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Dark Money Pushes Weakening of Child Labor Laws

By dianeravitch
April 30, 2023 //
15

The Washington Post revealed the organization promoting the dilution of child labor laws. Iowa and Arkansas, both solid red states, were first to remove protections for children to meet the needs of employers.

To learn more about the gutting of child labor law in Iowa, watch this chilling video, thanks to reader Greg B.

Remember, the GOP is the party that loves the unborn but disdains the born. They value life in the womb but not actual children.

Investigative reporter Jacob Bogage of the Washington Post wrote:

When Iowa lawmakers voted last week to roll back certain child labor protections, they blended into a growing movement driven largely by a conservative advocacy group.
At 4:52 a.m., Tuesday, the state’s Senate approved a bill to allow children as young as 14 to work night shifts and 15 year-olds on assembly lines. The measure, which still must pass the Iowa House, is among several the Foundation for Government Accountability is maneuvering through state legislatures.
The Florida-based think tank and its lobbying arm, the Opportunity Solutions Project, have found remarkable success among Republicans to relax regulations that prevent children from working long hours in dangerous conditions. And they are gaining traction at a time the Biden administration is scrambling to enforce existing labor protections for children.
The FGA achieved its biggest victory in March, playing a central role in designing a new Arkansas law to eliminate work permits and age verification for workers younger than 16. Its sponsor, state Rep. Rebecca Burkes (R), said in a hearing that the legislation “came to me from the Foundation [for] Government Accountability.”
“As a practical matter, this is likely to make it even harder for the state to enforce our own child labor laws,” said Annie B. Smith, director of the University of Arkansas School of Law’s Human Trafficking Clinic. “Not knowing where young kids are working makes it harder for [state departments] to do proactive investigations and visit workplaces where they know that employment is happening to make sure that kids are safe.”

That law passed so swiftly and was met with such public outcry that Arkansas officials quickly approved a second measure increasing penalties on violators of the child labor codes the state had just weakened.
In Missouri, where another child labor bill has gained significant GOP support, the FGA helped a lawmaker draft and revise the legislation, according to emails obtained by The Washington Post.
The FGA for years has worked systematically to shape policy at the state level, fighting to advance conservative causes such as restricting access to anti-poverty programs and blocking Medicaid expansion.


But in February, the White House announced a crackdown on child labor violators in response to what activists have described as a surge in youths — many of them undocumented immigrants — working at meat packing plants, construction sites, auto factories and other dangerous job sites.
The administration’s top labor lawyer called the proposed state child labor laws “irresponsible,” and said it could make it easier for employers to hire children for dangerous work.
“Federal and state entities should be working together to increase accountability and ramp up enforcement — not make it easier to illegally hire children to do what are often dangerous jobs,” Labor Solicitor Seema Nanda said. “No child should be working in dangerous workplaces in this country, full stop.”
Congress in 1938 passed the Fair Labor Standards Act to stop companies from using cheap child labor to do dangerous work, a practice that exploded during the Great Depression….

On the surface, the FGA frames its child worker bills as part of a larger debate surrounding parental rights, including in education and child care. But the state-by-state campaigns, the group’s leader said, help the FGA create openings to deconstruct larger government regulations.
Since 2016, the FGA’s Opportunity Solutions Project has hired 115 lobbyists across the country with a presence in 22 states, according to the nonpartisan political watchdog group Open Secrets.
“The reason these rather unpopular policies succeed is because they come in under the radar screen,” said David Campbell, professor of American democracy at the University of Notre Dame. “Typically, these things get passed because they are often introduced in a very quiet way or by groups inching little by little through grass-roots efforts.”
Minnesota and Ohio have introduced proposals this year allowing teens to work more hours or in more dangerous occupations, such as construction. A bill in Georgia would prohibit the state government from requiring a minor to obtain a work permit.

The FGA-backed measures maintain existing child labor safety protections “while removing the permission slip that inserts government in between parents and their teenager’s desire to work,” Nick Stehle, the foundation’s vice president, said in a statement.
“Frankly, every state, including Missouri, should follow Arkansas’s lead to allow parents and their teenagers to have the conversation about work and make that decision themselves,” said Stehle, who is also a visiting fellow at the Opportunity Solutions Project.
The FGA declined to make Stehle and other representatives available for interviews.
It’s one of several conservative groups that have long taken aim at all manner of government regulations or social safety net programs. The FGA is funded by a broad swath of ultraconservative and Republican donors — such as the Ed Uihlein Family Foundation and 85 Fund, a nonprofit connected to political operative Leonard Leo — who have similarly supported other conservative policy groups.
The youth hiring or employment bills, as they are often titled, represent growing momentum among conservatives who contend that parents and not government policy should determine whether and where 14- and 15-year-olds should work.
“When you say that a bill will allow kids to work more or under dangerous conditions, it sounds wildly unpopular,” Campbell said. “You have to make the case that, no, this is really about parental rights, a very carefully chosen term that’s really hard to disagree with….”

Supporters of the child worker proposals say they reduce red tape around the hiring process for minors. A spokeswoman for Arkansas Gov. Sarah Huckabee Sanders, a rising Republican star, said her state’s law relieved parents of “obsolete” and “arbitrary burdens.”
“The main push for this reform didn’t come from big business,” Stehle, the FGA vice president, wrote in an essay for Fox. “It came from families like mine, who want more of the freedom that lets our children flourish…”

Tarren Bragdon, a former Maine state legislator, founded the FGA in 2011 with a focus on cutting social safety net and anti-poverty programs. It quickly tapped into conservative political fundraising networks and grew from $50,000 in seed funding to $4 million in revenue by its fourth year, according to tax filings and the group’s promotional materials.

In 2020, the most recent year for which the FGA and its funders’ full financial disclosures are available, more than 70 percent of its $10.6 million in revenue came from 14 conservative groups.

The FGA joined the State Policy Network, a confederation of conservative state-level think tanks that practice what leaders call the “Ikea model” of advocacy, its president said during the group’s 2013 conference. Affiliates such as the FGA display prefabricated policy projects for state officials, then provide the tools — including research and lobbying support — to push proposals through legislative and administrative processes.
In 2021, for example, Arkansas legislators passed 48 measures backed by the FGA, according to the foundation’s end-of-year report. It identified Arkansas, Missouri and Iowa among its five “super states” where it planned to increase its advocacy presence.
In 2022, the FGA claimed 144 “state policy reform wins,” including 45 related to unemployment and welfare, across a slew of states.
“Success in the states is critical for achieving national change, as it often opens the door to federal regulatory reform,” Bragdon wrote in the group’s 2021 report. “Once enough states successfully implement a reform, we can use the momentum and proven results to build pressure for regulatory change.”
Yet even legislators who support the FGA’s policies expanding child labor have found their limits.
Missouri’s bill was amended to require a parental permission form for children aged 14 to 16 who want to take a job. The original legislation, edited by the FGA, did not contain any such provision.

Categories Accountability, Arkansas, Childhood, Cruelty, Dark Money, Economy, Evil, Extremism, For-Profit, Health, Injustice, Iowa, Jobs

DeSantis Attacks Disney Property Rights Again

By dianeravitch
April 17, 2023 //
42

Florida Governor Ron DeSantis is going after Disney again, trying to prove he’s a tough guy. He is angry at Disney because the corporation—Florida’s largest employer—issued a statement opposing the Governor’s “Don’t Say Gay” law.

First, DeSantis retaliated by dissolving the Reedy Creek District, a special self-governing district controlled by Disney, which supplies all services to Disney’s theme park. DeSantis created a new board called the Central Florida Oversight District Board of Supervisors to oversee the district, packed with his cronies.

But before the legislation passed, Disney quietly held public meetings and granted its district decades of future control.

Outraged, DeSantis threatened to increase hotel taxes and put tolls on the roads to Disney. He also told the State Attorney General to investigate Disney. Not a nice way to treat the state’s biggest employer.

Now he is wreaking vengeance again:

The Disney versus DeSantis fight headed into round three on Monday as Florida’s governor announced that the Florida Legislature will revoke the last-minute development agreements that undercut the authority of the governor-controlled board and unleashed a litany of retributive efforts aimed at to the powerful corporation.

“We want to make sure that that Disney lives under the same laws as everybody else,’’ said Gov. Ron DeSantis at the headquarters of the Reedy Creek Improvement District near Orlando.

DeSantis said he has authorized state agencies to increase regulatory oversight over Disney operations, such as the monorail and amusement rides. He suggested the DeSantis-controlled oversight board could use undeveloped land not owned by Disney for other purposes.

“Maybe create a state park, maybe try to do more amusement parks,’’ he said. “Someone even said like, maybe you need another state prison. Who knows? I mean, I just think that the possibilities are endless.”

The announcement comes two days before the newly-named Central Florida Tourism Oversight District’s Board of Supervisors is scheduled to review a new proposal to strengthen its authority over planning, zoning and land development regulations for the special taxing district that operates the 39-square-mile property on which Walt Disney World exists.

DeSantis must be terrifying every big corporation in the nation. This is a guy who puts his nose into corporate governance; he is also hostile to corporations that embrace equity, diversity and inclusion programs and environmental policies.

His desire to exercise political control over private corporations will not win new friends for him except his yahoo base.

Categories Bigotry, DeSantis, Economy, Environment, Equity, Extremism, Fascism, Florida

Mercedes Schneider: Jesus Loves the Little Children, So Let’s Put Them to Work.

By dianeravitch
April 10, 2023 //
29

For her Easter post, Mercedes Schneider wrote about the hypocrisy of those who loudly proclaim their love of Jesus, but also pass laws to put adolescents to work in dangerous low-wage jobs.

She writes:

The corporate world is short on workers, sooo, let’s see what states will pass legislation to loosen restrictions on child labor.

This drive reminds me of the blindside on K12 education that is Common Core– the justification (and assumption) being that the chief purpose K12 education is to “prepare students for 21st century jobs.”

Well, its the 21st century, and it seems that business is short on bodies, and any warm body will do.

So, on this Easter as I think of Jesus, who brought to the attention of his male-centric culture the importance of considering children as people valuable in their own right, I also think of the primarily-Republican push to feed children to the god of business and industry.

On March 14, 2023, journalist Jacob Knudsen published a piece in Axios, stunningly entitled, “Lawmakers Target Child Labor Laws to Ease Worker Shortage.”

Forget childhood. We must appease the god of business and industry.

Knudsen writes, in part,

Legislators in multiple states are invoking a widespread labor shortage to push bills that would weaken long-standing child labor laws.

Why it matters: Some bills go beyond expanding eligibility or working hours for run-of-the-mill teen jobs. They’d make it easier for kids to fill physically demanding roles at potentially hazardous work sites. …

Driving the news: A new Arkansas law signed by Gov. Sarah Huckabee Sanders (R) last week makes it easier for teens as young as 14 to work without obtaining a permit.

Between the lines: The laws and proposals have largely been introduced by Republicans but received support from some Democrats in Ohio and New Jersey. …

Zoom in: Iowa lawmakers are considering Republican legislation that would allow 14- and 15-year-olds to work in industrial laundry services and freezers at meatpacking plants. It’d also prevent many of them from receiving worker’s compensation if they are sickened, injured or killed on the job.

The Iowa law specifically excludes businesses who hire teens from any civil liability in the event they suffer harm or even death in the workplace.

Mercedes concludes:

This exploitation (make no mistake that this loosening of child labor laws in numerous states is exactly that) has at its center a lack of planning combined with the desire for a lower bottom line (and greater profits). Many of my teenaged students already drag themselves to school, only to fall asleep in class with the apology that “I had to close last night.” Therefore, making it easier for employers to squeeze even more out of school-aged employees even as society expects of them (and their schools) stellar academic results (dog whistle: test scores) is indeed speaking out of both ends of a hypocritical, corporate-adulating mouth.

Jesus loves the little children, sooo let’s exploit their labor potential, even for dangerous jobs, as we simultaneously absolve ourselves of any responsibility– even death.

Categories Accountability, Childhood, Cruelty, Economy, Ethics, Health, Safety

John Thompson: Why Are Big Corporations Avoiding Oklahoma?

By dianeravitch
April 2, 2023 //
9

Historian and retired teacher John Thompson updates us on the toxic MAGA politics that is undermining the state’s economy and the future of the state.

Republican politicians are competing to see who can be more extremist, more MAGA than the other far-right zanies. Although an unreleased poll conducted by a Republican pollster found that Oklahomans are overwhelmingly opposed to vouchers, the Governor, the state commissioner of education, and legislators are competing to see who can offer the biggest voucher and who is most indifferent to public schools. Quality of education is a lure for corporations; indifference is not.

Similarly, MAGA Republicans are competing to denounce corporations that are committed to socially responsible policies regarding ESG (environmental, social, and corporate governance). Corporations don’t usually like government interfering in their internal policy making, especially those attempting to present a public face of social responsibility.

Thompson writes:

Monday marked the beginning of the second half of the Oklahoma legislative session. The first half was largely dominated by the MAGAs rhetoric, and led by Gov. Kevin Stitt, Secretary of Education Ryan Walters, and the House leader Charles McCall, as they tried to be tougher than Ron DeSantis and the other extremists. But the top headlines, recently, have shifted to the state’s failure to persuade Panasonic and Volkswagen to make major investments in Oklahoma.

On National Public Radio, Sen. Pro Temp Greg Treat sounded like a timid version of old school, adult Republicans. Treat seemed to be pushing back on the $300 million House voucher bill (called a tax credit), saying we need to protect funding for the 90% of students who will remain in public schools. But, the House bill then advanced in the Senate Education Committee with 100% of Republican votes. Perhaps the timid nature of Treat’s comments about pushing back on the House’s demands foreshadowed the Senate increase in the size of tax credits (vouchers) by 50% per student.

Although the Senate committee increased the size of the teacher pay raise, it also provided steps towards Ryan Walters’ merit pay for 10% of educators, which would promote even more of a reward and punish school culture.

Democrat Sen. Julia Kirt explained that the private school tax credit cap is $250,000 which is almost ten times as great as the average Oklahoma wage. Only 3% of taxpayers would hit that limit, so “almost any Oklahoman could claim $7,500 tax credit for private school.”

Moreover, education supporter Greg Jennings gave examples of two private religious schools that are being constructed which could undermine the survival of two rural districts (serving 3,800 students combined). Even when the goal was $5,000 vouchers, these religious schools showed how private schools could be replicated, with serious negative consequences, in rural areas. The plan is to expand from pre-k to 8th grade by 2024. Students would be taught a “Christian Based Education.”

In other words, the MAGA culture wars may have undermined corporate investments seeking to create good-paying, 21st century jobs, but vouchers could spark a boom in Christian Nationalism.

Then, Treat addressed the loss of the Volkswagen plant to Canada and called for a study as to why it happened. He compared it to the bipartisan study which launched Oklahoma City’s growth in the 1990s after United Airlines rejected the city’s bid because of our lack of social, cultural and educational institutions. As the Oklahoman’s Ben Felder reported, despite a $700 million incentive, Volkswagen chose to invest in Canada with its “strong ESG practices,” rather than the mindset expressed by Jonathan Small, the Oklahoma Council of Public Affairs’president:

Not only do ESG policies penalize energy production to prop up “green’ companies, but they also pressure businesses to take stances on non-economic issues such as redefining gender, promoting Critical Race Theory, and abortion tourism.

Surely, even the most extreme MAGAs know that those beliefs would make investors cautious about coming to Oklahoma after the state’s “Legislature and governor banned state investment funds from working with companies that utilize ESG policies.” After all, Stitt had said, “don’t expect support from us unless you reject ESG.”

Neither would investors be encouraged by State Treasurer Todd Russ, who “issued letters to more than 160 companies giving them an April 1 deadline to confirm they don’t ‘boycott energy companies.’” Russ further explained:

I took office on January 9 and began compiling a list of companies, banks, and other entities that act against Oklahoma’s interests because of their ESG stance. … It is my responsibility to ensure Oklahomans’ tax dollars will not be used to enrich organizations that act counter to our taxpayers’ interests and our values.

Getting back to Monday’s education debate, Democratic Sen. Carri Hicks said, “We’re asking taxpayers to fund a second school system when we haven’t funded the first.” She then explained, “Struggling schools mirror struggling communities. Oklahoma legislature has ignored the urgent need to address the 60 percent of Oklahoma’s children who live in poverty in our public schools.” Then she closed with a message that Treat should understand. “When we are looking at removing additional funding that could be invested in all of our kids’ futures — I think this is a misstep.”

And this brings back Treat’s call for remembering the lessons learned in the 1990s after Oklahoma City lost in the effort to attract 1,000 United Airlines jobs. During the deindustrialization spurred by the Reagan administration’s Supply Side Economics, Oklahoma received national and international attention for scandals ranging from the bank and saving and loans collapses; the Housing and Urban Development and County Commissioners scandals; and corruption in juvenile justice, prison, and county jails. Even the CEO of the Chamber of Commerce acknowledged that Oklahoma City “was a really destitute place to live.”

It took a two-pronged, collective response to turn Oklahoma City around. The first was bipartisan campaigns to raise taxes and rebuild abandoned neighborhoods; invest in parks, libraries, and sports and cultural institutions; and invest in public schools. As Sam Anderson of the New York Times Magazine explained:

After all of that sacrifice — the grind of municipal meetings and penny taxes and planning boards, the dust and noise and uncertainty of construction, the horror of 1995 — the little city in the middle of No Man’s Land has finally arrived on the world stage.

I would add in regard to the horror of the Murrah Building bombing on the second anniversary of the Waco tragedy, with the loss of 86 lives, nobody bought Timothy McVeigh’s justification for terrorism as a response to federal intervention in Waco.

Finally, I guess it’s is too much to ask of Treat et.al, but if we want to thrive in the 21stcentury, don’t we need a bipartisan rejection of Trump’s beginning his presidential campaign on the 30th anniversary of Waco with dog whistle calls for violence? Why can’t Republicans distance themselves from Trump’s supporters like the Proud Boys who cite Waco as justification for more violence? And why do they support a candidate who has “vowed retribution;” proclaimed, “PROTEST, TAKE OUR NATION BACK!;” and warned of “potential death & destruction” if he is prosecuted?

So, when Republican leaders like Treat are reluctant to speak out against ideology-driven policies that they know will fail, the damage from that timidity – though significant – is not the biggest problem. It’s their silence in the face of attacks on our democratic systems that should be the #1 concern.

Categories Accountability, Economy, Education Reform, Extremism, Funding, Ignorance, Oklahoma, Trump

Mickey Mouse Humiliates Ron DeSantis

By dianeravitch
March 30, 2023 //
40

When the Disney Corporation criticized Ron DeSantis’s “Don’t Say Gay” bill, the Governor struck back by taking control of Disney’s special district and creating a board (appointed by him) to oversee Disney. The board consisted of rightwing extremists and DeSantis campaign donors. DeSantis boasted about his ability to punish and subjugate the state’s largest employer and its economic engine. It was easy to imagine the extremist DeSantis board censoring Disney attractions and shows to make sure nothing happened that was “woke.”

But wait!

While DeSantis was boasting, the Magic Kingdom was making a deal to elude his grasp.

CNN reported here on Disney’s quiet escape from DeSantis’ clutches:

(CNN)The battle between Disney and Florida Gov. Ron DeSantis may not be over yet.

The new board handpicked by the Republican governor to oversee Disney’s special taxing district said Wednesday it is considering legal action over a multi-decade agreement reached between the entertainment giant and the outgoing board in the days before the state’s hostile takeover last month.

Under the agreement — quietly approved on February 8 as Florida lawmakers met in special session to hand DeSantis control of the Reedy Creek Improvement District — Disney would maintain control over much of its vast footprint in Central Florida for 30 years and, in some cases, the board can’t take significant action without first getting approval from the company.

“This essentially makes Disney the government,” board member Ron Peri said during Wednesday’s meeting, according to video posted by an Orlando television station. “This board loses, for practical purposes, the majority of its ability to do anything beyond maintaining the roads and maintaining basic infrastructure.”

The episode is the latest twist in a yearlong saga between Disney and DeSantis, who has battled the company as he tries to tally conservative victories ahead of a likely bid for the 2024 GOP nomination.

The board on Wednesday retained “multiple financial and legal firms to conduct audits and investigate Disney’s past behavior,” DeSantis spokeswoman Taryn Fenske said. According to meeting documents, the board was entering into agreements with four firms to provide counsel on the matter.

“The Executive Office of the Governor is aware of Disney’s last-ditch efforts to execute contracts just before ratifying the new law that transfers rights and authorities from the former Reedy Creek Improvement District to Disney,” Fenske said. “An initial review suggests these agreements may have significant legal infirmities that would render the contracts void as a matter of law.”

In a statement to CNN, Disney stood by its actions.

“All agreements signed between Disney and the District were appropriate, and were discussed and approved in open, noticed public forums in compliance with Florida’s Government in the Sunshine law,” the company said. Documents for the February 8 meeting show it was noticed in the Orlando Sentinel as required by law.

Multiple board members did not immediately respond to request for comment. The Sentinel first reported on Wednesday’s vote to hire legal counsel.

According to a statement Wednesday night from the district’s acting counsel and its newly obtained legal counsel, the agreement gave Disney development rights throughout the district and “not just on Disney’s property,” requires the district to borrow and spend on projects that benefit the company, and gives Disney veto authority over any public project in the district.

“The lack of consideration, the delegation of legislative authority to a private corporation, restriction of the Board’s ability to make legislative decisions, and giving away public rights without compensation for a private purpose, among other issues, warrant the new Board’s actions and direction to evaluate these overreaching documents and determine how best the new Board can protect the public’s interest in compliance with Florida Law,” the statement from Fishback Dominick LLP, Cooper & Kirk PLLC, Lawson Huck Gonzalez PLLC, Waugh Grant PLLC and Nardella & Nardella PLLC said.

The spat between Disney and the governor stems from the company’s opposition to a Florida law that prohibits the instruction of sexual orientation and gender identity through third grade and only in an “age appropriate” manner in older grades. In March of last year, as outrage against the legislation spread nationwide, Disney released a statement vowing to help get the law repealed or struck down by the courts.

DeSantis and Florida GOP lawmakers retaliated by eliminating the Reedy Creek Improvement District, the special taxing authority that effectively gave Disney control of the land in and around its sprawling Orlando-area theme parks. But Republicans in control of the state legislature changed course this year and voted instead to fire the board overseeing the district and gave DeSantis power to name all five replacements. It also renamed Reedy Creek as the Central Florida Tourism Oversight District and eliminated some of its powers.

DeSantis stacked the board with political allies, including Tampa lawyer Martin Garcia, a prominent GOP donor; Bridget Ziegler, the wife of the new chairman of the Republican Party of Florida; and Peri, a former pastor who once suggested tap water could be making people gay.

The controversy is central to DeSantis’ political narrative of a leader who is unafraid to battle corporate giants, even one as iconic and vital to Florida as Disney. It is a saga that is featured prominently in his new book and one he often shares at events across the country as he lays the groundwork for a likely national campaign.

At last month’s signing ceremony for the bill that gave him control of Reedy Creek’s board, DeSantis declared, “The corporate kingdom finally comes to an end.”

“There’s a new sheriff in town,” he added.

However, it may be a while before the new power structure has control, if Disney gets its way. One agreement signed by the outgoing board — which restricts the new board from using any of Disney’s “fanciful characters” — is valid until “21 years after the death of the last survivor of the descendants of King Charles III, king of England,” according to a copy of the deal included in the February 8 meeting packet.

“President Trump wrote ‘Art of the Deal’ and brokered Middle East peace,” said Taylor Budowich, spokesman for the Trump-aligned Make America Great Again PAC. “Ron DeSantis just got out-negotiated by Mickey Mouse.”

The stealth move by Disney prompted allies of DeSantis’ chief political rival, former President Donald Trump, to suggest the governor had been out-maneuvered.

DeSantis’ political operation insisted the governor’s appointees were holding Disney accountable.

“Governor DeSantis’ new board would not, and will not, allow Disney to give THEMSELVES unprecedented power over land (some of which isn’t even theirs!) for 30+ years,” Christina Pushaw, of DeSantis’ rapid response team, wrote on Twitter.

Sorry, Christina, DeSantis should stick to bullying minorities and pick on someone his own size. The Mouse just beat the Mouth.

The BBC scrutinized the new Disney agreement and found that it includes a “royal clause.”

The declaration is valid until “21 years after the death of the last survivor of the descendants of King Charles III, king of England”, according to the document.

Such so-called royal lives clauses have been inserted into legal documentation since the late 17th Century, and they are still found in some contracts in the UK, though rarely in the US.

The 151-page Florida agreement also states that no “fanciful characters” owned by Disney, including Mickey Mouse, can be used by the board. The use of the name Disney is also banned.

Categories Accountability, Creativity, DeSantis, Disruption, Economy, Extremism, Fascism, Florida, Freedom, Freedom of Speech, Gender

Chicago: Hedge Fund Giants $$$$$$$$$upport Vallas

By dianeravitch
March 30, 2023 //
2

We know that Mayoral candidate Paul Vallas is getting money from Betsy DeVos. Vallas is also getting even larger contributions from hedge fund financiers because Vallas has promised not to raise taxes on them. His opponent Brandon Johnson wants to tax the highest earners to pay for improved education, mental health, and social services.

Matthew Cunningham-Cook reports in The Lever:

In the final stretch of Chicago’s closely watched mayoral race, candidate Paul Vallas is attacking his progressive opponent’s plan to fund public schools and infrastructure by taxing the wealthy — including a tax on financial trading that would hit some of Vallas’ top campaign donors.

The revenue plan proposed by Cook County Commissioner Brandon Johnson includes what he calls a “Big Banks Securities and Speculation Tax,” which would levy a $1 or $2 charge on most trades. Johnson’s campaign estimates this financial transaction tax could raise as much as $100 million annually for the city.

Vallas opposed Johnson’s tax plan during a debate last week, arguing that raising taxes “is the absolute wrong approach to take,” and that Chicago’s next mayor should instead focus on reducing spending.

Johnson’s tax proposal would hit financial firms that profit from speculative trades, often conducted at the millisecond level. Executives at six such firms have contributed $1.6 million to Vallas’ bid, according to a Lever review of campaign finance records. That’s nearly 10 percent of Vallas’ total mayoral fundraising haul.

Among the firms that profit from speculative trading is the hedge fund giant Citadel, whose financial dealings were swept up in the 2021 Gamestop controversy. Citadel’s billionaire founder and CEO Ken Griffin, Jr. has been a major funder of right-wing politicians like Florida Gov. Ron DeSantis and former Illinois Gov. Bruce Rauner.

Earlier this month, Griffin endorsed Vallas, telling Bloomberg News, “I really admire my colleagues who have supported Paul Vallas publicly with their voice and with their money.”

Johnson’s financial transaction tax plan mirrors those proposed by progressives at the state and federal levels. Griffin is on record opposing the idea, claiming during a 2021 congressional hearing that a national financial transaction tax would “injure Americans hoping to save for retirement.”

Ten Citadel executives have contributed a total of $762,000 to Vallas, a former Chicago Public Schools chief who helped Wall Street firms extract more than $1 billion in additional interest payments from the school district during his tenure, as The Lever reported last week.

Johnson is a former social studies teacherendorsed by the Chicago Teachers Union, which has denounced Griffin’s past interventions in local politics and support for mass school closings.

Vallas has additionally received donations from executives at Calamos Investments, the Chicago Trading Company, Cognitive Capital, Consolidated Trading, and DRW — firms that also profit from speculative trades.

Some of the largest U.S. financial exchanges are based in Chicago, including the Chicago Board Options Exchange and the Chicago Mercantile Exchange.

Critics of the proposed financial transaction tax say that it could drive some financial firms out of Chicago. Given the robustconnections between financialization and inequality, and the relatively small number of good jobs created by the financial sector, it’s unclear whether the departure of the industry would be a net negative for the city.

On the other hand, the passage of a financial transaction tax in Chicago or in Illinois could buttress efforts to pass such policies in New York — which had a stock transfer tax for most of the 20th century — and New Jersey.

“Enough of Illinois”

The bestselling 2014 book Flash Boys, authored by Michael Lewis, chronicles the world of high-frequency traders, who make enormous sums of money by running trades at the millisecond level, exploiting minor differences in prices to collect huge profits.

Citadel and its affiliated market making firm, Citadel Securities, have long been players in this arena. A 2013 CNN report showed Citadel employees executing 21 million trades in less than three minutes.

In January, Citadel was fined $10 million by South Korean regulators for violating the country’s securities laws while using its proprietary high-frequency trading algorithm.

Griffin moved Citadel from Chicago to Miami in 2021, telling Bloomberg this month that he’d “had enough of Illinois.” But the firm still maintains a significant presence in the city, and as an active high-frequency trader, the financial transaction tax championed by Johnson could cost Citadel enormously.

On January 23, when Johnson announced his financial transaction tax proposal, polls had begun to show a likely runoff between Johnson and Vallas in a then-crowded field of candidates. In Chicago’s municipal elections, if no candidate garners a majority in the first round of voting, the top two advance to a runoff.

That same day, Citadel executive Gerald Beeson contributed $100,000 to Vallas’ campaign, records show. Two days later, another Citadel executive gave $75,000. After Johnson and Vallas proceeded to a runoff, the cash pump was unleashed, with executives at companies connected to aggressive trading donating another $1 million to Vallas.

“Brandon Johnson wants to improve services like mental health and youth jobs programs by taxing speculative financial trading,” said Saqib Bhatti, co-executive director of the Action Center on Race and the Economy, which backs the transaction tax. “It doesn’t surprise me that executives at firms that specialize in this risky trading would pour money into his opponent’s campaign.”

A Citadel spokesperson told The Lever, “We moved our HQ from Chicago to Miami last year, and with it the bulk of our investment professionals and trading activity takes place outside of Illinois.”

Citadel did not answer questions about the number of employees the firm maintains in Chicago, nor the estimated impact of Johnson’s proposed financial transaction tax on its business. In city election records, all but one of the donations to Vallas from Citadel executives list addresses in Illinois.

The Vallas campaign did not respond to a request for comment.

Protecting Retirees

Griffin, Citadel’s CEO, opposed the idea of a financial transaction tax in a 2021 congressional hearing on the video game retailer Gamestop and other “meme stocks.” Citadel was accused by retail investors of ordering stock trading firm Robinhood to stop executing trades in Gamestop as the stock was rising, threatening Citadel’s short positions.

In the hearing, held over Zoom, progressive Rep. Rashida Tlaib (D-Mich.) asked Griffin whether his firm’s trading algorithm is programmed to trade ahead of transactions by pension and retirement funds — and whether that increases costs for such funds.

Griffin replied that his firm has “generated exceptional returns for pension plans and for endowments.”

Tlaib noted that as a result of high frequency trading, ordinary investors end up effectively paying a $5 billion tax each year.

“This means that Wall Street firms like yours engaging in high frequency trades are actually making money at the expense of my residents’ retirement funds,” she said, before asking whether Citadel opposed a federal financial transaction tax.

“We firmly believe that a transaction tax will injure Americans hoping to save for retirement,” said Griffin.

Citadel has also been a member of the Coalition to Prevent the Taxing of Retirement Savings, a collection of stock exchanges and trading platforms that banded together in 2020 to defeat a proposed financial transaction tax in New Jersey.

The coalition opposed the idea nationally in 2021 when it was being floated by the Biden administration, telling CNN, “This approach has a long history of unintended consequences that will penalize workers, pensioners, and American families.”

Griffin has a history of spending big to oppose increases on his taxes: In 2020, he spent nearly $54 million to help defeat a constitutional amendment that would have allowed the state of Illinois to establish a progressive income tax, akin to income taxes on the federal level. Last year, ProPublicaestimated that Griffin’s gamble could save him $51 million in taxes annually.

In the 2022 election cycle, Griffin spent nearly $75 million backing federal Republican candidates and committees, according to a Lever review of campaign finance data.

In the same March interview where Griffin praised Vallas, Griffin also endorsed a 2024 presidential run by DeSantis, saying, “I would love to see him run.” Griffin has donated nearly $11 million to DeSantis’ political committee, according to Florida records.

Current polls show a tight race between Vallas and Johnson. Chicago’s runoff election will take place April 4.

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Categories Accountability, Chicago, Democracy, Economy, Elections, Funding, Vallas, Paul

Princeton Sociologist: If the 1% Paid Their Taxes, We Could Eliminate Poverty

By dianeravitch
March 25, 2023 //
22

NPR interviewed Princeton sociologist Matthew Desmond about his new book, Poverty, by America. Desmond says that we can afford to eliminate poverty, if we want to. Income inequality is a driving force behind disinvestment in public services, he says.

Over 11% of the U.S. population — about one in nine people — lived below the federal poverty line in 2021. But Princeton sociologist Matthew Desmond says neither that statistic, nor the federal poverty line itself, encapsulate the full picture of economic insecurity in America.

“There’s plenty of poverty above the poverty line as a lived experience,” Desmond says. “About one in three Americans live in a household that’s making $55,000 or less, and many of those folks aren’t officially considered poor. But what else do you call trying to raise three kids in Portland on $55,000?”

Growing up in a small town in Arizona, Desmond learned firsthand how economic insecurity could impact a family’s stress level. He remembers the gas being shut off and his family home being foreclosed on. Those hardships would later drive his research — specifically the question of how so much poverty could exist within a country as wealthy as the U.S….

His new book, Poverty, by America, studies various factors that contribute to economic inequality in the U.S., including housing segregation, predatory lending, the decline of unions and tax policies that favor the wealthy. Desmond says that affluent Americans, including many with progressive political views, benefit from corporate and government policies that keep people poor.

“Most government aid goes to families that need it the least,” Desmond says. “If you add up the amount that the government is dedicating to tax breaks — mortgage interest deduction, wealth transfer tax breaks, tax breaks we get on our retirement accounts, our health insurance, our college savings accounts — you learn that we are doing so much more to subsidize affluence than to alleviate poverty.”

Desmond says that the growing affluence of those at the top drives it’s unwillingness to invest in public services:

If you are a family of means, you have the incentive to rely less and less on the public sector. So we used to want to be free of bosses, but now we want to be free of bus drivers. We don’t want to take the bus. We don’t want to often enroll our kids in the public school system. We don’t need to play in the public park or swim in the public pool. We have our own clubs, our own schools. We have our own cars. And as we withdraw into the private opulence, we have less and less incentive to invest in public services…

This one statistic that I calculated just blew me away. So a recent study was published and it showed that if the top 1% of Americans just paid the taxes they owed, not paid more taxes, … we as a nation could raise an additional $175 billion every year. That is just about enough to pull everyone out of poverty, every parent, every child, every grandparent. So we clearly have the resources to do this. It is not hard.

Matthew Desmond is a MacArthur Fellow and a principal investigator of the Eviction Lab, a research project focusing on poverty, city life, housing insecurity, public policy, racial inequality and ethnography. (Barron Bixler/Penguin Random House)

This is a rough estimate. I arrive at this number by looking at everyone under the poverty line, calculating the average it would take to just bring them over the poverty line and adding that all up. It’s pretty equivalent to what we could earn by just enforcing fair taxes at the very top of the market. What else could we do with $175 billion? We could more than double our investment in affordable housing. We could reestablish the extended child tax credit that we rolled out during COVID. … [That]was basically a check for middle and low-income families with kids. That’s all it was. And that simple intervention cut child poverty almost in half in six months. We could bring that back again with $175 billion and still have money left over.

Categories Cruelty, Democracy, Economy, Education Industry, Equity, Poverty, Privatization

Donald Cohen: What We Learned from the East Palestine Rail Disaster

By dianeravitch
March 20, 2023 //
18

Donald Cohen, executive director of “In the Public Interest” and author of The Privatization of Everything discovered an important insight about public attitudes. Many people assume that private business is invariably more efficient than the public sector. But, as he shows here, the private sector’s highest goal is profit, and the pursuit of profit leads to cost-cutting that is inefficient and actually, in the case of a train derailment in East Palestine, Ohio, dangerous.

Here is an excerpt:

Let’s dig into the basic “mathematics of efficiency.” It’s about spending or doing less to get the same or better (cost/time + efficiency = same or better.) In that formula, “efficiency” could either be “smarter” or “cheaper.”

The problem is that far too often it equals cheaper. Efficiency could mean fewer workers than are needed to ensure high quality or safe production on the shop floor. Efficiency could mean lower wage workers. Efficiency could be using lower-quality supplies and equipment. And sometimes, efficiency means fewer inspectors and less monitoring of safety protocols.

Sometimes “same or better” means outsized profits, expensive stock buybacks, high-dividend payments, and high executive compensation packages–in other words, the fruits of high productivity built upon a package of “efficiencies.”

So, I’ve come up with a new term. When efficiency means cutting corners for increased profits, we should call it: “Extractive Efficiency.”

That’s what happened in East Palestine and could happen again if the underlying extractive efficiency isn’t dealt with. In fact, over the last few years, all the railroad companies have focused on efficiency to increase profits, cheering Wall Street, but not the residents of East Palestine. Less than two weeks before the derailment, it was reported that Norfolk Southern, the train operator, had improved the average speed of its trains from 17.5 miles per hour to 20.7 between the second and fourth quarter of 2022, and by January was at 22.2 miles per hour.

Here are a few of Norfolk Southern’s “efficiencies.”

Fewer workers: Norfolk Southern removed a senior type of inspector from the track division that runs through East Palestine, making more work for signal maintainers. Over the past five years, employment among the nation’s largest freight rail carriers has fallen about 18 percent. With fewer workers doing more work, they may miss telltale signs of safety failures.

Harder work and more hours per worker: The industry, including Norfolk Southern, implemented “Precision Scheduled Railroading” that, according to The American Prospect“means no excess engines, no track not under constant use, no downtime in the yards, no employees not busy driving the trains or maintaining the tracks, and never have three one-mile-long trains when one three-mile-long train can be assembled.” Shockingly, railroad workers get no paid sick days.

The people who live near the derailment are paying the price of Norfolk Southern’s “efficiencies.” They will be dealing with the consequences of the toxic spill for years to come, affecting their health, the value of their homes, and the quality of their water.

But the railroad is returning handsome profits to its top executives and shareholders.

Categories Accountability, Deregulation, Economy, Ohio, Privatization

What Caused the Layoffs at a Successful Tech Company?

By dianeravitch
March 11, 2023 //
30

As you probably know, there have been many layoffs across the tech sector in recent months. At the same time, unemployment is close to a 50-year low, at 3.2%. Employers are raising wages to attract employees for low-wage jobs. Why is the tech sector in trouble? I’m no financial or corporate expert, so I can’t explain what is going on.

But something caught my eye as I read a story about Salesforce, which was both very successful and yet laying off 10% of its employees.

The company has been dogged by five activist investors in recent months, and is being pressured to cut costs, but the layoffs continue in spite of a stellar quarter. In fact, Benioff bragged to Swisher in bombastic fashion: “We had a great quarter. Yeah, it’s probably I think, it’s probably the best quarter of a software company ever.”

I clicked the link to see who those five activist investors who were demanding more cost cutting, no matter how it hurt morale at the company.

The first was Elliott Management. It rang a bell, but at first I didn’t remember why. More googling and soon I see the name Paul Singer.

Singer is a billionaire. Singer is a big supporter of charter schools. Singer is a rightwing Republican. Singer loves Eva Moskowitz’s Success Academy charter chain; in addition to giving SA millions, he served on its board.

An article in Mother Jones a decade ago called Singer a “vulture capitalist” and a “fundraising terrorist.”

A few years back, the U.K. Independent said that Singer had destroyed Peru’s economy and was threatening Argentina’s. Again, “vulture capitalist.”

Singer has been called a “doomsday investor.” When he takes over, he sucks out the lifeblood.

This guide to “vulture funds” was published only a month ago.

I have been trying to understand the connection between vulture investing and the aggressive charters that suck the lifeblood out of their host, the public school system.

What do you think?

Categories Billionaires, Charter Schools, Cruelty, Disruption, Economy, Education Industry, Harlem Success Academy

Heather Cox Richardson: What Divides the Two Parties: Looking to the Future or the Past

By dianeravitch
March 3, 2023 //
15

Historian Heather Cox Richardson describes the sharp contrast between the two parties: the Democrats are looking to the future, building platforms for innovation, new industries, and economic growth, while the Republicans are mired in stale culture war issues—campaigning for more restrictions on abortion, despite public opinion, and relitigating the 2020 election.

She writes:

At Georgetown University’s School of Foreign Service today, Commerce Secretary Gina Raimondo spoke on “The CHIPS Act and a Long-term Vision for America’s Technological Leadership.” She outlined what she sees as a historic opportunity to solidify the nation’s global leadership in technology and innovation and at the same time rebuild the country’s manufacturing sector and protect national security.

Congress passed the CHIPS and Science Act in August 2022 by a bipartisan vote, directing more than $52 billion into research and manufacturing of semiconductor chips as well as additional scientific research. Scientists in the U.S. developed chips, and they are now in cars, appliances, and so on. But they are now manufactured primarily in East Asia. The U.S. produces only about 10% of the world’s supply and makes none of the most advanced chips.

That dependence on overseas production hit supply chains hard during the pandemic while also weakening our national security. The hope behind the CHIPS and Science Act was that a significant government investment in the industry would jump-start private investment in bringing chip manufacturing back to the U.S., enabling the U.S. to compete more effectively with China. In the short term, at least, the plan has worked: by the end of 2022, private investors had pledged at least $200 billion to build U.S. chip manufacturing facilities.

Today, Raimondo framed the CHIPS and Science Act as an “incredible opportunity” to enable the U.S. to lead the world in technology, “securing our economic and national security future for the coming decades.” In the modern technological world, “it’s the countries who invest in research, innovation, and their workforces that will lead in the 21st century,” she said.

Raimondo described the major investment in semiconductor technology and its manufacture as a public investment in the economy that rivals some of the great investments in our history. She talked of Abraham Lincoln’s investment in agriculture in the 1860s to cement the position of the U.S. as a leader in world grain production, Franklin Delano Roosevelt and Harry S. Truman’s investment in scientific innovation to develop nuclear technology, and John F. Kennedy’s investment in putting a man on the moon.

Each of those massive investments sparked scientific innovation and economic growth. Raimondo suggested that “the CHIPS and Science Act presents us with an opportunity to make investments that are similarly consequential for our nation’s future.”

The vision Raimondo advanced was not one of top-down creativity. Instead, she described the extraordinary innovation of the silicon industry in the 1960s as a product of collaboration between university scientists, government purchasing power, and manufacturing. Rather than dismissing manufacturing as a repetitive mechanical task, she put it at the heart of innovation as the rapid production of millions and millions of chips prompted engineers to tweak manufacturing processes a little at a time, constantly making improvements.

“This relentless pace of lab-to-fab[rication] and fab-to-lab innovation became synonymous with America’s tech leadership,” she said, “doubling our computing capacity every two years.” As the U.S. shipped manufacturing jobs overseas, it lost this creative system. At the same time, inability to get chips during the pandemic hamstrung the U.S. economy and left our national security dependent for chips on other countries, especially China.

Reestablishing manufacturing in the U.S. will spark innovation and protect national security. It will also create new well-paying jobs for people without a college degree both in construction and in the operations of the new factories. With labor scarce, Raimondo called for hiring and training a million women in construction over the next decade, as well as bringing people from underserved communities into the skilled workforce to create “the most diverse, productive, and talented workers in the world.”

Raimondo warned that the vision she laid out would be hard to accomplish, but “if we—as a nation—unite behind a shared objective…and think boldly,” we can create a new generation of innovators and engineers, develop the manufacturing sector and the jobs that go with it, rebuild our economy, and protect our national security.

Just “think about what’s possible 10 years from now if we are bold,” she said.

Later, Raimondo told David Ignatius of the Washington Post: “This is more than just an investment to subsidize a few new chip factories…. We need to unite America around a common goal of enhancing America’s global competitiveness and leading in this incredibly crucial technology.… Money isn’t enough. We all need to get in the same boat as a nation.”

Part of the impetus for the bipartisan drive to jump-start the semiconductor industry is lawmakers’ determination to counter the rise of China, which has invested heavily in its own economy. As the U.S. seeks to swing the Indo-Pacific away from its orientation toward China, Raimondo will travel to India next month to talk about closer economic ties between the U.S. and India, including collaboration in chip manufacturing as India, Japan, and Australia are launching their own joint semiconductor initiative.

For the Biden administration, the investment in chips and all the growth and innovation it promises to spark, especially among those without college degrees, is also an attempt to unite the nation to move forward. Theirs is a heady vision of a nation that works together in a shared task, as Lincoln’s United States did, or FDR’s, or JFK’s.

Their orientation toward the future, growth, and prosperity is a striking contrast to the vision of today’s Republicans, who look backward resolutely and angrily to an imagined past. In the short term, many of them continue to relitigate the 2020 presidential election, long after the Big Lie that Trump won has been debunked and the rest of the country has moved on.

In the New York Times yesterday, Luke Broadwater and Jonathan Swan reported that one of the reasons House speaker Kevin McCarthy handed access to more than 40,000 hours of video from the U.S. Capitol from January 6, 2021, to Fox News Channel personality Tucker Carlson was that McCarthy had promised the far right that he would revisit that event but did not want to have the Republican Congress tied to the effort. His political advisors say swing voters want to move forward.

In the longer term, today’s Republicans are out of step with the majority of Americans on issues like LGBTQ rights, climate change, gun safety, and abortion. Although Republicans are pushing draconian laws to end all abortion access, today Public Religion Research Institute (PPRI), a nonprofit, nonpartisan organization, released a report showing that 64% of Americans say that abortion should be legal in most or all cases, while only 25% say it should be illegal in most cases and only 9% say it should be illegal in all cases. Less than half the residents in every state and in Washington, D.C., supported overturning the 1973 Roe v. Wade decision legalizing abortion, as the Supreme Court did with the Dobbs v. Jackson Women’s Health decision of last June.

In a speech in Des Moines, Iowa, yesterday, Senator Tim Scott (R-SC) echoed Trump’s “American Carnage” inaugural address with his description of today’s America as one full of misery and hopelessness. Florida governor Ron DeSantis traveled this week to New York City, Philadelphia, and Chicago to insist those Democratic-led cities were crime-ridden, although as human rights lawyer Qasim Rashid pointed out, Florida has a 19% higher rape rate, 66% higher murder rate, and 280% higher burglary rate than New York.

Another study released yesterday by the Anti-Defamation League, which specializes in civil rights law, noted that domestic extremist mass killings have increased “greatly” in the past 12 years. But while murders by Islamic extremists, for example, have been falling, all the extremist killings in 2022 were committed by right-wing adherents, with 21 of 25 murders linked to white supremacists.

President Biden’s poll numbers are up to 46% in general and 49% with registered voters. Perhaps more to the point is that in Tuesday’s four special elections, Democrats outperformed expectations by significant margins.

There are many reasons for these Democratic gains—abortion rights key among them—but it is possible that voters like the Democrats’ vision of a hopeful future and a realistic means to get there rather than Republicans’ condemnation of the present and vow to claw back a mythological past.

To read her footnotes, open the link.

Categories Biden, Democracy, Democrats, Economy, Elections, Innovation, Republicans, Research
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