California Bill Makes App-Based Companies Treat Workers as Employees (nytimes.com) 188
California legislators approved a landmark bill on Tuesday that requires companies like Uber and Lyft to treat contract workers as employees, a move that could reshape the gig economy and that adds fuel to a yearslong debate over whether the nature of work has become too insecure. From a report: The bill passed in a 29 to 11 vote in the State Senate and will apply to app-based companies, despite their efforts to negotiate an exemption. California's governor, Gavin Newsom, endorsed the bill this month and is expected to sign it after it goes through the State Assembly, in what is expected to be a formality. Under the measure, which would go into effect Jan. 1, workers must be designated as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company's regular business.
The bill may influence other states. A coalition of labor groups is pushing similar legislation in New York, and bills in Washington State and Oregon that were similar to California's but failed to advance could see renewed momentum. New York City passed a minimum wage for ride-hailing drivers last year but did not try to classify them as employees. In California, the legislation will affect at least one million workers who have been on the receiving end of a decades-long trend of outsourcing and franchising work, making employer-worker relationships more arm's-length. Many people have been pushed into contractor status with no access to basic protections like a minimum wage and unemployment insurance. Ride-hailing drivers, food-delivery couriers, janitors, nail salon workers, construction workers and franchise owners could now all be reclassified as employees.
The bill may influence other states. A coalition of labor groups is pushing similar legislation in New York, and bills in Washington State and Oregon that were similar to California's but failed to advance could see renewed momentum. New York City passed a minimum wage for ride-hailing drivers last year but did not try to classify them as employees. In California, the legislation will affect at least one million workers who have been on the receiving end of a decades-long trend of outsourcing and franchising work, making employer-worker relationships more arm's-length. Many people have been pushed into contractor status with no access to basic protections like a minimum wage and unemployment insurance. Ride-hailing drivers, food-delivery couriers, janitors, nail salon workers, construction workers and franchise owners could now all be reclassified as employees.
So does this bill aim to make freelancing illegal? (Score:2)
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I'm not entirely sure if that was the intent, but I can sure as hell see it being a consequence.
I doubt it. From the news reports this bill was pretty targeted just for companies like Uber and Lyft. Specific exemptions have already been inserted for delivery people, custodial work, etc.
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We regulate specific industries all the time. For a relevant example, look at the regulations around taxis.
Re: So does this bill aim to make freelancing ille (Score:2)
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There was some concern about building tradespeople earlier on in the process, but not sure how it ended. (Also not sure what the right classification for them would be.)
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The bill does nothing to change the definition of a freelance contractor in California. It only clarifies that companies in the so-called gig economy are not exempt from existing California labor laws. There are fairly strict definitions in place for who qualifies as a contractor and who is an employee, and that applies to every type of company.
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Many (EU) countries have the concept of virtual employment:
A true freelancer is not affected. But if you're a freelancer but are dependent on a single "customer" for, say, more than a year, you are determined to be virtually employed.
The result is that the company must pay social security taxes in addition to the state, about 20-40% extra.
Companies don't like that, so either they have to rotate their freelancers, or hire them permanently.
It is intended to prevent companies from diminshing their responsibil
What if people do not WANT to be employees?? (Score:5, Insightful)
I have talked a lot of Uber/Ltfy drivers, because I like asking them how they feel about doing their jobs for these different companies (most of them work for both).
Almost all of them say they really like the freedom they have, about working whenever they want, however long they want.
If they become employees doesn't it seem like that will be curtailed?
Also speaking of most of these drivers working for both companies, is that even allowed if they are considered real "employees'".,,,
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Re:What if people do not WANT to be employees?? (Score:4, Insightful)
Re:What if people do not WANT to be employees?? (Score:5, Insightful)
Don't forget, the State then gets to also charge things like unemployment and disability insurance, so moving them to employees drops billions in to Sacramento's coffers...
Excellent! Unemployment and disability insurance are there for a reason. It's not like Ubers and Lyfters are safe from unemployment or disability.
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Re: What if people do not WANT to be employees?? (Score:2)
You can be a part time employee and have flexible hours. There is no law preventing that. You can also incentivize with commission and bonuses on top of the base pay.
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unrelated (Score:2)
That's unrelated to whether or not somebody is an employee. If these "app" companies want to let their employees choose their workload, that's up to them.
Re:What if people do not WANT to be employees?? (Score:5, Insightful)
For sure, dude! Everybody knows it's, like, ILLEGAL for somebody to have 2 jobs with 2 different companies. Right?
It can be illegal if you are fraudulently working for both at the same time.
As a contractor, you are paid for completing a ride, so working for both is no problem.
As an employee, you are guaranteed a minimum wage for your time.
But if you have both the Uber and Lyft apps open while you wait for a fare, which company is paying you for that time?
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Remember what made CA great? (Score:2)
What happened when the East coast of the USA got too expensive?
Projects and money moved to CA.
Make app-based companies pay more in CA?
Do app-based companies need the good weather of CA and its app tax?
Re: Remember what made CA great? (Score:3)
Cheap colleges is what really made CA a tech hub. Now that's over and tuition is increasing at a record rate we can expect the slow exodus of businesses. Silicon Valley is no longer the focal point of the brain drain, and sadly the rest of US won't be the winner in this either. We already see an international spread of new campuses and increases in hiring outside of the US. The party is over, and the East coast isn't going to suddenly rise up from the West coast's ashes.
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The East coast needs to get its no new app tax message going..
Speaking as a Calif. Republican... (Score:5, Interesting)
...every once in a very great while Newsom (and our California Democratic one-party overlords) surprise me.
This is a good law, for several reasons. First off, the workers clearly *are* employees. "Ride-sharing" may have originally been a noble carpooling goal, but it's blatantly obvious to anyone who uses the service that Uber and Lyft are functioning as employer-provided services. That much is clear. Secondly, the lack of rules-following that these companies (Uber in particular) have gotten away with is staggering. It's only *because* they've flouted rules on employment, payment, insurance, and regulation (or successfully dodged enforcement of arguably applicable ones) that they've "succeeded" this far... Of course, I say "succeeded", but Uber loses money constantly and shows no signs of going into the black any time soon. In the meantime, real existing entities suffer disruption that they can't compete with because they're playing by the rules and regulations that we've had in place for a long time. That's blatantly unfair and quite anti-competitive.
CA is generally a horrible climate for businesses, but allowing app-based business to disrupt those existing ones by side-stepping rules doesn't help anyone in the state except Silicon Valley investors. Either deregulate everybody, or stop letting the Bay Area walk all over physical, bricks-and-mortar, existing, or mom-and-pop shops.
My $.02
Re:Speaking as a Calif. Republican... (Score:5, Informative)
So I haven't paid attention to this in a long time, but I am unclear why "the workers clearly *are* employees" when they set their own hours, decide their own location to work, provide their own vehicle, and don't get paid a salary. In what way are they employees?
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No idea who you are, but I'm willing to bet I had proved my GOP bona-fides before you were able to vote.
I'm a libertarian-ish/leaning Republican, but that doesn't mean I have to be a pure Libertarian, nor must I conclude that all regulation is bad. Some regulations are good. I'm no fan of Newsom or the CDP (no CA Republican could be), but leveling the playing field by requiring everyone in a given industry to play by the same rules makes for better competition.
Look, I'm old enough to once have been naive ab
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This is one of those cases where the uncertainty of not yet having decided is worse than deciding it one way or another. In t
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I was trying to think of what makes my contracting work different than what you described. Because everything you mentioned is par for the course for contractor programmers like me. I go into work like normal, and work on critical projects on company equipment, just like any other employee.
The key difference, IMO, is that I've always been hired for a fixed (if negotiable) length of time for a specific job. If you're paying someone more or less indefinitely, it seems like that's more of an employee and le
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I was trying to think of what makes my contracting work different than what you described. Because everything you mentioned is par for the course for contractor programmers like me.
Is that really the current norm? Is this a California thing?
My main role is IT ops, not programming, but since some things require custom programs I always use contract programmers for those things.
I've never once experienced a contractor even expecting, let alone operating, the way you describe:
I go into work like normal, and work on critical projects on company equipment, just like any other employee.
All of the contractors I've worked with, easily a couple dozen, either work independently (aka from home) or work for a company that specifically hires employees for them, and that company does the contracting.
In n
talking points (Score:2)
I'm sure that they're the 5th largest economy on the planet because it's such a horrible business climate. That makes total sense.
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Heard of 1099?
You are taxed regardless. This just shifts the tax burden away from the employee, yes, employee, and onto Uber/Lyft, which brings with it a whole slew of benefits for the employee.
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Heard of 1099?
You are taxed regardless.
A 1099 is only filed if your income exceeds $600, and are not filed at all if the recipient is incorporated. You can sometimes stay under the $600 threshold by having checks made out to your spouse or kids. My housekeeper does this. I pay her $120 to clean once a month, so $1440 annually. So she asked me to split it into three checks made out to three different people. I don't have to file any 1099s, and she avoids taxes. Win-win.
Contractors are supposed to pay income tax on 1099 earnings (although m
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Heard of 1099?
You are taxed regardless.
A 1099 is only filed if your income exceeds $600, and are not filed at all if the recipient is incorporated.
Based on my discussions with Uber drivers (and friends) here in San Diego, the vast majority of those who drive make far more than this. Otherwise it's barely worth the hassle.
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My housekeeper does this. I pay her $120 to clean once a month, so $1440 annually. So she asked me to split it into three checks made out to three different people. I don't have to file any 1099s, and she avoids taxes. Win-win.
Isn't this tax fraud?
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Isn't this tax fraud?
Yes, yes it is. Now if $1440 is something the IRS will go after someone over, is another story, but dang, why would you just fess up to fraud on the Internet?
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Isn't this tax fraud?
Why? Do you want to turn her in?
Most likely you are committing tax fraud as well. Do you report cash income from your garage sale? Do you pay the sales tax for items you buy on eBay?
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BINGO. It's the 4.4% unemployment and disability tax that Sacramento now gets to charge on every dollar that any driver earns. Sacramento is looking for yet another source of revenue...
Uber and Lyft are already bleeding cash. So these extra taxes will have to come from either paying employees less, or charging customers more. If customers are charged more, some will use other transportation options, which will mean fewer fares for employees.
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DUMBO. If you earn income, you're supposed to pay your fucking taxes.
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Yes, as a contractor, you are responsible for paying the taxes. But as a contractor, you are not eligible to collect UI and DI [thebalancecareers.com] from the State. So you don't pay those taxes. But then, if they become employees - the State gets to collect.
It's quite apparent you've never run a business, or even been a contractor, if you don't understand this very basic thing. Contractor/self-employed = no UI/DI. Employee = UI/DI. State likes the latter...
it's a stupid bill (Score:4, Funny)
The right approach is anyone who isn't a licensed contractor is an employee. From a maid to a web designer, no special casss. Once someone is licensed with the state and sets up a sole proprietorship or LLC then they can be a real contractor.
Outlaws independent contrators (Score:4)
Re:Outlaws independent contrators (Score:4, Funny)
Also happening in BC in Canada (Score:2)
The West shall make you free!
Software Dev Contractors (Score:2)
The whole point of being a freelancer/contractor is to do the work, when you want, how you want and where you want as long as deadlines are
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The whole point of being a freelancer/contractor is to do the work, when you want, how you want and where you want as long as deadlines are met, no matter how many hours it takes. If we are stuck working full time and cant even work remote then whats the point? All they want to have is the availability and work of a regular employee, without having to pay for benefits.
The company also gets to shift it's payroll tax obligations (~7.5%, for SS and Medicare) onto you (assuming US). So, a definite win from their point of view...and what are you going to, risk getting blackballed by standing up for your rights. Don't jeopardise your credit rating, boy.
Double Edged Sword (Score:2)
Oh no! (Score:2)
That's the end, then... (Score:3)
As CoyoteBlog as already discussed in detail: this is the beginning of the end for companies like Uber and Lyft. [coyoteblog.com]
If workers are contractors, they can choose when and where they work. If they want to hang around at some suboptimal place - maybe at home - waiting for a gig, that's on them. Uber/Lyft don't care how efficiently they use their time. One they are employees, that freedom is gone. If they are on salary, they will be told where to wait, when to work, which rides to give. They will be required to be efficient, or they will be fired.
There's the old saying: "Be careful what you ask for, because you might get it."
For Uber and Lyft, well, they are now just ordinary taxi companies, with apps and ridiculous valuations. Of course, that's all they ever were, just like WeWork is just a real estate company with espresso machines.
We're destroying something unique (Score:2)
This won't stand up to an Appeal (Score:2)
I am assuming this summery is poorly written, as I am pretty sure a law using that wording would make Google and Amazon employees of millions of other businesses. But I have to wonder how they expect to enforce this? How do they expect to basically make two independent corporations signing a contract to exchange goods and services illegal?
It disembowels the entire American system of equality, marking every actor as either a serf or a baron.
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California is the US's largest state economy, so good job at giving yet another example of Republicans not understanding economics.
The trickle down will arrive soon, just hopes and prayers more.
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I guess CA doesn't have faith that the common person can decide for themselves if the terms of a contract is worth their time or not.
I mean, it isn't like most people treat Uber or Lyft as a full time job, its just something to earn side money.
I guess CA doesn't like that either....and feel the STATE has to decide for the lowly common citizen how they best want to spend their time earring money.
I mean, it isn't like anyone holds a gun to the hea
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Well, so much for trusting people to contract as they wish.
By your logic, let's abolish the Department of Labor altogether.
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Well, so much for trusting people to contract as they wish.
By your logic, let's abolish the Department of Labor altogether.
You say that like there aren't well funded mainstream political organizations that have that as their explicit goal.
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You say that like there aren't well funded mainstream political organizations that have that as their explicit goal.
Sure but the one you're probably thinking of didn't invent the idea. They just jumped on the bandwagon as a bunch of posers without any original thinking whatsoever. I was really just playing devil's advocate because if you're going to play the Anarchist Libertarian card, you have to abolish everything. If you don't, you have to explain why it's good to keep one piece of legislation and based on what virtues and/or justification and why not to keep the others. I was merely pointing out GP was engaged in
Re:More Socialist left-coast BS (Score:4, Interesting)
I guess CA doesn't have faith that the common person can decide for themselves if the terms of a contract is worth their time or not.
It does not, and with good reason. In the 1990s there was a major crackdown in California on ... guess who? ... the major tech companies of the time (Oracle, HP, etc) for categorizing workers as contractors when clearly they met the definition of employees. The practice was widespread, and California put a stop to it.
This is not just California, either. The IRS has developed a checklist of about 20 questions to determine whether someone meets the definition of a contractor.
Re:More Socialist left-coast BS (Score:5, Insightful)
I mean, it isn't like anyone holds a gun to the head of a person forcing them to drive Uber/Lyft.
On the other hand, you might be surprised at how many of their legal rights someone might be willing to waive when they have to pay the rent and keep food on the table.. So in a sense, yes, it's a gun to their head. That's why government regulation is necessary.
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And the thing is, these days, most contracts are not negotiated. They're contracts of adhesion, where some corporation specifies the terms, and the person on the other end can either accept the terms or reject them, with no opportunity to change them. It takes a huge percentage of people rejecting the terms and somehow managing to miraculously make the reasons for that rejection known in spite of thick layers of corporate bureaucracy designed to insulate the upper management from the general public befor
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It's basic employment law - you have to know what's a contractor and what's an employee, and this was presumably settled law that everyone understood until Uber upended it. Ie, at McDonald's the person serving you the food is not a contractor, that's an employee getting wages. Having contractors do exactly the same job as an employee in the next cube over, with the same hours and same supvervisor structure, is an anomaly and a bending of the law that most companies turn a blind eye to.
So what this law say
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Re: workers rights before corporate greed (Score:5, Insightful)
We outsource to them because it costs too fucking much to employ people in the usa anymore. You have run business to the ground or out of every town and forced them to cheaper countries. Increasing pay rate decreases competition and decreases employment and decreases overall business. You eliminate low margin production. You eliminate startups. You eliminate jobs for labor or immigrants. You do everything but what you want to accomplish. We should be lowering prices and cost of living not increasing it.
Wrong.
Pay your fucking people moron, they are the ones that buy shit.
Re: workers rights before corporate greed (Score:5, Insightful)
Isn't this a classic tragedy of the commons situation?
As an individual firm, if I outsource my labor and nobody else does, then I pay less for labor but the consumer economy is still healthy, because my potential employees represent only a small portion of that consumer economy. Thus, there's an incentive for me to outsource. Since there's an incentive for individual firms to outsource, more and more individual firms decide to outsource to get the benefits. As this behavior becomes more common, the consumer economy starts to take more and more of a hit, thus degrading the resource for everyone. If all the firms worked together to preserve this resource, then we'd all be better off but these individual "best" decisions led to this poor collective situation. Since this resource is where most of the money comes from in a healthy economy, I am hurt much more by the loss of this resource than I gained by outsourcing (though the damage may not be obvious since we can only the current economy to past economies, so we can't see that we'd be much better off today if we still had a strong consumer economy today).
Worse yet, in this particular case the problem is self-reinforcing (leading to a death spiral/race to the bottom). As an individual firm I think "If I outsource, I can make more profit!" but once most firms are doing this, I find out that my customers can't pay nearly as much, so I am forced to lower my prices to stay in business. This means that any firm that didn't outsource is now dealing with other firms charging lower prices and customers that can't afford their products anymore and no good way to decrease prices, causing them to go out of business (or to start outsourcing). This weakens the consumer economy further, forcing prices down further, forcing more local firms out of business, continuing the cycle until more or less all the local firms are out of business.
Of course, the real economy is more complicated, some work can't be outsourced and local firms can find niches that allow them to survive and thrive even in this situation. Government employment also forms a base of consumer spending that is not impacted by this. Some economic activity is not part of the formal economy. These kinds of factors have kept the death spiral from collapsing the economy, even if it has caused serious injury to the economy.
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Ford made sure to provide a product that its workers could afford. And that took off.. but keep think invisible hand and what not.
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We outsource to them because it costs too fucking much to employ people in the usa anymore.
Bullshit. The problem is most companies create useless products and services and then scapegoat the problem onto everything else but the faulty wishful thinking of the entrepreneurs. But only after they've thoroughly taken advantage of bamboozling investment capital firms with false promises. If companies actually made marketable products and services based on proper business plans paying people for talent wouldn't be an issue. It didn't used to be as big of an issue but since the Great Recession there
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No, executive compensation is where so much of employee compensation goes these days. Take a look at these two graphs:
Executive compensation over time:
https://www.vox.com/policy-and... [vox.com]
Average hourly wages:
https://www.pewresearch.org/fa... [pewresearch.org]
If you took the top 500 CEOs pay in the US, that $5.9 billion would add an extra $2.40/hour to all full-time minimum wage earners in the US.
https://www.vox.com/2014/8/6/5... [vox.com]
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Yeah and it got that way thanks to friendly federal legislation that has severely disadvantaged most of the other states including all their time with a cushy deduction allowing them to subsidize state taxes with a federal deduction. Advancement of federal policy to subsidize green energy, tech, agriculture, etc all the biggest industries of California while using said deduction to maximize to minimize their own contribution to those subsidies while retaining as much of the income from them in state as poss
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California is currently running a budget surplus. A very substantial budget surplus. Much of it is currently being used to pay off various liabilities though.
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California is currently running a budget surplus. A very substantial budget surplus. Much of it is currently being used to pay off various liabilities though.
I'm actually happy to hear this. One step closer to #calexit.
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California is currently running a budget surplus. A very substantial budget surplus. Much of it is currently being used to pay off various liabilities though.
I'm actually happy to hear this. One step closer to #calexit.
Fuck off, Russian troll [bbc.com].
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Yeah and it got that way thanks to friendly federal legislation that has severely disadvantaged most of the other states including all their time with a cushy deduction allowing them to subsidize state taxes with a federal deduction. Advancement of federal policy to subsidize green energy, tech, agriculture, etc all the biggest industries of California while using said deduction to maximize to minimize their own contribution to those subsidies while retaining as much of the income from them in state as possible. All the heavy blue states have done the same but California is by far the worst offender.
No
No
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That's because "Trickle down economics" is code.
It means give the money to the rich guy not the poor guy.
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It's not code - it's a flat out con.
I'm sure that there's something akin to the Laffer curve in the real world, but that doesn't mean it's shaped like a bell curve on its side.
Supply-siders pretend to believe we're in the top part of the curve (where decreasing taxes increases revenue), but time and time again, it's been demonstrated that we're actually well within the bottom part of the curve where there's plenty of room to increase taxes and revenue together. Paul Ryan and his ilk know better, but they h
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And a lot of taxes just end up paying people for doing jobs. And those people then spend that money in their communities, which again, largely pays people for doing jobs. And every step of the way that money gets taxed.
Contrast that with for-profit organizations, where money ends up being stockpiled in war chests or gets pumped into the investment accounts of the C* bosses. Once that happens that money is largely removed from local economies, and doesn't do anything except for the very wealthy stockpiling i
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Thomas Sowell provides a good explanation of why the notion of trickle-down economics as it's commonly used makes no sense at all when viewed from the perspectives of basic economics and how businesses function...
Wat?
I don't know who Thomas Sowell is, but he's an idiot if he thought that was any kind of argument. He didn't even describe trickle-down theory correctly.
Let me repeat his own words: "When an investment is made, whether to build a railroad or to open a new restaurant, the first money is spent hiring people to do the work." "Even with successful and well-established businesses, years may elapse between the initial investment and the return of earnings."
The key word that appears repeatedly is "investment"
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"Thomas Sowell"
Lost a lot of people right there. He's a moron.
Re: More Socialist left-coast BS (Score:2)
Capitalism is awesome (Score:2)
Fortunately in America we're already building on a foundation that includes an educated working class, an enormous investment in infrastructure, a culture of self-reliance, and relatively low corruption in government. But you pure capitalists want to tear down half of th
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Re: Capitalism is awesome (Score:2)
Re: More Socialist left-coast BS (Score:5, Insightful)
We settled 150 years ago that secession is not legal. California is part of the USA and isn't allowed to leave.
Amusingly the right-wing likes to go on about the importance of state's rights, except when California excercises their rights.
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Meanwhile people in the US shit on on the EU for not capitulating to the UK's brexit demands.
Re: More Socialist left-coast BS (Score:4, Informative)
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So who are you proposing we shoot? The voters or the politicians?
Regardless of which one you choose, I hope you're smart enough to understand just how well that would work.
I don't get the hard-on for the 2nd amendment. It no longer is effective in allowing you to "water the tree of liberty" because you can't own the firepower that the government is allowed to own. We've locked down most of our governmental agencies like fortresses. The most recent "successful" attacks on politicians occurred on the campaign
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So you completely deny the effect of advertisement and paid propaganda on the masses?
Why then do you need a lot of money to be able to run for president?
Money equals power and influence, and therefore money distorts the normal democratic process.
Once you get too much concentration (in mega corporations), your're bound to move from a real to a fake democracy.
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If they hate capitalism, why are they part of the USA?
Kansas (capitalist paradise) GDP per capita: $46,982
California (socialist hellhole) GDP per capita: $58,619
Why is that, Anonymous Coward?
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Kansas (capitalist paradise) GDP per capita: $46,982
California (socialist hellhole) GDP per capita: $58,619
Why is that, Anonymous Coward?
I assert the California GDP is high in spite of not because of our high taxes and spending.
Our GDP is high because we have a wonderful climate and a fortuitous confluence of attitudes, resources, and people. The highly productive people often stay here even though we grumble about our ridiculously high taxes. Even my uber-liberal friends hesitate to say "yeah, we ought to raise my taxes a bit more...".
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If you want capitalism to survive, it should strike a balance between various groups. If you only suppress workers, you will get a revolution or a harsh dictatorship. Neither is capitalism.
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I don't believe that about the gig economy. I think it is basically a way to set up a company to extract as much value out of people who fall into working for them by not paying any benefits. You cannot do that as easily with a real company. And when the gig company goes bust, as I expect most of them will, the people running it will close up shop and open another gig company to start the scam all over again.
It's a way to game the current economic system into allow a company to form with little investment a
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So the infrastructure the state invest in that allows companies to set up shop is free in your little bunny world?