Consider This A Warning: Mayor de Blasio is Taking New York Down the Wrong Path

Thomas Warns*

On the same day that the ball dropped at Times Square, an even more important event occurred – Mayor de Blasio was sworn into office at City Hall. Mr. de Blasio is the first Democrat in the mayor’s office since David Dinkins left City Hall twenty years ago. While the inauguration was an opportunity for supporters to celebrate with the mayor, it also highlighted a few reasons why New Yorkers should be concerned.

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Let’s start with the company de Blasio kept during the inauguration. The first major speaker on the day was Harry Belafonte, a noted music recording artist and civil rights activist. Mr. Belafonte has the dubious distinction of having received praise from Fidel Castro, and once called Condaleeza Rice and Colin Powell “house slaves” of the Bush Administration. Mr. Belafonte proceeded to skewer the outgoing Mayor Bloomberg – who was seated in the first row – without much regard for factual accuracy. In particular, Mr. Belafonte blasted Mayor Bloomberg for stop-and-frisk and bemoaned New York’s high number of incarcerated individuals, without noting that the New York City prison population had dropped by 36% since 2002.

Following Mr. Belafonte was Reverend Fred Lucas Jr., who bizarrely called New York City a “plantation.” While it is confusing what could have prompted such radical language, it is outrageous and slanderous to call Mayor Bloomberg a slave-owning planter, regardless of his own failures to defend liberty. When Bill Clinton, a beloved but comparably moderate liberal icon stepped onto the stage to offer some perspective and remind the crowd of Mayor Bloomberg’s successes as mayor, he was met with deafening silence. The people in attendance were fired up for the new Mayor’s far-left agenda, not an honest reflection on the achievements and disappointments of Mayor Bloomberg’s uneven twelve years in office.

Of course, it was eventually Mayor de Blasio’s turn to speak; amid a growing wave of editorials declaring Mr. de Blasio’s election part of a rising tide of Progressive energy across the country, the new Mayor did not disappoint. His Honor repeated the “Tale of Two Cities” rhetoric of his campaign, which centers on the idea that a parasitic elite class is destroying New York at the expense of everyone else, variously defined as the middle class, working class, or poor, depending on the audience. He also reiterated his plans to raise taxes even higher on the rich.

While it is commonplace for the lofty rhetoric of an inauguration speech to get watered down as time goes by for practical political reasons, it is clear that the results will be bad if the Mr. de Blasio gets everything he wants. Winston Churchill once said “you don’t make the poor richer by making the rich poorer,” yet that is precisely what Mr. de Blasio believes. Readers can conduct a simple internet search and sift through the dozens of articles supporting or denying the contention that higher taxes on the wealthy destroy jobs (with the answer almost always being nuanced, and not binary), but this column shall consider the liberty interests at stake.

Money (and income) is property, and in America people are allowed to utilize their own property in whatever ways they see fit, with the general limit being that they not use it to harm others. One exception to this principle is taxation; individuals surrender money to the government, which then decides through various mechanisms how to spend or utilize the wealth collected. While people often fight about what amount should be paid, only an anarchist would say that people shouldn’t pay taxes at all. There are huge collective action problems that make it much easier for the government to handle national defense and infrastructure problems in a way that benefits everyone.

But what makes taxation work is the proposition that the level of taxation should be value-enhancing for everyone. If a flat income tax rate of 10% is applied to everyone, it isn’t unfair if someone who makes $50,000 a year pays $5,000 in taxes, while someone earning $100,000 a year pays $10,000 in taxes; ideally, the benefits of the public services created (such as parks, roads, schools, security, etc.) will exceed $5,000 for the first person and $10,000 for the second person.

Problems arise though when the tax rates are such that one group receives more in benefits than it pays in taxes at the expense of another group, which pays more in taxes than it receives in benefits; then the system of taxation ceases to add value for everyone and merely becomes a disguised wealth-transfer mechanism. In a democracy, the temptation to levy taxes on anyone just a little wealthier than one’s self is always present, but it must be prevented. Civilized people form a government for their mutual gain, while barbarians use force and numbers to deprive others of their property for their own gain (of course, for an example of how wealth can be transferred by government to certain high income earners, examine how the Federal Reserve’s monetary policy has benefited those Americans wealthy enough to buy securities in the last three to four years).

The situation calls to mind the metaphorical debate in the song “The Trees” by the Canadian progressive rock band Rush. The shorter maple trees cry oppression because the taller oaks absorb most of the sunlight. The maples eventually organize and pass a “noble law” to end “oak oppression.” The song emphatically ends when Geddy Lee sings that the “trees are all kept equal by hatchet, axe, and saw.” While Mr. de Blasio’s method, like that of the maples, could eventually secure equality by dragging everyone down to the same level of wealth, a heavy progressive tax burden is not a guarantee of mutual prosperity and has about as much precision in its implementation as a hatchet.

While Mr. de Blasio brings more sizzle to New York after Mayor Bloomberg’s third term seemed to fizzle out and go flat, his election should not become a clarion call to trample on the liberty of our city’s wealthier inhabitants. Unlike race, which no one would dare to openly discriminate against in government, wealth is not an immutable characteristic. While you might vote in favor of a higher tax for your neighbor who drives a BMW today, you might find out tomorrow that you too must pay more in taxes because you drive a Lexus while the rest of your neighbors drive Fords. And then I can guarantee you’ll be against taxing the “rich.”

*Thomas Warns is a J.D. Candidate, class of 2015, at NYU School of law, Staff Editor on the NYU Journal of Law & Liberty , and author of the weekly column "Consider This a Warning."

Consider This a Warning: Unpaid Interns

Thomas Warns*

Unpaid internships have come under fire recently, as a swell of class action lawsuits have been filed in the last year against companies that use unpaid interns, even whilst the number of unpaid interns reaches close to 2 million people per year. This past week Linda Federica-O’Murchu wrote an article for NBC News articulating the views of defenders and critics of the unpaid internship. While you should read the informative article here, below is a snapshot of the two competing schools of thought:

It's easy to see why unpaid interns are replacing salaried employees at some companies. Employers know they can fill vacant positions with a virtually unlimited supply of bright, hard-working young helpers, and at the same time try them out risk-free for future paid positions. Many interns said they benefit from the arrangement as well, by obtaining valuable on-the-job training and greater employability…

"Interns say, 'I'm just doing this to get my foot in the door of this industry.' But it's not that simple," Glatt said. "We had an unpaid intern picking up performers and driving them to and from rehearsals. Teamsters handle transportation on films. When they found out what was happening, they rightfully reclaimed that job. 

"The interns that are taking out the garbage and sweeping the floor—that's somebody's union job."

Are unpaid internships a valuable part of a young professional’s career or is it just an opportunistic attempt by companies to save money at the expense of full-time employees? Should they be legal at all?

Perhaps complicating the conundrum is the majestic simplicity of the arguments for both sides. On the one side, it seems obvious that people should be paid for their work. Equally obvious is the fact that unpaid internships are voluntary associations, and that workers can gain benefits from employment besides a paycheck. If companies were forced to pay interns the minimum wage, many might opt to do without their help altogether. What is a policymaker to do?

One solution would be to get the government out of the way. As this Forbes article points out, the legal battle to get interns paid centers around the Fair Labor Standards Act of 1938, and the Labor Department’s regulations that followed it. The Labor Department has a six-part test to determine whether an intern should be paid; among the six prongs are requirements that the job has to be “for the benefit of the intern,” the intern doesn’t displace paid workers and the employer “derives no immediate advantage” from the intern’s activities. This amorphous standard basically says that the internship must be for the benefit of the student, not the employer. This is interesting, since most private contracts/business arrangements are entered into on the premise of mutual value. Companies aren’t expected to teach raw college graduates important job skills with no expected benefit, are they?

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Regulations Threaten Mutual Benefit

It may be helpful to glance briefly at what the author did this summer. The author was one of about ten interns in the Major Offense Bureau at the Nassau County District Attorney’s Office (the numbers fluctuated throughout the summer). The County provided no remuneration for interns, although the author received funding from his law school, as did some interns from other law schools; some merely received credits. The first week or so, we had few opportunities to do substantive work, mostly digesting lectures on different crimes which the office prosecuted and observing a variety of motions and hearings. There was also dreaded photocopying. At this stage, our value to Nassau County was probably close to $0 per hour.

By week ten however, the situation had palpably changed. Many of us were gaining valuable experience writing motions and memos to be submitted to the court, or researching a variety of legal topics for Assistant District Attorneys. Some even accompanied ADAs to hearings in order to research cases cited in opposing counsels’ arguments and help form a response. Our value certainly exceeded $0 per hour, but no one thought we were being taken advantage of; the benefits of an automatic second-round interview for a full-time job, building our resumes, and having built important connections with superiors in the office were valuable rewards.

But would the Department of Labor condemn this mutually beneficial arrangement? Is it clear that our employer discerned “no immediate advantage” from our activities? After all, every hour we spent writing a brief or doing research saved a similar amount of time for ADAs to work on different, potentially more important matters. Did the amount of work we performed take away a job from a paralegal or other member of the office’s support staff?   

If the County were forced to pay us the minimum wage because of the Labor Department regulations, we likely would have been on the street with no internship and no paycheck in a heartbeat. It was no secret walking through the shabby courthouse that Nassau County has budget woes, and that intern pay would not be a priority. This would have been a disservice to both sides caused by the regulators trying to help us get paid at least minimum wage.

 

The Minimum Wage and Volunteerism

One pervasive criticism of unpaid internships is that they favor middle and upper class interns who can lean on their family’s wealth while they are not being paid, at the expense of those without such an advantage. But what if the minimum wage law didn’t exist and Nassau County (or other businesses, firms, etc.) could only afford to offer $3 or $4 an hour, enough say for gas to go to and from the internship and buy groceries? This would help bridge the resource gap among interns to an extent, and allow interns more choice in balancing where to work with a wider variety of paid employment. Where employers once cried that they couldn’t afford to pay interns at all, they may suddenly find themselves bidding higher (though potentially still below minimum wage) to secure students from better schools or with more work experience.

What about the union boss who whines about hungry interns taking away union jobs sweeping floors and taking out the garbage? The complaint is ironic, since many unions rely on apprenticeships (a.k.a. unpaid interns) to train new workers, and indeed their jobs wouldn’t be in jeopardy if they didn’t push wages for unskilled labor so high. While it is possible that allowing the interns to usurp these “union jobs” like taking out the garbage and cleaning up on the set of the Black Swan may have been a violation of a contractual agreement between labor unions and Fox Searchlight, it seems unlikely a wily intern had nothing to gain by having such close contact with figures inside the movie industry for an extended period of time.  If the internship was not worth their time and effort, they were always free to quit thanks to the 13th Amendment. Like many other companies, if forced to pay the minimum wage to interns Fox Searchlight might decline to hire interns at all, robbing many young professionals of a chance to gain some exposure to the industry.

If we are so concerned by unpaid internships, should we ban volunteerism as well? Indeed consider the perversity that our minimum wage law creates right now. A boy scout can work to sell baked goods outside a Walmart and raise $4 per hour to finance his Little League baseball team, but if the store manager invited him to come inside and bag groceries for $6 per hour towards the Little League team, he would be vilified as a law-breaker and robber baron – two voluntary transactions, two wildly divergent outcomes. Common sense prevents bureaucrats from banning volunteer activity, but unfortunately common sense is not enough to knife through every set of unhelpful regulations.

 *Thomas Warns is a J.D. Candidate, class of 2015, at NYU School of law, Staff Editor on the NYU Journal of Law & Liberty , and author of the weekly column "Consider This a Warning."

Consider This a Warning: Fracking Stuck on Political Fault Lines

Thomas Warns*

The moratorium on fracking in New York State has entered its sixth year. A recent New York Post editorial argues that fracking could bring major financial benefits to a cash-strapped state where voters recently approved a constitutional amendment authorizing the construction of 7 upstate casinos to create jobs and fill Albany’s coffers. Is Governor Cuomo’s delay blocking a burgeoning business opportunity at a time when New Yorkers need one the most? With State Republican Party Chairman Ed Cox calling for the ban to be re-examined, the New York Post Editorial Board has decided to take Governor Cuomo to task for his delay:

“Cox is right to call the policy of delay environmental Luddism, named for the 19th-century movement that opposed new technology. Even worse is the dishonest way the governor has gone about it: by making a policy out of putting off a decision. In one of the rare truths about fracking to come out of the mouth of a New York official, the state’s environmental conservation commissioner, Joe Martens, summed it up this way: ‘We don’t feel that there’s a great urgency.’

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With Gov. Cuomo still eyeing his chances for a presidential run in 2016, his stonewalling on fracking is not likely to change — at least not until after the Iowa caucuses. There’s probably nothing Cox and his fellow Republicans can do to change that.”

Hydraulic fracturing, popularly called fracking, is a practice that involves injecting water, sand, chemicals, and/or gasses deep into underground shale in order to liberate the natural gas that resides there in abundance. As part of the practice’s promise, the New York Post Editorial Board would likely point to the industry-funded study that found that the fracking boom created 2.1 million jobs in the U.S. last year, added $75 billion to state and federal revenues, and helped line the pockets of homeowners and businessmen alike who benefit from cheaper fuel.

The New York Post however brushes off the detrimental side effects of fracking. Numerous studies have determined that when operating near fault lines, hydraulic fracturing wells can cause minor earthquakes. Likely an even greater threat is the risk of water contamination from fracking; it would be disastrous if the upstate aquifers that keep New York City wet were irretrievably polluted in a search for cheap gas.

It would seem that the New York Post editorial board should be admonished for ignoring the significant risks of fracking, but that doesn’t mean they aren’t wrong to urge Governor Cuomo to quit dodging the issue with the moratorium. The costs of fracking are now more apparent than ever, making a further delay to “study” the issue unhelpful. The delay is pointless and politically motivated, as the state’s environmental conservation commissioner more or less admits. 

The prudent course would be to begin making preparations at once to allow fracking to proceed while making sure its costs are borne by the natural gas companies. The fracking-induced earthquakes have all been minor to this date, but that doesn’t mean they should be ignored or that a larger one couldn’t strike in the future. Private companies could step up by offering groundwater and seismographic surveillance to independently monitor the fracking wells. Homeowners could either enforce their property rights in the courts, or create contractual arrangements with companies that penalize the companies for exceeding acceptable limits on water pollution or earth-shaking. If fracking leads to significant groundwater pollution as many environmentalists fear, rising costs would put a quick end to this controversial drilling technique.

Of course, if these fears aren’t realized, then New Yorkers will benefit economically from an end to the moratorium. Indeed, proponents say that many of the alleged groundwater pollution incidents have alternate explanations that don’t implicate the fracking process itself. If Governor Cuomo believes the costs of fracking can never exceed the benefits, the only other democratically defensible maneuver would be to extend the ban permanently, clearly state the grounds for doing so, and let the political process determine New York’s energy future. Right now, the Governor’s delay is merely dodging accountability with constituents in order to score cheap political points.

 *Thomas Warns is a J.D. Candidate, class of 2015, at NYU School of law, Staff Editor on the NYU Journal of Law & Liberty , and author of the weekly column "Consider This a Warning."

Why You Must Support Obamacare

Thomas Warns*

Don’t believe your own eyes or ears. You may have heard a lot in the news over the past few weeks about how Obamacare has been a massive flop. I’m here to tell you not to think about it. Let me explain to you why the critics are wrong.

The Affordable Care Act will be a tremendous success – who could be against a law providing affordable care for Americans? And I further know it will be a success because none other than the President of the United States has said so.

Yes it might be true that the President lied when he said the “shared responsibility payments” weren’t a tax, and it might be true that the President lied when he said if you liked your healthcare plan and doctor you could keep them, but what is truth in a fight for justice? The President couldn’t risk telling the truth to the American people, because they might not have liked it. A few white lies will be quickly forgotten since the President knows what is best for all of us.

Can you really trust those crazy Republicans and tea-partiers to do what’s right? They are so fixated on the $17,000,000,000,000 national debt that they can’t even see the wisdom of intervening into a multi-trillion dollar market in order to force Americans to buy more expensive health insurance that would be partially paid for with generous subsidies for low-income Americans! Despite reports from the Government Accountability Office saying otherwise, President Obama has given us his word that the Affordable Care Act won’t add a dime to the national debt, just like Social Security and Medicare. While I doubt the President is lying again, if he is, he sure has a good reason to do so for the greater good.

The Obamacare rollout hasn’t been perfect, but you can blame the Republicans for sabotaging it at every stage. A wise Democrat-majority Congress passed the Affordable Care Act in 2010 without a single Republican vote. The Act includes provisions whereby states can make their own healthcare exchanges, or allow the federal government to operate one for them. Making one of these exchanges is simple, evidenced by the federal government’s rollout, but 36 states, including tea-party hot beds like Illinois and Vermont, decided to allow the federal government to create exchanges for them. If they were really team players, they would have made superior healthcare exchanges at the state level rather than allowing the law as written to run its course. Why would supposed states’ rights Republicans in all of these states refuse to act with the federal government holding a gun to their heads and screaming “do this now, or we will do it for you!”? The only explanation is bad faith on their part.

One thing the President does need from you is more time. Imposing a one-size fits all national solution to a massive and complex national marketplace isn’t easy. With only three and a half years to prepare, it shouldn’t be a surprise that there have been some glitches on the healthcare.gov site. We couldn’t afford to delay opening the exchanges and make it look like the law wouldn’t work, even if the site contains glaring security risks and privacy intrusions, and gives customers false price estimates. Individual concerns are unimportant when compared to our overwhelming national interest.

The Constitution clearly states that healthcare is a fundamental right that everyone must be provided with courtesy of the federal government. Well then again maybe it doesn’t state that, but we shouldn’t have to pass an amendment to actually change what that document means in the first place. That right might include a pricey plethora of coverage options you think you don’t need, like pediatric care, maternity care, and substance abuse care, but I told you in the beginning not to think Dr. President Obama has done the thinking for you! Isn’t living in a nanny state easy?

 *Thomas Warns is a J.D. Candidate, class of 2015, at NYU School of law, Staff Editor on the NYU Journal of Law & Liberty , and author of the weekly column "Consider This a Warning."

Consider This a Warning: Time to Re-Think the Income Tax?

Thomas Warns

You may not have noticed, but last Friday our country passed a major milestone: our current income tax regime turned 100 years old. The first income tax was established during the Civil War, but the current regime has existed since October 4th, 1913 following the passage of the 16th Amendment.

CNBC’s Mark Koba wrote about the anniversary:

"One expert sees the 100 years as a system run amok. . . . ‘In 1913, the tax code consisted of 400 pages,’ said Timothy Nash, a professor of free market economics at Northwood University. . . . ‘By 2012, the tax code was 73,608 pages,’ he said. ‘We have gone from a simple tax system to a complex, unfriendly system.’

The tax code is now 185 times longer than it was in 1913, and that creates a host of issues. The National Taxpayer Advocate’s Annual Report estimates that individuals and businesses spend 6.1 billion hours doing their taxes and complying with the tax code annually. Since 2001, there have been more than 4,680 changes to the tax code. The code is so complex that a majority of individuals, unable to navigate the code themselves, hire a professional, and the IRS’ own experts answer tax queries incorrectly about 10% of the time.

These statistics point to some troubling issues. The complexity is literally a drain in both time and money on the economy that costs $168 billion a year on compliance. It is also a haven for tricks by politicians. The complexities and constant changes mean that politicians can point to tax breaks for their constituencies while still getting your money in other less obvious ways. A tax cut for the middle class might be met with a new corporate tax, which gets passed back to consumers when the products they buy cost more money or when employee wages are cut. That’s how politicians can often get away with saying they cut your taxes while also expanding the welfare state – they confuse who pays the IRS with who the tax burden falls on. This past summer we also got to see the tremendous potential for IRS auditors to abuse their power for illegitimate reasons.

Americans understand the importance of paying taxes to support essential government services, but how can we reform the behemoth that is our tax code? The idea has bounced around the USA for decades, but the timing might be right for a flat tax. A true flat tax would have no deductions whatsoever, collecting the same percentage of personal income from everyone. Regulations would still be needed to determine what was considered income, but the code could certainly be small enough for an American to actually be able to read.

Milton Friedman theorized a “negative income tax” which would set simple deductions for a family based on the number of dependents; if the family’s deductions were greater than their income, they would actually get money back from the government. Friedman envisioned that this would replace the current welfare system. Others have advocated abolishing the income tax and replacing it with a sales tax, arguing that abolishing an income tax would make America a haven for business while still taxing the wealthier at a higher rate than the poor (since presumably they would spend more money).

Either way, Americans have options in the ongoing battle to replace the colossal mess that is the U.S. tax code. A flat income or sales tax would be much fairer to all and easier for ordinary Americans to understand; it would also save businesses and individuals billions during tax season. Finally, a simpler tax would probably result in lower taxes for all because politicians wouldn’t be able to hide taxes on their constituents, and that may have the incidental benefit of reducing tax revenues and slimming down the government.

 *Thomas Warns is a J.D. Candidate, class of 2015, at NYU School of law, Staff Editor on the NYU Journal of Law & Liberty , and author of the weekly column "Consider This a Warning."

Consider This a Warning: Is Our Republic in the Emergency Room?

Thomas Warns*

It is no secret that the current healthcare debate taking place in Congress may end up temporarily shutting down the government. As Republicans and Democrats battle over a spending bill and the debate surrounding the future funding of Obamacare intensifies, The New York Times set the stage for a possible government shutdown:

“Without a complete capitulation by House Republicans, large sections of the government would close, hundreds of thousands of workers would be furloughed without pay, and millions more would be asked to work for no pay.
Polls show that the public is already deeply unhappy with its leaders in Congress, and the prospect of the first government shutdown in 17 years would be the latest dispiriting development. With a temporary shutdown appearing inevitable without a last-ditch compromise, the battle on Sunday became as much about blaming the other side as searching for a solution.”
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Ignoring the merits of the Obamacare legislation itself, what does this legislative impasse reveal about how Americans perceive democracy in a Republic? And what should we see as the result of this debate?

Many Americans are frustrated that partisan gridlock seems to have prevented Congress from doing much of anything recently besides passing the Affordable Care Act in 2010. For many this budget debate seems to represent the worst of Congress’ partisan politics, but this sort of all-or-nothing showdown could be exactly what the doctor ordered for stopping future gridlock. If the government does shut down, one party is likely to come out a big winner while the other comes out a big loser.

Midterm elections are a year away, and this debate will significantly shape the outcome. With both parties trying their best to achieve their partisan goals while blaming the other party for a potential shutdown, it seems like the “winning” side could stand to take a larger share of seats in Congress. Democrats largely believe that the 2012 elections were an unconditional victory, however, the Republicans still control the House of Representatives – if Congress unites wholly under one party, it would be much easier for legislation to make it to the President’s desk.

Both parties claim that they are speaking for the majority of Americans; clearly at least one of them is wrong, but perhaps they both are. Only 57.5% of Americans eligible to vote actually did so in 2012. Since the election was close to a 50-50 split (roughly speaking) of those who voted, neither side can plausibly say that they represent a majority of the country’s citizens.

America’s political system is obsessed with the idea of majority rule, but the fact is that no such majority political consensus exists nationally. The Tea Party members behind the defund Obamacare movement constantly take flak for allegedly hijacking the nation’s political system by trying to wield influence that exceeds its base of support. But the Tea Party is merely just one minority group among many trying to exert its influence to the maximum extent possible.

Should we be concerned or surprised when a small but dedicated movement is able to score legislative victories at a greater pace than a larger but apathetic plurality? Certainly not. We expect and receive more input on legislation from the people who are most affected by it and who care about it the most. That is normal, just as it is normal for the EPA to receive more feedback from the automobile and trucking industry than from the general public about newly proposed improved emissions standards for cars and trucks.

John McCain recently said that he would not defund Obamacare because the American people “spoke” and Congressmen need to “respect the outcomes of elections because they reflect the will of the people.” But his view of democracy doesn’t make sense in a Republic. Nationally President Obama was re-elected running in support of Obamacare, but the House of Representatives has 232 Republicans and the Senate has 46. Should Ted Cruz vote in favor of Obamacare after being elected on a platform staunchly opposed to it because voters in states he doesn’t represent support it? Absolutely not.

So what does this all mean? It means that a government shutdown followed by a political “win” for one party is not necessarily a sign of dysfunction in Washington, but could actually demonstrate that our Republic is operating just fine and that Congress might start working more smoothly after the midterm elections.

 

*Thomas Warns is a J.D. Candidate at New York University School of Law, class of 2015, and is Staff Editor of the Journal of Law & Liberty. Mr. Warns is author of the weekly column "Consider This a Warning". 

Consider This a Warning: Get Heated Millennials

Thomas Warns*

Megan McArdle, a columnist for Bloomberg View, recently wrote a piece titled “Hey Millennials: You Got a Raw Deal. Get Over it.” In it, she responds to some of the complaints from Generation Y by writing:

“In other words, while it’s true that there are fewer guarantees than there used to be, it’s not true that everyone in the good old days had an easy path to lifetime employment. Those people were always a lucky minority. They still are, if a somewhat smaller one. Most people in the generations before the millennials had to struggle. They were afraid they wouldn’t be able to make it. They, too, were woken up in the wee small hours by their own economic terror.”
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Ms. McArdle backs up her beliefs with both anecdotal and empirical evidence, and reminds readers that because of persistent racism prior to the Civil Rights movement successful careers were often reserved for White males. While it is unquestionably true that previous generations had to struggle for employment and were often denied the American Dream because of the color of their skin, should millennials “get over” the raw deal they are receiving?

Let’s set the record straight here: millennials are not just growing up into a tough economy – they are growing up in an economy that is particularly tough on them. Unemployment for people aged 16-24 is estimated at 16.3% by the Bureau of Labor Statistics, more than double the national average. In 2011 a Pew Research study revealed that the wealth gap between those over 65 and those under 35 had doubled since 2005. Moreover, a family whose head of household was 65+ years old had a net worth 47 times greater than a household headed by a 35-year-old.

The 2011 Pew Research study illustrates a disturbing trend: the old are getting richer and the young are getting poorer. Largely, this trend is the result of a bloated and dysfunctional entitlement system. Retirees have been promised far more money than they contributed to the system. Due to decades of government mismanagement, the money they contributed is essentially gone, which places the burden of payment on the present generation of young workers. Not only are millennials struggling with rising student loan debt and finding a job in a particularly tough economy, but they will also be expected to foot the bill for retiring seniors who by and large have far more money than they do. Because social security is not means-tested, even billionaires like Ken Langone are paid once a month. Generation Y is often labeled as narcissistic, but is it narcissistic to expect not be robbed as a generation?

Millennials should get worked up about their circumstances. This comparison may seem a bit over the top, but millennials should revolt against this taxation without representation like the Founders of our country. Before we were born or old enough to vote, our elders created a system where they received benefits - financed by deficit spending - which our generation will have to pay for. That sounds a lot like taxation without representation to me. Sorry Megan, but we are not going to get over it.

 

*Thomas Warns is a J.D Candidate at New York University School of Law, class of 2015, and Staff Editor of the Journal of Law & Liberty

Taking Sides on Net Neutrality

Thomas Warns

Last week the D.C. Circuit Court of Appeals heard a case that could have massive reverberations for the millions of Americans that use the internet. The litigants are the Federal Communication Commission and Verizon.  The New York Times characterizes the fight thusly:

“Verizon and a host of other companies that spent billions of dollars to build their Internet pipelines believe they should be able to manage them as they wish. They should be able, for example, to charge fees to content providers who are willing to pay to have their data transported to customers through an express lane…The F.C.C., however, believes that Internet service providers must keep their pipelines free and open, giving the creators of any type of legal content — movies, shopping sites, medical services, or even pornography — an equal ability to reach consumers.”
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One factor to keep in mind, however, is that the D.C. Circuit Court ruled in favor of Comcast in similar litigation in 2010. In that case, the Court ruled that the F.C.C. did not have the authority to regulate and punish an Internet Service Provider for blocking access to a website; the Court could rule once more that the F.C.C. overstepped its bounds with its “Open Internet Order,” which the agency published in December 2010.

But how should the internet be regulated? On the one hand, Verizon and other telecom giants do have a point: if they built the highway, it seems right to let them decide who can drive on it and how fast. Moreover, companies like Verizon do not have a history of conducting the type of internet blocking that the F.C.C. fears. Only 4 such incidents of internet blocking have been documented in the last 6 years. For its part, Verizon has even argued that the F.C.C.'s current internet regulatory scheme implicates the First Amendment. Verizon argues that it has the right to pick and choose what to provide along its pipeline, like a newspaper editor picks stories to print (though it is unclear how Verizon would exercise its editorial power in a broad way, and it could even leave it liable for illegal websites that use Verizon as a conduit).

Allowing the F.C.C. the authority to regulate the internet, and thus the massive scope of activity that occurs in the web, would be a tremendous expansion in the agency’s power. But advocates say the agency is best equipped to defend net neutrality, which is important for many reasons. First, without net neutrality the large corporations with well-established access to capital markets would be in a strong position to prevent new start-ups from disrupting the telecom market. Net neutrality advocates fear that companies like Google and Facebook  would have the upper-hand over start-up competition in an arm's race over faster internet service. Further, if Verizon could choke off certain avenues of its network, it would actually have an incentive to throttle bandwidth for everyone in order to reap the benefits of charging premiums for faster access. With most Americans having only one or two broadband options to choose from, there is little besides the F.C.C. to stop telecom giants from acting as internet overlords.

Although government regulation often creates more problems than solutions, it might be best to expand the F.C.C.’s powers in this case. Given the monopolistic nature of internet’s infrastructure and its current unique platform as the ultimate conduit of free speech, it doesn’t seem prudent to leave all that power in the hands of a few corporations.

 

*Thomas Warns is a J.D. Candidate at the New York University School of Law, Class of 2015, and a Staff Editor on the Journal of Law & Liberty .  

Fast Food Workers Strike Out Swinging

Thomas Warns*

On Labor Day, Ned Resnikoff asserted in an article posted on msnbc.com that the recent nationwide fast food strike has the potential to revive the long flagging American labor movement. In particular, Resnikoff stated:

“Over the past several months, a new kind of labor activism has emerged from some of America’s poorest-paying and least-unionized industries. Fast food workers have stood near the forefront of the movement, waging a nationwide strike campaign which began in December with about 200 New York-based fast food employees and now encompasses thousands of workers spread across 58 cities…If the fast food workers achieve tangible results, it could transform low-wage fast food and retail in the same way that the United Auto Workers (UAW) and other unions helped to transform manufacturing during the 1930s. Their efforts, combined with the stimulative impact of World War II, helped birth a new American middle class and an organized labor Golden Age.”

Although the burgeoning fast food labor uprising may be sending chills down the spines of some franchise owners, its impact on employers, employees, and consumers is still far from certain.

Fast Food Strike.jpg

The employees who are striking for $15 an hour attract some sympathy from the public when juxtaposed with the multi-billion dollar revenues companies like McDonald’s, Subway, and Wendy’s rake in every year. But this David vs. Goliath comparison is hollow on two levels: first, the overwhelmingly majority of fast-food workers are employed by franchisees, not the parent corporations; second, wages are determined primarily on the skill required for the work and the scarcity of replacement workers. Unfortunately for the fast food strikers, the low amount of skill required and the ease with which their jobs can be filled severely undercuts their bargaining strength.

In light of such weaknesses in their cause, the strikers appear to be picketing with an eye towards Washington. As this article notes, the protests may just be a way of influencing politicians to raise minimum wages at the state and federal level if the franchises should refuse a wage increase. There may be sufficient political capital on Capitol Hill and in state legislatures across the country for such legislation if, as some have indicated, the large increase in employee wages does not lead to a corresponding significant price increase at the register. However, the LA Times indicates that “a $15 minimum wage would cause as much as a 17% surge in fast-food prices.” Although consumers may not like such a spike in prices in the historically value-based fast food industry, such an increase doesn’t seem crippling to the strikers’ call for increased wages.

But what about Resnikoff’s bit comparing a revival in fast-food labor activism to the rise of the UAW in the 1930s? That comparison should draw both hope and peril for strikers and their supporters. The UAW did succeed at providing middle class wages for union employees, and if the same happened in the fast food industry, turnover would likely plummet (it is estimated to be around 75% every year in the industry). On the other hand, the high wages the UAW bargained for are often cited as a cause of the decline of the American auto industry. While it is impossible for fast food businesses to outsource the kind of work performed by line food-prep workers, higher wages could influence franchisees to cut employment or turn towards automation, two trends the UAW have encountered. If prices do increase significantly for customers, their consumption habits might change and further drop the demand for workers in many stores.

While the appeal of a $15 wage is obvious for fast food workers, they may be better off if Washington and the labor unions stay out of the picture, and the strikers negotiate a smaller price increase that would be closer to a coveted “living wage” without undermining the very existence of the strikers’ jobs.

*Thomas Warns is a J.D. Candidate, class of 2015, at New York University School of Law and is a Staff Editor of the Journal of Law & Liberty.