Coyote Blog

Here are some numbers from the DOL draft rule.

They think there are 21.4 million salaried workers subject to the wage test.  Since the new number was set at the 40th percentile of these workers, presumably about 8.6 million will fall below the new number.  But of these, only 4.6 million would be have to be shifted to hourly/overtime rules (not sure why the difference, I guess other tests must still apply as well).

Those 4.6 million are expected to cost employers an additional $1.2 billion in wages, which seems like a lot but equates to an additional $261 per person per year extra.   In other words, a pittance for all this disruption.

The Left is already saying that companies won't adjust and all these folks will get raises.  But the DOL obviously thinks differently.  Either it thinks these folks are only working maybe an hour each of overtime per week, such that the overtime rules will only cost a few bucks a week, or the DOL thinks that a lot of work and wage rates are going to be pared back leaving folks about where they are today, except now as timeclock punchers rather than trusted salaried professionals.

I am still going through all the tables in the back where they generate this stuff, but there are a couple of admissions there you WILL NOT find on liberal blogs today

1. The DOL expects that base wage rate for regular work hours to fall for the affected workers with this new law.  You heard that right.   See table 21.  The fall from $18.38 to $18.21 after this rule in DOL projections
2. You will see folks (like Kevin Drum linked above) saying that this ends 60 hour work weeks.  In fact, in table 22 the DOL says the average work week of those affected by the rule is 41.6 hours, which will go down to 41.5 hours by this rule.  In fact, the 60 hour folks are a minority of go-getters who are trying to prove themselves out for upper management.  These are the folks hamstrung by this law, hammering precisely the upwardly mobile folks one would hope to encourage.

I have only skimmed the new DOL overtime rules, but this bit really hit a nerve:

The Department has long recognized the salary level test as “the best single test” of exempt status. If left at the same amount over time, however, the effectiveness of the salary level test as a means of determining exempt status diminishes as the wages of employees entitled to overtime increase and the real value of the salary threshold falls. In order to maintain the effectiveness of the salary level test, the Department proposes to set the standard salary level equal to the 40th percentile of earnings for full-time salaried workers ($921 per week, or $47,892 annually for a full-year worker, in 2013).

This is exactly the kind of thing that will look scientific to you average journalism major.  See, $921 is not arbitrary, it is set at the 40th percentile of salary earnings.

WTF?  Where did the 40th percentile come from?  Out of someone's butt, that is where.  The Administration started with a number they wanted, between $47K and $50K and then obviously went looking for some round-number metric that landed in this zone to justify their number as somehow analytically based.

Think about it.  The 40% number is meaningless.  In fact it is worse than meaningless, it is astoundingly arrogant.  Basically they are saying arbitrarily that 40% of people earning a salary should not be earning a salary.  What do these people do?  What are their alternatives?  What are the other circumstances of the job that might affect them?  What is the value of their benefits?  None of this stuff is considered.  Some arrogant jerk just drew a line and said, below this line all those folks are paid wrong.

Well, they did it.  The Obama Administration has proposed a new rule that everyone has to punch a time clock unless they are paid at least $921 a week.  Here is the proposed rule.  Of course, everyone on the Left is patting themselves on the back for giving everyone under that number a raise.  In fact what has happened is that everyone under that number just got a demotion, from trusted junior manager to 40-hour-a-week timeclock puncher.

Here is another way to put it:  The only people who now have the right to work more than the minimum to demonstrate one's readiness for more responsibility are those paid over $48,000 a year.  McKinsey consultants and lawyers and investment bankers can choose to work extra hours in order to gain promotions.  McDonald's shift managers no longer have that same right.  This is a law written by salaried professionals telling younger and lower-paid workers that they have no right to be ... salaried professionals.    This is a law propounded by a President who pays many of the young professional interns in his campaign and non-profit $0.00 an hour.

More here.

Update:  By the DOL's own reckoning, 40% of salaried employees fall below this number and thus are affected.  Some will get a small raise over the bar, but an enormous part of the workforce will find themselves dumped into the ranks of work-just-the-minimum timecard punchers.  This has the potential to hit far more people than any minimum wage increase.

From the Telegraph

The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises, the Bank for International Settlements has warned.

The so-called central bank of central banks launched a scatching critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.

These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates....

“Rather than just reflecting the current weakness, [lower rates] may in part have contributed to it by fuelling costly financial booms and busts and delaying adjustment. The result is too much debt, too little growth and too low interest rates.

"In short, low rates beget lower rates."

The BIS warned that interest rates have now been so low for so long that central banks are unequipped to fight the next crises.

The vast majority of so-called consumer or employee protection laws in California appear to be written with one purpose in mind -- to create more rent-seeking opportunity for lawyers.  While more expensive to comply with than laws in any other state, most of these laws do little to actually make the life of consumers or employers easier.  Are consumers really better off for the myriad of carcinogen warnings one sees in California, or is it just white noise?  Are employees better off because they can sue over having to work through lunch?  In most cases, the answer is "no" or only trivially at best.

But what all these laws have in common is that they give attorneys incredible power to extract money from businesses via any number of extortion techniques.  For example, my company has never lost an employee lawsuit in California, but I have spent hundreds of thousands of dollars of my money to successfully defend such claims (no insurer will cover you for such employee suits without a deductible of at least $25-50 thousand per claim in CA).  How can anyone call this justice?

The only defense we have is to try to take claims to arbitration.  I have no problem paying a thousand dollars of back wages if we made a mistake, but I don't want to pay $50,000 in legal fees reaching that conclusion.  That is the point of arbitration, to pay off employee claims without the long hassle of litigation.  It offers the bonus of paying employees quickly, rather than forcing them to wait through years of legal procedures.

The only folks hurt by arbitration are the attorneys, and of course since they virtually control the California State Legislature, CA attorneys are urging their government lapdogs to ban arbitration of employment issues

When you take a job, should you be required to waive your right to have a future employment dispute adjudicated by the state labor commissioner or in civil court?

That has increasingly become the case for job applicants. Forty-three percent of companies nationwide now require employees to sign arbitration clauses precluding class-action suits, according to the Wall Street Journal. That’s an increase from 16 percent of companies in 2012. It’s paid off for businesses – employee class-action lawsuits have declined 5 percentage points since 2011, saving employers $136 million.

Assemblyman Roger Hernández, D-West Covina, believes mandatory employee arbitration agreements provide California businesses with an unfair advantage in employee disputes. He authored Assembly Bill 465, which would make it illegal to require such agreements as a condition of employment.

The bill passed the Senate Labor and Industrial Relations Committee along party lines on June 10 after a debate over the pros and cons of arbitration.

It is telling that even the supporters cannot point to any study or evidence that employees do worse with their claims in arbitration vs. in the court system.   The only real claim they make is this one, which is hilarious:

“The harm from these kinds of agreements goes beyond the impact on the individual worker. Obviously, no workers should be required to give up such core protections when it’s not knowing or voluntary. But beyond that, this takes away the ability to the state labor commissioner to even know what is happening in these work sites. These arbitration agreements are private, they are individual.

“They do not provide a forum for the state labor commissioner or anyone else to know what is happening and try to find a more systemic solution or to say, ‘Wow, there’s a lot of violation coming out of this one site or employer. Maybe we should consider a more efficient enforcement plan than just each individual worker having to take their claim separately to an arbitrator.’

This is stupid.  First, there is nothing in an arbitration agreement that prevents an employee from reporting his or her issue to the state labor commissioner.  Second, if this really were an issue, a simple reporting requirement of the basic facts of arbitration cases to the state labor commissioner would suffice to solve the problem.

Here is how you should think about this proposed law:  Attorneys are the taxi cartels, and arbitration is Uber.  And the incumbents want their competitor banned.

A few years ago I had a woman file a discrimination case against me, saying her supervisor discriminated against her.  This person did not even attempt to lay out a factual basis for the claim, just said essentially she was dissed.  What made the case a total joke is that the person who was her supervisor was her sister (no more making exceptions to nepotism rules after that one).  The claim went nowhere, but it still cost be $20,000 to make go away.  And the real kicker was the employee's attorney.  This person came to me (actually my attorney) and he said he would drop the case with no payment to the plaintiff if we agreed to give him $X thousand dollars personally.  Basically, the attorney said that if he got paid, but his client did not, he would be satisfied and get her to drop the suit.  This is the racket attorneys have created for themselves in California.

Paul Krugman and a surprisingly large portion of Leftish economists have staked out a position that labor does not act like any other commodity, such that higher minimum wages have no effect on demand.  I have had people on the Left tell me that this absurd, common-sense-offending position is actually "settled".  So explain Puerto Rico:

Another problem is that just 40 percent of the population [of Puerto Rico] has a job—or is even looking for one. That figure has plummeted in recent years. In the United States as a whole, it is 62.9 percent....

The report cites one surprising problem: the federal minimum wage, which is at the same level in Puerto Rico as in the rest of the country, even though the economy there is so much weaker. There are probably some people who would like to work, but because of the sickly economy, businesses can't afford to pay them the minimum wage.

Someone working full time for the minimum wage earns $15,080 a year, which isn't that much less than the median income in Puerto Rico of $19,624.

The report also cites regulations and restrictions that make it difficult to set up new businesses and hire workers, although it's difficult to know just how large an effect these rules might or might not have on the labor market.

By the way, the fact that the author thinks this is "surprising" just goes to show how far this anti-factual meme of a non-sloping labor demand curve has penetrated.

As pointed out in several places today, Puerto Rico has a surprising number of parallels to Greece.   It seems to have zero fiscal restraint, it has structural and regulatory issues in its economy that suppress growth, and has its currency pegged to that of a larger, much richer nation.  It is apparently facing a huge $70+ billion potential debt default.

I have been predicting for years that the only solution for the Greece problem is for it to exit the Euro, go through a horrible economic crisis and deal with substantial devaluation, and then hopefully move on with a cheaper currency that makes its tourist industry look better and plugs the hole between taxing and spending with inflation.  It appears we are closer than ever to this actually happening.  The Greeks would likely be moving forward now, like Iceland, if they had taken their medicine years ago rather than try to kick the can.  Now it is just going to be worse.

I have been enamored off and on with the idea of a gold standard but Megan McArdle made some powerful points today about how the Greek situation teaches us that a gold standard doesn't necessarily impose discipline on governments.

It's easy to moralize Greece's feckless borrowing, weak tax collection and long history of default, and hey, go ahead; I won't stop you. But whatever the nation's moral failures, what we're witnessing now shows the dangers of trying to cure the problems of weak fiscal discipline with some sort of externally imposed currency regime. Greek creditors and Brussels were not the only people to joyously embrace the belief that the euro would finally force Greece to keep its financial house in order; you hear the same arguments right here at home from American gold bugs. During the ardent height of Ron Paul's popularity, I tried to explain why this doesn't work: "You don't get anything out of a gold standard that you didn't bring with you. If your government is a credible steward of the money supply, you don't need it; and if it isn't, it won't be able to stay on it long anyway."

This goes double for fiscal discipline. Moving to a fixed exchange rate protects bond-holders from one specific sort of risk: the possibility that inflation will erode the real value of your bonds. But that doesn't remove the risk. It just transforms it. Now that the government can't inflate away its debt, you instead face the risk that they are going to run out of money to pay their bills and suddenly default. That's exactly what happened to Argentina, and many other nations on various other currency regimes, from the gold standard to a currency peg. The ability to inflate the currency had gone away, but the currency regime didn't fix any of the underlying institutional problems that previous governments had solved with inflation. So bondholders protected themselves from inflation, and instead took a catastrophic haircut.

Postscript #1:  I had one issue with McArdle's piece when she writes

The only people this will be good for is people who long to vacation on the Greek Islands. If Grexit actually happens, book those plane tickets now, but hold off on the hotel. It will be cheaper in six months. Then try to enjoy it as you remember that those fabulous savings are someone else's whole life evaporating.

Hey, if Grexit occurs, you have no reason to feel guilty about taking advantage of the weak currency and low prices for a Greek vacation.  There is nothing the Greeks need more than for you to do exactly that.   It is the single best thing you could do for the Greek people.

Postscript#2:  Here is why exiting the Euro, devalutation, and inflation are the only way out for Greece at this point. Creditors allow countries to run long-term deficits and keep lending despite rising debt (see: Japan) because of a combination of a) the country can always just print the money they need; b) the country can raise taxes and take the money it needs or c) the country can keep spending flat and grow their way out from the debt.

None of these are available to Greece. They can't print money, at least without running up new debts (excess printing of Euros is automatically added to Greece's debt to the ECB).  They can't raise taxes because their citizens don't pay the taxes that already exist.  And they can't grow their way out because there is zero support for austerity or market-based reforms that would be necessary, and besides a huge portion of Greek deficit spending is for inherently unproductive activities.  At this point Greece's only option is charity, that the other countries of the EU will forgive debt or write them new debt, either to be nice or to avoid bad precedents with other PIGS countries.  But  the EU seems at the end of its charity rope, and besides given zero prospects of any sort of Greek recovery, even after a major write-off of debt the EU would be in the position of still having to send Greece new money for its new debts.

I see a lot of folks wanting to poo-poo the notion that Uber's flexibility in terms of hours driven and such is good for drivers.  Folks on the Left have in their head that any job that does not punch in and punch out at fixed hours with a defined lunch break and actually rewards working more than the minimum is somehow exploitive.

This got be thinking about a Kickstarter update I received a while back (for a computer game project).  The entrepreneur wrote:

Looking back, most of the year was spent trying to recover from the 2013 Robotoki saga which delayed development by almost an entire year, left me financially devastated, and almost sunk this project beyond recovery. We’ve had our ups and downs and I’ve always found a way through, but man, these were not fun times. I was actually living out of my car when I signed the private investment contract a few months ago, so it’s been a little bit of a rough year.

This project and I are currently surviving on that private loan, my personal credit cards, and whatever I can make driving for Uber, but at least we’re getting close to launch now. I hope this doesn’t come off as a “whoa is me” kinda thing. I only mention all of this because I want to put the project into perspective and give some deserved answers about what has been going on. I know it sucks that the game is severely late and I hope you know that I’ve done everything in my power to not give up.

This entrepreneur is trying to fund his game development effort in part by working during the day on the game and driving for Uber in his spare hours.  There is no way he could work really anywhere else because he would have to be an official employee and keep a regular schedule -- you can't imagine someone just showing up at McDonald's to cook whenever they feel like it.  But that is what he can do for Uber.  And now California is trying to kill that flexibility.

A reader and frequent contributor sent me this:

When 120,000 people head to downtown Orlando for the big July 4 fireworks show at Lake Eola, none will be getting on SunRail.

It’s not running.

Central Florida’s $1 billion commuter-rail line usually only operates Monday through Friday, and while a few special weekend events in recent months have booked the train, one of the biggest gatherings of the year won’t.

Fireworks at the Fountain, in addition to the sky show, will feature more than 25 vendors, live music and children’s activities.

But Orlando city staff researched the addition of SunRail service, but found it wouldn’t work, said Cassandra Lafser, the city’s public information officer.

“Several factors contributed to this decision, including safety, availability and costs,” Lafser said in a prepared statement.

“The city’s concerns included: total train capacity, safety and security, hours of operation, pedestrian wayfinding and transport operations between the downtown stations and Lake Eola, and funding availability.”

Rocochet asks this question over the weekend:  What are your top 5 causes of the fall of the Roman Empire.  OK, I will take a shot at this from my decidedly amateur perspective:

1. Demographic collapse, caused by a series of plagues (perhaps even an Ur version of the black death) and possibly climate change (colder) that depopulated the western half of the empire
2. A variety of policies (e.g. grain dole) that shifted population from productive farms to the cities.  In the 19th century, this shift was to be growth-inducing as farm labor was moving into growing factories, but no such productivity revolution existed in Roman cities.  The combination of #2 with #1 left huge swaths of farmland abandoned, and the Romans dependent on grain ships from North Africa to feed the unproductive mouths in large Italian cities.  It also gutted the traditional Roman military model, which depended strongly on these local farmers for the backbone of the army.
3. The Romans lost their ability to be innovative in including new peoples in their Empire.  The Romans had a bewildering array of citizenship and tax statuses for different peoples who joined or were conquered by the empire.  For hundreds of years, this innovation was hugely successful.   But by the 4th and 5th centuries they seemed to have lost the trick.  The evidence for this is that they could have solved multiple problems -- the barbarians at the gates and the abandonment of farm land and the need for more soldiers -- by finding a way to settle barbarians on empty farm land.  This is in fact exactly what the barbarians wanted.  That is why I do not include the barbarian invasions as one of my five, because it did not have to be barbarian invasions, it could have been barbarian immigration.  Gibson's thesis was that Christianity killed the Roman Empire by making it "soft".  I don't buy that, but it may have been that substituting the Romans' earlier incredible tolerance for other religions in their Pagan period with a more intolerant version of Christianity contributed to this loss of flexibility.
4. Hand in hand with #3, the Roman economy became sclerotic.  This was the legacy of Diocletian and Constantine, who restructured the empire to survive several centuries more but at the cost of at least an order of magnitude more state control in every aspect of society.  Diocletian's edict of maximum prices is the best known such regulation, but in fact he fixed most every family into their then-current trades and insisted the family perform the same economic functions in all future generations.  Essentially, it was Ayn Rand's directive 10-289 for the ancient world, and the only reason these laws were not more destructive is that the information and communication technologies of the time did not allow for very careful enforcement.
5. Splits in the governance of the empire between west and east (again going back to Diocletian) reduced the ability to fund priorities on one side of the empire with resources from the other side.  More specifically, the wealthy eastern empire had always subsidized defense of the west, and that subsidy became much harder, and effectively ended, in the century after Diocletian.

I will add, as a reminder, that to some extent this is all a trick question, because the Roman Empire really did not totally fall until the capture of Constantinople in 1453.  So I should have stated at the outset that all of the above refers to the fall of the western empire in the late 5th century, which in part explains why #5 is there in the list.

And, if you were in a room of historians of this era, you could quickly get into an argument over whether the western Roman empire really fell in the late 5th century.  For example, the Visigothic Kingdom in the area of modern southern France and Spain retained a lot of Roman practices and law.  But I have gone with tradition here and dated the "fall" of the empire to 476 when the Roman Emperor was deposed and not replaced.

Yeah, neither do I.

Law professors Stephen J. Schulhofer and Erin Murphy are trying to update the criminal code when it comes to sex offenses, believing current definitions of rape and sexual assault are antiquated. The focus of their draft is on what constitutes consent. It adopts the "yes means yes," or "affirmative consent" model that was passed in California last year.

The California law applies only to college campuses, however. Schulhofer and Murphy aim to take that definition of consent — which says that before every escalation of a sexual encounter, clear and convincing consent must be given — to the state or federal level. No one actually has sex this way, requesting permission and having it granted perhaps a dozen times in a single encounter.

But the theory that millions of Americans are having sex wrongly has gained currency among campus activists. This new attempt to alter the American Law Institute's Model Penal Code, a highly influential document that has been adopted in whole or in part by many states' legislatures, is part of a push to bring authoritarianism into the bedroom.

I often argue that our political parties are not just internally inconsistent (ie they simultaneously hold positions whose logic essentially contradict themselves) but they are inconsistent across time.  This is a great example of the latter.

CEO of Uber France has been arrested because, uh, his competitors have resorted to violence to defend their inferior product.  The fact that the victim rather than the perpetrators of violence is getting arrested speaks volumes to how far governments will go to block innovation that hurts politically-connected incumbents.

After days of violent protests and defiance on the part of Uber's French management, two of the company's employees were taken into custody for "illicit activity" today. Uber France CEO Thibaut Simphal and Uber European GM Pierre-Dimitri Gore-Coty were arrested for running the company's ride-sharing service illegally. TechCrunch reports the pair is also being held under suspicion of "concealing digital documents." Last week, French Interior Minister Bernard Cazeneuve took legal action to shut down UberPOP, the service that employs non-professional drivers to provide rides, in response to protests that blocked key transportation hubs.

... While UberPOP was banned in France earlier this year, an appeals court said it could continue to operate until the final decision was handed down in September.

This seems to be perfectly in the spirit of the times:

The French government has ordered police to crack down on Uber in Paris after violence erupted at demonstrations by taxi drivers against the online ride service.

Interior Minister Bernard Cazeneuve said Thursday that he asked the Paris police authority to issue a decree forbidding activity by UberPOP drivers. Similar decrees have already been issued in other major French cities.

Cazeneuve said vehicles using UberPOP will now "be systematically seized" by police when caught operating.

The UberPOP app was ruled illegal by the French government last year, but the U.S. company hasn't yet exhausted all legal recourse and has told its drivers to keep operating.

Responding to Cazeneuve's comments Thursday, Uber said it was "still assessing on which legal ground such measures could be implemented."

Uber said that it is up to the courts to decide what is legal and that no court has so far told it to stop operating.

Angry over Uber's incursion into their industry, taxi drivers held protests around Paris on Thursday that disrupted traffic near airports, major rail stations and key intersections, ensnaring American rock singer Courtney Love in the chaos.

This is the corporate state at work -- any business not explicitly approved by politicians will be suppressed.

Arizona has one of the worst asset forfeiture laws in the country, essentially allowing law enforcement to help themselves to any money or real property that takes their fancy, and then spend it on anything they like.   For example, one AZ sheriff is spending the asset forfeiture stolen money** on buffing up his image by providing scholarships, even though such scholarships sure seem to be specifically prohibited as a use for the money.  You can think of this as pure PR - give 1% of the stolen money to some worthy cause so no one will question what you do with the other 99%, or more importantly question why they hell you had the right to take it without due process in the first place.

The Cochise County Sheriff's Office is providing nine high school students with college scholarships financed by money and assets seized from people suspected of illegal activity.

The $9,000 for scholarships is paid from the county's anti-racketeering revolving fund. State law specifies that cash in this account is to be used for things like gang and substance-abuse prevention programs and law enforcement equipment.

So, how do the scholarships fit the bill?

Though federal law appears to prohibit such a use of the money, Cochise County says the spending is permissible because it plays a role in substance-abuse prevention....

[The IJ's Paul] Avelar agreed.

The categories that specify how the money should be spent are "incredibly broad," allowing for a gamut of expenditures, he said.

"It's very loosey-goosey on what they spend it on," Avelar said. "They have the ability spend it on a lot of things that we might not think are wise expenditures of public money."

But McIntyre said that it's essential that counties retain broad spending power over this money, because "local elected officials are in a much better position to determine what priorities need to be addressed than people outside of the county."

"And additionally, the reality is that if the local voting populous doesn't agree with the use of those funds or the priorities that have been set by these decision makers, they have the ultimate remedy to vote us out," McIntyre said.

The last is a total joke.  First, most sheriff's offices refuse to provide any comprehensive reporting on their seizure and spending activities, so without transparency there can be no accountability.  And second, this is a classic redistribution scheme that always seems to get votes in a democracy.  Law enforcement steals this money from 1% of the citizens, and spends it in a way that seems to benefit most of the other 99%.  It is exactly the kind of corrupt policy that democracy consistently proves itself inadequate to prevent -- only a strict rule of law based on individual rights can stop this sort of abuse.

** While the forfeitures are legal under the law, that does not make them right.  The law is frequently used by one group to essentially steal from another.  Allowing police to take money at gunpoint from innocent (by any legal definition, since most have not been convicted of a crime) citizens is stealing whether it is enabled by the law or not.

Rising minimum wages are bad enough, but generally we can offset them with price increases (remember that, though, next time you get ticked off about your camping fees going up).  As an aside, not every business is in a competitive position that they can do this.

But the new Obama Administration rules greatly scaling back on our ability to have our managers be exempt employees is far, far worse.  Because its not just money, but it changes the entire relationship between me and my managers.  Most of my managers don't want to be hourly employees (you should see the complaint emails I am getting since I announced that this is likely coming) and have pride they have moved beyond timeclock punching.  Also, I think a lot understand they are not going to make more from this, and they may even make less.  To the extent they are working overtime today (and they all are) they will not be allowed to work overtime in the future.  So I will have to hire someone else to do those extra tasks, and that person's salary is likely to come in part from what the managers are making now.

These next few months I am having all of my salaried managers fill out time sheets just for analytical purposes.  I need to know how bad this is going to be.  If you run a business, you shouldn't be waiting for next year to do something, you need to be thinking and analyzing right now how you are going to handle these rules.

I wrote a long article on this here.  Stephen Miller has more in the same vein (via Overlawyered great wage and hour news roundup).  Here is a taste:

In McCutchen's view, the administration fails to understand that "it's still the same pot of money that's available to compensate the employee," whether a worker is classified as exempt or nonexempt. So if overtime pay is required, a likely result will be to strictly limit overtime hours worked, despite the adverse effect on productivity, rather than—as the administration expects—to increase the employee's annual compensation.

While many non-executive employees view themselves as professionals and react negatively when shifted to hourly compensation, "the DOL wants nearly everyone to be nonexempt, and to sign in and clock out as do unionized workers," McCutchen contended. "They don't believe that some employees prefer to be salaried, with guaranteed pay and the flexibility to adjust when they do their work."

Postscript:  I guess I just don't understand the vision that is in the head of Progressives.  How does it help their stated goal of empowering the average Joe to convert him from a valued, up-and-coming junior manager to a 40 hour a week timeclock puncher?  How will people ever be able to migrate from lower end jobs to management positions if there are not junior manager positions in which they can demonstrate their energy and dedication?  I suppose they must believe that junior managers will still be doing the same things and working the same hours, but just earning lots of extra overtime with these new rules.  If that is really what they think, they are completely divorced from reality.

Last week I wrote:

One can build a very good predictive model of government agency behavior if one assumes the main purpose of the agency is to maximize its budget and staff count.  Yes, many in the organization are there because they support the agency's public mission (e.g. protecting the environment at the EPA), but I can tell you from long experience that preservation of their staff and budget will almost always come ahead of their public mission if push comes to shove.

Despite being a Jerry Pournelle fan, I had never heard his Iron Law of Bureaucracy, but it certainly fits my observations

Iron Law of Bureaucracy

In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control and those dedicated to the goals the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely.

In an article on an incipient bank run in Greece, Zero Hedge wonders, "What is perhaps more shocking is that anyone still had money in Greek banks at all..."  I agree.  With talk for weeks of capital controls and the example of raids on depositor funds (even supposedly insured deposits) in Cyprus, my money would have been long gone.  Even in the US in 2008-2010, I took our corporate funds out of the main Bank of America account and spread them all over.  It was a pain in the butt to manage but even facing much smaller risks than in Greece, I thought it was worth it.

It turns out that small government libertarians like myself and large-government progressives actually have something in common -- we both fear accumulations of unaccountable power.  We just find such power in different places.  Progressives fear the accumulation of power in large corporations and moneyed individuals.  Libertarians fear government power.

I won't try to take Caplan's ideological Turing test today, but will just speak from my own perspective.  I wonder how Progressives can ignore that government has guns and prisons while corporations just have the ability to sell you something or hire you (though perhaps not on the terms you prefer).  When pressed to explain why the Left is more comfortable with government power, their explanations (to my taste) depend too much on assumptions that competent versions of "their guy" pull the levers of power, and that power itself and the vagaries of government incentives will not corrupt this guy.

On the other hand, progressives ask me all the time, "how can you trust corporations so much" and then list off a justifiably long list of examples of them acting poorly.  This, I think, is where the real difference comes in, and where the confusion often comes int he public discourse.  I will answer that I don't trust anyone, government or corporations.  What I trust are the incentives and the accountability enforced in a market where a) consumers can take their money elsewhere if they get bad products or services; b) employees can take their labor elsewhere if they are treated poorly; and c) entrepreneurs can make a fortune identifying shortcomings in incumbent businesses and offering consumers and/or employees a better deal.

Unfortunately, when a person or organization finds itself very successful in this game, there is a natural tendency to want to protect their winning position.  But nothing in the market can stop a challenge from a better product or service, so successful entities tend to turn to the government (which has a monopoly on guns and prisons and asset seizures and the like) for protection against upstart challengers.  If successful, these restrictions tend to hobble growth and innovation -- imagine if IBM had successfully used government influence to halt the PC revolution or if AT&T had blocked the growth of cell phones.

This dynamic is at the heart of Brink Lindsey's new white paper at Cato (pdf).   As has been his wont in several past works, Lindsey is looking for proposals that bridge the gap between Left and Right.  So, rather than stake out the 98th salvo in an area where there seems to be a hopeless ideological divide (e.g. minimum wage or low-skill immigration), he focuses on four areas one could imagine building a broad coalition.  Lindsey focuses on attempts by successful incumbents to use government to cement their position and calls them "regressive regulation" because they tend to benefit the already-successful at the expense of everyone else.

In the following sections, I examine four major examples of regressive regulation: (a) excessive monopoly privileges granted under copyright and patent law; (b) protection of incumbent service providers under occupational licensing; (c) restrictions on high-skilled immigration; and (d) artificial scarcity created by land-use regulation. In all four examples, current government policy works to create explicit barriers to entry. In the first two cases, the restriction is on entry into a product market: businesses are not allowed to sell products that are deemed to infringe on a copyright or patent, and individuals are not allowed to sell their services without a license. In the other two cases, actual physical entry into a geographic area is being limited: on the one hand, immigration into the country; on the other, the development and purchase or rental of real estate.

One can immediately see how this might appeal across ideologies.  Libertarians and market Conservatives will like the reduction in regulation and government scope.  Progressives should like the elimination of government actions that primarily help the wealthy and powerful.**

I said "cross ideologies" above rather than bi-partisan because things get messy when actual politics intrude.  All of these protected constituencies wield a lot of political influence across both parties -- that is why the regressive regulation exists in the first place.  And they all have finally honed stories about how these restrictions that prevent new competition and business models are really there to protect the little people (just watch the battles between Uber and the taxi cartels and you will see what I mean).

Never-the-less, this strikes me as a pretty good list.  For whatever barriers there may be, it is a hell of a lot easier to picture a bipartisan agreement on any of these issues than on, say, low-skill immigration.  I haven't finished reading to the end -- I have to get on now with my day job -- so I have yet to see if there are any concrete proposals that look promising.

**The ideological problem here, of course, is that libertarians think that these restrictions are the primary way in which the wealthy unfairly benefit while most Progressives would (I suppose) see it as a side issue given that they believe that even the free-est of market capitalism is inherently unfair.

In honor of an anniversary of sorts for the book, I have done a substantial edit on both the printed and Kindle editions of my first novel "BMOC" and it is now on sale through Monday for the low, low price of $0.

Go and grab a copy.

Hey, Glenn Reynolds blogs about cameras, and he sets the standard, right?  I just looked at a few of the pictures I took at the Aerosmith concert last week and I thought they came out surprisingly well for a pocket camera.  I was using a Canon PowerShot SX260HS that I actually own to take pictures of campgrounds for my business web site.  These pictures were not from close up, they were zoomed all the way out to 20x (I was up in the seats on the side, not on the floor or right by the stage).  I shot with a no flash night mode the camera had that I had never played with.  Given the time it takes to process each shot, it must be some kind of HDR thing but I was impressed it caught fast action pretty clearly.

Loved that Joe Perry guitar, by the way.

Many of us casual fans were introduced to the culture war in baseball (i.e. Bill James / data-driven analysis vs. grizzled old scouts looking for five-tool players) by the book Moneyball.

Well, with the recent news that the St. Louis Cardinals may have been caught hacking the Houston Astros data base, it is pretty clear which side won.  This article explains why the until-recently hapless Astros were the target of hacking by one of the last decade's most successful teams.

If you remember the scene in the movie Moneyball where there were a bunch of traditional old scouts sitting around the table debating players, compare that image to this:

When the Astros plucked Colorado's Collin McHugh off the waiver wire after the 2013 season despite his career 8.94 ERA, the move might've surprised some folks. But today's major league stadiums are wired with systems such as PitchF/X and TrackMan that use Doppler radar to track the ball in three dimensions. For every pitch thrown in every game, teams now know the location, acceleration, movement, velocity and the axis of rotation of the ball. The Astros grabbed McHugh because they saw that while his sinker didn't play well at Coors Field, he had a superior curveball that rotated about 2,000 times a minute, or 500 times more than an average curve spins.

It was the baseball equivalent of noticing a needle in the data haystack.

Once he was in Houston, the coaches told McHugh to change his arsenal by throwing that terrific curve more and replacing the sinker with a high fastball.

The result? His ERA nosedived to 2.73 in his first season with the Astros.

By the way, given the technology described here, and the tech I see deployed on the typical baseball TV broadcast, why do we still have human beings calling balls and strikes?

In honor of an anniversary of sorts for the book, I have done a substantial edit on both the printed and Kindle editions of my first novel "BMOC" and it is now on sale through Monday for the low, low price of $0.

Go and grab a copy.

Last night on NBC news they were discussing the mass murder in South Carolina.  The network interviewed some guy (sorry, missed his name) who lamented that -- can you believe it -- South Carolina doesn't even have a hate crime law!

And my response was:  So what?  I imagine that there may be circumstances where a hate crime law somehow might provide for a more appropriate punishment or better deterrence for some sort of crime.  Maybe for ordinary assaults?  But how in the world is it relevant to the punishment of some asshole who just got caught red-handed killing 9 people.  The guy could not possible be more legally f*cked.  What, is there some possibility of confusion that without the hate crime law, someone might think it was OK to kill 9 people?

I get exhausted with this kind of stupid symbolism.  In this case, the call for hate crime laws is not aimed at criminals, but are being used by politicians to signal to certain groups of voters that they "care."  This is the kind of zero-cost, zero-benefit "caring" that politicians specialize in.

Apparently, it is Hamilton that will get the ax on the $10 bill rather than Jackson on the $20 in order to make way for some fresh historical faces.  I am not the biggest Hamilton supporter in the world, and he was never a President, but he had as much to do with the form our Constitution takes today as any man in history.  On the other hand, for whatever points Jackson might make with me by opposing the Bank of the United States, he was really a horrible person.  His attitude about blacks and his treatment of slaves represented the worst of the slave-holding South, his his ruthless role in wiping out of the Cherokee nation is beyond criminal.

To this day, I don't know how the conflict between nomadic Native Americans and European settlers looking to build towns and farms could ever have had a happy ending.  But the one exception to this was the Cherokee, who settled down in communities in Georgia that in most ways mirrored European communities in the rest of the early United States.  If there are any native americans we should have been able to integrate into American society, it was the Cherokee.   And we wiped them out.  Awful.  I would rather the $20 bill be blank than have that genocidal maniac on it.

PS- would love to see someone like Harriet Tubman on the money, or really anyone else whose contribution did not consist merely of exercising power over me.  Hell, put Steve Jobs on there -- the iPad, and the Apple II before it, have improved my happiness more than any politician.

Megan McArdle is one of my favorite writers on the web.  So it was fun to see my recent post on California and Uber drivers get a mention from her.  I just focused on the implications for Uber and its customers, but she goes further to say that the likely results for its drivers will be negative as well, comparing their likely plight to that of freelance writers.

On the face of it, this ruling seems ludicrous. Raise your hand if you've ever had an employer who said: "Hey, as long as you don't actively alienate the customers, you can just show up and work whenever you feel like. No need to let me know when you're coming, just show up and I'll pay you for any work you do. Just put in a couple of hours every six months, m'kay?" Yeah, I never had that job either, and neither did anyone else who wasn't blackmailing the boss or working for a family member.

Not even freelance writers or contract columnists have this job......

Uber has to worry about not just the expense of complying with all these mandates, but also the expense of documenting that it has complied with these mandates -- which will mean more paperwork and hassle for Uber's HR staff and for the drivers themselves. The effect would be to introduce a substantial wedge between what Uber spends to keep a driver on the road and what drivers actually get in their checks. How many people will still be driving when their work starts to be micromanaged and their checks are docked to pay for all the new requirements?

In other words, the possibilities for Uber drivers are probably not "status quo" or "status quo plus paid sick leave"; the possibilities are probably "status quo" or "figure out what to do next because Uber just went out of business." Since economists generally assume that whatever that is, it's a less attractive option than driving for Uber, that's not a happy answer for the driver.

And in fact, these are exactly the complaints we are hearing from freelance writers as more places rely more heavily on staff, because with the economics of the Internet, it makes more sense to manage a small number of staffers than a large number of freelancers. The staffers are happy, because they're working. The freelancers are miserable, however, because here the new version of our old "gig economy" does not support that many people