The Jones Act Webinar is part of WJLA-TV’s Government Matters series on “Sea-Air-Space 2020 Virtual Edition.” It will include Frontiers of Freedom Senior Fellow, the Honorable Ernest Istook, who served in the U.S. House of Representatives from 1993 to 2007 and is currently teaching at Brigham Young University.
The Host will be Francis Rose. Topics will include: What is the Jones Act? Why is it both a commercial and national security issue? What are common misconceptions about the Jones Act? How does it work? How does China and its “One Belt, One Road” plan play into this issue?
If you are in the Washington DC metro area, you can watch the program on WJLA 24/7 News (formerly NewsChannel 8). If you are anywhere else you can watch it at FedInsider.com.
It will be broadcast on Tuesday, April 7, 2020 from 1 p.m. to 2 p.m. Eastern Time.
The Right to Life, Liberty and the Pursuit of Happiness
Through most of human history, there have been two ways by which humans have organized themselves: tribal and totalitarian. Tribes were based on families which came together to form clans, which combined to create tribes. In the end, what united the various clans into a tribe was the culture they all shared – language, values, customs and religion.
The primary driving factor in this move toward greater numbers was the greater power -and defense – afforded by greater numbers and the greater accumulation of wealth made possible by a greater variety of skills and a heightened group ability to take on ever larger projects, such as cities, roads, dwellings, and monuments. These factors eventually resulted in cities and nations. And empires. It was called “civilization”.
Nevertheless, the original loyalties to families and tribes have remained forceful elements in all societies.
As the more advanced “civilizations” grew in power and wealth, they grew also in territory, mostly by conquest of other countries. The management of the conquered territories was solved by the creation of a hierarchy of different classes of inhabitants: the ruler, his direct followers (usually military), the wealthy who provided financial resources, and the poor who were the vast majority of the population, whether slaves, peasants, serfs or servants, who supplied the labor on which the entire nation depended.
The average life span of mankind was about 35 years. This pattern, with a few exceptions, endured for most of human history. Until the 18th century. Then human life began a radical series of changes. Between 1700 and 2020 human life span grew from 35 years to over 70. The average annual income grew from a few dollars a year to $10,000 a year. (Gallup 2012) And world population grew from an average 1% annual increase for 1000’s of years to about 610 million in 1700 and nearly 8 billion in 2020 (Source: Worldometer).
It started with one of the exceptions to totalitarianism mentioned above. Beginning in the early Middle Ages (c. 11th century), some European merchants began to form caravans to travel from place to place buying and selling merchandise. Since merchants in general were discriminated against in Medieval Europe, they were not subject to any specific prince, and they were freemen. They soon banded together for defense against outlaws and princes alike forming the Great Caravans of Europe. In time, many began to accumulate wealth and became bankers as well as traders. They were the first middle class, instrumental in the formation of the guilds of tradesmen which consolidated the identity of a middle class — neither nobility, peasants nor clergy – all of whom opposed them. [Note: trade routes and caravans existed throughout the ancient world from time immemorial but were not “free” of any jurisdiction.]
There had been numerous intellectuals who taught the separation of Church and State (including Thomas Aquinas in the 13th century) and limited government (e.g. John Wycliff in the 14th century), but none had the political and financial strength to effect cultural changes. In the 18th century, however, these ideas combined with an emerging middle class to begin the most radical change in history. A new movement came into being and caused the revolutions which characterized the next two centuries, from the American Revolution (1776) to the Russian Revolution (1917).
This movement yielded three major views of how a country should be run: socialism and democracy as political systems and capitalism as an economic system. All involved the overthrow of the totalitarian government. The difference was in who led the revolt: the Europeans (and later the South Americans and others) were led by the poor people; the Americans by the middle class. The poor people had no experience of handling money or building an economy. They considered the wealth of the nobility a bottomless pit and they invented socialism. The Americans were led by wealthy middle class lawyers, plantation owners and merchants. They feared the power of governments and invented democratic capitalism.
The different types of socialism will be discussed next week. But first, let’s look at America’s democratic capitalism.
The American Way
The United States of America was a land controlled by people who had escaped both the walls and the comforts of the Old World and had survived in an environment which rewarded courage, skill and endurance, rather than birth and privilege. Their bias was against rather than favorable to government. They saw government as a greedy king out to take away their liberty. They therefore fashioned a government which was limited in every way by competing forces: the federal government by the states, the president by the legislature, each House of Congress was limited by the other, everybody by the courts – and so on down the line to the local dogcatcher.
The purpose behind this design was to keep government officials from ascending to the powers of that old king. They understood intuitively the saying of John Lord Acton a century later: “Power tends to corrupt, and absolute power corrupts absolutely.”
What they have left us is the American version of a capitalist society. It is dynamic, constantly changing. The poor may not always be poor; the rich may not always be rich. In fact, most Americans (58.5 percent) will spend at least one year below the poverty line at some point between ages 25 and 75 according to Yale University’s Jacob S. Hacker (The Great Risk Shift, New York, 2006). The wealth of the society is expected to grow constantly through the creation of new opportunities, new products and services, new jobs, new skills, and new technologies, leading to new and expanding wealth.
For Americans, the fundamental error of socialism is that it does not account for the creation of that wealth in the first place. Government cannot confiscate what isn’t there. Socialists foresee the proverbial pie of underclass income being cut into more and more pieces; Americans keep creating a bigger pie.
America’s Democratic Capitalism
The United States of America has brought together economic capitalism and political democracy in a dynamic tension which we call democratic capitalism, and which has produced the most prosperous nation in the history of the world. Its greater attribute is that it provides hope – hope that the poor may be able to escape the bonds of poverty as so many Americans have done in the past. This hope is the shining city on the hill which still attracts the envy of millions.
It has taken Americans most of our history as a nation to achieve the balance by which capitalism is accountable to democracy, and there are still many problems to be solved. Nevertheless, Americans are always optimistic.
The motivation for individual Americans to persevere in pursuit of their personal goals is provided by the real and potential ownership of private property. No other motivator – not coercion, not slavery, not charity, not communal property – not even religion – has ever been found which can impel vast numbers of individuals in a society to be hard working and creative. Providing a good life for oneself and one’s family is a motivator above all others.
Life, Liberty and the Pursuit of Happiness – the American Way
Our history has proven that personal freedom is a necessary prerequisite for the success of this system. An oppressive government – even if well-intentioned – sucks out the initiative required to make an ever-better life for all of us. Personal freedom without economic freedom is no freedom at all. Capitalism, in a refined and mature linkage with democracy, provides the economic power which makes freedom possible.
The challenge to Americans is not to change an evil system; it is to live up to the ideals which are required for that system to succeed.
Freelancers are rising up in opposition to the state’s new law regulating “gig workers.”
By City Journal•
Are California Democrats—responsible for the state’s new anti-gig-worker law, AB5—so out of touch that they’re not aware of the growing anger of their constituents? It appears so.
Since AB5 took effect on January 1, hundreds of thousands of Californians are finding their businesses in tatters. Musicians can’t join bands for a one-night gig, chefs can’t join forces with caterers, nurses can’t work at various hospitals, and writers must cap their submissions per media outlet to 35 per year. Under the law, these freelancers can no longer conduct the same business-to-business transactions they have for years or even decades. Clients with whom they fostered valuable relationships are gone—as are their successful careers and incomes. An overwhelming majority of professionals in fields affected by AB5 identify as liberals and have generally voted along the blue line. Today, however, many are so disillusioned with their representatives that they’re changing political loyalties.
When Gloria Rivera, a San Diego-based, Peruvian-born translator and interpreter, achieved U.S. citizenship, the first thing she did was register as a Democrat. “Now I’m seeing a lot of people like me who are either going Independent or Republican,” she says, “myself included. The Democrats are not listening to us.”
Lorena Gonzalez, the San Diego assembly member who authored AB5, faces public condemnation wherever she goes. Online and in person, independent contractors are confronting Gonzalez and demanding a repeal of the law. Her condescending response: independent contractors need the protection of union-driven labor laws. In a damning KUSI news interview, Gonzalez denied that AB5 has resulted in widespread income loss. Her dismissive attitude has fueled outrage against Democrats. “Lorena Gonzalez is doing a great job turning everybody red,” says Rivera.
Gonzalez deserves much of the blame for the AB5 train wreck, but she had plenty of support from her party: nearly every assembly member who approved AB5 is a Democrat, including Governor Gavin Newsom. Those opposed: Republicans and Independents. Senator Patricia Bates, a Republican state senator representing parts of Orange and San Diego counties, has been hearing from constituents who had no idea that they were swept up in the AB5 net. “They’re asking, ‘Who did this to me?’” says Bates. “I don’t like to make it partisan, but I have to tell them the majority party that runs the show did it. There’s a new awareness about the anti-business environment and how it affects their right to work, to be free.”
Independent contractors are entering new territory. Suddenly, a more conservative approach seems more attractive. “My entire political mindset has changed drastically following the enactment of AB5,” says Cathy Hertz, a freelance copyeditor of STM (science-technology-medicine) books, from Loma Linda. Hertz campaigned for Barack Obama cross-country at her own expense in 2008; she campaigned for him locally, in Los Angeles, in 2012. “Now I feel that the rights of entrepreneurs are being stifled, trampled upon, violated,” she says. “Free enterprise is one of the main pillars of modern democracy.”
Apparently oblivious to the reaction in California, congressional Democrats have passed HR 2474, a national version of AB5, known as the “Protecting the Right to Organize” or “PRO Act.” The PRO Act, designed to boost union membership, will put 57 million independent contractors across the country out of work if it becomes law. These enterprising professionals will be forced into low-paying jobs—if they can find them—with none of the autonomy, flexibility, or opportunity that they currently enjoy. When the Trump administration denounced the bill, people who normally hiss at mention of the president’s name found themselves in a peculiar position: feeling grateful.
As for Gonzalez, she’s up for reelection this year and is aiming for secretary of state in 2022. Her campaigns will be tougher than she likely imagines. The movement against her is ramping up.
“I see a revolution on the horizon,” says David Mills, a musician from Lake Elsinore who created the Facebook group Freelancers against PRO Act. “This may be the final straw that breaks the camel’s back. But I think it’s leading to something good. The American people on all sides are waking up. We’ve gotten too caught up in partisan support. Now we’re paying attention. There is a huge uprising. People had to lose their jobs to find out what it was.”
Kevin Kiley, a Republican assembly member representing a large swath of Sacramento and a vocal ally of independent contractors, agrees. In January, he led a rally on the steps of the state capitol against AB5 and introduced a bill to repeal it. “We have a capital that’s controlled by special interests, and the public good isn’t even considered,” says Kiley. “That disconnect is stark. I’m more motivated to change this law than anything I’ve ever worked on because it has such a direct and negative impact on peoples’ lives. I believe very deeply in economic freedom, the right to pursue your calling. AB5 is a grave moral offense. So if there’s a silver lining to all this, it’s giving a diverse range of people a window into the dysfunctional nature of politics in Sacramento. For those who are disenchanted with the political majority, there is now an opportunity for alternatives.”
Such alternatives are popping up around the state. Evan Wecksell, a comedian and tutor by trade, is running for state senate as a write-in candidate for District 25, which encompasses parts of Los Angeles and San Bernardino county. He was registered as a Democrat until recently. Today, he’s a Libertarian.
“I definitely sense a change,” says Wecksell. “People who swore they would never vote for a Republican are doing it. We were not up to speed with knowing what was going on in Sacramento, but AB5 was a lesson and we’re learning from it. They’re taking away our natural human rights.”
Independent contractors are a unique bunch. Deeply committed to individual liberty, they’re becoming a unified group of fighters in California. They come from all walks of life and political persuasions, and if voting differently means that they can continue to run their businesses as they see fit, then so be it. Unless Democrats change course, the AB5 revolt may be the Brexit that the U.S. never saw coming. California certainly didn’t.
Raising concern “about the direction the health care policy debate is moving” – particularly among conservative lawmakers – the National Center for Public Policy Research has joined with more than 70 other conservative and free-market organizations to warn Congress about the dangers of price fixing.
In trying to remedy the issue of surprise medical bills for out-of-network emergency treatment, and insurers balking at covering all of such costs, some typically conservative politicians are favoring proposals to essentially enact price controls on these health care services. This would prohibit doctors and hospitals from setting their own rates and potentially make them operate at a loss.
Senator Rand Paul has explained that this could compromise the quality of American health care by driving people out of the medical field. “If you fix the price that ER doctors work at,” he said, “you will get a shortage.” He suggested that what has happened to the economy in Venezuela could happen in the United States as a result of such changes to the marketplace.
In a letter to conservative lawmakers on Capitol Hill, the National Center and others note:
[W]hat is troubling is how often otherwise right-of-center policymakers are resorting to one of the key pillars of the Medicare for All playbook – government imposed price controls. Whether it is called price fixing, rate setting, subsidy capping or inflation capping, government price controls have wormed their way into the healthcare reform plans of too many of our friends in Washington.
The National Center is joined on the letter by organizations including Americans for Tax Reform, the Competitive Enterprise Institute, Frontiers of Freedom, the Discovery Institute, the Institute for Policy Innovation and Eagle Forum.
The coalition letter concludes:
This was a bad idea a half century ago with gasoline line rationing, and it’s a bad idea today in health care. Something can only be affordable if it’s available to buy in the first place.
To read the entire letter and see all of its signers, click here.
Last week, the California Senate passed a new bill that will cause somewhere between one million to two million workers, perhaps even more, to lose their status as independent contractors. If California governor Gavin Newsom signs the bill, an independent contractor will have to satisfy the following legally binding criteria:
The first of these three requirements highlight just how difficult it will be to qualify as an independent contractor in California. And all three requirements taken together will make it nearly impossible to be classified as an independent contractor. The obvious intent of this worker reclassification bill is to force workers who presently work as independent contractors into old-school employer-employee contracts.
Are you looking to hire a gardener, housekeeper, handyman? Be careful, because according to this new bill, all these people may be required to be treated as your formal employees.
This is an incredibly dangerous bill, and not just for gig-economy companies such as Uber and Lyft. Following the bill’s passing in the state senate, media headlines trumpeted “Big Win for Labor,” but this is about as misleading as can be. Rather, this bill is likely to be a big loss for most everyone other than unions, politicians who are supported by unions, and the state’s unemployment and disability reserves. And the biggest losers will be those whom the bill’s “winners” claim to support: immigrants, workers without advanced education, lower-income households, and women, who often require much more flexible schedules than men.
Sharply curtailing the use of independent contractors will raise business costs, which in turn will raise prices, reduce demand, increase business failures, and depress economic activity. When analyzing economic policies, there is no more of an inconvenient truth than the laws of supply and demand, which tell us that this bill will be a huge negative for the State. But the bill’s supporters are turning a blind eye to this.
Higher business costs will not be due to businesses that previously were “exploiting workers and shirking their social responsibilities,” as has been frequently argued by supporters of the bill, including Newsom. Rather, app-based businesses will have to completely change their organizational structure and create entirely different business plans.
App-based businesses such as Uber and Lyft are rightly concerned, because forcing them to hire their independent contractors as formal employees requires them to depart sharply from what they currently do, which is to create proprietary software that matches drivers with riders, and manage how that software is used.
Instead, Uber and Lyft will now become taxi companies, in which they will need a much larger human resources department, as well as a scheduling and strategy department to figure out where to send drivers and when. They would need to deal with the myriad issues that arise when managing employees, including determining which drivers get peak-demand schedules, such as Friday nights, and which get low-demand schedules, such as Sunday mornings.
Not surprisingly, Uber and other app-based companies have pledged $90 million to fight this bill should it become law.
There is no doubt that the costs of complying with this bill will be much higher for gig-economy businesses such as Uber. An important reason this bill is so dangerous is that much of our recent economic growth is from these gig-economy businesses. Forbes estimates that roughly 36 percent of today’s workers are in the gig economy, accounting for about 57 million US jobs.
These 57 million jobs have been created in just the last 10 years. The Great Recession was kept from being much worse because the gig economy developed around the same time and created new and much-needed economic opportunities when jobs across many traditional sectors, including autos, construction, and finance, were plummeting.
Governments should be thanking those who took enormous risks, particularly at the time of the Great Recession, to create these entirely new app-based businesses. They are now a fundamental part of the US economy and are creating substantial new economic opportunities, as well as providing new services that consumers desire.
But instead, California is risking killing the goose that laid those 57 million golden eggs. It is hard to conceive of a worse state-level economic policy that realistically could become law.
So who benefits from this? It is potentially a win for unions, who want the bill because it creates a large new pool of potential union members. I say “a potential win,” because unionization in the private sector is now below six percent, and there is no reason to expect that trying to unionize gig businesses will be any different. And since unions want the bill, it is no surprise that state lawmakers, who are supported by unions, want it.
But this bill can devastate economic opportunities for those who are presently independent contractors and who would be forced to become employees. A recent Los Angeles Times column included interviews with those who presently are independent contractors but who would lose that classification if the bill becomes law.
The interviews predictably show that current independent contractors value schedule flexibility very highly and are extremely concerned about scheduling difficulties should they become employees. One Uber driver noted that his wife was fighting breast cancer, and his ability to determine his own driving schedule meant that he was able to take her to all her medical appointments. He worries about what will happen if he must become an employee and lose his ability to determine his own driving schedule.
Another Uber driver, one who supports the bill, claims that his pay is too low, and hopes that this reclassification will increase his pay. And Uber, which lost $5 billion last year and is currently laying off some of its professional staff, might agree with him that his driving services are undervalued. But what matters is the market value that riders – not rideshare drivers – place on this service. Rideshare drivers who support this bill may very well be in for a negative surprise if this bill becomes law.
Not so long ago, this bill would not have seen the light of day in California. At one time, state political leaders understood that their job was to promote freedom and economic opportunities for all. Sadly, this is no longer the case, and the most vulnerable in the state are the ones who will lose the most if this bill becomes law.
By Christian Barnard • Reason
“Do School Vouchers Only Benefit the Wealthy?” asks an article this month in Governing. Like too many headlines, the implication is that school choice is a scam that disproportionately benefits wealthy students who already live in high-performing districts. The Governing story suggests that Arizona’s education savings accounts (ESAs)––publicly-funded savings accounts that parents can use to pay for private school tuition or other education services for their children––rarely help out those who authentically need assistance, favoring already-privileged children instead.
The article cites a 2017 report from The Arizona Republic which found that 75 percent of the ESA money went to students leaving districts that had an “A” or “B” ranking, and only 4 percent of the money followed students opting out of districts rated “D” or lower.
But these numbers hardly even hint at the full story. Arizona’s ESA program can only be used by specific groups of disadvantaged students. In fact, Arizona Department of Education data from 2017 reveals that 82 percent of ESA recipients were students with special needs, from military families, or students from D/F rated schools. Continue reading
By Jack Crowe • National Review
President Trump announced during a Wednesday press conference that his meeting with European officials yielded key trade concessions, including an increase in American soybean and liquefied natural gas (LNG) exports to Europe, and a commitment to work toward eliminating non-auto tariffs entirely.
“We have agreed today to work toward zero tariffs, zero tariff barriers and zero subsidies on non-auto industrial goods,” Trump said, reciting a joint statement crafted with European Commission president Jean-Claude Juncker. “We will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans. The European Union is going to start almost immediately to but a lot of soybeans, they’re a tremendous market, to buy a lot of soybeans from our famers in the midwest primarily.”
“The European Union wants to import more liquefied natural gas from the United States and they’re going to be a very big buyer. We’re going to make it much easier for them but they will be massive buyers, so that they will be able to diversify their energy supply,” he added.
By Adam Mill • The Federalist
Recently, Jesse Kelly wrote a worthy article forecasting the United States’ decline and eventual suffocation in the quicksand of socialism. He correctly notes that as government gets bigger, freedom must get smaller.
Kelly clearly fears a socialist America will follow the failures of Greece, Venezuela, and every other country that has followed a welfare state model to its logical conclusion. While he is absolutely right that economic failure and socialism are inexorably related, he is not correct that the United States is on an unstoppable path to this oblivion.
Take cheer, Kelly: we have reason to be optimistic as a result of President Trump’s brief but dazzling experiment with cutting taxes and regulation. While government is growing, it’s not growing fast enough to crowd-out all freedom. One byproduct of the Trump boom is that economic growth is actually outpacing growth in government spending. The government’s share of gross domestic product has fallen to Continue reading
The economy is booming. Even the New York Times, no fan of the president, decided that “splendid” and “excellent” were appropriate adjectives to describe Friday’s jobs report from the Bureau of Labor Statistics.
These showed the nationwide unemployment rate falling to 3.8 percent. If it improves yet further, it will hit lows not seen since the 1960s. The unemployment rate among black people fell to 5.9 percent, an all-time low, which makes one wonder how many African-American voters might think twice about voting against the incumbent Republicans in the midterm elections. The Hispanic or Latino unemployment rate ticked up a tenth of a point, but remains below 5 percent. Before President Trump took office, that stat could only be said of one month since the statistics bureau began tracking it in the 1970s.
The good news is not confined to the fact that there is an abundance of jobs. Wages are rising, too. For the first time Continue reading
By Stephen Moore • Investor’s Business Daily
T.S. Eliot famously wrote that “April is the cruelest month,” but when it comes to America’s fiscal picture, nothing could be further from the truth about this April. The latest government numbers confirm that last month was a blockbuster for growth, federal revenues, and deficit reduction.
One of the key principles of Trumponomics is that faster economic growth can help solve a multitude of other social and economic problems – from poverty, to inner-city decline, to lowering the national debt.
We’re not quite at a sustained elevated growth rate of 3% yet, but the latest economy snapshot tells us we are knocking on the door. The growth rate over the last four quarters came in at 2.9% — which Continue reading
Economy: Have Donald Trump’s policies had a big impact on the U.S. economy and its competitiveness? The answer, we think, is an obvious yes. Now comes a new report, based mainly on “hard” data, that confirms that.
The report comes from the IMD Competitiveness Center in Switzerland. Each year it ranks countries by 256 different variables to come up with its global competitiveness rankings.
For 2018, there was a surprise: The U.S. leapt three places to take over the top spot in global competitiveness — just ahead of Hong Kong, Singapore, the Netherlands and Switzerland. That jump was based on its “strength in economic performance and infrastructure,” ranking first in both areas.
That this is so shouldn’t shock anyone with any knowledge of what’s going on in the economy.
Since Trump took office, GDP growth has Continue reading
Washington D.C. – This week, the U.S. Postal Service released its financial report for the midway point of the 2018 fiscal year, which detailed yet another distressing loss of $1.3 billion. After monitoring the Postal Service’s financial mismanagement for years, Frontiers of Freedom expressed its continued concern about the agency’s direction.
“The latest losses posted by the USPS offer yet another indicator that the organization and its governing bodies have neglected to offer meaningful solutions to avert a likely taxpayer bailout of the Postal Service,” said George Landrith, president of Frontiers of Freedom.
Landrith further discussed the Trump Administration’s work to address the beleaguered agency: “The new Postal Task Force to be led by Secretary Mnuchin offers a promising step towards implementing structural changes that the USPS needs. It is imperative that the Task Force identify the right path forward. Any serious proposal will ensure that the Postal Service fixes its deteriorating letter mail service for all Americans and becomes a sustainable operation well into the future. But making minor course corrections at this point will not get the job done. The problems at the USPS are serious enough that real and bold reforms are required. There is no time to waste.”
As Frontiers of Freedom notes, the Postal Service’s ability to provide reliable and efficient mail service to all, and especially for those in rural communities, is a significant point of concern. A recent report by the USPS’ regulator found that the Postal Service failed to meet its performance objectives for every single service included within First-Class Mail.
Previous policymaking and management practices have proven insufficient for correcting the Postal Service’s course and the Administration must now seek new drastic changes to ensure a genuinely accountable and sustainable operation.