California Knifes the Gig Economy

 

(Sacramento, Aug. 29) Car displaying Uber and Lyft fliers advocating California unionize the gig economy.
California state legislators embarked last week on the single most important regulatory misadventure this country has seen in many decades, seeking to redefine the obscure but critical legal distinction between an employee and an independent contractor. The employment relationship today is subject to massive regulation that is inapplicable to the independent contractor, who pretty much works on his or her own.

Like it or not, the employee receives many statutory protections, including the right to receive minimum wages and overtime, to join a union, to receive worker’s compensation benefits and unemployment insurance, and to receive paid family and sick leave. None of that mandated protection comes without significant costs. It has been estimated that reclassification of Uber and Lyft drivers as employees in California alone will cost the two companies an average of $3,625 per driver per year for a combined annual bill of nearly $800 million per year. Nonetheless, in 2018, the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court forged ahead with such a reform by unanimously holding that drivers who worked for a firm that supplied nationwide courier and delivery services should be classified by law as employees and not as independent contractors.

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Distribution of Control is a new political paradigm ideally suited to 21st Century economic challenges. It is intended to inform a new politics for our still new millennium. I’ve more fully explored DC at BurkeanNation.org, and am now bringing it to the Ricochet community. My goal is to find collaborators who will help advance the […]

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Here Come the Robots: We Can Prepare for the Future Without Fearing the Future

 

Andrew Yang had his best policy moment of the Democratic debates last week when he said, “This country has been a magnet for human capital for generations. If we lose that, we lose something integral to our continued success.” Yang should talk more about immigration. And more about thorium-fueled nuclear reactors. Maybe also flesh out his VAT idea.

But Yang’s main idea, a universal basic income (UBI), is less appealing. It’s an elegant idea that would quickly look less so when filtered through the reality of government sausage-making and flawed human behavior. Then there’s Yang’s alarmist argument that we need UBI to meet the looming and “unprecedented crisis” of widespread technological unemployment. Yang: “In the next 12 years, 1 out of 3 American workers are at risk of losing their jobs to new technologies—and unlike with previous waves of automation, this time new jobs will not appear quickly enough in large enough numbers to make up for it.”

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Jim Geraghty of National Review and Greg Corombos of Radio America enjoy watching some Democrats fret that Beto O’Rourke’s vow to take everyone’s AR-15 and AK-47 might convince voters that Democrats are after our guns. They also shudder as Iranian-funded and armed rebels in Yemen attack Saudi oil production facilities, leading to much higher tensions […]

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Jim Geraghty of National Review and Greg Corombos of Radio America are pleased to see a high-ranking government official actually moving closer to facing the same type of prosecution most Americans would face for allegedly divulging sensitive information and then lying about it. Jim also hilariously shreds CNN legal analyst Jeffrey Toobin for acting like […]

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Jim Geraghty of National Review and Greg Corombos of Radio America shed no tears at the death of former Zimbabwe dictator Robert Mugabe, who repressed and sometimes killed his people and ruthlessly clung to power for decades. They also react to the new that former Starbucks CEO Howard Schultz will not be mounting a 2020 […]

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Jim Geraghty of National Review and Greg Corombos of Radio America welcome the news that Hong Kong – at the direction of Communist China – has withdrawn the extradition bill that sparked massive protests, but they’re still not sure this story will have a happy ending. They also pummel Bloomberg News and reporter Ben Penn […]

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Trump’s Trade Travesty

 

On Friday, August 30, Trump confidently tweeted that anyone who thinks that his aggressive trade war with China could lead to a recession is sadly misinformed. He offered his own two-part explanation for a possible economic downturn. First, unnamed but “badly run and weak companies” are being undone by their own incompetence. Second, their present plight has not been caused by the trade war, but rather by the Federal Reserve’s failure to rapidly cut interest rates.

Chairman Jerome Powell has become a frequent target of the President’s ire. To be sure, the Fed did trim rates by a quarter of a point, from 2.25% to 2.00%, in July 2019. But Trump wanted the Fed to cut rates, already low by historical standards, by a full point. Even more, he wanted the Fed to further jolt the economy through another round of bond repurchases. In an attempt to prod Powell into action, Trump accused Powell of having a “horrendous lack of vision.” When Powell did not blink, Trump doubled down. “As usual, the Fed did NOTHING! It is incredible that they can ‘speak’ without knowing or asking what I am doing,” he tweeted. “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” So much for the traditional independence of the Fed. Trump then lashed out at the private sector by ordering corporations to find alternatives to China. So much for limited presidential powers.

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They published this cartoon today, and it says a lot. Thank the President. More

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In the latest episode, the Young Americans get super nerdy, with the help of real-life tech policy researcher Caleb Watney of the R Street Institute. He and Jack discuss the virtues of free markets vs. Millennial skepticism thereof, question the emerging conventional wisdom on tech addiction and Silicon Valley, rebut the Unabomber (!), and go […]

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Here are highlights from his interview with Russ Roberts in 2006: I’ve always felt that the big defect politically of the Federal Reserve is precisely that so much depends on unelected representatives. The central bank is treated as if it were the Supreme Court. That’s why during the Depression, there was no effective controls on […]

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According to Freud, the death wish in individuals is a fundamental psychological propensity. Similarly, a Soviet dissident mathematician, Igor Shafaravich described socialism as a fundamental death wish for society on the part of intellectuals. More

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A Tale of Economic Dynamism from North Carolina Furniture Country

 

This would be a terrible time for American to reject dynamism, that churning of jobs and firms that marks a vigorous economy where creative destruction is happening apace. Even with big economic policy actions in recent years, this still seems to be an economy where potential growth is around 2%. The Atlanta Fed describes a healthy, dynamic economy thusly:

In a dynamic economy, firms are constantly opening and closing, with workers churning among them. In a dynamic economy, entrepreneurs and innovators are incessantly commercializing new ideas and business models, keeping established firms on their toes, and pushing the economy to evolve and advance. … Like a living being, the economy needs circulation — churn — in order to remain healthy. It needs its old or damaged cells to be broken down and their raw materials recycled. It needs to develop new resiliencies when exposed to the contagion of a recession or technology-driven disruption. And it must be able to constantly adapt to changes in its environment in order to survive. Dynamism powers all of this.

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What Is the Purpose of a Corporation?

 

In a memorial service honoring Milton Friedman held at the Hoover Institution shortly after his death in 2007, Hoover Senior Fellow Edward Lazear hit the nail on the head when he said, only half in jest, “It is amazing how many people can best Milton in an argument when he is not in the room.”

His remark has added relevance today because last week the Business Roundtable (BR), a non-profit comprised of CEOs of major U.S. organizations, did battle with an empty chair with its short announcement entitled, “Statement on the Purpose of a Corporation.” The statement rejects the received wisdom—boldly pronounced in Friedman’s famous 1970 New York Times Magazine article, “The Social Responsibility Of Business Is to Increase Its Profits”—that corporate directors and officers should maximize shareholder value rather than some nebulous concept of social responsibility.

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Jim Geraghty of National Review and Greg Corombos of Radio America close the week with three crazy martinis and a champagne toast. They sigh as President Trump tweets that he is ordering U.S. companies to scale back in China in response to the very real practice of China ripping us off. They also evaluate former […]

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Jim Geraghty of National Review and Greg Corombos of Radio America have no good martinis today. They wince as the national deficit creeps closer to $1 trillion again and lament that neither party has any intention of seriously addressing the problem before disaster strikes next decade. They also cringe as President Trump rightly slams Rashida […]

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Jim Geraghty of National Review unleashes an epic rant about the re-emergence of Anthony Scaramucci – this time as an anti-Trump figure suddenly loved and respected by the press – and the Trump culture that created the Mooch. But first, he and Greg Corombos of Radio America celebrate Planned Parenthood withdrawing as an applicant for […]

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Wherever there are free markets, there are people with poor impulse control. One can sympathize with the temptation to over-indulge. We all want more than what we can afford. But ultimately the fault of spending beyond one’s budget rests with the consumer and not with clever advertisers. That said, elderly consumers have always presented dilemmas […]

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David French of National Review and Greg Corombos of Radio America welcome the news that U.S. sanctions are inflicting a devastating economic toll and putting a lot of political pressure on North Korean Dictator Kim Jong-Un. They also cringe at reports that President Trump promised China two months ago that he would not condemn a […]

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David French of National Review and Greg Corombos of Radio America welcome reports that members of the Illinois congressional delegation have at temporarily convinced President Trump not to commute the prison sentence of former Illinois Gov. Rod Blagojevich. They’re also frustrated that President Trump is not speaking out more forcefully in favor of the pro-democracy […]

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