Rubin, host of The Rubin Report, in an interview on Fox Business last week explaining his support for DeSantis.

Rubin, a self-described classical liberal who moved his business and home from Los Angeles to Miami in 2021, will join Reason‘s Nick Gillespie and Zach Weissmueller this Thursday at 1:25 p.m. Eastern to discuss the DeSantis candidacy, what the bitter Trump-DeSantis rivalry says about the state of the GOP, and the policies DeSantis has implemented in Florida to better understand what his agenda for the country might be and weigh the implications for liberty in America.

Watch and leave questions and comments on the YouTube video above or on Reason‘s Facebook page.

The post Dave Rubin's 'Centrist' Case for DeSantis appeared first on Reason.com.

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