Tag Archives: the economy

Views from a happy California expat

Thank you to Richard Eber, frequent contributor to California Political News & Views, for his article on reasons people are leaving California, and for including the Just Vote No Blog editor’s views. Actually, the article wonders why anyone would choose to stay in the once Golden State.

Certainly, there are reasons not to join the California exodus — family ties, a good job, balmy weather, lovely scenery, world-class art and music venues, health constraints, dependence on California’s generous welfare, or reliance on bountiful flow of drugs. However, as Richard Eber’s article points out, the reasons to leave are mounting.

Although Californians are leaving mainly because of exorbitant taxes, housing prices, and living costs, many are rejecting the principal underlying cause of those costs – the all-enveloping far-left one-party rule.

The resulting inefficiencies of the one-party rule make California less desirable than, say, North Carolina, one of the destination states mentioned in Eber’s article. Sure, there are Republicans, Greens, and Libertarians in California. But they have descended into near irrelevance given the power of the Democrat machine. Power of such magnitude, regardless of what party or faction holds it, empowers, and inspires extremes.

Richard Eber’s article is reproduced below:

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Leaving California, by Richard Eber, published September 22, 2022, in California Political News & Views

It’s no secret families of all economic classes from the poor to the super rich are leaving California in droves. From illegal aliens to billionaire Elon Musk folks of all backgrounds are quickly putting the former “Golden State” in their rear view mirrors

Libertarian types like me would like to attribute the migration of about half a million people each year to Texas to be politically motivated. In reality this is not the case. Spurred by the socialistic government headed by Governor Gavin Newsom, high taxes, housing costs, energy costs, crime, and poor schools, are more important than politics.

Migrating businesses are following as well. Texas has been the main beneficiary of what amounts to a wealth transfer of billions of GNP each year welcoming 500,000 new residents. It is no coincidence Austin is quickly gaining the reputation of becoming the Silicon Valley of the South.

Typical is the family of my daughter’s best friend and her family who packed their life and moved to Texas after Lexi graduated from high school. Despite both of her parents having decent jobs, they could not afford to purchase a house in the Bay Area.

This soon changed in Texas when they bought a 2500 square foot home for less than half of what it might cost in California. If Lexi’s family would have stayed, it is doubtful they could even have purchased sardine like dwelling in a Priority Development Area (PDA) Sacramento believes people prefer to single family homes.

Prospering with an upper middle class standard of living, my daughter’s friends have never regretted bolting California. They are pretty much apolitical believing their standard of living and lifestyle is more important than living under expensive Progressive social values.

The truth of the matter is Bill Clinton’s campaign advisor James Carville’s remark in the 1992 Presidential election “It’s the economy stupid” is in the forefront of the exodus of folks departing for greener pastures. While this phenomenon has been partially balanced by immigrants settling in California from South of the border, there is major disparity in tax revenue being taken in.

Last week it was reported government revenues declined 11% in the last quarter. While Sacramento might sugar coat these statistics blaming Covid-19 for the drop, many economists believe this will be a preview of coming attractions as the land of Hollywood is fast losing its luster.

Apparently, Gavin Newsom with his fixation with promoting the use of electric vehicles doesn’t care if it costs up to $35.00 dollars more to fill up ones tank compared with several other states. This is but a tip of the iceberg families pay to live in a so called sunny paradise.

If those departing California were really interested in staying rather than being fitted for PF Fliers, they would try to change the Progressive agenda which dominates politics in all but a few rural communities. What then prevents voters from supporting more rational policies that would lower their cost of living?

There is no clear answer for middle of the road and conservative individuals who might want to change the current system. There doesn’t seem to be a clear path for those who wish to slow down going all in on climate change, Sanctuary Cities, defunding the police, reducing the influence of public employee labor unions and paying for costly social programs.

Apparently, this growing group of disenfranchised citizens doesn’t feel the Republican Party of California has the ability to elect candidates to carry out their wishes.

In contrast we have my friend Marcy Berry who recently departed San Francisco to live near her daughter’s family who relocated to North Carolina. As a Libertarian, she has been delighted with the political environment there. After a few months, here is her report from the land of Tar Heels and Blue Devils:

Hello from a transplanted Californian in North Carolina. Why are y’all still in California? Family ties, great job? Legitimate reasons. Barring that, anyone who stays must love California’s all-enveloping progressive reign. Just sayin’. And here are some more unsolicited opinions:

California’s all-enveloping progressive reign is the state’s most salient characteristic, and is what makes California so politically different from North Carolina, a swing state. Folks in a swing state just behave differently than those in a dominant regime.

North Carolina has a Democrat governor, and a majority-Republican but not veto-proof state legislature. Governor Roy Cooper navigates a peaceful balance, without the histrionics that Governor Gavin Newsom can perpetrate in his all-Democrat dominion.

Voter profile in North Carolina is currently 34.6% Democrat, 30.3% Republican, 1% Libertarian, and a whopping 34.5% unaffiliated. The unaffiliated contingent could account for the majority-Democrat voters and majority-Republican legislature. Let’s see what happens in the 2022 midterm elections, with unaffiliated voters residing mostly in the most populous counties.

North Carolina, not having (yet?) a dominant political party, is awash in both right and left-leaning voices. The local newspaper in my county leans left, my neighbors lean right, I am told that transplants arriving daily from California due to North Carolina’s rapidly expanding technology sector lean semi-left (they are aware of the mess they left behind but are not sure how else to think).

Unlike Republicans in California, Republicans in North Carolina are vocal and determined. Current and aspiring political candidates know they matter. They know they have a shot at making the state legislature veto proof and of turning the U.S. Senate majority-Republican.

Is there still hope to bring the two-party system back to California? Will the domination of the three quarters Democratic legislature and all State office holders continue indefinitely? The answer to this question is unequivocally “yes”. My only regret is wondering if such a change might occur in my lifetime.

I would suppose GOP State Chairwoman Jessica Patterson and her inept followers will eventually be replaced (if there is still a Republican Party). In a similar vein it is likely if Gavin Newsom and his successors continue to run the State into ground with their Marxist-Lite policies, needed changes will eventually occur.

There are so many “could have should of” scenarios to contend with in predicting California’s future. All we can do is hope.

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Picture: Meme from Babylon Bee, a publication that never tires of having fun at California’s cost.

Logo of the SEIU

CA AB 257 vs Fast Food Industry

The California Legislature passed Assembly Bill 257, the Fast Food Accountability and Standards Recovery Act, on August 29, 2022. If Governor Gavin Newsom approves AB 257, California will be the first state in the nation to broadly regulate wages and working conditions for an entire industry. Fight for $15 and the Service Employees International Union (SEIU) California sponsored AB 257. Their hope is the bill will lead to European-style industry-wide unionization, and end company-by-company efforts. The fast-food industry predictably opposes the bill.

Although states, as well as the federal government, regulate several industries, like banking and petroleum, these regulations do not set minimum wage and labor standards. They do not attempt to regulate social inequities. That is why the bill is being touted by the media as “first in the nation.”

A Super Agency in the Making

AB 257 creates a council comprised of government officials appointed by the Governor, business leaders, and worker representatives. The council will draw regulation to apply to all fast food restaurants with 100 or more establishments nationally that share a common brand. The bill has broad powers to repeal or amend existing regulation to accomplish its mission of establishing wage and labor standards.

AB 257 claims its intent is not to usurp legislative powers by creating or amending statutes. However, sections of the bill seem to send a contradictory message.

Section 4 (d) (1) (B) Nothing herein restrains the Legislature from enacting legislation that prevents a standard, repeal, or amendment from taking effect.

This wording seems to say elected representatives of the people do not have the power to simply veto regulations presented by the council, but instead can if they choose create legislation that would amend or repeal the regulation.

The council created by AB 257 seems in reality to be a super-agency, whose unelected members have de facto power to make and enforce law. As such, voters have no say in rules and regulations this super-agency implements. The only recourse of unhappy voters is appeal to their California legislators to try to enact more legislation that modifies or repeals the “law” created by the council – a council they themselves created.

The council will succeed where no agency has before?

California already has numerous laws, rules and regulations regarding wages and working conditions. However, AB 257 correctly states that enforcement is ineffective and problems in the workplace abound.

Section 2 (j) Furthermore, because existing enforcement and regulatory mechanisms have proved inadequate in ensuring fast food restaurant worker health, safety, and welfare, the Legislature concludes that sectorwide minimum health, safety, and employment standards, including standards concerning wages and other working conditions, identified by an expert body with subject matter expertise and experience in the fast food sector and which can represent the demographic diversity of the state’s fast food restaurant operators and employees, are necessary to protect, maintain, and ensure the health, safety, and welfare of, and to supply the necessary cost of proper living to, fast food restaurant employees.

So, AB 257 creates a super-agency (without discontinuing any of the ineffective agencies) and claims it will do the job none of the other numerous agencies have succeeded in doing. Seems this endeavor could only be accomplished either by amazing efficiency, for which government agencies are not well known, or tyrannical power over the fast food industry, approaching a takeover.

Interesting background of AB 257

AB 257 was originally authored by then Assemblymember Lorena Gonzalez, who resigned from office in January 2022 to take the position of chief officer of the California Labor Federation. Ms. Gonzalez is also the author of Assembly Bill 5, signed into law September 2019, which reclassified numerous California workers from independent contractors to employees.

AB 5 caused enormous upheaval, like upending supply chains by curbing the work of hundreds of independent truckers. AB 5 has also spawned numerous high-profile lawsuits, the most prominent of which are those initiated by ride-sharing company Uber, the California Trucking Association, and the International Franchise Association.

It would not be unreasonable to expect the same upheaval from AB 257, given the bill’s unusually broad powers.

After Assemblymember Lorena Gonzalez’s resignation from office, Assemblymember Chris Holden reintroduced the bill in January 2022.

There is a better way

Government micromanagement of industries, promising “living wages” and a plethora of “benefits” might seem to low-wage workers like a dream come true.

Unfortunately, they do not realize that life will find a way. The marketplace is a living thing that survives the harshest conditions – ask any underground entrepreneur thriving in the world’s tyrannies. Another quote is “money goes to where it is treated best.” Ask the many major companies that have left California for more business-friendly states. The cure promised by AB 257 might be worse than the ailments.

Another way to view low-wage workers, like those in the fast food industry, is that there are too many of them. Although sometimes denied by today’s progressives, supply and demand do determine prices. If companies see too many people with non-marketable skills (like graduates of California’s low-rated school system or graduates from Stanford with degrees in philosophy) then companies can pay their workers low wages without fear of exhausting the worker supply.

A more sustainable way to guarantee worker respect, good wages, and benefits is to encourage workers to obtain marketable skills. Never-ending battles with the realities of the market only serve to grow government power, increase taxation necessary to maintain bureaucracies, and divert resources from helping the populace obtain good skills.

Hardfire TV guests

Hardfire asks – “Ukraine: Weapons or Immigration?”

Cameron Weber – economist, historian, professor – has a show called Hardfire. Dr. Weber likes thought questions. What are thought questions? They are “what if,” “would you want it?” “what stands in the way?” “what could make it work?” questions. They are questions the Founding Fathers must have asked when someone must have said, “Man, we really need to get rid of King George!” Or maybe questions like President John Kennedy asked when he pledged to put a man on the Moon before the decade ended. For sure, not all thought questions end in successful endeavors – some do, some don’t.

The latest Hardfire show asked the following:

On May 19, 2022, the U.S. Senate approved a $40 billion emergency military and humanitarian aid package to Ukraine in support of Ukraine’s fight against Russian invasion. That is not the first package and probably not the last.

From a pragmatic cost-benefit point of view, would it not be cheaper to offer Russian conscripts tasked with fighting in Ukraine immigration into the U.S. plus $100K?

Discussions would need to include cost-benefits of immigration. And cost-benefits of distressing Vladimir Putin any more than he is distressed already.

Here is a link to the Thursday, July 7, 2022, Hardfire show – only about 30 minutes long.

Ukraine: Weapons or Immigration

Soros visits early childhood education center

Quotable Quotes from George Soros

To those right of center, George Sorors is evil incarnate. Whatever goes wrong, it’s Sorors fault. Given such position, the specifics of what he does goes unaddressed.

George Soros, the billionaire investor and philanthropist founder of Open Society Foundations, has made his philosophy, objectives, and modus operandi perfectly clear, especially in the numerous very quotable quotes in his books, speeches, and public conversations.

Soros is an intellectual who is considered one of the best hedge fund managers in the world. His fortune, estimated at $8.6 billion, attests to his acumen. His Open Society Foundations, endowed at around $18 billion, is a grant-making machine amply capable of transforming markets and societies.

His objectives, as clearly expressed in his own words, matter.

A man with a mission

Soros objectives could be boiled down to two of his quotes:

When I had made more money than I needed for myself and my family, I set up a foundation to promote the values and principles of a free and open society.

An open society is a society which allows its members the greatest possible degree of freedom in pursuing their interests compatible with the interests of others.

Back in the late 1970s, when Soros started his philanthropic work, he funded educational initiatives for Black South Africans and gave financial support to dissidents of the Communist regime in the European Eastern Block. When South African apartheid dissolved and the Soviet Union collapsed, Soros turned his attention to other “enemies of open societies.”

The main obstacle to a stable and just world order is the United States.

According to information on its website, Open Society Foundations spends approximately one in five dollars in the United States.

Why? Because most people, including George Soros, view the U.S. as the hot bed of capitalism.

The main enemy of the open society, I believe, is no longer the communist but the capitalist threat.

Capitalist threat?

Such view of capitalism espoused by someone who made his fortune in the world’s capital markets is surprising.

However, today, Soros views his same theory of reflexivity that led to his success in the capital markets as a destabilizing force that needs government regulation.

Reflexivity is the “gap between perception and reality.” According to Soros markets often operate on perception, so prices reflect perception not reality. Reliance on past performance and ideas of how markets should behave can become useless when perceptions of the day interfere with prices.

Add to reflexivity what Soros sees as a tendency of markets toward excess, and we have, according to Soros, a recipe for instability, uncertainty, and economy mayhem.

His solution is to regulate institutions and the market

Throughout the 19th century, when there was a laissez-faire mentality and insufficient regulation, you had one crisis after another. Each crisis brought about some reform. That is how central banking developed.

A global regulatory system would be even better, as Soros explains in one of his books, The Crisis of Global Capitalism.

To stabilize and regulate a truly global economy, we need some global system of political decision-making.

In short, we need a global society to support our global economy.

Soros explained during his remarks on October 1, 2013, at the Global Economic Symposium,

Behind the invisible hand of markets lurks the visible hand of politics. Both the markets and the authorities are fallible; that is what makes their interaction reflexive.

The downside? According to Soros, reflexivity applies to society as a whole, not just to capital markets. He willingly admits that his views and actions are a result of his perceptions of reality. As his perceptions change given new information or new developments, he recalibrates.

Unfortunately political decision makers are seldom blessed with such wisdom. Their perceptions mushroom into eternal rules

More downsides

* Soros view of the ideal society “which allows its members the greatest possible degree of freedom in pursuing their interests compatible with the interests of others” clashes with his desire to achieve stability through heavy regulation. Nevertheless, he acts on his perception that wide-spread regulation is desirable.

* The perception is that capitalism, especially American capitalism, is the cause of imbalance, uncertainly, and economic disaster. The reality is that capitalism has been transformed into cronyism. Already excessive regulation exclude competitors from markets, low interest rates facilitate acquisitions and monopolies, largess showered on the populace disincentivizes workers.

* Power corrupts. Thus, it stands to reason that politicians with the power to heavily regulate and control markets, especially on a global scenario, face temptations to act in corrupts ways.

* Soros is quick to clarify that when he refers to global decision makers, he means a decision-making body that supports sovereign open societies. A nation that must take orders from a global decision maker cannot be called sovereign, whether it is an open society or not.

Watch who supports your political candidates

George Soros’ Open Society Foundations aim to transform economic and social systems in America. Some systems like the creation of elites through inflated stock or real estate prices, for example, could use improvement. But transformation from a sovereign nation with still some semblance of free markets and still some semblance of individual freedom into a subsidiary of a global decision-making body is not what we should want.

Open Society Foundations has created a vast network of grant-making entities that target candidates who will support George Soros’ vision of what America should look like.

Voters need to pay attention for whom they vote. Voters that reject the U.S.’s form of capitalism as does Soros are certainly free to vote for Soros-supported candidates. However, voters who still place faith in our markets and our sovereignty, might want to choose other candidates.

In this article the JVN blog discussed Soros’ economic objectives and how he is advancing those objectives in the U.S. In an earlier article, published in California Political News & Views, JVN discussed Soros’ focus on transforming America’s judicial system by funding selected candidates for district attorney.

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Pictured: This picture, from a timeline of initiatives on the Open Society Foundations website, shows Step by Step, an early childhood education institution funded by Open Society. These institutions are now in 120 countries, including the U.S.

Source of Soros’ Quotable Quotes: Most of the quotes in this JVN article come from Everyday Power: Daily Inspirational Quotes

Alexander Hamilton on computer chip

CBDC: Where Angels Should Fear to Tread

CBDC stands for Central Bank Digital Currency, and President Joe Biden, along with other heads of state are on a roll to get CBDC implemented.

“My Administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.” Executive Order, March 9, 2022.

The Fed’s White Paper

The Federal Reserve had already been tasked with preliminary exploration, and on January 20, 2022, the Fed released Money and Payments: The U.S. Dollar in the Age of Digital Transformation, a surprisingly balanced white paper.

The paper mainly lists the forms CBDC could take, and the benefits and risks of implementation. That is all the paper could do, since the key issue – the form CBDC could take – is at this time undetermined.

However, Money and Payments is clear on the following points,

* CBDC is a liability of the U.S. government, just like paper money. The general public and private institutions such as banks carry no liability. The white paper does not discuss that a U.S. government liability is a public liability – when government functions sour, Joe Q. Public pays the price in taxes or soup lines.

* CBDC can be designed to achieve various levels of privacy, stability, surveillance, crime fighting, inclusion, risk, transparency, permanency, cross-border availability. The white paper does not discuss the likely levels of each. Numerous articles found on the Internet simply assume the shapes CBDC will take without any basis for such assumptions.

In other words, CBDC is not like Bitcoin or Stablecoin or any other form of private digital currency in existence today. CBDC is government issued, and government controlled to stay in concert with government objectives.

Today, several countries have launched pilot CBDC programs, and 9 countries – 8 in the Caribbean plus Nigeria – have fully functioning CBDC.

Rushing to where angels should fear to tread

It is not just Internet pundits imagining what CBDC would look like.

The Federal Reserve Bank of Boston and the Massachusetts Institute of Technology are collaborating on Project Hamilton to explore CBDC design.

Some members of Congress have introduced legislation on CBDC. Not the kind of authorizing legislation that Chairman Powell would like to have, but what could be called preemptive legislation. Examples:

On January 12, Representative Tom Emmer (R-MN) introduced a bill prohibiting the Federal Reserve from issuing a central bank digital currency directly to individuals.

On March 30, Senator Ted Cruz (R-TX) introduced a bill, companion to Rep. Emmer’s, in the U.S. Senate. The Federal Reserve is already prohibited by Constitution and statute from issuing money directly to the public; which might be the reason Senator Cruz emphasizes his concern for individual privacy and his desire to keep the market competitive

U.S. Sen. Ted Cruz (R-Texas), member of the Senate Commerce Committee, today introduced legislation to prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) directly to individuals. Sen. Cruz’s bill was cosponsored by Sens. Braun (R-IN) and Grassley (R-IA).

Specifically, the legislation prohibits the Federal Reserve from developing a direct-to-consumer CBDC which could be used as a financial surveillance tool by the federal government, similar to what is currently happening in China. The bill aims to maintain the dollar’s dominance without competing with the private sector.

On March 28, Representative Stephen Lynch (D-M), with co-sponsors Jesús “Chuy” García (D-IL), Rashida Tlaib (D-MI), Ayanna Pressley (D-MA), and Alma Adams (D-NC), introduced a bill calling for an “ECash” prototype that would be distributed directly to the public by the U.S. Treasury.

The Fed treads more lightly

The Fed Board of Governors so far has stuck to what it was mandated to do: produce a preliminary study.

On several occasions Fed Chairman Jerome Powell indicated that he will not proceed with CBDC on his own. He wants specific authority from Congress in the form of legislation, concurrence from the Administration, and acceptance from the general public.

When issuing those statements, Powell might be referring to the fact that the U.S. Constitution clearly says that the power “to coin money, regulate the value thereof…” belongs to Congress. Also, although the Federal Reserve is tasked with ensuring the efficiency and safety of payment systems, it does not have the power to unilaterally implement a totally new payment system or engage in transactions with the public directly.

Powell also might be noting that implementation of CBDC could, as the white paper states, “fundamentally change the structure of the U.S. financial system, altering the roles and responsibilities of the private sector and the central bank.” Not something the Federal Reserve should undertake without support from the public and their representatives in Congress.

What is Biden proposing exactly?

We don’t know what Biden is proposing, and at this point neither does he. U.S. CBDC could be designed in many forms and to accomplish many diverse objectives.

The Money and Payments white paper comment section illustrates how widely interpreted is CBDC. Comments vary from viewing CBCD as a pig in a poke, a solution looking for a problem, another step in the evolution of the current U.S. payment system, a great opportunity for inclusion, and so on.

Informed consent from Congress in the form of adopted legislation (if that ever happens) with the approval of the President will provide cover for Chairman Powell.

But can do little to ensure,

  • Individual privacy
  • Economic good health
  • Sustainable national debt
Los Angeles Skid Row

Guaranteed Income: California’s Next Horizon

Guaranteed income pilot programs are emerging throughout the state of California. The programs differ in who is selected and how much recipients get. None have strings attached.

The concept of a guaranteed income gained publicity during the 2020 elections, when presidential contender Andrew Yang made it a central part of his campaign. In California, additional exposure came from Michael Tubbs, who founded Mayors for a Guaranteed Income in June 2020, a coalition that advocates implementation of guaranteed income trials.

Three Sample Guaranteed Income Programs

Michael Tubbs, when mayor of the City of Stockton implemented one of the first guaranteed income pilot programs in the state, with great fanfare and a lot of private donations. The program gave $500 a month to 125 selected low-income residents and ran for two years (February 2019 to January 2021).

Oakland Mayor Libby Schaaff launched her pilot guaranteed income program in March 2021. The privately-funded program will give low-income families $500 per month, for 18 months. Families selected are of color, in an effort to close the racial wealth gap.

On April 19, 2021, Los Angeles Mayor Eric Garcetti, proposed a $24 million tax-payer funded one-year guaranteed income pilot program. The program will give $1,000 per month to 2,000 low-income families adversely affected by Covid-19.

The Selling Points

A guaranteed income, with no strings attached, given in addition to established public assistance programs takes aggressive selling in some communities. In Stockton, for example, Mayor Tubbs was not re-elected in spite of accomplishments. His defeat was in part (there were other adverse circumstances) because some of his constituents were not ready for agendas as progressive as a guaranteed income.

The promotional efforts are convincing, but debatable in some regards. Here is a sample of the press California’s guaranteed income programs have received, followed by clarifications that might be helpful.

  • “The idea of the government providing poor residents with some basic level of income has been floated by a number of prominent people over the years, including civil rights leader Martin Luther King Jr., libertarian economist Milton Friedman and Republican President Richard Nixon.” L.A. could soon become the largest city in the U.S. to offer guaranteed income for poor residents.” L.A. could soon become the largest city in the U.S. to offer guaranteed income for poor residents, Fortune, April 19, 2021.

Martin Luther King criticized the existing welfare system as fragmented and designed to affect root causes of poverty, not mitigate poverty itself. He did propose a guaranteed income as remedy. However, his plan came with strings attached. Government needed to create “social good” jobs for individuals who the market economy left behind. Dr. King’s plan, therefore, differs from the current “no strings” proposals.

Milton Friedman proposed a negative income tax, not a guaranteed basic income. Under Friedman’s plan, people file their tax returns, and depending on their income level, they either pay taxes or receive cash from the government. Also, Friedman’s plan was intended to replace existing welfare programs not supplement them. Today’s guaranteed income plans require nothing of recipients and supporters intend to avoid cannibalizing other public assistance programs.

Richard Nixon introduced in 1969 The Family Assistance Program (FAP), which aimed to implement a negative income tax that would benefit working parents with household incomes under a certain level. Unlike today’s guaranteed income proposals, FAP had a work requirement that applied to most recipients (there were exceptions to mothers with small children at home). The proposal passed the House of Representatives, but failed in the Senate.

  • “There’s a number of ways to pay for guaranteed income, from a sovereign wealth fund in which citizens benefit from shared national resources like the Alaska Permanent Fund, to bringing tax rates on the wealthiest Americans to their 20th century historical averages.” Mayors for a Guaranteed Income

Alaska’s principal source of revenue is crude oil. Residents receive an “oil dividend” from a natural resource that theoretically belongs to all residents. It might be difficult for California to come up with a comparable natural resource dividend.

California already has one of the highest tax rates in the nation. Several large employers have recently left California citing high taxes and high costs, among them California icons like Hewlett-Packard and Tesla. Texas and Arizona are among low or no-tax states that are happy to welcome California’s wealthy expatriates.

An objective of Mayors for a Guaranteed Income and others is to establish a federal guaranteed income program. The federal government can print copious amounts of money, redistribute revenue from low-spending to high-spending states, and does not need constituents’ approval to raise taxes. The only catch is that residents of low-spending states might not be happy with this plan.

  • Preliminary analysis of Stockton’s guaranteed income program: “Results gathered from the first year, which spanned February of 2019 to February of 2020, found recipients obtained full-time employment at more than twice the rate of non-recipients. Recipients were less anxious and depressed, both over time and compared to the control group … Recipients had a greater ability to pay for unexpected expenses …” University of Tennessee, College of Social Work, March 5, 2021.

“Asian/Pacific Islanders and homeowners comprised a larger share of the debit-card recipients than of the control group , which could have biased the results…The study’s small sample and reliance on self-reported outcomes are bigger problems. It’s difficult to assess a statistically significant effect on employment among such a small group over a one-year period—from Feb. 2019 to Feb. 2020—especially given high labor-market turnover among lower earners.” Universal Basic Income Hype, Wall Street Journal, March 22, 2021.

Conclusion

The highly-promoted Stockton experiment is serving as a catalyst for the proliferation of guaranteed income trials in California. However, it is difficult to see how a study of 125 folks, among them homeowners, can apply to California’s large population of low or no-income residents.

The state of California has a poverty rate of 11% compared to lower-poverty states like New Hampshire at 4.9%. Also, California has the third largest rate of homelessness of all states in the U.S. (after New York and Hawaii).

Guaranteed income programs in California will prove expensive. Local and state jurisdictions will have difficulty finding sources of cash. The federal government, with its ability to create debt, would be a reasonable source, but would low-spending states be willing to subsidize high-spending states?

Lyndon Johnson’s expensive Great Society sounded wonderful, but nothing really got fixed. It will be worth carefully reading the fine print on guaranteed income programs.

GameStop Saga Continues: Congressional Hearing on Feb 18

By January 2021 half a dozen or so short sellers had lost around $13 billion. Retail investors on Reddit’s WallStreetBets forum became catalysts in catapulting the stock price of GameStop from $13.66 on December 9 to $345.83 on January 27. The unfortunate short sellers were betting the stock price of ailing GameStop would fall.

Who knows why any of the retail investors chose to invest in GameStop. Money can be made by purchasing a low-priced stock, pushing the price up by incentivizing lots of other purchasers, and selling before the stock crashes. Also much satisfaction can come from watching short sellers and other dealers in market misery squirm.

Regardless of gain or loss, or impetus for the massive investment in an ailing company, the GameStop saga will most likely have lasting effects.

Congress Wants to “Do Something”

Congresswoman Maxine Waters, Chairwoman of the House Committee on Financial Services, announced a full Committee virtual hearing for February 18, at 12 PM ET. Subpoenas have gone to the CEOs of Reddit, Robbinhood Markets Inc. (on-line investing platform), Melvin Capital Management LP, Citadel LLC (capital management), and Keith Gill (retail investor).

Congresswoman Waters’ statement:

We must deal with the hedge funds whose unethical conduct directly led to the recent market volatility and we must examine the market in general and how it has been manipulated by hedge funds and their financial partners to benefit themselves while others pay the price.

Did either the short sellers or the retail investors involved in GameStop do anything illegal or even unethical? They appear to have done what law and practice has allowed since the financialization of the U.S. economy away from manufacturing, the proliferation of financial instruments that facilitate market manipulation, and the abundance of cheap money and debt.

The Misery Makers Might Get a Slap on Their Wrist

Hedge funds who use short selling as one of their many money-making activities and private equity firms who specialize in buying ailing companies are indeed the most visible dealers in market misery today. Private equity firms buy struggling companies with cheap borrowed money, and burden the companies with debt and a downsized workforce. As the companies struggle to pay interest on their debt, hedge funds borrow the companies’ stock from brokers, sell it, and then buy back the stocks at a lower price.

Poor management, inflexible strategies in changing times, and lately government responses to the Covid-19 pandemic contributed to the downfall of companies that were household names: Thomas Cook Travel, J. Crew, Neiman Marcus, Toys R Us. However, the role of the misery makers should not be overlooked.

But they also shared one increasingly common problem for retailers in dire straits: an enormous debt burden — roughly $1.7 billion for J. Crew and almost $5 billion for Neiman Marcus — from leveraged buyouts led by private equity firms. Like many other retailers, J. Crew and Neiman over the past decade paid hundreds of millions of dollars in interest and fees to their new owners, when they needed to spend money to adapt to a shifting retail environment. The Pandemic Helped Topple Two Retailers. So Did Private Equity, NY Times, June 18, 2020

Unsustainable debt is a good indicator of a company in decline that can enrich short sellers. GameStop’s debt was almost 6 times its equity at July 31, 2020.

At February 12, 2021, GameStop’s price was $52.40. Depending on when investors bought GameStop stock, and when they sold it, if they sold it, they either made money or they lost money. That’s how markets work.

Let’s see what Maxine Waters contributes to this saga.

The Great Reset: Elites Caring About Us?

During the week of January 25, the World Economic Forum will meet digitally for “high-level ‘Davos Dialogues’ where key global leaders will share their views on the state of the world in 2021.”

The WEF’s annual January in-person conference in Davos, Switzerland, has been postponed until May 2021.

Background

The Word Economic Forum, a non-profit foundation established in 1971 in Geneva, Switzerland, considers itself “the International Organization for Public-Private Cooperation.” Its mission is to engage “the foremost political, cultural and other leaders of society to shape global, regional and industry agendas.” It says its aim is to be impartial, global, holistic and forward looking.

WEF holds annual meetings in Davos, Switzerland. Although their Open Forum is free and “anybody can attend” (if you queue up early, since space is limited), free main events are by invitation only. Uninvited members of WEF can attend for a fee (around 480,000 Pounds Sterling or around 650,000 U.S. Dollars). Around 3,000 people typically attend, usually about 1/3 from business and the rest from government and quasi-government.

The Great Reset

WEF’s agenda for 2021will continue to be “The Great Reset”. The January 2020 meeting rebranded this long-time push for controlled globalization as response to Covid-19. The fine points of this agenda are expected in 2021. But the general platform seems to be set.

Build Back Better: Highlight of The Great Reset

“Build Back Better” is the core principle for those who believe capitalism is not working, so every aspect of our society needs to be re-shaped. Among the most ambitious plans are the following:

* Corporations must give up shareholder (owner) focus and adopt stakeholder (society as a whole) focus. The public sector must support this new focus.

* Harm to the global environment dominated the latest Global Risk Report. Therefore, both private and public sectors must take action to mitigate climate change and other environmental threats.

* New education models must equip children with skills demanded by globalization and rapid advances in technology.

* Building Back Better must include a wide-range of investments by the public sector – government spending in improved greener infrastructures as well as in human capital.

* Both private and public sectors must adapt to the Fourth Industrial Revolution.

The Fourth Industrial Revolution can be described as the advent of “cyber-physical systems” involving entirely new capabilities for people and machines … Examples include genome editing, new forms of machine intelligence, breakthrough materials and approaches to governance that rely on cryptographic methods such as the blockchain.

The Great Opportunity

Proponents of The Great Reset view Covid-19 as “a great opportunity” to implement controlled globalization guided by moral governance. Note, “governance” is the term used, not government. By way of reminder, government implies leaders elected by their constituents; while “governance” implies rules implemented by the non-elected.

Precedents

Jekyll Island and the Federal Reserve: In November of 1910 leaders of the financial world met in secret at Jekyll Island, off the coast of Georgia. The crisis that prompted the meeting was not a virus but persistent foolish investments that resulted in bank runs and general financial instability. The response was the creation of the Federal Reserve Bank, an independent institution that operates outside the control of Congress or any other elected body. Indeed the Fed provided reasonable financial stability, but unfortunately brought about undesirable results as well.

The fact that the Federal Reserve was born on Jekyll Island backed by the cream of the banking elite, it enables a debt-based economy, and it finances wars is freely acknowledged even by the Federal Reserve. End the Fed, April 25, 2018, Just Vote No

Bretton Woods and the short-lived gold-backed dollar: In 1944, the cream of the crop in the financial world met again, this time in Bretton Woods, New Hampshire. The crisis turned into opportunity was the need to plan for the reconstruction of war-torn Europe and Japan. The response was the establishment of the International Monetary Fund, the establishment of the Bank for Reconstruction and Development (now called the World Global Bank), and the creation of a totally new monetary system. The new system made the U.S. Dollar a global currency pegged to gold reserves, and all other currencies pegged to the dollar. The strong dollar allowed Europe and Japan to revive their manufacturing base by selling their goods to the U.S. Unfortunately, discipline required to maintain the dollar pegged to gold evaporated by 1971, opening the floodgates of government spending and unsustainable debt.

Now the “Public-Private” Elite Meets Again

Again people important enough to be invited to the table will meet at Davos. This time the meetings are not secret — as in Jekyll Island — or as narrowly focused — as in Bretton Woods.

This time, participants aim to shape all sectors of the global society: Manufacturing, Consumption, Digital Economy, Energy, Financial and Monetary Systems, Global Public Goods, Health and Healthcare, Investing, Media, Mobility, Technology Governance, Trade and Global Economic Interdependence, The Internet of Things, New Economy and Society.

We The Little People

Those of us nowhere near important to be invited to Davos or well off enough to pay around $600,000 to attend need to remain vigilant. When our elected officials start talking about “building back better” and reshaping institutions, we need to sift through the rhetoric and find out what it is we will eventually be voting for and how much will need to be taken out of our wallets.

Your Stimulus Check is Coming – Think No Further!

On December 27, 2020, President Donald Trump signed the Consolidated Appropriations Act of 2021 (H.R. 133), which contains in it the Coronavirus Response and Relief Supplemental Appropriations Act. This omnibus bill carries a price tag of $2.3 trillion dollars — $1.4 trillion in regular annual appropriations that keep the federal government running, and $900 billion in supplemental appropriations for Coronavirus relief.

Under this bill, a $600 check will be sent to people who made up to $75,000 in 2019. As of this writing, President Trump’s demand that Congress cut “unnecessary” expenses and increase direct payments to $2,000, might be DOA in the Senate. Senate Majority Leader Mitch McConnell has attached a couple of powerful poison pills to the proposal (elections investigation and repeal of legal protections for social media platforms) which Democrats are unlikely to approve.

Situation Chaotic But Normal

The signing came after several weeks of haggling in Congress and four days of objections by President Trump – not an unusual situation. Legislators are under pressure to bring the bacon home to their constituents, so compromises can get lengthy. Presidents do not have line-item veto power, so they must approve or veto an entire bill.

The approve-the-whole-bill or veto-the-whole-bill process leads to pork-laden bills landing in a President’s desk.

In a video release President Trump strongly objected to “wasteful” expenditures in the Appropriations Bill. He would have preferred less “unnecessary” spending and more Coronavirus relief. However, he had to sign the whole bill in order to fund relief and fund government operations.

The Consolidated Appropriations bill occupies 5,593 minutiae-filled pages – 3,280 pages more than last year’s bill. The House Committee on Appropriations website has brief summary of the bill plus links to specific sections (called “Divisions”).

Divisions A through L are regular appropriations, Divisions M and N deal with Coronavirus Relief, and Divisions O through Z are Authorizing Matters unrelated to the funding of regular or Coronavirus appropriations.

This massive bill was delivered to Congress shortly before a vote was expected, not an unusual situation, but much worse than last years’ 24-hour reading allocation of 2,313 pages.

Focus of Coronavirus Relief

As numerous news outlets have reported, the focus of the $900 billion Coronavirus Relief is direct payments to citizens, forgivable loans to businesses, and extension of federal unemployment subsidies ($300 per week).

There are many other provisions, like: Funding of cultural and entertainment venues. A campaign to increase awareness of the safety and effectiveness of vaccines, and combat misinformation. Funding for low-income families that pay for drinking water and wastewater services.

Focus of the Annual Appropriations

The $1.4 trillion regular annual appropriations include the usual, very wide, domestic and international funding. “Very wide” means funding the average American would probably not fathom. For example:

Not less than $20 million for the recruitment and retention of women in the Afghanistan National Security Forces—twice the amount specified last year. Division C – Defense

Up to $500 million for Jordan, including not less than less than $150 million for reimbursements for enhanced border security. Division C – Defense

$116 million for the wild horse and burro program, $15 million above the fiscal year 2020 enacted level. Division G – Interior/Environment

Authorizing Matters

Here are a couple of samples of the Authorizing Matters in the Appropriations and Coronavirus Relief Bill 20121:

Establishes, within the Smithsonian Institution, the Women’s History Museum and the National Museum of the American Latino.” Division T – Smithsonian

Requires the Secretary of Energy to conduct a study on the benefits of blue hydrogen technology and how that can further enhance the deployment and adoption of carbon capture and storage.” Division Z – Energy, Title IV Carbon Management

Who Voted No

Not everyone in Congress felt pressured to concur with this bill.

In the House, 50 Republicans, 2 Democrats, and 1 Libertarian voted against the bill. The two Democrats issued strong statement explaining their vote:

Rashida Tlaib (D-Michigan) – We will be back here in a month because the suffering will have gotten much worse because there has been a lack of bold action and priorities to put people first.

Tulsi Gabbard (D-Hawaii) – $600 is a slap in the face to every American struggling due to the pandemic. You deserve better. I voted against the 5,593-page spending bill that gave billions to corporate interests, the military industrial complex & other countries, leaving crumbs for you who need help most.

In the Senate, 6 Senators, all Republicans, voted NO. They objected to the bill’s price tag in light of an already perilous national debt, the nearly 6,000 pages of complex legislation that nobody had time to read, and the process by which just a few legislators craft bills and expect automatic approval from everyone else. Here is a sample of the Senator’s frustration:

Rick Scott (R-Florida) – Once again, in classic Washington style, vital programs are attached to a massive omnibus spending bill that mortgages our kids & grandkid’s future. Therefore, I can’t support this bill.

Ron Johnson (R-Wisconsin) – The dysfunction of Washington, D.C. was on full display as Congress combined covid relief with a massive omnibus spending bill three months past the deadline and into the current fiscal year. This monstrosity was 5,593 pages long, and passed only nine hours after the Senate first saw it.

Mike Lee (R-Utah) – This process, by which members of Congress are asked to defer blindly to legislation negotiated entirely in secret by four of their colleagues, must come to an end.

And the Spending Goes On

Constituents clamor for relief – this time from the economic effects of Coronavirus response – and legislators are happy to oblige by passing massive spending bills. The idea of cutting back on non-urgent spending to allocated funds to urgent challenges is anathema to most legislators.

The U.S. national debt is $27.5 trillion, and debt to GDP is 128.9%. No matter, say the bulk of today’s legislators. What used to be a derisive accusation – making money out of thin air – is now accepted as Modern Monetary Theory. Government keeps producing money by borrowing, legislators keep spending, and the people are happily appeased. Think no further!

After AlphaGo There Is No Stopping AI

Artificial Intelligence, in one form or another, is everywhere. We invite it into our homes and feed it on social media. Businesses that have the resources to automate, will. Every sector of the economy utilizes AI in some form.

It is nearly impossible to find an industry that is not looking to AI for improvements. AI is potentially playing a role in semiconductors, industrial applications, military and defense and everything in-between. Manufacturers hope AI will make developing products and innovation easier. Globalspace, September 6, 2019

Advances in AI

Meanwhile, AI keeps advancing in what it can do. An interesting way to observe AI’s recent trajectory is to recall the times when AI competed against human champions and won.

* IBM’s Deep Blue defeated chess grandmaster Garry Kasparov in 1997.

Chess kept Deep Blue in the realm of what computers are good at, using statistics and probabilities to determine strategy. (Popular Science, 12/26/12)

* IBM’s Watson defeated two Jeopardy! champions, Ken Jennings and Brad Rutter, in 2011.

Jeopardy! … pushed Watson into an unfamiliar world of human language and unstructured data. (Popular Science, 12/26/12)

* DeepMind’s AlphaGo program defeated go world champion Lee Sedol in 2016.

When compared with Deep Blue or with Watson, AlphaGo’s underlying algorithms are potentially more general-purpose… (Wikipedia, AlphaGo vs. Lee Sedol)

Ultimate Goal With Unknown Results

Real artificial intelligence is general-purpose. It is artificial general intelligence. AGI has the potential to perform any task that a human being can perform, not just a specialized task such as playing board games. It can teach itself by manipulating massive amounts of data. It can act based upon its own knowledge.

Here is a description of Google’s machine learning tool AutoML-Zero, published in Google AI Blog July 9, 2020:

In our case, a population is initialized with empty programs. It then evolves in repeating cycles to produce better and better learning algorithms. At each cycle, two (or more) random models compete and the most accurate model gets to be a parent. The parent clones itself to produce a child, which gets mutated. That is, the child’s code is modified in a random way, which could mean, for example, arbitrarily inserting, removing or modifying a line in the code. The mutated algorithm is then evaluated on image classification tasks.

When asked why he wanted to climb Mount Everest, George Leigh Mallory responded, “Because it’s there.” Once a goal is envisioned, there is no stopping those who will pursue its attainment, regardless of unknown collateral results. The envisioned goal in AI technology is to spread AI everywhere in ever-advanced forms.

On December 2, 2014, BBC News made headlines with remarks by theoretical physicist Stephen Hawkins and response by Cleverbot creator Rollo Carpenter.

The development of full artificial intelligence could spell the end of the human race … It would take off on its own, and re-design itself at an ever increasing rate… Humans, who are limited by slow biological evolution, couldn’t compete, and would be superseded. Hawkins

I believe we will remain in charge of the technology for a decently long time and the potential of it to solve many of the world problems will be realized.… We cannot quite know what will happen if a machine exceeds our own intelligence, so we can’t know if we’ll be infinitely helped by it, or ignored by it and sidelined, or conceivably destroyed by it. Carpenter

Recommended Segment of PBS FRONTLINE

In the Age of AI aired on FRONTLINE’s Season 2019, Episode 5, November 5. The program serves as a good overview of what AI is, what it is used for today, what effect is has had in economies, what it has done to privacy and liberty, and where it looks like AI is going.

The program’s framework is the U.S. AlphaGo’s victory over China’s go player Ke Jie, which ignited China’s quest for AI supremacy.

Here are some good take-aways offered by In the Age of AI:

There are three important developments that changed the world – the steam engine, electricity and AI — “everything else is too small.”

In the U.S. automation amplified by AI has sadly caused a lot of white and blue collar workers to lose their jobs. However, developments in technology have always done that. Former elevator operators, telephone operators, and secretaries can attest to that.

AI’s most prominent role has been in personal data gathering. Both private and public sectors depend on some form of AI’s ability to collect massive amounts of data and use it to indicate individuals’ preferences, habits, routines, etc.

China’s advances in AI have been astounding. China sees benefit in having become a surveillance state where people’s routines are in a vast database that can be used to quickly process loans or quickly scoop disruptors for purposes of re-education. The regime’s Belt and Road Initiative invests in and builds infrastructure all over the world. Included in the developments, are China’s ubiquitous surveillance cameras.

AI is the ultimate tool of wealth creation. The push for advancing AI results in aid to capital and neglect of labor, causing inequality to grow. It used to be that wages rose with productivity, but with the advent of automation, especially that augmented by AI, productivity and wages decoupled. It won’t be long before there is real clamor for distribution of wealth created by capital.

You and AI

Whether you embrace or fear artificial intelligence, AI is here to stay. In the short run you will benefit from augmented diagnostic techniques or harmed by loss of a job. In the long run your place in the universe – to your advantage or not — might be determined by a machine.

(Featured picture: Ke Jie playing AlphaGo, NPR, Google A.I. Clinches Series Against Humanity’s Last, Best Hope To Win At Go, May 25, 2017)