“Brace For The Worst”: Super Typhoon Saola Barrels Towards South China

“Brace For The Worst”: Super Typhoon Saola Barrels Towards South China

Hong Kong government just issued a No. 10 storm signal — the highest warning under the city’s weather system — as super Typhoon Saola approaches Hong Kong, Shenzhen, and other southern Chinese metro areas. 

“According to the present forecast track, Saola will be closest to Hong Kong around midnight, skirting within around 40km (25 miles) south of the Hong Kong Observatory,” the Hong Kong Observatory said.

The storm is about 56 miles from the financial hub and has maximum sustained winds of 140 mph, which would be equivalent to a Category 4 hurricane on the Saffir-Simpson Hurricane Scale.

Major marine terminals are in the path of the storm. 

A No.10 signal was issued last during Super Typhoon Mangkhut in 2018. And since World War II, it has only been issued 16 times. 

China’s National Weather Office warned the storm “may become the strongest typhoon to make landfall in the Pearl River Delta since 1949,” referring to Hong Kong, Macau, and Guangdong provinces.

Former Observatory chief Lam Chiu-ying warned residents: “Can you see the trend for how the typhoon is moving? Brace for the worst, and make your best preparations.”

Tyler Durden
Fri, 09/01/2023 – 10:30

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Watch: Ramaswamy Vows To Publish Epstein Client List

Watch: Ramaswamy Vows To Publish Epstein Client List

Authored by Steve Watson via Summit News,

Republican Presidential candidate Vivek Ramaswamy has promised to make public the Jeffrey Epstein client list, outing elite pedophiles, should he be elected.

“I think what we have a lot in this country are a lot of conspiracy realists. And so, I’m one of them just because everything you sort of suspect oftentimes becomes true,” Ramaswamy noted in response to a question from a voter who urged that she is “tired of being called a conspiracy theorist.”

“We will publish the Jeffrey Epstein client list… Roll the log over, let’s see what crawls out,” he added.

“At least publish it, we’ve got to see it. Sunlight is the best disinfectant,” Ramaswamy continued, adding “And I trust the people of this country to say it is not just what is easy but what is hard, we will confront the truth.”

Watch:

Ramaswamy said a lot more than President Trump did when he was asked recently about Epstein:

Trump recently hinted that he would consider Ramaswamy as a VP pick, however the candidate has said that he isn’t interested.

Related:

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Tyler Durden
Fri, 09/01/2023 – 10:15

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“Increasing Sense Of Doom” – Manufacturing Surveys Scream Stagflation In July

“Increasing Sense Of Doom” – Manufacturing Surveys Scream Stagflation In July

With broader macro data serially disappointing in recent weeks, expectations were for the final ISM Manufacturing print for July to decline from June’s – and it did (from 49.0 to 47.9) but we note that the final print was higher than the preliminary print of 47.0. ISM Manufacturing also rose on the month from 46.4 to 47.6 (better than the 47.0 exp) but still below 50…

Source: Bloomberg

The Manufacturing PMI data has been in contraction (below 50) for 4 straight months and ISM Manufacturing has been in contraction (sub-50) for 10 straight months.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:

US manufacturers reported another tough month of trading in August. Output has fallen back into decline after a brief respite in July amid an increasingly steep deterioration in order books. Orders are in fact falling faster than factories are cutting output, suggesting firms will need to continue scaling back their production volumes into the near future.

And under the surface the report screams stagflation:

“An increasing sense of gloom about the near-term outlook has meanwhile hit hiring and led to a further major pullback in purchasing activity.

“The survey meanwhile adds to evidence that the deflationary impact of improving supply chains has peaked, with prices starting to rise at an increased rate again in August. However, falling demand is clearly continuing to dampen pricing power and is keeping overall inflationary pressures in the manufacturing sector very subdued.

New Orders down, Prices Paid up… not a good sign…

Williamson does offer some hope:

“Policy initiatives such as the CHIPS and Science Act and IRA should start to help buoy production in the medium term as capacity in US manufacturing is expanded.

A shifting of the inventory cycle toward restocking should also be evident by the end of the year, given improvements in some survey metrics such as the orders-inventory ratio.”

However, such rays of hope remain currently overshadowed by business confidence turning lower, which indicates that “producers anticipate some further near-term headwinds to any manufacturing revival.”

Tyler Durden
Fri, 09/01/2023 – 10:04

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Powell’s Speech Obfuscates The Truth Behind Inflation

Powell’s Speech Obfuscates The Truth Behind Inflation

Authored by Lance Roberts via RealInvestmentAdvice.com,

Powell’s recent Jackson Hole Summit speech was mainly as expected. Well, except for the part where Powell obfuscated the truth behind the surge in inflation. More telling was the misunderstanding of the impact of fiscal and monetary policies on long-term outcomes.

Let’s begin with Powell’s assessment of the cause of inflation.

“The ongoing episode of high inflation initially emerged from a collision between very strong demand and pandemic-constrained supply. By the time the Federal Open Market Committee raised the policy rate in March 2022, it was clear that bringing down inflation would depend on both the unwinding of the unprecedented pandemic-related demand and supply distortions and on our tightening of monetary policy, which would slow the growth of aggregate demand, allowing supply time to catch up. While these two forces are now working together to bring down inflation, the process still has a long way to go, even with the more favorable recent readings.”

It’s crucial to note the complete dismissal of the causes behind the “collision between very strong demand and pandemic-constrained supply.” I suspect this was intentional to avoid placing blame at the feet of the current or previous administrations or themselves. However, it muddies the impact of their actions that created the problem.

While the Fed, the Government, and the media repeatedly blame everyone but themselves for inflation, from greedy corporations to individuals, the issue is, and always has been, basic economics.

Basic Economics

As Milton Friedman once stated, corporations don’t cause inflation; governments create inflation by printing money. There was no better example of this than the massive Government interventions in 2020 and 2021. Those policy decisions sent subsequent rounds of checks to households. Those funds created demand concurrently with an economic shutdown constraining the supply of goods.

The following economic illustration is taught in every “Econ 101” class. Unsurprisingly, inflation is the consequence if supply is restricted and demand increases by providing “stimulus” checks.

  • Who had the power to shut down the entire economy and force everyone into their homes using a fear-driven campaign? Was it the war, corporations, or the Government?

  • Who then supplied trillions in stimulus checks directly to households to spend when no supply could be produced? Was that corporations? Russia? Or was it the Government?

  • Who supported the issuance of trillions in debt issuance to fund those stimulus checks and keep interest rates suppressed? Was that the Federal Reserve, Russia, or corporations?

  • Was it corporations who put a moratorium on student loan, rent, and mortgage payments giving individuals a source of additional funds to spend? Or was it the Government?

The inflation surge had much less to do with the war or giant corporations taking advantage of consumers and more about the Federal Reserve’s and the Government’s actions. The cause of inflation was the economic consequence of “too much money chasing too few goods.”

Unfortunately, Powell is blaming the wrong culprit.

War With Ukraine Is Not The Issue

“The effects of Russia’s war against Ukraine have been a primary driver of the changes in headline inflation around the world since early 2022. Headline inflation is what households and businesses experience most directly, so this decline is very good news. But food and energy prices are influenced by global factors that remain volatile, and can provide a misleading signal of where inflation is headed.”

While the war between Russia and Ukraine certainly did not help matters, it wasn’t as much of a factor of inflationary pressures as Mr. Powell makes it.

First, as Mr. Powell states, “I will focus on core PCE inflation, which omits the food and energy components.” Secondly, while the surge in energy prices was partially due to the war and restricted supply of Russian oil, prices were already well on the rise from the Covid collapse as the world began to open back up.

In fact, since the peak of backwardation in 2022, oil prices have steadily declined, lowering the inflationary impact on U.S. households. Such is also a function of the extraction of the $5 Trillion in deficit spending used to send checks to families, creating an outsized demand for oil during a production shutdown.

Mr. Powell is correct that declining inflation is a benefit to households. However, the excuse of using the war between Russia and Ukraine as a basis for inflationary pressures is disingenuous. Given that oil prices significantly correlate to the overall rise and fall of inflation, despite being a relatively small component of the overall calculation, it suggests it is far more of a reflection of the actions of both the Federal Reserve and the Government since 2020.

The most significant contributor to the decline of inflation is the reversal of the massive amount of monetary stimulus and support forced into the economy. As Powell noted:

“Turning to the outlook, although further unwinding of pandemic-related distortions should continue to put some downward pressure on inflation, restrictive monetary policy will likely play an increasingly important role. Getting inflation sustainably back down to 2 percent is expected to require a period of below-trend economic growth and some softening in labor market conditions.”

The problem with that statement is that if Powell does not acknowledge the actual cause of inflation, the Federal Reserve will likely be behind the curve when something eventually breaks.

A Day Late And A Dollar Short

As Powell noted in his speech:

“Beyond these traditional sources of policy uncertainty, the supply and demand dislocations unique to this cycle raise further complications through their effects on inflation and labor market dynamics.

These uncertainties, both old and new, complicate our task of balancing the risk of tightening monetary policy too much against the risk of tightening too little. Doing too little could allow above-target inflation to become entrenched and ultimately require monetary policy to wring more persistent inflation from the economy at a high cost to employment. Doing too much could also do unnecessary harm to the economy.

Without correctly identifying the true culprits of the current bout of inflation, the risk of doing too much or too little becomes elevated. In simpler terms, if you aim at the wrong target, the odds of success fall dramatically.

The problem is that monetary policy is already very restrictive. From inflation, surging short and long-term interest rates, and the “bullwhip effect,” economic growth will slow as the “lag effect” catches up. Such is already showing up in many of the economic reports. Our real-time composite economic index and the 6-month rate of change in the Leading Economic Index confirm the same.

While Powell most likely understands the true causes of inflation, he can’t undermine the current Administration. As Ian Shepherdson previously noted, this is more about controlling sentiment.

“Policymakers know very well the path of inflation, especially the core rate, over the remainder of this year is impervious to interest rate decisions. Monetary policy works with long lags. ‌But the Fed has constituencies other than monetary economists; they have to calm the inflation fears of the public, the markets, and politicians. That means they have no choice but to sound as tough as possible because part of their job is to rein in inflation expectations.”

As we discussed in “Stability/Instability Paradox:”

The ‘stability/instability paradox assumes that all players are rational, and such rationality implies an avoidance of complete destruction. In other words, all players will act rationally, and no one will push ‘the big red button.’”

With consumers under pressure from higher interest rates, tighter lending standards, and slowing economic growth rates, the risk of doing too much is rising. Since 1980, the financial landscape has been littered with the carcasses of monetary policy miscalculations.

Could the Fed engineer a “soft landing” in the economy? Such is always possible. However, even Jerome Powell admits that sticking such a landing may be more challenging than many expect.

“As is often the case, we are navigating by the stars under cloudy skies.”

The problem for “Powell & Co.” is that intentionally obfuscating the truth about the cause of inflation is one thing. However, if he genuinely believes that inflation is the function of organic economic activities, he will most likely be the architect of the next recession.

Tyler Durden
Fri, 09/01/2023 – 09:45

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Tesla Cuts Price Of Model S Plaid By 19% In China

Tesla Cuts Price Of Model S Plaid By 19% In China

Tesla is once again cutting prices in China, this time to its Model S Plaid. The automaker said on its Weibo account overnight that it is cutting the price of the Model S Plaid to 828,900 yuan from 1.03m yuan, a cut of about 19%. 

Tesla is also cutting the price of its Model S to 698,900 yuan from 808,900 yuan, its Model X to 738,900 yuan from 898,900 yuan and its Model X Plaid to 838,900 yuan from 1.06m yuan, Bloomberg News reported this morning. 

These cuts follow additional price cuts in China that took place only about two weeks ago. Recall we reported on August 16 that Tesla’s Model S price was being cut 6.7% to 754,900 yuan ($103,477) from 808,900 yuan prior and the company’s Model X was priced 6.9% lower at 836,900 yuan, down from 898,900, according to Reuters

Competitor BYD, listed in Shenzhen, erased gains of 2% after the news broke.

Earlier in August, news broke that Tesla was adding new, lower-range iterations of its Model S and Model X that would be priced $10,000 lower than previous base prices, Yahoo reported. The standard range Model S will start at $78,490 and will offer 320 miles of range and the standard range Model X will now be priced $88,490 and will have a range of 269 miles per charge, the report says. 

Tesla delivered just 19,225 Model S/X vehicles last quarter and the two models have made up a decreasing share of Tesla’s total deliveries as the quarters pass by. 

As we noted in mid-August, the price of the Model S is now down about 25% since the beginning of the year. The Model X has seen an even deeper discount, at a 27% price cut, as the company looks to work through its aging inventory while at the same time continuing to catalyze sales in an increasingly saturated market. 

Tyler Durden
Fri, 09/01/2023 – 09:30

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Biden Cancels $72 Million In Loans For 2,300 Student Borrowers

Biden Cancels $72 Million In Loans For 2,300 Student Borrowers

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

The Biden administration has approved a $72 million dollar student loan forgiveness initiative aimed at providing relief for students who were defrauded by an online school.

President Joe Biden announces student loan relief with Education Secretary Miguel Cardona (R) at the White House on Aug. 24, 2022. (Olivier Douliery/AFP via Getty Images)

The loan forgiveness will be applicable to over 2,300 students who attended Ashford University, a former online for-profit school based in San Diego, California, said an Aug. 30 press release by the U.S. Department of Education (DOE). The loan forgiveness has been approved under the “borrower defense” student aid program that has been in place for decades. Under the program, student loan borrowers who were misled by for-profit colleges could apply for forgiveness.

The loan forgiveness was approved after the DOE reviewed evidence presented by the California Department of Justice (DOJ) in its successful 2017 lawsuit against Ashford and parent firm Zovio.

The lawsuit accused Ashford of engaging in deceptive practices to mislead students. On March 3, 2022, a court ruled in favor of the California DOJ, judging that Ashford made over 1.2 million misleading representations nationwide to prospective students.

Based on its review of the case, the DOE approved loan forgiveness for Ashford’s student borrowers who filed for debt relief under the borrower defense program. The relief is applicable to borrowers who enrolled in Ashford between March 1, 2009, and April 30, 2020.

“As the California Department of Justice proved in court, Ashford relied extensively on high-pressure and deceptive recruiting tactics to lure students,” said U.S. Under Secretary of Education James Kvaal.

“Today we are protecting the students who were cheated by Ashford, and we will also hold the perpetrators accountable, protect taxpayers, and deter future wrongdoing.”

The $72 million forgiveness announcement comes days after dozens of Democrats wrote a letter (pdf) to President Biden asking that he “continually find ways to use your authority to bring down student debt” after the Supreme Court earlier blocked the government from implementing a massive student debt forgives scheme.

A few weeks earlier on June 30, SCOTUS had struck down the Biden administration’s plan to cancel as much as $20,000 in loan principal for 40 million student borrowers.

The Congressional Budget Office (CBO) had estimated that this forgiveness plan would cost around $400 billion. But an estimate from the Wharton School put the price tag higher at over $1 trillion.

Borrower Defense Injunction

The “borrower defense” program that the DOE is using to discharge debts of Ashford students recently faced a setback from a court.

New rules regarding the borrower defense program were set to come into effect on July 1.

Student loan debtors hold a rally in front of the White House to celebrate President Joe Biden’s intent to cancel student debt, which was later blocked by the Supreme Court on Aug. 24, 2022. (Paul Morigi/Getty Images for We the 45m)

However, the New Orleans-based U.S. Court of Appeals for the 5th Circuit issued an injunction against the new rules on Aug. 7 in a case brought forward by the Career Colleges & Schools of Texas (CCST) which represents more than 70 for-profit educational institutions in the state.

CCST argued that the new rules would no longer require borrowers to prove individualized harm in most circumstances and place an unfair cost burden on educational institutions.

On the Student Aid website, the DOE states that it will not judge “any borrower defense applications under the latest rule unless and until the effective date is reinstated.”

The new rules would only apply to “all claims pending on or received on or after July 1, 2023,” according to a DOE Fact Sheet.

In its Aug. 30 press release, the DOE said that it had approved the findings related to Ashford student debt forgives prior to July 1, 2023. Plus, “this action covers loans under the 1995 or 2016 regulation” and not under the July 1, 2023, regulation that has been delayed by the injunction.

The Ashford Case

In the Ashford case, the DOE found that the school had engaged in “extensive substantial misrepresentations.”

Recruiters told students they would be able to work as teachers, nurses, social workers, and drug and alcohol counselors even though Ashford never obtained the necessary state approval or accreditation to allow students to enter these professions.

Ashford’s recruiters “also lied about the cost to attend Ashford, the amount and type of financial aid students would receive, and the amount of debt students would accumulate,” the DOE stated in its press release.

Recruiters misled students about the time it would take to obtain an Ashford degree. Compared to the traditional four-year schools, Ashford’s programs took five academic years to complete, it stated.

Only 25 percent of students were found to have graduated from Ashford within 8 years of enrolment.

“Borrowers in their applications described the inability to obtain employment, unexpected financial burdens, and an inability to complete their programs.

“The evidence from the California case also demonstrated that three-quarters of all Ashford bachelor’s degree programs would have resulted in a negative value for students, making the education they obtained effectively worthless.”

With the DOE approval, Ashford student borrowers will not have to make any more payments on loans. Instead, the loans will be discharged by the Biden administration. An email to Ashford students who qualified for borrower defense discharge will be sent in September by the DOE.

“Borrowers will see any remaining loan balances for federal loans zeroed out and credit trade lines deleted. Any payments those borrowers made to the Department on their federal student loans will be refunded,” the DOE stated.

Ashford was acquired by the University of Arizona in 2020 and turned into the University of Arizona Global Campus (UAGC).

Tyler Durden
Fri, 09/01/2023 – 09:15

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“If Anything, The Data Is Almost Weak Enough To Spur Recession Fears…”

“If Anything, The Data Is Almost Weak Enough To Spur Recession Fears…”

Authored by Peter Tchir via Academy Securities,

If not Goldilocks, this report should help treasury yields go lower (nice short squeeze opportunity) which in turn, should push risk assets higher.

Barely any jobs created, but jobs nonetheless.  

The Establishment survey had 187k jobs, but that came with downward revisions of 110k, so a mediocre total of 77k jobs – too few to make the Fed hawkish and enough that we don’t have to price in recession risk – yet.

The Unemployment Rate went higher for all the right reasons.

The Household survey actually added 222k jobs, but unemployment went from 3.5% to 3.8% because the labor participation rate went to 62.8% from 62.6%. That is the highest since the pandemic and is the first time since the pandemic that we have higher labor participation rates than we did in much of 2018! 

Maybe the impact of student loan payments restarting won’t be a slowing economy, but more people seeking jobs? (ironically just as they become more difficult to find).

Average earnings dropped back down to a manageable 0.2% for the month (despite headline after headline of the strong position labor is in during wage negotiations)

Average hours ticked up slightly, to 34.4, which is good in that it is ticking back up, but it is still well below what we saw in 2021 and early 2022.

I’m biased, as I’m currently long bonds and long risk, but I think today’s number is perfect for that and think we could squeeze nicely into a new month!

If anything, the data is almost weak enough to spur recession fears, but I don’t think there is enough in here for that, and the reality is the Fed must be jumping up and down with joy about the unemployment rate – not just that it moved higher, but that it moved higher for all the right reasons!

Tyler Durden
Fri, 09/01/2023 – 09:06

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Unemployment Rate Unexpectedly Surges As BLS Revises Payrolls For Every Month In 2023 Sharply Lower

Unemployment Rate Unexpectedly Surges As BLS Revises Payrolls For Every Month In 2023 Sharply Lower

Ahead of today’s payrolls report consensus was already ugly enough, with some of the largest banks expecting a number well below expectations (JPM was at 125K, Citi at 130K, Goldman at 149K vs median consensus of 170K). And while moments ago we got a number which was at least nominally stronger than expected, the report in general was weak enough to suggest that – as we expected – the wheels are finally coming off the US labor market (as this week’s JOLTS report strongly hinted).

With that preamble out of the way, moments ago Biden’s BLS (Bureal Of Lies and Statistics) reported that in August, the US added 187K jobs, and beating the consensus estimate of 170K…

Superficially this would have meant an unchanged print from last month when the BLS also reported 187K jobs, however in keeping with recent trends that number was revised – drumroll – lower again, to 157K, meaning that every single monthly payrolls print in 20-23 has been revised lower (see chart below), a 12-sigma probability and virtually impossible unless there was political pressure to massage the data higher initially and then revise it lower when nobody is looking.

But wait there’s more: while July was revised down by 30K from +187,000 to +157,000, June was revised even more, by 80,000, from +185,000 to +105,000, which means that a number that was originally reported as 209K has been reivsed 50% lower, to 105K and a collapse vs original expectations of 230K. Here, the BLS was proud to report that “with these revisions, employment in June and July combined is 110,000 lower than previously reported.”

In other words, we now wait for the August payrolls number to be revised sharply lower as well because that’s how Biden’s handlers roll.

Turning to the unemployment rate, things here get really ugly: instead of the 3.5% expected print, in August the unemployment rate jumped to 3.8%, up sharply from 3.5% in July, and the result of 514K newly unemployed workers as the total civilian labor force increased by 736K individuals, as there were 597,000 new entrants in the labor market, people looking for work for the first time, and the highest level since October 2019. This confirms what we have been seeing: the savings are tapped out and credit cards are maxed out.

The jump in the unemployment rate means that the economy was only able to absorb a net 77K of them in August. At the same time, this surge in new workers also suppressed wage growth (as noted below).

Among the major worker groups, the unemployment rates for adult men (3.7 percent), Whites (3.4 percent), and Asians (3.1 percent) rose in August. The jobless rates for adult women (3.2 percent), teenagers (12.2 percent), Blacks (5.3 percent), and Hispanics (4.9 percent) showed little change over the month. The silver lining was that the participation rate actually rose from 62.6% to 62.8%, and is gradually catching up to where it was before the pandemic.

Next, turning to wage growth, August payrolls rose 0.2% MoM, down from 0.4% last month and missing expectations of 0.3%. On an annual basis, the 4.3% print came in as expected, and down modestly from 4.4% last month.

Some more details: In August, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents, or 0.2 percent, to $33.82. Over the past 12 months, average hourly earnings have increased by 4.3 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees rose by 6 cents, or 0.2 percent, to $29.00.

The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.4 hours in August. In manufacturing, the average workweek was 40.1 hours for the fifth month in a row, and overtime edged down by 0.1 hour to 3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.8 hours.

Of note, as the WSJ fed whisperer Nick Timiraos reminds us, “July had two more weekend days than June, which tends to bias upwards the monthly wage print.  August went the other way (two fewer weekend days than July). It doesn’t affect the YoY number, but it likely overstates July m/m wage gains and August wage softness.” In other words, wage growth was even lower.

Looking at the goalseeked data in more detail we find the following sector breakdown:

  • In August, health care added 71,000 jobs, following a gain of similar magnitude in the prior month. Over the month, job growth continued in ambulatory health care services (+40,000), nursing and residential care facilities (+17,000), and hospitals (+15,000).
  • Employment in leisure and hospitality continued to trend up in August (+40,000). The industry had gained an average of 61,000 jobs per month over the prior 12 months.
  • Employment in social assistance increased by 26,000 in August, in line with the prior 12-month average gain (+22,000). Over the month, job growth continued in individual and family services (+21,000).
  • Construction employment continued to trend up in August (+22,000), in line with the average monthly gain over the prior 12 months (+17,000). Within the industry, employment continued to trend up over the month in specialty trade contractors (+11,000) and in heavy and civil engineering construction (+7,000).
  • Transportation and warehousing lost 34,000 jobs in August. Employment in truck transportation fell sharply (-37,000), largely reflecting a business closure. Couriers and messengers lost 9,000 jobs, while air transportation added 3,000 jobs.
  • Employment in professional and business services changed little in August (+19,000) and has shown essentially no net change since May. Professional, scientific, and technical services employment continued to trend up over the month (+21,000).
  • Information employment changed little in August (-15,000). Within the industry, employment in motion picture and sound recording industries decreased by 17,000, reflecting strike activity. Job losses continued in telecommunications (-4,000).
  • Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; retail trade; financial activities; other services; and government.

Of note here, the Hollywood strikes removed 17,000 from August payrolls. Within the information category, employment in motion picture and sound recording industries was down. The BLS also highlighted that the “employment in truck transportation fell sharply (-37,000), largely reflecting a business closure” referring to the Yellow bankruptcy, the first of many.

The data is even uglier if one looks at the composition because in August, the number of full-time workers tumbled by 85K. Add that to the 585K full time jobs lost in July and you get a whopping 670K full-time jobs lost. This however has been “offset” by 1 million part-time jobs gains. And that’s all you need to know about “Brandonomics” folks.

Bottom line: as we said in our preview, that wheels are indeed coming off the labor market, but the BLS is doing its best to make the hit as comfortable as possible. Meanwhile, as Bloomberg’s Enda Curran writes, on a net basis, “these figures probably don’t change the Fed debate. They broadly show a labor market that’s cooling at a very controlled space, in line with slowing inflation. That’s a good outcome, but it’s unlikely the Fed will declare mission accomplished.”

Below we share some more hot takes on today’s print:

li Jaffery, an economist at CIBC Capital Markets, has this take:
“Overall, today’s report underscores that rebalancing in the labor is picking up pace and softening in labor demand could translate into even weaker income and spending ahead.”

Rubeela Farooqi, chief US economist at High Frequency Economics:

“We think these data support the case for no rate hike at the September FOMC meeting. As for the rate path past September, our base case remains that the Fed is at the end of the rate-hiking cycle. However, with the economy reaccelerating, posing a potential upside risk to inflation, another increase in rates later this year cannot be taken off the table.”

Richard Flynn, managing director at Charles Schwab UK:

“While Jerome Powell recently reassured the market that progress is being made against inflation, he did so with the caveat that if the labor market remains strong, more work still might be needed. Today’s report may signal to the Fed that inflation could remain elevated, prompting them to continue rate hikes in months to come.”

Peter Tchir of Academy Securities

“I think today’s number is perfect for that and think we could squeeze nicely into a new month!… If anything, the data is almost weak enough to spur recession fears, but I don’t think there is enough in here for that, and the reality is the Fed must be jumping up and down with joy about the unemployment rate — not just that it moved higher, but that it moved higher for all the right reasons!”

Derek Tang, economist with LH Meyer/Monetary Policy Analytics.

“Under the surface of the strong headline payroll print there is some support for the doves’ preference for no more hiking. After all, we are seeing negative revisions to previous months, slightly lighter wage growth, and still-rising participation. A September hike hasn’t been the base case, and this only rules it out more. The real issue is how to square it with the super-strong growth numbers we’re seeing. That will keep the FOMC hesitant to declare an end to rate hikes. The window for another hike begins in November.”

Ali Jaffery, economist at CIBC Capital Markets:

“Overall, today’s report underscores that rebalancing in the labor is picking up pace and softening in labor demand could translate into even weaker income and spending ahead.”

Ian Lyngen at BMO Capital Markets says:

“Monetary policy implications are relatively straight forward — it just got a lot harder to justify a hike in the fourth quarter.”

d

Tyler Durden
Fri, 09/01/2023 – 08:59

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In Scathing Rulings, Federal Courts Block Arkansas and Texas Age Verification Laws


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One decision deals with porn, the other with social media platforms more broadly. Federal judges issued preliminary wins to free speech, sex workers, social media, and civil liberties and blows to censorship, nanny statism, and overreaching Arkansas and Texas authorities yesterday. Both rulings involve recently passed age verification laws—one barring minors from accessing a variety of social media platforms without parental permission and one requiring pornography websites to check IDs.

Both cases could have implications far beyond their respective states of origin, since proposals requiring parental consent before minors use social media and laws requiring porn platforms to check visitor IDs have become popular around the country.

In NetChoice v. Griffin, the U.S. District Court for the Western District of Arkansas has halted enforcement of an Arkansas age verification law that was slated to take effect today.

Meanwhile, the U.S. District Court for the Western District of Texas halted enforcement of a Texas law (H.B. 1181) requiring age verification and public health warnings on porn platforms. The Texas law was also slated to take effect today.

Social Media Is Not Like ‘a Bar’

In the Arkansas case, the tech trade group NetChoice sued over Arkansas’ Social Media Safety Act (one of many recent attempts by state and federal lawmakers to childproof the internet). The measure—Act 689—bans minors from using social media platforms (with a number of confusing exceptions) unless they prove they have parental consent.

On Thursday, Judge Timothy L. Brooks blocked the state from enforcing the law as NetChoice’s legal challenge plays out.

“We’re pleased the court sided with the First Amendment and stopped Arkansas’ unconstitutional law from censoring free speech online and undermining the privacy of Arkansans, their families and their businesses as our case proceeds,” said Chris Marchese, director of the NetChoice litigation center. “We look forward to seeing the law struck down permanently.”

As with all such age verification laws, the Arkansas measure would invade the privacy of all social media users—including adults—who would be forced to turn over official IDs in order to speak or access information online. It would also infringe on the rights of minors to share and access constitutionally protected speech. Ultimately, Act 689 “puts the government in charge of how young people use the internet, rather than families and parents,” warns NetChoice on its website. It also “risks the leaking of sensitive information, like photos of driving licenses, by forcing websites to collect and process this information.”

In yesterday’s order, Brooks deemed Act 689 “unconstitutionally vague because it fails to adequately define which entities are subject to its requirements.” Brooks noted that during an evidentiary hearing, the state couldn’t even say definitively whether Snapchat was subject to the law’s requirements, saying at one point that it was and at another point that it was not. “Act 689 also fails to define what type of proof will be sufficient to demonstrate that a platform has obtained the ‘express consent of a parent or legal guardian,'” noted the judge.

In an amusing/infuriating exchange in court (that was cited in Brooks’ ruling), the state suggested that all of social media should be treated like “a bar” for purposes of excluding minors:

(from Brooks’ ruling)

 

“This analogy is weak,” wrote Brooks. “After all, minors have no constitutional right to consume alcohol, and the primary purpose of a bar is to serve alcohol. By contrast, the primary purpose of a social media platform is to engage in speech, and the State stipulated that social media platforms contain vast amounts of constitutionally protected speech for both adults and minors. Furthermore, Act 689 imposes much broader ‘location restrictions’ than a bar does.”

The judge also noted that the ID requirements the Social Media Safety Act would impose could deter adult speech, since “it is likely that many adults who otherwise would be interested in becoming account holders on regulated social media platforms will be deterred—and their speech chilled—as a result of the age verification requirements, which…will likely require them to upload official government documents and submit to biometric scans.”

Texas Law Would Let the Government ‘Peer Into the Most Intimate and Personal Aspects of People’s Lives’

A judge in Texas was similarly skeptical about the constitutionality of a Texas law related to age verification and adult content. The case was brought by the adult industry association the Free Speech Coalition (FSC).

In a Thursday order, Judge David A. Ezra blocked the state from enforcing the law as the FSC’s case moves forward.

“We’re pleased that the Court agreed with our view that HB 1181’s true purpose is not to protect young people, but to prevent Texans from enjoying First Amendment protected expression,” said FSC Executive Director Alison Boden. “The state’s defense of the law was not based in science or technology, but ideology and politics.”

Under H.B. 1181, platforms offering adult content would be forced to ID all visitors and to display warnings about the health dangers of viewing pornography. The law was set to take effect September 1.

“Even if the Court were to adopt narrow constructions of the statute, it would overburden protected speech of both sexual websites and their visitors,” wrote Ezra in yesterday’s order. “Courts have routinely struck down restrictions on sexual content as improperly tailored when they impermissibly restrict adult’s access to sexual materials in the name of protecting minors.”

Ezra called out Texas for not attempting less invasive means to shield young people from viewing porn and pointed out how thoroughly the law invades adult privacy.

If permitted to take effect, the law would allow “the government to peer into the most intimate and personal aspects of people’s lives,” wrote Ezra. “It runs the risk that the state can monitor when an adult views sexually explicit materials and what kinds of websites they visit.”

Mike Stabile, the FSC’s director of public affairs, called the order “a barnburner” in which the “court ruled with FSC on every major argument.” Stabile also pointed out that Ezra is not a liberal judge but a Reagan appointee.

Ezra’s ruling may reverberate beyond Texas, notes Boden. It “rebuffs nearly every argument made by state legislatures,” she said. “While Texas presented the most straightforward path to securing a ruling like this, the issues are the same whether in Utah, Louisiana or Virginia. Anyone who attempts to bring a case in those jurisdictions faces little hope of success.”

“This is a template for fighting back [age verification] laws state-by-state,” suggested Stabile. “The ruling may only enjoin Texas for now, but the constitutional issues it lays bare are almost exactly the same in those states. If an individual brings a suit in Utah, or a Attorney General in Louisiana, they’re likely going to come up against these same basic facts.”

Lawyer Gabriel Malor points out that the state in this case seems to be “teeing up an argument to reexamine precedent about how commercial speech can be regulated.” State prosecutors argued that H.B. 1181 should be “subject to a lower standard of judicial scrutiny because it regulates only ‘commercial entities, publication and distribution of material harmful to minors.'”


FREE MINDS

Meta has overhauled its controversial “dangerous organizations and individuals” policy. “The policy had come under fire in the past for casting an overly wide net that ended up removing legitimate, nonviolent content,” notes Sam Biddle at The Intercept. “The goal of the change is to remove less of this material.”

More from The Intercept:

Meta’s “Dangerous Organizations and Individuals,” or DOI, policy is based around a secret blacklist of thousands of people and groups, spanning everything from terrorists and drug cartels to rebel armies and musical acts. For years, the policy prohibited the more than one billion people using Facebook and Instagram from engaging in “praise, support or representation” of anyone on the list.

Now, Meta will provide a greater allowance for discussion of these banned people and groups — so long as it takes place in the context of “social and political discourse,” according to the updated policy, which also replaces the blanket prohibition against “praise” of blacklisted entities with a new ban on “glorification” of them.

The updated policy language has been distributed internally, but Meta has yet to disclose it publicly beyond a mention of the “social and political discourse” exception on the community standards page. Blacklisted people and organizations are still banned from having an official presence on Meta’s platforms.


FREE MARKETS

The Institute for Justice scores a win against civil asset forfeiture in Detroit:


QUICK HITS

• As the trial of former Backpage executives got underway yesterday in a federal courthouse in Phoenix, prosecutor Austin Berry reportedly objected to a defendant’s desire to show the jury the language of the First Amendment:

• Georgia Gov. Brian Kemp rejected calls to interfere in former President Donald Trump’s prosecution by Fulton County District Attorney Fani Willis. “Up to this point, I have not seen any evidence that DA Willis’s actions or lack thereof warrant action by the prosecuting attorney oversight commission,” Kemp said on Thursday. “In my mind, a special session of the General Assembly to end run around this law is not feasible and may ultimately prove to be unconstitutional.”

The Washington Post fact checks some of President Joe Biden’s personal stories, including a recently told tale about lightning striking a pond outside his home.

• New York City said it will use surveillance drones to spy on large Labor Day weekend parties.

• Proud Boys leader Joe Biggs was sentenced to 17 years in prison for his activity related to January 6, 2021. “While 17 years constitutes a lengthy prison sentence, it is considerably shorter than what the government requested: Prosecutors wanted 33 years for Biggs,” notes Reason‘s Robby Soave.

• The Institute for Justice is helping Indiana end-of-life consultant Lauren Richwine sue over the state’s attempt to force her to get funeral director and funeral home licenses in order to legally continue counseling and assisting terminally ill patients and their families with end-of-life planning.

• A Texas town of 250 people has 50 full-time and reserve police officers. “The town collected more than $1 million in court fines last year,” coming “from more than 5,100 citations officers wrote,” reports Texas’ CBS 19.

• In the latest episode of Reason‘s Why We Can’t Have Nice Things podcast, host Eric Boehm looks at the “chicken tax” that makes pickup trucks more expensive.

The post In Scathing Rulings, Federal Courts Block Arkansas and Texas Age Verification Laws appeared first on Reason.com.

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How Rage Against the Machine Used Capitalism To Sell Communism


Rage Against the Machine performing on stage | Wikipedia Commons

This November, rock’s most successful and pugnacious communists will be inducted, six years after they became eligible, to the Rock & Roll Hall of Fame. Rage Against the Machine, a band that kicked the doors down on the 1990s with a then-novel mix of brutally heavy guitars and hip-hop vocals, also blended in unlikely tandem two other disparate traditions of American life.

The first, obviously, is rock music: the rhythmically buoyant and harmonically uncomplicated sound of post–World War II popular song that, however corny it might sound to 2023 ears, signaled an explosive liberation for succeeding generations of youth. This quintessentially American mongrel mashup of demotic musics, from country to rhythm ‘n’ blues to gospel, vibrated with a rebellious, life-affirming energy that helped make a variety of old restrictions—racial, sexual, behavioral—seem ridiculously out of touch.

The second tradition Rage Against the Machine both emanated from and actively promoted is violent revolutionary communism: the forcible equality of output and outcome at the expense of independent choice and action. Whole mosh pits’ worth of young men received their first real introduction to the Cuban revolutionary murderer Che Guevara and the Peruvian Maoist rebel army Shining Path through the advocacy of Rage singer Zach de la Rocha and guitarist Tom Morello.

Rock music in its many permutations since Chuck Berry has been wildly capacious in the ways it can feel and mean. This year’s other Hall of Fame inductees range from the bubbly soul singers the Spinners to the dreamy/arty British songstress Kate Bush to the country songbook lifer Willie Nelson. But killing people in the name of equality was a relatively new emphasis within the decidedly individualistic art form of rock.

Rage’s enthusiasm for bloody revolution was expressed mostly in their extra-musical statements and iconography. (An early band T-shirt included instructions for making a Molotov cocktail.) Asked by the Chicago Tribune in 2001 about the atrocities committed by their favorite Peruvian insurgents, Morello defended the Shining Path as people “standing up against the U.S. corporations dominating their economy and directing the vast resources of Peru not toward the Peruvian people but toward U.S. pocketbooks.” This “context,” he added, explained the media’s “demonization of the Shining Path.”

RATM’s actual lyrics tend more toward domestic denunciations—against racism, cops, public education, mass media, misogyny, American exceptionalism, and the oppression of non-elite classes. Most of all, the group proclaimed itself from the rooftops as being devoutly anti-capitalist.

But therein lies a paradox deeper than the familiar charges of hypocrisy that greet millionaire Marxists the world over. Immediately prior to their meteoric rise, and one decade before technology toppled the music industry decisively in the direction of the consuming proletariat, Rage Against the Machine signed a deal for the release and, most importantly, ownership of their music with one of the world’s largest corporate entertainment conglomerates, Sony, via their subsidiary label Epic.

When asked about the possible hypocrisy of their Epic deal—and boy, were they asked—Morello liked to insist that they squeezed concessions out of the big bad corporation that most baby bands never get, maintaining total artistic control over music and packaging and promotions, plus a guarantee that the label would release each record as promised or face stiff financial penalties. But otherwise by all accounts it had the same crummy aspects that nearly every major label deal has always had, at least at the start of a career: The label, while charging nearly all the expenses in making and marketing the record against the band’s royalties, took and kept actual legal ownership of the recordings themselves.

Rage signed over ownership of their music to Epic by choice because they saw no other way to achieve what they wanted to achieve: not just a chance to make a living touring the country in a van like such rugged punk forefathers as Black Flag, but a chance to have the financial and promotional juice to get to the top of the charts, and eventually into the Rock & Roll Hall of Fame itself, while serving as an unintended advertisement for the very economic system the band so loathed. Capitalism in the form of the huge agglomeration of financial power in Sony gave them something they wanted, and they had no compunctions—like most human beings, artists or not—about taking advantage of it when they thought it might benefit them.

Communists by Nature, Capitalists by Choice

Rage arose amid a grunge-era hard-rock youth movement that, whatever the lyrical politics, tended to glorify as a business ethic punk rock’s brand of small-bore DIY capitalism. (The band’s first performance, in 1991, was at L.A.’s legendary punk/indie rock dive Jabberjaw.) They sold more than 5,000 copies of a demo cassette that was illustrated by a cover photo of the stock market and affixed with a match, to inform the buyer of the band’s desire to burn the system down.

That system came knocking almost immediately, with major labels showing interest already after the band’s second gig. Less than a year into their existence, they hooked up with Epic, a division of the globe-straddling entertainment/electronics/engineering behemoth Sony.

This devil’s bargain with The Man became a source of incessant razzing, even as the band spun previously unfathomable success out of foul-mouthed rap-metal and strident leftist politics. Mike Muir of Suicidal Tendencies, a beloved Southern California hardcore band that once opened for Rage on tour, recorded a song with his side project Infectious Grooves in which he slammed an unnamed but easily recognizable band for “making your political statement/or are you trying to add to your financial statement?/And let’s not forget the evil corporations/Then why is SONY the sponsor of your presentation?/Bitch!”

The indie-punk tradition exemplified by Black Flag or Fugazi often involved putting out your own damned records (which those band, respectively, did through the SST label run by guitarist Greg Ginn and the Dischord label co-owned by singer-guitarist Ian Mackaye) and engaging in a constant hardworking grind. This attitude ran through many of the “get in the van!” road warriors of independent music from then to now. Rock music was not merely a realm of art and play—it was, in the noblest sense, a creation of hard work. It’s capitalism at its most basic, of the sort nearly any person honest with themselves, left or right, admits they want: the chance to use what is yours in free exchange with other people to get the things you need. But as Morello would admit, that Black Flag and Fugazi way of evading corporate capitalism was more work than Rage felt inclined to do.

Rage, while aware of the potential contradictions in an anti-capitalist partnering with a multinational conglomerate whose engineering and electronics innovations were used in U.S. munitions in Vietnam, never flinched from defending their choice as a capitalist means to socialist ends.

“Rage Against the Machine sold 14 million records of totally subversive revolutionary propaganda. The reason why is that the albums were released on Sony and got that sort of distribution,” Morello told The Progressive in 2004. “I admire bands like Fugazi that take the other route. They are completely self-contained and independent. But if you do that, then you have to be a businessman. Then I have to sit there and worry about the orders to Belgium and make sure they get there. That is not what I’m going to do.”

Such a division of labor allows for the artists to focus on what they do best and care about most. “We’ve had…complete artistic control, 100 percent over everything,” Morello continued. “Every second of every video, every second of every album, every bit of advertisement comes directly from us. I don’t even look at it as a tradeoff. You live in a friggin’ capitalist world. If you want to sell 45s out of the back of your microbus, God bless you. And maybe that works better, I don’t know. I’ll see you at the finish line.” Capitalism’s advantages for the band were so obvious that Morello doesn’t even recognize tradeoffs being involved. It was just good for Rage, full stop.

With the proceeds from that successful arrangement, the band could generate more resources to donate to food banks and assist the homeless and rail against sweatshops. Morello blamed “the historical circumstances in which we were born” for the fact that there was no “socialist record label that would distribute our propaganda to the four corners of the globe.”

The world we are born into often does present circumstances we must adjust to, even while we can agitate to change it. But engaging in capitalist behavior—behaving as if one owns one’s self, one’s labor, and one’s property and should be free to make choices about how to use, trade, or sell one’s possessions—is something even the most capitalist-hating progressive embraces in practice. Observing both their actions and words, what they object to is not the choice-making apparatus of capitalism per se but some results of that system in practice that seem unfair. And few industries historically seemed as unfair as the music industry.

In the time between RATM’s chart-topping run in the 1990s and today, the particular shape and outcomes of how most popular music is made and distributed have changed nearly beyond recognition. Those changes, reflecting capitalism’s signature delivery of both abundance for the masses and creatively destructive heartache for previously successful producers, highlight a confusion at the core of the band’s understanding of the system they sought to burn down.

Hating Capitalism, or Hating Specific Capitalists?

Morello and his band not only freely allied themselves with corporate capitalism by signing with Epic; they did so leaping eyes open into an industry that has forever been one of the more famously rapacious, dishonest, and unfair to the worker/artist.

Most record labels, throughout the industry’s permutations, have offered fame-hungry artists variations on the following bargain: We will give you entrée into the tantalizingly impassable worlds of distribution and promotional networks and relationships with radio and retail, plus some advance money to record from your own future royalty stream, and in return you will sign this take-it-or-leave-it deal and not fuss over repayment details that frequently shock the conscience. And we will retain ownership of the copyrights in your recordings long after we’ve made in some cases hundreds or thousands of times as much money as we ever spent on selling them, since nearly all such costs are taken out of the artist’s royalty rate of maybe 10–15 percent at the most on the album price.

Even after the flagrant exploitations of the 1950s and ’60s were well into the rearview mirror, record companies maintained a notorious track record for not living up to even their limited commitments to pay artists the pittances they promised. Music industry lawyer Don Engel once told Fredric Dannen, author of the 1990 music industry exposé Hit Men, that “there isn’t an honest royalty statement issued by any major recording company in the business today….[D]id you ever in your career see an audit where there wasn’t a shortfall to the performer?”

Read virtually any detailed memoir of rock history, from Chuck Berry or Prince or even Taylor Swift, or go back even further to pre-rock songwriters such as Stephen Foster, and you’ll find tales of underpayment and outright theft of monies legally owed to artists. Label heads would arbitrarily assign themselves or associates unearned songwriting credits. They’d pay poor artists the occasional gift of a Cadillac (sometimes a rented one!) or a random pile of cash rather than fair accountings of money due. They invented arbitrary adjustments to make sure they didn’t even pay the royalty rate on at least 15 percent of sales; they deducted for “packaging” on digital sales that have no packaging; they paid songwriter royalties (distinct from royalties due for the albums or singles themselves) on only a preset number of songs per CD and at a rate only three-quarters of what any other user must pay. They’d decide you got only half your royalties on sales that occurred during times they were paying (with your money) for TV ads. Oh, and your lawyer also often represented the label.

The legendary Atlantic Records founder Ahmet Ertegun told the authors of the 1977 book Rock ‘n’ Roll is Here to Pay that he once rejected an offer from Columbia (the label which eventually became Sony, owner of Rage’s label Epic) to distribute Atlantic’s albums and pay Ertegun’s label a 3 percent royalty. Ertegun informed the Columbia representative that “We’re paying our artists more than that!” The Columbia man, per Ertegun, responded with “‘You’re paying those people royalties? You must be out of your mind.’ Of course he didn’t call them ‘people.’ He called them something else.”

All of the advance money a band gets on signing a standard label deal is just that—an advance against those royalties, not a genuine payment from the label’s own resources. Regardless, though they have essentially no actual skin in the game of their own money, to this day on Spotify you will see in the fine print that the copyright on Rage’s music still belongs to Sony. And while it’s true that labels often have to eat the costs of records that don’t sell, they can defray those losses through ever-creative accounting of the hits.

Hole singer-songwriter Courtney Love once calculated that a four-member band that received a $1 million advance, and then sold 1 million records, would end up with each member getting about $45,000, while the label pocketed $4.4 million. This may seem unfair, but bands make these deals not because it’s the only way in the world to sell recordings, but because they are gambling that the major label’s resources might push them to Rage level cultural heft and wealth.

Music for the Masses

Classical Marxism saw the core conflict in the industrialized world as a struggle between bosses and workers, eliding The People in their largest mass: as consumers. But modern progressives in the West should give more consideration to what consumers (that is, The People in their vastest sense) get in quasi-capitalist modernity. How the music industry in the 21st century has evolved to deliver cheap-bordering-on-free abundance to the listening masses is a wonderful object lesson in how capitalism can run roughshod over old Marxist categories focused only on bosses (labels) and workers (musicians).

The industry that Rage chose willingly to partner with has changed almost beyond recognition in the three decades since the band hitched its wagon to Sony. While pollyannas will stress that 2022 saw the recorded music industry’s highest revenue ever, that’s only in nominal terms; the inflation-adjusted 2022 haul of $15.9 billion was still lower than every year from 1990 to 2006, even if revenue growth is indeed on the upswing again over the 2010s.

Here the individual vs. collective divide that Rage’s brand of communism wants to forcefully settle for the collective gets complicated. Because while the entire world of music as paid for is stumbling upward again, companies and artists within it complain constantly about the pathetically low payments they receive from the primary means of listening to and paying for music these days: streaming. Consuming music through services such as Spotify or Amazon or Apple Music or YouTube now constitutes a startling 84 percent of total industry revenue. “The number of paid subscriptions to on-demand music services continued to grow at double digit rates and reach new highs in 2022,” the Recording Industry Association of America reports. “The average number of subscriptions for the year grew 10% to 92.0 million, compared with an average of 84.0 million for 2021.”

Purchased music, whether physical or digital, now accounts for less than 14 percent of total industry revenue. Things have changed fast: Downloaded purchases were 43 percent of industry revenue just a decade earlier. How money flows into the pockets of writers and performers and producers and distributors is always shifting—sheet music and even ringtones (remember?) were once substantial and even dominant moneymakers, and now they’re nearly meaningless. But a pattern of wider, cheaper access for listeners to recorded music continues apace this century, even if artists and labels feel squeezed. Rolling Stone recently reported that only 0.11 percent of artists on Spotify got more than $100,000 in 2022 from the service’s payments. Still, $1.8 billion of royalties in the current system that same year went to artists with no label affiliation. And listeners get to choose from around 40 million new music files uploaded for their pleasure to streaming services a year.

The audience for music—the masses—have access, for prices as low as $10 a month or even free with advertising, to a near-mystic percentage of the history of recorded music, on demand and easily searchable.

While nearly all professional musicians consider the likes of Spotify near criminal in their payment rates (such that it can take more than 300 streams for a recording artist to make a buck), a music listener would have to have an artists’-rights soul stronger than steel to deny the shocking increase in quality of life that the world of streaming has bestowed. That artists feel like they have to accept the deals that Spotify made with the labels over payments is rooted in the same original sin that Rage and nearly every other band in the past century committed of granting ownership of their music to a record label essentially just for an interest-free loan of their own income. (Taylor Swift’s recent move of re-recording her older albums whose ownership remains with her original label in new versions she now owns is her attempt to give fans a chance to redeem her own original, in retrospect, bad deal.) Rage and all the musicians complaining about how much Spotify chooses to kick back to their labels willingly made that deal in hopes of finding megasuccess by taking advantage of the accumulation of capital and marketing and sales savvy that in the old days only a major label could provide.

Markets: Realms of Coercion or Choice?

Buck AE Down is an L.A.-based musician of “card-carrying Marxist” inclinations. I met him through the worlds surrounding the Burning Man festival. Sympathetic as he is to Rage’s stated mistrust of corporate capitalism, the shape of Down’s career demonstrates that the simple binary choice Rage saw in 1992 has in the 21st century branched out.

In the 1990s, Down was in a band called Combine, signed to Caroline Records, a small indie-coded label owned by the bigger record corporation Virgin. He is very familiar with the temptations that young bands face to make decisions they might live to regret. There are advance amounts that sound upfront like glory to people who had been delivering pizzas 40 hours a week around their 40 hours a week of rehearsing. And music publishing companies offer similarly extravagant-sounding checks to induce young bands to hand over the rights to their compositions, and those lose control of the various complicated fees that legally accrue to that ownership when entities from restaurants to live bands to labels to radio to streaming sites use the songs.

But that asset could eventually be the most valuable thing the musicians own. And no matter how much money a label spends upfront for a recording, “at no point will any band have any say” in how that money is spent, Down says. The label generally dictates who gets hired and paid to work on a recording project and for how much, with “the band practically irrelevant to any of the fiduciary decision making being made.”

Down issues his own records now, as digital tracks and vinyl LPs, and he does pretty much everything involved from performance to production by himself, using the popular site Bandcamp as a sort of label substitute to find audiences and to showcase and sell his music. The records are not his prime source of income, but he has learned that “if the artist just does everything yourself” and cultivates direct relationships with fans, “you don’t need tens or hundreds of thousands of buyers.” A fan base as small as a couple thousand could in theory “keep a musician out of a day job.”

Down still has some nostalgic regard for aspects of the old major-label model that Rage bought into. Sometimes to make a truly excellent and rich-sounding recording in the classic rock style, the capital resources of a major label are necessary; no Bandcamp recordings are apt to have the quality of equipment, professionals, or time or years of artist development that lie behind most famous classic rock LP of the 1970s through the 1990s.

Still, Down has no doubt that Bandcamp is “the single greatest thing to happen to indie recording artists.” He sees it as a digital amalgam of the little cottage industries that arose in the old days of indie music scenes: the xeroxed zine gal, the guy who owned the four-track, the small venue that gave them a chance to expose their music to potential fans.

In giving artists and fans a one-stop shop to find hundreds of thousands of indie artists self-releasing music, and the chance to buy digital tracks or physical media or other merch directly—taking only 15 percent for itself (and on certain Fridays, zero)—Bandcamp is a low-cost replacement for a record label in nearly all its functions for artists with small but passionate fan bases. The site has funneled over half a billion dollars to musicians so far, with physical items amounting to about half its sales these days.

“Never in the history of recorded music has there been a deal that good” for artists, Down says. (Recall that Bandcamp’s 15 percent is about the most any band could expect from selling its recordings in the old label system.) And you can choose your own prices and have your money in your hands within a day rather than waiting for six months after the end of some company’s accounting period (or never getting your due at all, a common fate for major-label artists). “After five years [using Bandcamp], I have yet to have anything but a positive experience,” says Down. “I’ve never heard of a bad experience.”

Bandcamp’s ability to exist and thrive is an artifact of the same digital revolution that tore down the music industry from its turn-of-the-millenium heights of earning $25.6 billion in 1999. Its existence makes the decision that Rage felt obligated to make seem outmoded, while at the same time making things staggeringly great for the listener.

But whether or not a band can accept what is likely to come to them in this new listener-centric digital music business depends on its goals. If one’s aim is not just to be a musician, much less a living-wage working musician, but to be the kind of ideological champion that Rage imagined themselves as, then one craves more than Bandcamp’s chance to find a natural audience and allow them to patronize you directly. If you want to turn the world on to revolutionary communism, you need the power that only corporate concentrations of capital can give: the media and cultural push to make you the sort of superstar that will sell tens of millions of records and end up in the Rock & Roll Hall of Fame.

But in that case you had better be, like Rage was, both talented and lucky. Would-be revolutionaries linking their fate to a corporate label should remember that then, and even more so now, that alliance gives you at best a one in a thousand chance to achieve RATM’s level of prominence and wealth. The customer—The People, united!—is the ultimate driving force in capitalism. Fortunately, most musicians don’t, and needn’t, have that sense of global mission (in Rage’s case, alas, for a sinister cause).

For musicians who understand that the true driver of any success they can earn is not a major corporate label but a willing paying customer, the current state of the music business is nearly heavenly, even if that paying customer is nearly always just paying for the right to listen at will and not to buy outright. A revolution has upended the power structure of the music industry, creating a more level playing field for artists and a shocking abundance for the masses. And it had nothing to do with Rage Against the Machine’s cherished communism.

The post How Rage Against the Machine Used Capitalism To Sell Communism appeared first on Reason.com.

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