Immigrants Don't Drain Welfare. They Fund It. →

Groups like The American Immigration Council have long argued that, contra conservative depictions of “moocher,” immigrants have long given more to the welfare system than they take from it. “In one estimate, immigrants earn about $240 billion a year, pay about $90 billion a year in taxes, and use about $5 billion in public benefits,” a 2010 report by the Council found. “In another cut of the data, immigrant tax payments total $20 to $30 billion more than the amount of government services they use.” And a report by the U.S. Chamber of Commerce in 2013 found that “more than half of undocumented immigrants have federal and state income, Social Security, and Medicare taxes automatically deducted from their paychecks.” Those immigrants are essentially helping to underwrite the welfare system, providing an enormous subsidy to it every year without being able to reap any of the benefits.
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...From construction sites in Virginia to farms along the California coastline, immigrants provide essential labor in an evolving economy. The Chamber of Commerce report found they are more than twice as likely as native-born Americans to start a new business each month. In fact, immigrants started 28 percent of all new businesses in the United States in 2011. Immigrants pay billions in taxes to the government every year; in Texas alone, they generate $1.6 billion annually in taxes. To deport millions en masse, sending them back to their home countries—to say nothing of Donald Trump’s proposal to uproot American citizens born here—would be economically disastrous.

This Is How Big Oil Will Die →

...the internal combustion engine has too many moving parts.
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A New York City cab driver puts in, on average, 180 miles per shift (well within the range of a modern EV battery), or perhaps 50,000 miles per work year. At that usage rate, the same vehicle will last roughly 10 years. The economics, and the social acceptance, get better.
And if the vehicle was owned by a cab company, and shared by drivers, the miles per year can perhaps double again. Now the capital is depreciated in 5 years, not 10. This is, from a company’s perspective, a perfectly normal investment horizon.
A fleet can profit from an electric vehicle in a way that an individual owner cannot.
Here is a quick, top-down analysis on what it’s worth to switch to EVs: The IRS allows charges of 53.5¢ per mile in 2017, a number clearly derived for gasoline vehicles. At 1/4 the price, a fleet electric vehicle should cost only 13¢ per mile, a savings of 40¢ per mile.
40¢ per mile is not chump change — if you are a NYC cab driver putting 50,000 miles a year onto a vehicle, that’s $20,000 in savings each year. But a taxi ride in NYC today costs $2/mile; that same ride, priced at $1.60 per mile, will still cost significantly more than the 53.5¢ for driving the vehicle you already own. The most significant cost of driving is still the driver.
But that, too, is about to change. Self-driving taxis are being tested this year in Pittsburgh, Phoenix, and Boston, as well as Singapore, Dubai, and Wuzhen, China.
And here is what is disruptive for Big Oil: Self-driving vehicles get to combine the capital savings from the improved lifetime of EVs, with the savings from eliminating the driver.
The costs of electric self-driving cars will be so low, it will be cheaper to hail a ride than to drive the car you already own.
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The battle over oil has historically been a personal battle — a skirmish between tribes over politics and morality, over how we define ourselves and our future. But the battle over self-driving cars will be fought on a different front. It will be about reliability, efficiency, and cost. And for the first time, Big Oil will be on the weaker side.
Within just a few years, Big Oil will stagger and start to fall. For anyone who feels uneasy about this, I want to emphasize that this prediction isn’t driven by environmental righteousness or some left-leaning fantasy. It’s nothing personal. It’s just business.

If We Care About Inequality, We Must Confront Capital →

The owners of this wealth, or capital, capture around 30 percent of the income produced by the country every year. This income flows to them, not because they work for it, but merely because they own income-generating assets like real estate, equity, and debt. In 2015, total US capital income was around $4.8 trillion.
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It is worth emphasizing just how much income at the top of society comes from passive ownership of investments rather than from working. The top 0.01 percent of individuals in society have an average income of $28 million. Three-fourths of that income, or $21 million, came from capital in 2014.
If we want to get serious about creating a fair and egalitarian society, we must confront capital directly. Wage levels are important. Benefit levels are important. But getting those things right will not be enough so long as nearly one-third of the national income flows out passively to a handful of people at the top of society.
Current liberal efforts to tackle wealth inequality are woefully inadequate. Policies aimed at building the assets of low-income families, the typical approach to this issue, rarely succeed on their own terms and, even if they did succeed, would only be an insignificant drop in the bucket. For wealth and capital income to become more fairly distributed throughout society, the ownership of existing assets must be reordered towards that end.

Jubilee Year, anyone?

To My Fellow Plutocrats: You Can Cure Trumpism →

...A century ago, as communism and fascism threatened to overrun Europe, our nation struck a grand bargain: We plutocrats would continue to be tolerated—even celebrated—as long as broadly rising incomes meant that each new generation of Americans continued to do better than the last. But through the policies we championed in the corridors of power and through the longstanding social norms we violated in the corporate boardroom, we broke our end of that bargain....
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Many of my peers prefer to hide behind the enduring myth that today’s crisis of economic inequality and insecurity is the result of forces unleashed by unstoppable trends in technology and globalization. “It’s not my fault I have so much while others have so little,” we comfort ourselves, “it’s the economy.” That is nonsense. There’s no intrinsic reason why the social and political changes delivered by technological advances and globalization have to massively concentrate wealth in the hands of the few. We simply exploited changing circumstances to take advantage of people with less power than us. 
Over the last 40 years, corporate profits as a percentage of GDP have increased from about six percent to about 11 percent, while wages as a percentage of GDP have fallen by about the same amount. That represents about a trillion dollars a year that used to go to wages, but now goes to shareholders and executives. One trick we use to keep profits high and labor costs low is to refuse to schedule workers for the 30-plus hours a week they would need to qualify for benefits. Today, an astonishing 6.4 million involuntary part-time workers are denied the full-time work they seek in order to keep our profit margins high. You can call that “the market” or you can call that “stealing,” but from the point of view of a disgruntled worker it amounts to the same thing. How could they not be angry?
Another elite excuse for inequality is “education.” If everyone had a Harvard MBA, the argument goes, then we’d all be fine. Don’t get me wrong; the better educated our citizens, the better off we all will be. But someone is still going to need to clean the hotel rooms, flip the burgers, pour the coffee, assemble the cars, cut the hair, etc. But if that job doesn’t provide a decent and dignified life, then we have made little collective progress. And while it’s true that college graduates earn more on average than those without college degrees, wages for young college graduates have stagnated since 2000, with wages for young female graduates falling 6.8 percent. Churning out more college graduates can’t close the inequality gap if wages are stagnating or falling across the board.
 

The CEO Pay Machine: How Can We Stop It? →

The ratio of the pay of corporate chief executive officers (CEO) to ordinary workers has exploded in the last 40 years. It was a bit over 20 to 1 at the start of the 1970s, now it is well over 200 to 1, and in good years for CEOs, it can be more than 300 to 1. Steven Clifford’s book, The CEO Pay Machine (Blue Rider Press) is an effort to explain how this happened and what we can do about it.
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Clifford’s basic story is that the process that determines pay has become hopelessly corrupted. At the most basic level, the corporate boards that are supposed to represent shareholders and put a check on CEO pay have little interest in doing so. Clifford describes a process of whereby boards are captured by CEOs and other top management. Being a board member is a cushy job, typically paying well over $100,000 a year for around 150 hours of work a year, by Clifford’s calculation. With many boards paying $300,000 or $400,000 a year, the pay can be in the range of $3,000 an hour.
And, as Clifford notes, it is almost impossible to get fired from a board by shareholders. More than 99 percent of the directors who are nominated by the board for reappointment win their election. Furthermore, the boards are typically used to working with the CEOs. The CEOs and their staff are the ones who provide them with information. Often the CEO himself is a board member, usually the chair.
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Clifford dismisses the idea that CEOs are worth anything comparable to their current pay. He argues that the inequality created by bloated CEO pay is destructive both to the companies themselves and to democracy. I would add to Clifford’s list of complaints that excessive CEO pay contributes to a distorted pay structure throughout the economy. After all, if a moderately competent CEO of a mid-sized company can pocket $5 million a year, then certainly the president of a major university or non-profit foundation is worth at least $1 or $2 million. And more pay for these people means less for everyone else. That is how arithmetic works.
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Clifford cites several major studies indicating that pay is not closely correlated with returns. He notes that pay is often associated with a large element of luck, such as the CEO of an oil company getting a huge payout because the share price of the company surged along with world oil prices. Clifford also points out that CEOs are generally not especially mobile. They have firm-specific skills, so even a hugely talented CEO may not have a good second option if her current company won’t agree to a big raise.
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If the basic problem is a corrupt corporate governance structure, then the solution must involve reforming the governance structure. This means changing the incentives for directors and restructuring the voting process so that insiders do not tightly control it.
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The other issue is changing who gets to vote in shareholder elections. As it stands now, the fund managers that act as trustees for shares held in mutual funds often cast the majority of votes in shareholder elections. These managers have no direct interest in holding down the pay of CEOs. In many cases they have ongoing business relationships with CEOs who they count on to keep them informed of developments with the company...

She Was Convicted of Killing Her Mother. Prosecutors Withheld the Evidence That Would Have Freed Her. →

A horrifying case showing how much power prosecutors have determining the outcome of trials, and how we got here:

The Tennessee Supreme Court called Jones and Weirich’s failure to disclose Hammack’s note before trial a ‘‘flagrant violation’’ of Noura’s constitutional rights. The justices also overturned the verdict against Noura for another reason — Weirich’s closing exclamation in front of the jury demanding: ‘‘Just tell us where you were! That’s all we are asking, Noura!’’ The Constitution’s protection of the right to remain silent means that a defendant’s decision not to testify ‘‘should be considered off limits to any conscientious prosecutor,’’ the Tennessee justices wrote, so that the jury doesn’t view it as an implicit admission of guilt..
In the United States, defendants gained the right to see certain evidence in the government’s possession relatively recently, in the 1960s. Before that, our rules reflected their origin in early modern Britain, where people suspected of crimes were required to speak on their own behalf, without a lawyer. In 16th-­century trials, people suspected of crimes had no right in advance to learn of the evidence against them, or even the charges, because the element of surprise was deemed crucial to ascertaining the truth. The idea of ‘‘trial by ambush,’’ as it is called, persisted throughout the 18th century, even after the accused gained the presumption of innocence, the right to hire a lawyer and the right to remain silent. In 1792, the Lord Chief Justice in Britain rejected a defendant’s request to see the evidence against him in advance of trial, saying that such disclosure would ‘‘subvert the whole system of criminal law.’’
Over the next century, however, the British courts changed course, joining countries like Germany and France to require broad disclosure of the prosecution’s case before trial, including a full list of witnesses, a summary of how they would testify and other investigative material, like police and lab reports. The nascent justice system in the United States, by contrast, imported Britain’s earlier rules. Judges in this country emphasized that defendants might harm or intimidate witnesses if they knew they were planning to testify.
In March 1963, Justice William J. Brennan Jr., an Eisenhower appointee who became one of the era’s leading liberal jurists, criticized the American practice of keeping the prosecution’s case secret before trial in a major speech at Washington University’s law school. Brennan argued that it was ‘‘particularly ironic’’ that at the Nuremberg trials, conducted in the late 1940s to bring Nazi war criminals to justice, Soviet prosecutors protested the American rules of evidence as unfair to defendants. Isn’t denying access to the facts of the prosecution’s case ‘‘blind to the superlatively important public interest in the acquittal of the innocent?’’ Brennan asked.
Brennan’s speech was part of a sweeping argument for criminal-­justice reform. Led by Earl Warren, the consensus-­seeking California governor chosen as chief justice by Eisenhower, the court revolutionized the process the government must follow to convict someone of a crime. The Warren Court gave poor defendants the right to a free lawyer, barred police officers from coercing confessions and required them to inform defendants of their rights (the Miranda warning).
Two months after Brennan’s Washington University speech, defendants for the first time won a constitutional right to see some of the evidence in the state’s possession. The ruling came in Brady v. Maryland, a 1963 appeal by an Air Force veteran, John Leo Brady, who was sent to death row for murder. Brady’s lawyers argued that prosecutors should have disclosed that a co-­defendant had confessed to the killing. In response, the Warren Court decreed that before trial, prosecutors must turn over evidence that is ‘‘favorable’’ to the defense if it is ‘‘material either to guilt or to punishment.’’
The Brady ruling appeared to rebalance the scales between the defense and the prosecution, as British and European courts began doing a century and a half earlier. For years, however, little attention was paid to enforcing the Brady rule, in part because there was little proof it was being broken. Prosecutors decide what counts as ‘‘material’’ or ‘‘favorable’’ — in the heat of battle — while the judge and the defense have no way to see what they’re holding back. It’s as if prosecutors are tennis players calling their own lines when their opponents, and even the referee, can’t see the other side of the court...

Why A Trump Pivot Might Backfire →

Trump’s problem is that there aren’t many voters who could plausibly be persuaded to join the Trump train, at least not on short notice. Not only are Trump’s disapproval ratings high — about 58 percent of the country now disapproves of Trump’s job performance, the highest figure of his presidency to date — but also most of the voters who disapprove of him do so strongly.
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So Trump has every incentive to play the long game. If he were to really and truly pivot and sustain that new course, perhaps some of the 47 percent of voters who are currently in the “strongly disapprove” camp would eventually become reluctant supporters, after stopping in the “somewhat disapprove” category along the way.
But if Trump is looking for a short-term fix, a pivot probably won’t work. A sloppy attempt at a pivot — in which Trump loses conservative support faster than he gains support from moderates — could turn into one of his nightmare scenarios from the list of possible presidencies we imagined in February:...
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I’m not sure we’re on this path yet. But there are some signs of it. The recent downtick in Trump’s approval ratings — after a couple of months when his numbers were steady — coincides with a period where Trump is getting more scrutiny, both from Republicans in Congress and from the conservative media. These are measured steps — it’s not like Republicans have begun impeachment proceedings or Sean Hannity has abandoned Trump. But in his time as president so far, Trump has found more ways to lose supporters than to gain them.