Shelly Luther

This is another one of those stories in which the protagonist is, while clearly more wrong than right, something less than a clear-cut hero. We live in a time of lionization of lightning rods, but that rarely presents the entire scenario.

To be sure, Judge Eric Moye behaved like a total bonehead. Texas was about to ease its restrictions on businesses such as hair salons, and it would have made all the difference if that had been taken into account. A week in jail for not apologizing merely provided fodder for the open-it-all-back-up-right-now camp's push to paint a picture of heavy-handed government.

Luther, however, was clearly grandstanding when she tore up the cease-and-desist order at the rally. Yee-haw gestures aren't helpful at the present moment.

Then there's the question of why she didn't have some support from friends, family or loyal clients. Hair stylists tend to have particularly supportive customers who have a vested interest in seeing their favorite salons make it through challenging times. To wax anecdotal, my wife is a stylist and salons owner, and her clientele has not only stepped up in the present situation, but rose to the occasion during a couple of surgeries in recent years that necessitated some days of inactivity. And it's my understanding that since this brouhaha, a Go Fund Me account has raised several thousands of dollars for Luther and her business.

Then there's the matter of Ted Cruz seeking out Luther for a haircut yesterday. It's the perfect political move, is it not? Great publicity all around.

Glad to see that this one seems to have been resolved in a win for an entrepreneur under economic duress, and for freedom generally. But on the way to that resolution, there were some moments of testiness and excess that, sadly, probably portend more of the same as we work out the delicate balance this nasty virus is requiring of us.

Thoughts on Mike Lindell at the White House

Look, I get that of the four corporate CEOs who came to the podium to talk about what their companies were doing to address the coronavirus crisis, he was the only one who did what he did: strongly suggest that Trump's 2016 election was a sign of God's grace. That was indeed a cringe-worthy moment. But the guy has made no secret of being a die-hard Trumpist for a long time. Yes, it bothers me. It diminishes what is otherwise a remarkable success story on a number of levels. I think he is a serious Christian. He attributes his recovery from crack cocaine addiction to God's grace. He then embarked on a classic American entrepreneurial undertaking. He'd been thinking about why so many people don't get a good night's sleep, researched the matter, and then developed his line of My Pillow products. He then hired hundreds of his fellow Minnesotans to make them. He also has an appealing, infectious personality.

And now, he, like the other three CEOs, is engaged in the not-small project of changing his manufacturing processes so as to dedicate them to make products that can help people with this horrible disease.

Along with the people unwilling to cut him some slack for being a Trumpist, I have seen, on Twitter, some objection to him speaking about the grace of God in the most publicly owned place of all: the White House. These atheists, or secular humanists or whatever they are, want to use precious moments in this time of national urgency to get into some nonsense about separation of church and state.

Drop it. He, like the others, deserves our admiration.

And speaking of yesterday's briefing, I am aware that CNN's Jim Acosta has a history of being obnoxious at White House pressers, and he did not need to be provocative yesterday. That said, all he did was read past statements by Trump about coronavirus back to him, so the argument could be made that it was fair from a journalistic standpoint. And, true to form, the Very Stable Genius blew a chance to be the bigger person, and instead went for the venomous insult.

That little episode sullied the vibe of national unity that had been established immediately beforehand. Both of you boys need to go to your corners for a time out.

Travis Kalanick resigns as Uber CEO

The move was prompted by a letter, entitled "Moving Uber Forward, drafted by five big investors and delivered to Kalanick in Chicago.



Uber is a lot of things. It has rightly earned the admiration of free-market champions for bringing an entirely new business model to the transportation world, one in which supply and demand were synced up in real time, as riders could see how many drivers were in their area on their app, and drivers could likewise see what the concentration level of riders was like - indeed, whether it had risen to the point where surge pricing was in effect. The unionized taxi industry hates it, which led to baseball bats being taken to Uber cars at the Paris airport a couple of years ago.

But the company had some odd ways to go about asserting its efficacy, such as hiring former Obama campaign manager David Plouffe to be its negotiating face with regulators, or hiring Eric Holder to lobby for it against efforts to make it conduct fingerprint checks, and then putting him in charge of an internal investigation into funny-business aspects of its corporate culture.

And about that funny business in the culture: It seems the place was rife with sexual harassment and bullying and bad morale.

It's at least somewhat emblematic of the tech-world's ethos in general: a combination of nerd-style go-getter-ism with a strong scent of testosterone, a corporate line crafted to burnish its progressive bona fides, and a line of undeniably cool products and services.

There's a real outreach campaign going with regard to drivers, probably at lest in part due to feeling the heat from proliferating competition. Tipping is now going to be part of the model, as is getting paid for wait times, and driver injury protection insurance.

Good moves, but let's hope the company is not drifting in the direction of conferring employee status on drivers. Ride-sharing's entrepreneurial aspect is most of its appeal.

But its current fortunes are representative of something true in any realm of human activity: Without a culture that venerates character, the most exciting model for improving everybody's lot will not sustain the enterprise.

The real-world effects of gummint's sclerotic involvement in a society's economic life

Perusing the morning's array of news and opinion pieces, I was struck by the parallels between Andrew Browne's WSJ comparison of the regions of China that are in deep recession and those that are humming along, bringing general prosperity and vitality to their inhabitants, and Kevin Williamson's analysis of why Detroit, Michigan died.

In China, because its socialism is more monolithically and ruthlessly applied than is the case in post-America, you have a tier in the economy of enterprises that are actually state-owned. And that's the problem:

China’s economic slow lane is choked with state-owned industrial firms in sectors linked to real estate—steel, cement, coal and construction equipment—all suffering from massive overcapacity. Many get by on bank loans, endlessly rolled over, and orders for boondoggle civil-works projects. They are zombies in a phantom economy. Lawmakers gathered at the Great Hall of the People are likely to review government plans to reduce industrial capacity somewhat and to gradually lay off several million workers while offering them help with relocation and retraining.

Zipping along in the economic fast lane are private companies producing goods and services for a burgeoning consumer market that has taken over from manufacturing as the engine of China’s growth. These corporate leaders are mainly clustered in megacities along China’s eastern seaboard—Shenzhen, Guangzhou, Shanghai, Beijing—linked to global networks of knowledge, finance and talent.

Lopsided growth in a nominally socialist country is an especially thorny problem. Deng Xiaoping resolved the issue by turning Marxism on its head: “Let some people get rich first,” he famously declared. But today’s Internet-empowered industrial workers won’t be treated as second-class citizens. Some hanker for a return to socialism. Others find solace in religions and cults that challenge Communist Party control. Widespread anger at wealth disparities could further sap the resolve of China’s leaders to press ahead with economic reforms—and might even encourage them to launch  military adventures to deflect popular frustrations.

The same basic pattern played itself out in the Motor City:

Detroit is a big city, or at least the ruins of a big city, but it is economically in much the same situation as the poorest parts of Appalachia: Even if you were inclined to open a factory there and create some jobs in the process, you’d have to bring in workers to fill them. The people in Vance, Ala., like the people in Stuttgart, know that putting Mercedes-Benz automobiles together requires a great deal of high-skill work. The people building Toyotas in Texas know the same thing. Nobody is moving to Detroit, because there are no jobs to be had; good jobs aren’t coming to Detroit, because there aren’t enough good workers to be had. The best you’re going to see in Detroit is Shinola workers shoving Swiss-watch movements into Chinese cases and stamping them “Made in Detroit.” Sentimentality is a form of capital, too, when it can be used for marketing purposes. But we’re going to have to do better than that. 

Detroit is a city in which only one in five black men graduates from high school on time — in a city that is 83 percent African American. You think Google is going to move its headquarters there, or invest in a major facility? Tesla? Apple? Does that sound like a place you would invest in?

How did Motown fall so low?

 . . . civic and corporate myopia left Detroit dependent upon a handful of firms whose production undergirded the entire economic ecosystem of Detroit. A combination of factors deformed the economic foundations of Detroit, from governmental protectionism (which made managements thick and lazy) to union rapacity (which diverted potential investment capital into inflated pay and benefits, creating a lot of multimillionaire union bosses) to our national unwillingness to deal with the fact that Germany and Japan — smoking ruins at the end of World War II — would eventually rejoin the modern industrial economy. Rather than finding its way to its best uses through Schumpeterian creative destruction, capital was locked up in poorly performing enterprises such as Chrysler (executive hipster Lee Iacocca was into bailouts before bailouts were cool) and in malinvestments such as unsustainable pension funds. Because most of us lack sufficient imagination, we do not understand what the price of that was. The price isn’t just bailouts and layoffs and factory closings, as painful and convulsive as those have been in Detroit and throughout the industrial communities that inflicted similar problems upon themselves. No, the real cost — the literally incalculable cost — is the lost value that would have been created had all that capital been liberated and put to its best use. We have forgone generations’ worth of compounded returns on investments that we should have made but did not. Another way of putting that: It is far easier to solve the problems of 2016 starting in 1950 than starting in 2016.

Okay, boys and girls, what is the basic takeaway from examining these two scenarios?


It's real obvious, and has been pointed out by those who understand the relationship between economic freedom and human advancement since at least the time of Adam Smith: When the state controls economic activity, no one has any incentive  to think of better ways to do things, or better products to offer the public.

What I find attractive in someone vying for high public office is an understanding that free-market economics is at its core a spiritual matter. Anybody can spew platitudes about "jobs for the middle class" and "surmounting wage stagnation," but that message's ability to inspire pales in comparison to reminding folks that human beings were designed to be marvelous, powerful, inventive creatures and that they will do great things - if they are free to do so.

Regulation zealots, keep your hands off Uber!

These DC interviewees know what's what:

A D.C. resident said some state and local governments are attempting to crack down on Uber and Lyft because they are more reliable than taxis.

“Uber is going to beat them there every time,” he said in a video interview at Union Station in Washington. “No, I think since they are freelance, they should stay freelance. They are not cabs, are they? They’re Uber. Let Uber do their thing.”

Another D.C. resident agreed that taxis and app-based car services should not be subject to the same requirements.

“I don’t think they should necessarily have to because I think the taxis are a little bit older, so they may not play by the same rules or adhere to the same guidelines as Uber,” she said.

A tourist from Russia said overregulation has hurt his home country’s economy. He argued that Uber should be free to compete with taxis.

“I firmly believe that any regulation of the economy is evil. It creates deficits. It creates corruption and it lowers the quality of services available to people so unless criminal damage to the passenger is done, no regulations,” he said. “Uber should work, city taxis should work, they should compete, they should be different.”

Free market economics, baby!

Memo to statists: don't you worry your pretty heads about gig-economy workers' risks

I'm currently working on an assignment for a business magazine on freelancing, and how it's gone from representing a fairly fixed percentage of the American workforce to a trend. My editor wanted me to focus on tech types, and I found some of those, but people in a position to observe the overall trend, such as an IU Kelly School of Business professor, have been more inclined to focus on independent providers of simple services like ride sharing.

One prominent national writer whose focus is freelancing is Jeff Wald, who writes a column on it for Forbes.  His most recent piece takes Hillionaire to task for her recent economic speech, in which, as has been noted here, she signaled her statist intentions to interfere in what she called the "gig economy." I was pleased to see Wald school her on this matter, but was disappointed to see him qualify it by saying hat he agrees with her positions on a number of other issues, such as health care.  I guess that's par for the course for the modern techie kind of guy who sells his startups to Salesforce.

Standing as somewhat of a foil to Wald is Catherine Rampell, a Washington Post world-of-work columnist, although this is only partially true, because she likewise shows some statist colors. Actually, we can say that Rampell is plum ate up with statism.

Back in January, she wrote a column entitled "The Dark Side of 'Sharing Economy' Jobs." Her depiction of worst-case scenarios in gig-economy work is a bit of reach.  The examples she plucks from her imagination or from anecdotal data are not exactly likely:

It’s true that, in many ways, sharing-economy jobs can offer more autonomy than traditional employer-employee relationships. But there’s a dark side to these work arrangements that gets considerably less press: the shifting of risk off corporate balance sheets and onto the shoulders of individual Americans, who may not even realize what kinds of liabilities they’re taking on.

The risks involve everything from income instability (the worker, rather than the firm, has to absorb the brunt of demand shocks or price cuts); to irreversible capital investments (Uber and Lyft have infamously pushed drivers to buy new cars by promising big returns that never materialized); to unforeseen criminal liabilities (what happens if an Airbnb guest turns your home into a brothel?); to fewer protections in the event of catastrophe (no access to programs such as workers’ comp). Sure, sharing-economy “entrepreneurs” can get a lot of upside, but there are a lot of hidden downsides, too.

She then puts on her sociologist / historian hat and walks us through the history of the spreading of risk:

Celebration of these riskier arrangements can seem especially strange when you consider that society’s ability to better manage risk, and spread it over larger pools of people, is considered by many historians to be one of the great advances of 20th-century finance. This achievement arose partly because economists developed a much more sophisticated understanding of insurance market design. But it also stemmed from social necessity. The safety nets humans relied on for centuries — their extended families — became less reliable in the age of industrialization and urbanization. As kinship networks frayed, European governments developed robust welfare states. Here in the United States, for reasons driven partly by ideology and partly by historical accident, these new safety nets were largely administered through employers (for example, health insurance). Some historians call this “welfare capitalism.” 

Then, beginning around the 1970s, this form of corporate-based risk-sharing began to unravel. Exactly why is debatable; globalization, the decline of unions, regulatory changes, new technology and financial markets all likely played a role. The result, though, is that programs such as defined-benefit pensions began to disappear. Just-in-time scheduling, outsourcing and other arms-length relationships between firms and workers blossomed. In some ways, these developments were very good for economic growth, but they also introduced much more instability into the lives of middle-class workers. 

She wraps up her argument by saying that, as the "corporation-centered safety net" fades as a societal force, it's a good thing government is there to take up the slack with programs like government-controlled health care. (See what I mean about how viewing her as a foil to Wald has its limits?)

It's an endorsement of the Juila life .

I was heartened to see several commenters under Rampell's piece express contrary views.

Here's one:

Americans are not Europeans but many liberals would like to change that fact. They want us to live our lives in the shadow of cradle to grave government control (safety nets). Fortunately, most Americans can still think for themselves and choose how they will live their lives. They evaluate their options and make a decision. If they made the wrong decision, they adjust and keep adjusting until they have the life they want. Americans are inherent risk takers. When that changes, America will become another mediocre social welfare state. Exactly what our progressive friends want.

Another makes the obvious point - well, obvious to conservatives, anyway - that we could revitalize the basic building block of society rather than look to leviathan:

One thing we could try is re-invigorating kinship 'networks.' That doesn't even seem to occur to the author. But valuing and supporting families again will revive our society, and even rebuild our ability to get along. Why would we want to go down the road to decay which Europe has chosen? Their welfare systems have been propped up by the US providing much of their defense needs, paying higher prices on certain items like drugs so they can pay artificially low prices, etc. Even so Europe is in trouble.  Rebuilding the family is an important ingredient. 

Another commenter points out that the traditional employment model is not all gravy:

Rampall calls the decoupling of employer safety net programs (health insurance, pensions) from employment contracts the dark side of sharing economy jobs and suggests "America probably needs a more robust government safety net." I disagree.   It seems to me, that government meddling in employment contracts, health insurance deductibility for employers, and government rules on private pensions are what is driving workers to a system where "employment contracts" are more free. A system where people can make their own decisions and be more like owners of businesses and decide what health insurance they'll buy, and what they'll save for retirement. Randall wants to penalize workers by forcing them to join a government insurance pool, and pay for it, rather than allowing them the freedom to choose their preference.   

As for the risk of "income instability" she apparently doesn't think employees of firms are subject to getting fired when their employer's revenue declines or goes bankrupt. And "irreversible capital investments" brings to mind the cost of a college degree in poetry on money borrowed from government (bankruptcy won't relieve the borrower of their student debt), or setting up the Obamacare exchange. I'd rather be deciding my capital investments then government forcing me to do it. Freedom yields prosperity, while government control yields less of it and what someone else decides for you. 

To be sure, there were several statist commenters who came to Rampell's defense.

Here's where they're wrong: The only kind of risk we can expect government, as envisioned by Madison, Hamilton, and even Jefferson,  to mitigate for us is assault on our actual rights - by providing a police force and a military.  Sickness, old age and liability are just part of this deal called human life, and if someone comes up with a profitable way to help shield us from their effects, then we can sign up for what he or she has to offer. Or, as the one commenter said, we can, within our families, look after each other.

But that's not what American government was designed for.

Hands off my great little gig

Something else Hillionaire discussed in her New School speech was the private contractor - service provider relationship.  She's not at all pleased that the leviathan state has not yet found a way to get its tentacles into that arrangement.

"I'll crack down on bosses who exploit employees by misclassifying them as contractors or even steal their wages," Clinton said in her economic speech at the New School in Manhattan on Monday. 

Her remarks come as billion-dollar startups like Uber and Lyft are under mounting scrutiny from legislators, court judges and the media for classifying drivers as independent contractors rather than part-time or full-time employees entitled to healthcare benefits, sick time and paid time off.

Clinton did not cite any businesses by name in her comments, but earlier in her speech she expressed concern about the "gig economy" which comes without healthcare or benefits. 

"This on demand or so called gig economy is creating exciting opportunities and unleashing innovation, but it is also raising hard questions about workplace protections and what a good job will look like in the future," Clinton said in her speech at the New School in Manhattan on Monday. 

Businesses like Uber argue that many of their employees actually prefer to be contractors, rather than employees, for the freedom it provides. Some contractors work for multiple startups, or choose to work only a few hours or days per week. Left unspoken, however, is the fact that classifying most or all contractors as employees would cut into these companies' profit margins, perhaps forcing them to raise prices or otherwise change their approach.

Listen up, bitch: Uber driving is one of my income streams.  I have my app on as I type this.  I signed up precisely because I can have autonomy and set my own hours, which renders the crud about "sick time and paid time off" moot.  It involves exactly zero paperwork.  I meet interesting people. And I want the company to make as much profit as possible.  And I'm not interested in getting any damn healthcare benefits from the relationship.

Democrats hate human initiative and ingenuity.  Their goal is to turn us all into docile cattle completely dependent on the state.

Just like when you jackboots start coming after my food choices, this puts the war for America's soul on a personal footing.  How I work and what I eat are my business, period.

Economic freedom is always elegantly simple compared to any form of statism

Austin Hill's Townhall column today takes a look at the recent rise of freelance service providers such as Uber.com and TaskRabbit.com.  He makes a series of points about them that build one upon the previous one:  1.) They're independent contractors, which makes labor unions' attempts to subsume them ring hollow.  2.) Established big-company providers of those services are understandably none too happy about this encroachment on their markets.  3.) If we really respect individual rights in this country, we can't advocate a solution that merely puts this new breed of freelancers out of business.

I'll excerpt point number four in full:

Resolving the disparities between established industries and freelance services providers will require less government regulation, not more: In New York City - another region where President Obama's vision of politicians determining economic winners and losers remains quite popular - Mayor Bill DeBlasio has determined that individuals who rent-out a room in their house or apartment are violating city law, and has vowed to run AirBnB.Com out of the city.

On the other hand, in Spokane, Washington - a city where American free enterprise is still generally accepted - the city just crafted new transportation industry regulations that both the taxi cab industry and Uber.Com seem to like. Despite city council members' threats to run Uber.Com out of their city, the voices of freelancers managed to be heard and the result was a compromise that subjects Uber.Com and its service providers to some new, minimal levels of government regulations, while reducing the heavy-handed burdens the city has historically placed upon traditional taxi operators.

Will the USA move to respect and uphold the rights of freelance service providers? Or will we continue to embrace the Obama-styled protections and privileges for large corporations and old-school traditional groups? Americans have an important choice to make - and the economic wellbeing of individuals is weighing in the balance.

The whole phenomenon reminds me of the emergence in South America in the 1980s of micro businesses.  Peruvian economist Hernando DeSoto depicted it in very visceral, human terms in his book The Other Path.    He said that an informal economy in which people got busy providing services directly to those who wanted them, unburdened by bureaucracy, regulation and taxation, offered a constructive alternative response to poverty to the revolutionary rage of groups like the Shining Path.

Even though statists, even the well-known ones who get lots of media exposure, are indeed faceless bureaucrats devoid of any real animation, their motivations for wanting to squelch this kind of enterprise are really personal.  They are typically the kind of people who don't have much private-sector experience, and never really gave any thought to the very basic question of what flesh-and-blood individuals might need or want for the enhancement of their lives, and how they might profitably provide it.

Economic liberty brings up a statist's stuff. He or she has to get real, has to take a look at the fact that his or her professional life has been based on a drive to boss other people around and subject them to suffocating and mind-numbing mountains of red tape.

And what a joyless existence that is.  The only momentum there is to get excited about is an increase in state intrusiveness.

To the world's collectivists, I say, give it up.  Have some fun.  Make some money.  And leave other, successful people alone.  The greatest cure for envy is to do something cool with your life.

What we discover when we peer into the internals of inequality data

Megan McArdle points out a noteworthy fact:

As a new article from Bloomberg News explains, Democrats aren’t benefiting from hammering on inequality because almost all the areas with the worst inequality are already controlled by Democrats:

There’s just one problem: the districts where Democrats have the best shot to win Republican-held seats show some of the smallest gaps between rich and poor in the U.S., an indication of just how hard it will be for their message to take hold with voters.

Of the 100 congressional districts ranked as having the greatest gap between rich and poor, not one is held by a Republican whose seat is considered up for grabs this November,according to data compiled by Bloomberg.

. . . The seat with the widest gap between rich and poor belongs to a Democrat, Jerry Nadler, whose district takes in Wall Street and parts of Brooklyn not yet reached by that borough’s redevelopment. In all, 32 of the 35 districts with the greatest income inequality are held by President Barack Obama’s party.

And the better-off segment of the population in flyover country is qualitatively different from that found in FHer-heavy enclaves:

The rich of America’s affluent urban areas tend to be the beneficiaries, one way or another, of a global tournament economy in which markets are often close to “winner take all,” and vast sums can flow to people who are just a little bit better than their competitors. The wealthy in Republican districts, on the other hand, are more likely to be competing in local or national markets, not glamour industries, where sales are ground out one at a time. Because the sums involved are smaller, the wealth gap is also smaller -- and business owners are less likely to be sympathetic to the idea that their success has a huge luck component.

Corporatists and bureaucrats tend to see things through a macro lens, while those who take their freedom seriously tend to think in terms of individual lives shaped by individual decisions.

 

Striking themselves right out of jobs

When the workers at a Chcago specialty sandwich shop struck for higher wages, they got this e-mail from the owner:

1. Due to increased competition and losses, ownership has decided to consider remodeling and reconcepting the store at 600 West Chicago Ave.

2. The store is closing, effective tomorrow, December 23, 2013 for an unknown period of time for this remodeling and reconcepting.

3. All staff is terminated, effective Monday, December 23, 2013.

4. All staff may apply for unemployment, if eligible.

5. Return any keys and Company property to Will Ravert at 600 West Chicago Avenue on Monday, December 23, 2014 during normal business hours.

6. Payroll will be processed as usual this week and paid on Friday, December 27, 2013.

7. Keep an eye out for the grand opening of the new store.

8. Ownership appreciates your service and wish you well in your new endeavors.

Doug Besant

Director of Operations

Hee hee.

How it's really done, and how the FHers want us to believe it's done

The MEC picked the wrong state for trying to sell his statist economic prescription when he came to Texas.

The consequences of regulation

Per a Hudson Institute study, entrepreneurial startups are at a record low in America.

When pride in being an entrepreneur trumps feelings about one's demographic identity

Fantastic column by small-businessman Richard Carter in the Amsterdam News, NYC's leading black  - and usually very left-leaning - newspaper on the reverberations from the MEC's "you-didn't-build-that" debacle.