Los Angeles Welcomes the Robots

I weep for Los Angeles. The “fight for 15” has made it to the LA City Council and is now poised to pass, setting the stage for a $15 minimum wage by 2020.

Progressives are celebrating of course, but thankfully there are some who understand that this is a bridge too far. Both Jordan Weissman and Danny Vinik of Slate and The New Republic respectively expressed reservations about such an exorbitant hike in the minimum wage, despite their favorable stances on progressive and union economics. Weissman frets that the available economic research “doesn’t really tell us anything about what happens because of an increase along the lines of what Los Angeles is now poised to pass,” while Vinik worries that “this isn’t a small hike and the employment effects could be significant.”

They are right to worry even as they celebrate the effectiveness of the “grass roots” (scare quotes for the fact that this is entirely a Big Labor driven initiative) campaign to agitate for a higher wage. Where they go astray is in their reliance on the “research” of experts and economists because as anyone paying attention knows, an economist or think tank or lobbying interest can produce the research they want to bolster support for a given policy. Data manipulation and rosy projections of a policy’s impact are the rule rather than the exception in Washington. An army of experts is just as fallible as an army of the first four hundred names in the Boston phone book, and in fact most of us would opt for the latter. Instead, progressives are never going to face reality unless they are forced to reckon with their glaring failures.

Fortunately, they seem to think that skepticism of the $15/hr minimum wage is just noise coming from conservative scolds who hate poor people. This kind of dismissive arrogance is going to be their undoing. Whereas Detroit and Baltimore and most major American cities under the thumb of one party Democratic rule took decades to succumb to the market distortions and bad incentives that go hand-in-hand with progressive economics, Seattle, San Francisco and Los Angeles – all who have adopted $15 minimum wages – are going to crater much faster if they adhere to utopian visions of egalitarian societies brought about by coercive meddling in the most basic and essential of all economic tenets: supply and demand.

It still boggles the mind that we have to keep repeating this, but if you arbitrarily hike the cost of labor, an equal and opposite reaction is inevitable. Either the employer will reduce his suddenly higher (doubled!) labor costs by reducing the amount of labor generally (i.e. layoffs) or he is going to raise prices to account for higher costs. That means $7 Big Macs sold through electronic kiosks. In fact it means a whole lot of robots replacing a whole lot of humans as employers find it cost effective to install automation in place of low-skilled workers making $15 an hour. Progressives seem to believe that costs can be magically deferred, or else ignored altogether. This juvenile, childish, ignorant view of the market explains how so many call for companies to pay their employees double what they earn now, because they can “afford” it.

One question: when did we cease treating fast food jobs as the entry level, foot-in-the-door opportunities that they are and instead as vocations in need of proper benefits?

I almost wish the LA measure took effect immediately, as I am eager to get this experiment underway and then over with, as it is going to be anything but pleasant for the residents of my beloved home town. $15/hr is insane. You’re going to see franchises hightailing it to Nevada and Arizona, a massive spike in unemployment, and a huge influx of robots. Remember when George H.W. Bush was raked over the coals for being in awe of an grocery store checkout automation? Prepare yourself for legions of frustrated people whose exasperation at encountering machines and kiosks in every store is compounded by the fact that everything is twice as expensive as before. Progress!

Obviously LA has some time before they implement this folly, so there is hope that someone with sense will get the ear of the city council during the next five years. And as Megan McArdle explains in her warning for Los Angeles, most noticeable impacts from minimum wage distortions tend to take a while:

When the minimum wage goes up, owners do not en masse shut down their restaurants or lay off their staff. What is more likely to happen is that prices will rise, sales will fall off somewhat, and owner profits will be somewhat reduced. People who were looking at opening a fast food or retail or low-wage manufacturing concern will run the numbers and decide that the potential profits can’t justify the risk of some operations. Some folks who have been in the business for a while will conclude that with reduced profits, it’s no longer worth putting their hours into the business, so they’ll close the business and retire or do something else. Businesses that were not very profitable with the earlier minimum wage will slip into the red, and they will miss their franchise payments or loan installments and be forced out of business. Many owners who stay in business will look to invest in labor saving technology that can reduce their headcount, like touch-screen ordering or soda stations that let you fill your own drinks.

This is right, but it is a summary of what typically occurs with small increases in the minimum wage. LA and Seattle and San Francisco are each flirting with stratospheric wage hikes, on the order of 80-100%. Thus, all of the symptoms and reactions by business McArdle outlines will still occur, just much faster. You will see major layoffs, major automation and major corporate flight from Washington and California if these states don’t wise up and walk back these wage increases. I assume this is what will happen, especially once politicians start getting browbeaten by their preferred business interests as well as by their less well off constituents suddenly faced with soaring prices for food and basic essentials. But all this does beg the question: why are they doing it?

Unions. By raising the minimum wage unions enjoy a higher corresponding wage floor from which to bargain in the future. Once a minimum wage is set, it affects contractors across the economy. Bids for public and private sector work must compete with union wage edicts to have any chance at the bid. This serves to crowd at smaller competitors and secure easy access for unions. And it similarly lifts the baselines for pension and benefit negotiations in addition to wages. In short, every single minimum wage initiative in America is about fattening the pockets of unions at the expense of the working poor, who are doubly affected by this union greed in the form of higher prices and fewer available jobs.

But we’re supposed to cheer on the “Fight for 15” and take to the streets to rail against corporate greed. But who is being greedy here? Somehow this mosaic of heroic workers in solidarity loses some romance once you realize they are just props for a larger union agenda, one that doesn’t give an actual damn about poor people or jobs. Unions by and large live by the wisdom of Michael Mulgrew, the former president of the New York United Federation of Teachers, who said

“If someone takes something from me, I’m going to grab it right back out of their cold, twisted, sick hand, and say it is mine. You don’t take what is mine. And I’m going to punch you in the face and push you in the dirt.”

Beautiful. It is also the prevailing wisdom of unions and the Democratic Party. This same sentiment animates progressive objection to reforming the welfare state or anything to do with public pensions. Same with cutting federal spending or eliminating waste. Right now the Ex-Im Bank is close to going the way of the dodo, something all of us on the free market right are cheering with heightened enthusiasm since it will be the first actual elimination of a federal anything in as long as I can remember. This worthless avatar of abject cronyism purports to serve America’s economic interest by providing taxpare loans to companies that deal heavily in exports. In practice the bank is an unfair bonanza for two large companies, Boeing and GM, who enjoy protection from smaller competitors without crony access to the bank’s largess. Conservatives and libertarians in Congress are close to declaring victory by not renewing the bank’s charter. Democrats are threatening to walk from the trade deal if Ex-Im is not renewed. What a farce of a position that is for a party purporting to stand against cronyism and speak for the little guy. Ex-Im is most definitely not about the little guy, rather it is federal bank for handing out favors to connected corporations. Not even Elizabeth Warren will allow it to expire, proving how sincere she is about reducing the incestuous and toxic relationship between big business and big government.

In the end, when it comes time to let a useless federal program sunset, the left rallies in unison to condemn it as heartless and bad for the economy. Because for the left, anything that reduces government at all is bad for the economy. The inverse of never wanting to allow government programs to disappear is always wanting to make more government appear, which is thew motivation behind the “fight for 15.” This is all about expanding union power and reducing private commercial autonomy in the market. The result will be more robots and less humans in the workplace.

While it is possible that Brett and Jermaine might welcome the robot revolution, the rest of us will be screwed. Straighten up, Los Angeles.

 

Twilight of the Public Sector Union

Politico has an interesting piece today on the growing movement among Democrats to curtail public union clout. Like today’s WSJ editorial it focuses on Republican governor Bruce Rauner’s efforts to follow Scott Walker down the public pension reform path. What’s interesting is how many Democrats in state legislatures are waking up to the sustainability problem with the public union model.

In November Democrat Gina Raimondo won the Rhode Island governor’s race after a bruising primary where she defeated two union-backed candidates who were hell-bent on keeping the union reformer out of power. Raimondo is Rhode Island’s first female governor; just as importantly though, she is clear-eyed about the problem with public sector unions and unabashed about taking them on and demanding key reforms. Like every brave blue state Democrat trying to convince her left flank that reality is the obstacle standing athwart their collectivist dreams, Raimondo faces an uphill battle and is probably going to lose in the end. Such is life when facing off against the naked self-interests of a rabid and entrenched opposition.

Chicago Mayor Rahm Emanuel is nobody’s idea of a conservative, but he is fully aligned with Rauner in opposing the nasty Chicago Teachers Union, which needs corrupt legislators to rubber-stamp their collective bargaining scheme in the same way that humans need oxygen. Emanuel and Rauner are old colleagues, so the union left will say this is just more cronyism to fatten their own coffers by attacking unions. But any honest appraisal of Illinois politics will show that public unions exist first and last to expand the state bureaucracy, demanding always more money for pensions and benefits and higher taxes to pay for them. As a result, Illinois has the worst pension crisis of all the states and is considered a wasteland for business and economic growth. Neighboring Indiana and Iowa have so thoroughly outperformed Illinois this century that some Democrats in Springfield acknowledge the need for reform.

San Jose Mayor Chuck Reed offered an admirable sentiment after “clash[ing] with public employee unions” in California when he said that “there’s a difference between being liberal and progressive and being a union Democrat.” Is there really, though?

The hard truth that confronts the left is that they are not a viable political coalition without the millions of dues-paying public union members contributing millions to keep Democrats in office. At the federal, state and local levels, union leadership as well as the rank and file line up behind Democrats at astonishing rates. Take a gander at candidate contributions by federal bureaucrats (especially the lawyers) in the last presidential election. And what happens if the miracle occurs and Democrats abandon their corrupt union practices and admit that they are more responsible than anyone for the epidemic of blue state pension and budget fiascoes?  Do they go full retard and devote their entire political project to identity politics and the cultural fetishes of cloistered academics? I mean, I welcome it should it transpire, given that a politics that doubles and triples down on postmodern relativism and political correctness is a political movement not long for this world.

The only practical solution for the 21st century left is a complete re-think and overhaul of their approach to the economy. I am not confident or optimistic this will happen, committed as the left is to a religious conviction that they are constantly beset by a rigged system and the culprit is capitalism. Going back to the San Jose Mayor’s comment, I’m genuinely curious to learn what a liberal or progressive not in thrall to the romantic ideal of the trade union looks like. The left’s overriding ethos is that power and wealth are unfairly concentrated at the top, where “owners” exploit “workers” with their unearned capital accumulation. Marx was adamant that capital could only be accumulated through theft, and that impulse is alive and well with today’s left. The romance of the unions is all about leveling the field, sticking it to the fat cats via labor “solidarity,” strikes and bargaining power. It’s a zero sum philosophy with a cynical message: the wealth has been unfairly allocated to the rich few, thus the only recourse is to organize and plot to take back your rightful share. This line of thinking, beyond being juvenile and simple, betrays a fundamental lack of understanding of how market economies work. It obsesses over equitable distribution and is uncomfortable with the fact that life’s natural order is not fair. And it treats as obscene high profits and earnings, imagining that prosperity is best when it is shared; the point of politics then is to guard against unfairness wherever possible. That they fail to see how a system of perceived unfairness does in reality serve to foster the most broadly shared prosperity (see: America, The Unites States of) imaginable is a frustration we will likely have to endure forever.

Unless of course the left is forced into reconsidering its economic perspective by blue state voters sick of living in stagnant economies where insane percentages of state budgets are allocated just to public employees and their lavish benefits. 25% of Illinois’ budget is swallowed up union costs. TWENTY FIVE PERCENT! And yet the Chicago progressive mob is adamant that taxes must increase along with spending, a tune that never changes regardless of the fiscal climate. This is the kind of blind, tone-deaf, oblivious political thuggery that is going to doom the left eventually. The question is do they see the writing on the wall and are willing to make adjustments to their chief economic plank, or are they going down with the ship? By all accounts, union leadership is going to fight to the death to coax every last possible dime out of taxpayers before they shuffle off into the void, but there are more encouraging signs among rank and file members as well as savvy Democrats in the states. The problem is at the federal level, where public unions are less strapped by finite state budgets and reap the rewards of an out-of-control government spending apparatus. But even the big federal players like Afscme and AFT can see that reformer governors in blue states where unions typically enjoy broad approval are finding receptive audiences among state Democrats who realize the union model is unsustainable.

I contend that California will be a red state before Texas ever turns blue. Their pension crisis is not as horrible as Illinois’ but it ain’t pretty either. Chuck Reed and other California Dems (including Jerry Brown) may intuit the problem correctly, but it remains to be seen whether they have either the will or the ability to take on CALPERS and the rest of the bloated public sector. Far be it for me to offer advice to progressives on how to avoid squandering their entire movement, but if they want to be viable post-Obama they absolutely must ditch their wretched attachment to public sector unions and the cesspool of half-baked Marxism from which it draws inspiration. The only way that is ever going to happen is if they leave the politics of envy behind. Rising tides do indeed lift all boats, but if you’re consumed with rancor and envy and are convinced that America and capitalism are evil schemes constructed by greedy monocle-wearers, then it is going to be impossible to recalibrate your perspective on economics. Let’s let Schumpeter weigh in on the subject because no one has ever been able to explain this stuff quite like the Austrian master (emphasis mine):

In part [Capitalism] appeals to, and in part it creates, a schema of motives that is unsurpassed in simplicity and force. The promises of wealth and the threats of destitution that it holds out, it redeems with ruthless promptitude. Wherever the bourgeois way of life asserts itself sufficiently to dim the beacons of other social worlds, these promises are strong enough to attract the large majority of supernormal brains and to identify success with business success. They are not proffered at random; yet there is a sufficiently enticing admixture of chance: the game is not like roulette, it is more like poker. They are addressed to ability, energy and supernormal capacity for work; but if there were a way of measuring either that ability in general or the personal achievement that goes into any particular success, the premiums actually paid out would probably not be found proportional to either. Spectacular prizes much greater than would have been necessary to call forth the particular effort are thrown to a small minority of winners, thus propelling much more efficaciously than a more equal and more “just” distribution would, the activity of that large majority of businessmen who receive in return very modest compensation or nothing or less than nothing, and yet do their utmost because they have the big prizes before their eyes and overrate their chances of doing equally well. Similarly, the threats are addressed to incompetence. But though the incompetent men and the obsolete methods are in fact eliminated, sometimes very promptly, sometimes with a lag, failure also threatens or actually overtakes many an able man, thus whipping up everyone, again much more efficaciously than a more equal and more “just” system of penalties would. Finally, both business success and business failure are ideally precise. Neither can be talked away.”

-Joseph Schumpeter, Capitalism, Socialism and Democracy

The Year in Ridiculous

puffyshirt

“But I look ridiculous!”

The unbound progressive id unleashed on the country this year was truly something to behold. No faction of the identity politics left went without aggressive advocacy and not a small number of the population was subjected to the inchoate and nauseating “agitation” that characterizes the activist method. From the false “war on women” to the cynical highjacking of a burgeoning cross-partisan police reform movement by race-baiters (and then subsequently by police unions) to the bald-faced lie repeated by every progressive that the child migrant surge at the Texas border was due to anything other than direct incentives created by Obama’s Deferred Adjudication of Child Arrivals (DACA) executive action to the execrable and absurd on its face notion that the president finished the year strong and in fact the the year was actually a success for him and for liberalism.

Unreal.

It is also tempting to declare that because there is only so much ridiculousness and farce a respectable society will accept, and that eventually lies and propaganda are exposed as such by the cold nature of reality, the progressive strain of leftwing politics is nearing its sell-by date. Just glance at some of the thoughtful midterm election postmortems by some left pundits and marvel at their nearly unanimous conclusion that the party’s decision to go all-in on divisive cultural issues at the expense of an employment focused campaign targeted at the working class is responsible for the Democrats’ lowest representation in Congress and across statehouses and state legislatures in about a century. This is no small observation. This is a blanket repudiation by people on their side of the Democratic Party’s cynical identity politics platform. Whether we’re talking about blacks, Hispanics, gays, or women, the politics of victimhood and grievance have worn increasingly thin. Throw climate change into the mix as well because it is the identity politics issue for coastal white liberals and it is something to which all right-thinking millennials give as much thought as the New Testament Gospels. The point of being a hip progressive is not to know the truth but to possess the right opinions. Far better to tow the climate change line on pure faith than be deemed a “denier.”

Why is it more important for the left to hold the correct stances on issues rather than the truth? Jonah Goldberg offers this explanation:

If you work from the dogmatic assumption that liberalism is morally infallible and that liberals are, by definition, pitted against sinister and — more importantly — powerful forces, then it’s easy to explain away what seem like double standards. Any lapse, error, or transgression by conservatives is evidence of their real nature, while similar lapses, errors, and transgressions by liberals are trivial when balanced against the fact that their hearts are in the right place.

Good intentions are more important than objective reality. In normal times this would be an outrageously controversial claim, but these are not normal times. While many feminists with a conscience have done noble and searching work in the wake of the Rolling Stone campus rape story debacle, still many others are digging in and insisting that it matters not that the story accusing a UVA fraternity of systematic and brutal gang rape is a fabrication, what matters is the narrative and the important spotlight being shined on the “epidemic” of campus sexual assault. Then, almost like mana from Heaven, the Justice Department released updated statistics on criminal sexual assault, which committed the public service of dumping ice cold water all over the favored falsehood of the president and feminists that “one in five” women will be sexually assaulted in their time on campus (the stat is closer to 6 out of 1,000, which is still too high, but nowhere near an epidemic or a crisis and certainly not one in five. That a segment of the radical left still insist on their narrative even after ideologically sympathetic outlets have suggested that this has all gone too far is pretty strong evidence that their agenda trumps the truth. If feminists are actually interested in rooting out rape cultures, they should look to Syria or, closer to home, Rotherham, England.

Though I am at odds with the majority of conservatives on the issue of immigration, I am not a full “open-borders” libertarian either. As a Texan, I tend to think the model here works pretty well, far better at any rate than my other home state of California, which has a vast and bloated public employee system over which uncontrolled immigration holds a Sword of Damocles. In Texas, where we eschew the public employee model as much as we can, Hispanics are much more likely to vote Republican than their counterparts on the West Coast. This past November, Governor-elect Greg Abbott got 44% of the Hispanic vote and Senator John Cornyn was re-elected with 49%. Whatever else can be said about the farce that is Battleground Texas, the idea that their modus operandi is to “turn Texas blue” is surely in the running for most ridiculous conceit of the year, especially in light of those Texas Hispanic voting trends. Meanwhile, California public debt and pension obligations are on a one-way ride to fiscal calamity and the people who are going to bear the worst of that reckoning are the poor and immigrant populations.

The border surge of child migrants from three countries in Central America was among the more ridiculous scenes of American politics in my lifetime. The actual line parroted by the left – extensively – was that this was all due to rising tides of violence in the region. As if Guatemala, Honduras and El Salvador had never experienced cartel or gang violence before. No, what happened was obvious to anyone with a shred of decency or honesty: Obama issued the DACA order in the Spring which allowed child arrivals from non-contiguous countries (i.e. everywhere but Mexico) to avoid deportation. Leave aside for now this blatant instance of legislating from the executive branch and just connect the dots. Obama issued an order, either indirectly or directly got the word out in Central America that any children able to make it into the United States interior would be granted a “permiso,” which in turn would mean their parents would be subject to legal immigration at a later date. The sheer volume of children sent on that crazy sojourn through Mexico to the Rio Grande means the message was received. The incentive duly laid by the American government, rational people in want of a better life understandably jumped at the chance and sent their kids packing, even if it meant putting them in extreme danger by handing them over to the “coyotes” who were ably gaming the new system. The backlash by the right was too harsh, or at least not on point enough, because it focused more on the tangible reality of poor migrant children here illegally rather than the ungodly level of cynicism, deception and outright fraud perpetuated by the White House, Democrats and media nationwide.

The border surge was by design, yet we were loudly and assuredly told otherwise by the media chorus who understood it was their job to distort and confuse the issue until it went away, like all Obama scandals eventually do. Great tomes on the subject of stonewalling are still to be written about this administration and his enablers.

The piece de resistance of progressive ridiculousness is the national conversation on race. Rarely has such a broad coalition of left-right interests coalesced behind as seminal a reform effort as criminal justice and over-incarceration. Not just libertarians but conservatives, from Rick Perry to Chris Christie to governors across the South, are embracing initiatives like “Right on Crime” that aim to reduce prison populations and that carry the additional and (for some) counter-intuitive benefit of continued decline in crime rates. Had the left not been so wedded to its alternative reality narrative of America as an irredeemably racist society and instead been sober about picking its battles, it’s likely we never would have heard of Ferguson and would have instead concentrated on Eric Garner, Tamir Rice and other instances where police misconduct was far more concrete. Real consensus and coming together would have been possible, though far from assured, had the conversation remained on police conduct and the need for reform exclusively. New York’s Benjamin Wallce-Wells places his finger on it:

But something strange has happened during the past month, both in the politics of New York and those of the country. In the debates over policing that followed the tragedies of Michael Brown and Eric Garner and Tamir Rice and officers Ramos and Liu, race has assumed the central role, displacing crime. This has brought about a more direct confrontation with our remaining national sickness around race, but it has also surfaced an atavistic, tribal strain in our politics, reminiscent of the racialized fights of an earlier era. It is probably no accident that some of the central figures of New York’s recent past returned to the public stage last week, and that their view diverged from de Blasio’s. Instead of a reasonable, technocratic decision to adjust policies of policing and punishment to a place where there is much less crime, they saw the debate as a declaration of allegiances — of whose side you were on.

Of Mr. Wallace-Wells, I have just one question: who made this about race?

Based on the grand jury evidence aired to the public, one can say with 99% certainty that Michael Brown did not have his hands up and did not say “don’t shoot.” That does not make what happened any less of a tragedy, or any less of a reason to talk about the need for police reform, such as the need for body cameras which would have saved the country a whole lot of grief since this case would have been clear one way or the other. But somehow, within hours of the incident, the “hands up, don’t shoot” meme emerged in the streets of Ferguson and since that train left the station… it has barely slowed. While there is no reason to excuse the agitators for stoking ire and running with false narratives, the blame and the ridiculousness of it all lies with enablers in media and progressive politics. There are simply too many progressives in East Coast media willing to ignore facts and context so long as the existing narrative serves their interests, and it most definitely does serve the left’s interests to see America permanently mired in 1960’s racial strife, because nothing sustains power like a good grievance.

The corrosive effects on family and dignity imposed on poor inner city black and impoverished rural white alike are among the proudest achievements of the institutional left. Their policies trap the impoverished in their station, leaving them with little recourse but to look to government, while simultaneously feeding grievance and laying the blame at the feet of “the man.” What continues to escape them in this reasoning is the indisputable reality that in today’s America the left is the man. “Despite controlling the commanding heights of the culture — journalism, Hollywood, the arts, academia, and vast swaths of the corporate America they denounce — liberals have convinced themselves they are pitted against deeply entrenched powerful forces and that being a liberal is somehow brave,” says Goldberg. “Obama, the twice-elected president of the United States, to this day speaks as if he’s some kind of underdog.”

Progressives would bristle at the charge but it is no less true. They are ever so proud of the welfare state they erected, not because it works, but because they built it, and conservatives don’t like it. Liberals are responsible for any well-intentioned program gone bad because theirs is the philosophy that holds good intentions above truth in the heirarchy of virtues. Theirs is the vision of government that insists all social problems be adjudicated from on high. The vice grip that the left has on our culture is so tight that any objections are considered blasphemous rather than just wrong. Don’t believe me? Argue with a lefty about biological distinctions between sex and gender. Actually, for your own sake, don’t do that.

Why then, is the left allowed to avoid accountability for their failures? Going back to Goldberg, it is because their hearts are pure, and ours are not.

Peaceful, law-abiding tea-party groups who cleaned up after their protests — and got legal permits for them — were signs of nascent fascism lurking in the American soul. Violent, anarchic, and illegal protests by Occupy Wall Street a few years ago or, more recently, in Ferguson, Mo., were proof that a new idealistic generation was renewing its commitment to idealism.

When rich conservatives give money to Republicans, it is a sign that the whole system has been corrupted by fat cats. When it is revealed that liberal billionaires and left-wing super PACs outspent conservative groups in 2014: crickets.

When Republicans invoke God or religious faith as an inspiration for their political views, it’s threatening and creepy. When Democrats do it, it’s a sign they believe in social justice.

When it comes to progressives my sentiment is the same as Nick Frost’s frustration with Simon Pegg in the excellent The World’s End: “it’s pointless arguing with you.” Nowhere is that more on display than in the media’s attempt to put some kind of sheen on Obama’s 2014. All that they are left with is the spectacle of an unhinged president acting outside his constitutionally delegated authority to impose on the country his idea of what America should be. And most ridiculous of all is the fact that Obama genuinely believes he had a good year. He would look less ridiculous in the puffy pirate shirt.