Coyote Blog

Way back in 2014 I wrote:

I often wonder if Democrats really believe they will hold the White House forever.  I suppose they must, because they seem utterly unconcerned, even gleeful in fact, about new authoritarian Presidential powers they would freak out over if a Republican exercised.

Coyote's first rule of government authority:  Never support any government power you would not want your ideological enemy wielding.

As Damon Root writes:

In December 2007 presidential candidate Barack Obama told The Boston Globe that if he won the 2008 election, he would enter the White House committed to rolling back the sort of overreaching executive power that had characterized the presidency of George W. Bush. "The President is not above the law," Obama insisted.

Once elected, however, President Obama began to sing a different sort of tune. "We're not just going to be waiting for legislation," Obama announced. "I've got a pen and I've got a phone...and I can use that pen to sign executive orders and take executive actions and administrative actions."...

To make matters worse, many of Obama's fervent liberal supporters pretended to see nothing wrong with such obvious abuses of executive power. For example, consider the behavior of the prestigious editorial board of The New York Times. Back in 2006, when George W. Bush had the reins, the Times published an unsigned editorial lambasting Bush for his "grandiose vision of executive power" and his foul scheme to sidestep the Senate and unilaterally install his nominees in high office. "Seizing the opportunity presented by the Congressional holiday break," the Times complained, "Mr. Bush announced 17 recess appointments—a constitutional gimmick."

But guess what the Times had to say a few years later when President Obama had the reins and he utilized the exact same gimmick? "Mr. Obama was entirely justified in using his executive power to keep federal agencies operating," the Times declared in defense of Obama's three illegal appointments to the National Labor Relations Board. (Those three NLRB appointments, incidentally, were ruled unconstitutional by a 9-0 Supreme Court.)

I remember a conversation with my mother-in-law, who is a fairly accurate gauge of New England Left-liberal thought.  She was absolutely adamant that the Republican Congress, from the very beginning, had dug in and refused to work with Obama and that the resulting gridlock gave Obama the absolute right to work around Congress and govern by fiat.   I remember asking her, are you comfortable giving President Lindsey Graham that power too? (Trump was not even a glimmer in the eye of the body politic at that point so Graham was the best Republican bogeyman I could think up on short notice).  I don't remember an answer to this, which reinforced the sense I had at the time that Democrats honestly did not think they would lose the White House in their lifetimes -- I suppose they thought that 8 years of Obama would be followed by 8 years of Clinton.

Well, the freak out is officially here and I will happily embrace all Democrats who want to make common cause in limiting Presidential power.

Coyote's first rule of government authority: Never support any government power you would not want your ideological enemy wielding @reason

— Coyoteblog (@Coyoteblog) November 14, 2016

Update:  Glenn Greenwald makes many of the same points

Sen. Barack Obama certainly saw it that way when he first ran for president in 2008. Limiting executive-power abuses and protecting civil liberties were central themes of his campaign. The former law professor repeatedly railed against the Bush-Cheney template of vesting the president with unchecked authorities in the name of fighting terrorism or achieving other policy objectives. “This administration also puts forward a false choice between the liberties we cherish and the security we provide,” he said in 2007. Listing an array of controversial Bush-Cheney policies, from warrantless domestic surveillance to due-process-free investigations and imprisonment, he vowed: “We will again set an example for the world that the law is not subject to the whims of stubborn rulers.”

Yet, beginning in his first month in office and continuing through today, Obama not only continued many of the most extreme executive-power policies he once condemned, but in many cases strengthened and extended them. His administration detained terrorism suspects without due process, proposed new frameworks to keep them locked up without trial, targeted thousands of individuals (including a U.S. citizen) for execution by drone, invoked secrecy doctrines to shield torture and eavesdropping programs from judicial review, and covertly expanded the nation’s mass electronic surveillance.

Blinded by the belief that Obama was too benevolent and benign to abuse his office, and drowning in partisan loyalties at the expense of political principles, Democrats consecrated this framework with their acquiescence and, often, their explicit approval. This is the unrestrained set of powers Trump will inherit. The president-elect frightens them, so they are now alarmed. But if they want to know whom to blame, they should look in the mirror.

If you don't believe me, check out the NLRB's essentially no-show status in this case.  Had the employer engaged in even 1% of the practices the union had, the NLRB would have intervened in a second

In 2005, the SEIU decided to try to break into Houston by pushing “justice for janitors.” It began persuading the biggest janitorial companies in town to accept Local 5 as the representative for their workers. Five firms agreed. The sixth was Professional Janitorial Services.

The union wanted to organize workers through “card check,” which allows it to pressure workers one by one to sign an “authorization for representation.” But PJS insisted on a vote by secret ballot, as is its right.

The union responded with a campaign whose goals, according to internal emails entered into evidence, were to “cost PJS money” and “cost PJS accounts.” It accused the company of withholding workers’ pay, forcing them to work off the clock, and firing those involved with the union—none of which was substantiated.

The union filed “unfair practices” complaints against the company to the National Labor Relations Board, then withdrew some of them before they could be disproved. It filed a lawsuit against PJS that was dismissed. Mr. Zavitsanos argued to the jury that the union was trying to use these processes to libel-proof itself, since it cited the legal actions to substantiate its attacks on PJS.

The union sent letters to the building-management companies that contracted with PJS, spreading accusations. It circulated vicious fliers at disruptive demonstrations. One building manager said in a deposition that she fired PJS after protesters stormed her conference rooms while tenants were using them. PJS lost a dozen contracts. Usually somebody from Local 5 would email a colleague to take credit, which made damages easy to prove once the emails were discovered. In 2007, PJS announced in a press release that it would sue the union for “harassing and intimidating our customers along with companies and individuals that may be contemplating doing business with us.”

Mr. Zavitsanos argued to the jury that the Local 5 was operating out of an official SEIU playbook. This document, called the “Contract Campaign Manual,” surfaced five years ago in a different case, a racketeering lawsuit brought against the union by the food-services company Sodexo, which ultimately was settled. The manual advised union workers to “disobey laws which are used to enforce injustice against working people” and to threaten managers with accusations of racism or sexism.

Note that the Left came within an ace several years ago of eliminating secret ballots in union authorization votes.  The Left argued that card check was functionally equivalent to a secret ballot, but if this is true, why is the union going through so much trouble to avoid a confidential vote?

This week, the NLRB agreed to allow the players on the Northwestern University football team to unionize.   This is one of those issues that is simple and straightforward in a free society and a total mess in our less-than-free society.  Here are a few thoughts:

1. In a free society, this is a no-brainer.  The Northwestern players are welcome to create an association among themselves and call it anything they like, including "union".  That association is free to try to negotiate with the university for better terms  (they are also free to fail at this and make no progress).
2. However, it is clear that we are not a free society because the players had to go to the government and ask permission to form this particular type of association.  The reason is that associations called "unions" have been granted special powers and privileges under the law not available to other associations.  There are also a large body of very particular rules for how such associations may conduct business and how other groups (in this case the University) can or cannot interact with it.  It is a very tricky legal and philosophical question whether this package of benefits and privileges should be accorded to a group of college football players
3. In a free society, the fact that the players don't get paid cash and that their universities make millions off the football program would be irrelevant.  The players freely agreed to the deal (in most cases, playing in exchange for free tuition and perhaps a chance to land an NFL job) so there is nothing inherently unfair about it.
4. However, in our society, we have all sorts of government interventions.  I consider many of these interventions to be counter-productive, even occasionally insane.  But if one is to navigate such a society (rather than, say, go off and live in Galt's Gulch), I think the principle of equal protection is critical.  Arbitrary government interventions in free exchange are FAR worse when applied unevenly.  From an equal protection standpoint, I think the players may have a good case.
   • The law generally does not allow profit-making businesses (and the NCAA and college footfall are certainly those) to accept unpaid labor.  Many folks who don't deal with the Fair Labor Standards Act every day will say: "players are paid, they get free tuition."  But this is not how the FLSA works.  It counts non-cash wages only in very specific circumstances that are enumerated in the law (e.g. lodging).  Think of it this way -- McDonald's could not legally just pay all its employees in french fries and claim to be compliant with the law.  Also, large numbers of Division 1 football and basketball players never graduate, which shows a fair amount of contempt by players for this supposedly valuable "free tuition" compensation.
   • On the other hand, most college athletics are not profit-making.  My son plays baseball at Amherst College -- it would be laughable to call this a profit center.  I am not sure there are but a handful of women's teams in any sport that generate profits for their school, and even on the men's side money-making is limited to a few score men's football and basketball teams.   But the few that do make money make a LOT.  University of Texas has its own TV network, as do most major conferences.
   • The law generally does not allow any group of enterprises to enter into agreements that restrict employment options.  Google et. al. are getting flamed right now, and likely face criminal anti-trust charges and lawsuits, for agreements to restrict hiring employees from each other's firms.  The NCAA cuts such deals all the time, both severely restricting moves between schools (transfer provisions in Division I are quite onerous) and preventing poaching at least of younger players by professional leagues like the NBA and NFL.   The notion that top players in the NCAA are playing for their education is a joke -- they are playing in college because that is what they have to do in order to eventually be allowed in a league where they can get paid for their skills.
   • Actually trying to pay players would be a real mess.  In a free society, one might just pay the ones who play the most profitable sports and contribute the most value.   But with Title IX, for example, that is impossible.  Paying only the most financially valuable players and teams would lead to 99% of the pay going to men, which would lead to Title IX gender discrimination suits before the first paycheck was even delivered.  And 99% of college athletes probably don't even want to be paid
   • Part of the pay problem is that the NCAA is so moronic in its rules.  Even if the university does not pay players, many outsider would if allowed.  Boosters love to pay football and basketball players under the table in cash and cars and such, and top athletes could easily get endorsement money or paid for autographs by third parties.  But NCAA rules are so strict that athletes can be in violation of the rules for accepting a free plane ticket from a friend to go to his mother's funeral.  When I interview students for Princeton admissions, I never buy them even a coffee in case they are a recruited athlete, because doing so would violate the rules.
   • Much of this is based on an outdated fetish for amateurism, that somehow money taints athletic achievement.  It is hilarious to see good progressive college presidents spout this kind of thing, because in fact this notion of amateurism was actually an aristocratic invention to keep the commoners out of sports (since commoners would not have the means to dedicate much of their life to training without a source of income).  The amateur ideal is actually an exclusionist aristocratic tool that has for some reason now been adopted as a progressive ideal.   Note that nowhere else in college do we require that students not earn money with their skills -- business majors can make money in business over the summer, artists can sell their art, musicians can be paid to perform.  When Brooke Shields was at Princeton, she appeared in the school amateur play despite making millions simultaneously as a professional actress.  Only athletes can't trade their skill for money in their free time.

I am not sure where this is all going, but as a minimum I think the NCAA is going to be forced to allow athletes to earn outside income and accept outside benefits without losing their eligibility.

Back in 2011 I wrote an article in Forbes on this topic

The best time to argue for general principles is when they work against one's own interest, to firmly establish that they are indeed principles rather than political opportunism.  Two examples:

First, from a topic rife with political opportunism, the Supreme Court a three-judge panel recently ruled Obama's NLRB not-really-recess appointments were unconstitutional.  I think that was the right decision,  but a President has got to be able to get an up or down vote in a timely manner on appointments.  As much as I would love to see all of Obama's appointments languish for, oh, four years or so, and as much as I really don't like his activist NLRB, having to resort to procedural hacks of this sort just to fill administrative positions is not good government.  The Senate rules (or traditions as the case may be) that even one Senator may put a hold on confirmations is simply insane.  While I am a supporter of the filibuster, I think the filibuster should not apply to certain Constitutionally mandated activities.  Specifically:  passing a budget and appointment confirmations.

Second, readers of this blog know how much I dislike our sheriff Joe Arpaio.  He was unfortunately re-elected a couple of months ago, though the vote was closer than usual.  This week, an Arizona group who also does not like Joe has announced it is going to seek a recall election against him.  Again, as much as I would like to see Arpaio ride off into the sunset, this practice of gearing up for recall elections just days after the election is over is just insane.  It is a total waste of money and resources.  While I don't like to do anything that helps incumbents, there has to be some sort of waiting period (perhaps 1/4 of the office term) before we start this silliness.

Yet more crap to keep up with as an employer

Today the NLRB released its final rule mandating all private sector employers subject to the National Labor Relations Act to post notices informing employees of their rights under the Act. The final rule is scheduled to be published in the Federal Register on August 30, 2011. Posting of the Employee Rights Notice becomes effective November 14, 2011. Failure to post will be an unfair labor practice....

Failure to post the Notice will constitute an unfair labor practice which may be filed with the NLRB by any person. Further, the failure to post the Notice will be deemed evidence of anti-union animus or motivation where employers are alleged to have interfered, restrained, or coerced or otherwise discriminated against employees to encourage or discourage union membership or activity.

We already spend a thousand bucks a year or so with printing companies that keep us supplied with updated signs for all of our locations.  At some point we are going to have to buy billboards to fit all the stuff we are required to post -- minimum wage notices, NLRB notices, civil rights policies, occupancy permits, sales tax licenses, liquor licenses, egg licenses, cigarette licences, fire inspections, health inspections. Soon I am sure we will have a couple of square feet of Obamacare notices.

The Obama administration has abandoned even the pretense of not being in the tank for its union supporters.

First, it handed took ownership of GM away from secured creditors and gave it to the UAW.

Second was the NLRB over-reach in veto-ing plant relocation decisions by Boeing

More recently came the rules changes for quick, midnight unionization elections to prevent target companies from being able to tell their side of their story

Finally, comes news that the Obama Administration worked to trash pensions of non-unionized auto workers while protecting pensions of union workers.

I was thinking this weekend that one reason the US recovery may be slow is related to labor and capital mobility.

One substantial avenue to recovery in a recession has always been labor and capital mobility.  The fast labor and capital can be redeployed from losing industries to improving ones, the faster a recovery occurs.  One reasons Japan and certain European countries have had slower recoveries in the past than the US is that our mobility was higher and barriers to entrepreneurship lower.

But it strikes me that two things are going on in the US to endanger this advantage we have always enjoyed

1. The government push for home ownership has turned out to be a trap.  Not only did it help create the bubble, whose bursting destroyed a lot of real and paper wealth, but it has greatly reduced labor mobility.  Home ownership makes labor mobility much harder even in a good housing market when one can sell his or her home easily.  In a bad market like today, very few feel they can pick up and move.  I might want to give up on the construction industry in Michigan and move to the oil patch of North Dakota, but how can I do that if I own a home that I can't sell?  A number of other actions, most notably the repeated extension of unemployment benefits, contributes to the lack of mobility.
2. The government seems hell bent on doing everything it can to prevent, even reverse the tide, of capital mobility.  The government shifted tends of billions of capital into auto industry hands that had destroyed value for decades.  It continues to put the brakes on what should be an oil and gas exploration and production boom.  It kills health industries like light bulbs and shifts billions into useless politically powerful hands making ethanol.  The NLRB is preventing major American manufacturers from making factory investments in southern states.

In the late 1970's, the auto industry was in trouble but the oil patch was booming.  The Houston newspapers sold well in Michigan, popular for their help wanted ads.  From space, the Interstate highways between the Detroit and Texas probably looked orange from all the U-haul trailers.

The exact same dynamics could and should be occurring today.  Capital and labor should be shifting from, for example, the failing auto industry to the growing energy sector.  But the government today stands to block this reallocation. It is raising taxes on oil companies and placing barriers to their growth, while giving tax money to the auto industry and using every bit of power it can to sustain it.  Combine this type of barrier to capital flows (and auto/energy is but a couple of examples) with rising barriers to entrepreneurship, and it should be no surprise that growth is abysmal.

This is what happens in a corporate state.  Past winners retain huge amounts of power in the government long after their companies have become senescent in the marketplace.  Politicians argue for the power to pick winners and losers in the economy but generally use it only to protect current competitors and stand in the way of progress.

Kevin Drum doesn't buy the regime uncertainty argument as a partial explanation of the slow recovery.

Here's what's remarkable: Carter, a law professor at Yale, apparently never once bothered to ask this guy just what regulations he's talking about. Is he concerned with general stuff like the healthcare law? Or something highly specific to his industry? Or what?

Regardless, I've heard this kind of blowhard conversation too often to take it seriously. Sure, it's possible this guy manufactures canisters for nuclear waste or something, and there's a big regulatory change for nuclear waste storage that's been in the works for years and has been causing everyone in the industry heartburn for as long as they can remember. But the simple fact is that regulatory uncertainty is no greater today than it's ever been. Financialuncertainty is high, but the Obama adminstration just hasn't been overhauling regs that affect the cost of new workers any more than usual. The only substantial exception is the new healthcare law, and if you oppose it that's fine. But it was passed over a year ago and its effects are pretty easy to project.

First, the costs of the health care law are NOT easy to project, and are made even harder when your company might or might not get waivers from certain provisions.    Second, he seems to forget cap and trade, first by law and then by executive fiat; the NLRB's new veto power over corporate relocations it exercised with Boeing; the absurdly turbulent tax/regulatory/permitting regime in the energy field, and particularly oil and gas.  How about trillion dollar stimulus projects, that until very recently Obama was still talking about replicating (and Krugman begs for to this day).  I could go on and on.  This is spoke just like a person who never had to run a business.

Further, I wrote this in the comments section:

I think you are both right and wrong.  I am sure the discussion about this is to some extent overblown.  But you are thinking about business and hiring much too narrowly.

You seem to have a mental model of business showing up at the door, and someone turning that business down because they don't want to hire an employee to serve it (or out of sheer petulance because Fox News told them to sit on their hands, lol).  You find it unlikely anyone would refuse the business, and so do I.

But I run a small to medium size business, and a lot of hiring decisions don't work that way.    I do have some situations that fit your model - I have a campground that is really busy this year, so we hired more people to serve the volume.   No problem.

But most of my hiring decisions are effectively investments.  I am going to create a new position, pay money to train that person, and pay their wage for a while in advance of demand.  Or I am going to open a new site or department or location and make a lot of investment, and the return on investment may be very sensitive to small changes in labor or regulatory costs.

For our business, with labor costs over 50% of costs, the issue is definitely labor costs.  Our pre-tax margins are in the 6-7% range.  So if labor costs are 60% of revenues, then a 10% change in labor costs might wipe out the margin entirely, and a much smaller change in costs might flip the investment from making sense to not making sense.

We run a seasonal business with part-time workers who are older and on Medicare.  Regulations about exactly how much we will have to pay under Obamacare have not been written, so we have no idea how much our employment costs will go up in 2014, so we sit and wait.  I have cancelled two planned campground construction projects in the last 6 months because we have no freaking idea if they will make money.

If I am having trouble with just this one law figuring out whether to make investments, what are, say, oil companies doing in evaluating investments when they have absolutely no idea what their taxes will be, whether they will be permitted or not to drill, or whether they will be subject to cap and trade?

One other thought, it strikes me that there is a lot of good scholarship that suggests that the Great Depression was extended by just this kind of regime uncertainty.  Now, of course, the proposed structural changes to the economy being proposed at the time were more radical than anything on the table today.  The National Industrial Recovery Act was essentially an experiment in Mussolini-style economic corporatism, until most of it was struck down by the Supreme Court.   Nothing so radical is being proposed (unless you work in health care).

Look, I know the Left has convinced itself that only consumer demand matters in an economy, but business investment has simply got to matter in a recovery.   If the returns on future investments are harder to predict, and therefore riskier, businesses are going to apply a higher hurdle rate to new investments, meaning they don't stop entirely, but do invest less.

One interesting may to confirm this some day would be to look back and see if larger corporations with political access invested more than smaller ones or ones with less access.  Did GE, who clearly can get whatever it wants right now from the government, invest more than a small company or even than Exxon, which is on the political outs?  If so, this in my mind would confirm the regime uncertainty hypothesis, because it means that the companies doing most of the investing were the ones confident that they could shape the mandates coming out of the government in their favor.

Beyond regime uncertainty, if you want to talk about Obama and the recovery, you have to mention that a trillion dollars was diverted from private hands to public hands.  Does anyone believe that taking a trillion dollars out of whatever investments private actors would have used the money for and diverting most of it to help maintain government payrolls is really the way to increase the strength and productivity of the economy?