Regulating Facebook et al

Over the past few years, as my concerns about the media environment we inhabit have grown, I have found Tom Wheeler’s columns and interviews invaluable. Wheeler–for those of you unfamiliar with him– chaired the Federal Communications Commission from 2013 to 2017, and is currently both a senior fellow at Harvard’s Kennedy School Shorenstein Center and a visiting fellow at the Brookings Institution.

He’s also a clear writer and thinker.

In a recent article for Time Magazine, Wheeler proposes the establishment of a new federal agency that would be empowered to regulate Internet giants like Facebook. He began the article by noting Mark Zuckerberg’s apparent willingness to be regulated–a willingness expressed in advertisements and testimony to Congress. As he notes, however,

A tried-and-true lobbying strategy is to loudly proclaim support for lofty principles while quietly working to hollow out the implementation of such principles. The key is to move beyond embracing generic concepts to deal with regulatory specifics. The headline on Politico’s report of the March 25 House of Representatives hearing, “D.C.’s Silicon Valley crackdown enters the haggling phase,” suggests that such an effort has begun. Being an optimist, I want to take Facebook at its word that it supports updated internet regulations. Being a pragmatist and former regulator, though, I believe we need to know exactly what such regulations would provide.

Wheeler proceeds to explain why he favors the creation of a separate agency that would be charged with regulating “big Tech.” As he notes, most proposals in Congress would give that job to the Federal Trade Commission (FTC). Wheeler has nothing negative to say about the FTC but points out that the agency is already “overburdened with an immense jurisdiction.” (Companies have even been known to seek transfer of their oversight to the agency, believing that such a transfer would allow its issues to get lost among the extensive and pressing other matters for which the agency is responsible.) Furthermore,  oversight of digital platforms “should not be a bolt-on to an existing agency but requires full-time specialized focus.”

So how should a new agency approach its mission?

Digital companies complain (not without some merit) that current regulation with its rigid rules is incompatible with rapid technology developments. To build agile policies capable of evolving with technology, the new agency should take a page from the process used in developing the technology standards that created the digital revolution. In that effort, the companies came together to agree on exactly how things would work. This time, instead of technical standards, there would be behavioral standards.

The subject matter of these new standards should be identified by the agency, which would convene industry and public stakeholders to propose a code, much like electric codes and fire codes. Ultimately, the agency would approve or modify the code and enforce it. While there is no doubt that such a new approach is ambitious, the new challenges of the digital giants require new tools.

Wheeler proceeds to outline how the proposed agency would approach issues such as misinformation and privacy, and to describe how it might promote and protect competition in the digital marketplace.

It’s a truism among policy wonks that government’s efforts to engage with rapidly changing social realities lag the development of those realities. The Internet has changed dramatically from the first days of the World Wide Web; the social media sites that are so ubiquitous now didn’t exist before 1997, and blogs like the one you are reading first emerged in 1999–a blink of the eye in historical terms. In the next twenty years, there will undoubtedly be digital innovations we can’t yet imagine or foresee. A specialized agency to oversee our digital new world makes a lot of sense.

I’m usually leery of creating new agencies of government, given the fact that once they appear on the scene, they tend to outlive their usefulness. But Wheeler makes a persuasive case.

And the need for thoughtful, informed regulation gets more apparent every day.

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Incentivizing Appropriate Police Behavior

Many years ago, I spent three years heading up Indianapolis’ legal department. It was–among other things–my introduction to the way municipalities defended against (and far more often, settled) claims of police misconduct and/or brutality. I’d venture to say that very few taxpayers have any idea how costly those claims can be.

A recent post to Lawfare considered not only the dollars, but the sense.

On March 12, the City of Minneapolis agreed to pay George Floyd’s family $27 million for his wrongful death via the knee of a police officer. Despite being the largest pretrial civil rights settlement, it is only a fraction of the taxpayer money spent on settling police brutality. From 2015 to 2019, more than $2 billion, mostly taxpayer money, was used on civilian payouts for police misconduct in only the 20 largest police departments.

As the article points out, the way in which we currently address payouts for police misconduct operates to absolve officers from any financial culpability, no matter how egregious the behavior that triggered the settlement. This is mostly due to qualified immunity, which I have discussed previously. Qualified immunity is a court-invented doctrine that was originally intended to protect officers when they were acting in good faith, but actually ends up allowing police officers to escape civil liability for virtually any behavior, good faith or not.

While qualified immunity often shields government officials broadly from personal liability, it is particularly used with law enforcement. And though it is applicable only to civil proceedings, prosecutors, defense attorneys, judges and even jurors are often swayed during grand juries and criminal proceedings by the protection of qualified immunity.

Depending on the state, officers accused of misconduct might even keep their police pension and even be able to sue the municipality for back pay if they are fired and then found criminally not guilty. The money for civilian payouts for police misconduct does not come from police department budgets. Rather, civilian payouts overwhelmingly come from general funds, though some come from bonds and even insurance policies, particularly in smaller areas.

Between expansive doctrines like qualified immunity and a widespread social willingness to accord police officers–who have an admittedly difficult and dangerous job–the benefit of any doubt, holding an officer personally responsible for misconduct is an exceedingly rare event.

The Lawfare article suggests structural changes that would begin to redress the current imbalance. A number of legal scholars recommend abolishing qualified immunity, and there are other changes that would provide incentives for better monitoring of officer behaviors (and arguably, better training protocols) by police departments. They include moving payouts from city budgets to police department insurance policies and having individual officers carry liability insurance.

The costs of the current system are considerable, and it would be a mistake to shrug off the Chauvin settlement as an anomaly.

Besides the settlement for Floyd’s death, a series of notable civil settlements for police misconduct include $38 million in Baltimore County, Maryland, for the wrongful death of Korryn Gaines and the accidental shooting of her four-year-old son, Kodi; $20 million in Prince George’s County, Maryland, for the wrongful death of William Green; $12 million for the wrongful death of Breonna Taylor of Louisville, Kentucky; and $6 million in Cleveland, Ohio, for the wrongful death of 12-year old Tamir Rice, who was killed while playing with a toy gun in a park. All the people mentioned above are Black. These cases are not cherry-picked but, rather, are part of a much larger systemic problem in policing and municipal government. Black people are roughly 2.5 times as likely as whites to be killed by police. Blacks are 3.5 times more likely to be killed by police when they are not attacking or do not have a weapon relative to whites, like Floyd, Green and Rice. Black women are disproportionately more likely to be killed in their homes by police, like Taylor and Gaines.

There are also many incidents that do not end in death but will probably result in civilian payouts for police misconduct. Some of the most recent incidents include a five-year-old who was arrested and yelled at by police after leaving school in Montgomery County, Maryland, as well as Marion Humphrey Jr., a 32-year-old law student who was detained for more than two hours as state troopers in Arkansas searched his U-Haul. Humphrey, the son of a retired judge, has already sued the Arkansas State Police.

Reforming the way these settlements are funded would not only incentivize improved training, oversight and behavior, it would save taxpayer dollars that could be put to far more productive use.

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Structural Racism

Over the past several years, America has debated and (to some extent) confronted the extent of our country’s racism.The willingness of White Supremicists to make their animus explicit was triggered by the election of Barack Obama and evidence of shifting demographics, but we are still far from having a candid discussion of the ways in which that racism has infected the systems and structures of our society.

Far too many people think of racism as individual behaviors–the sorts of interpersonal  nastiness that goes viral after being captured by our ubiquitous iPhone cameras. Those of us who are white and middle-class rarely recognize the ways in which people of color have been systematically disadvantaged by official acts; I was shocked to learn about the federal government’s role in redlining from The Color of Law and similar books.

The Brookings Institution recently compared the treatment of South American immigrants with earlier treatment of immigrants from European countries. It was illuminating, to say the least.

Examining immigration policy through a systemic racism lens reveals that today’s largely Latino undocumented immigrants face far harsher consequences than white Europeans of years past for the same exact offense of unauthorized entry. A system that treats immigrants differently solely to their race is essentially the textbook definition of structural racism.

“Illegal” immigration was remarkably common in past decades. Around the turn of the century many Europeans came to the US “with a tag on,” a label sewn into their clothing to allow an employer or labor contractor who’d paid for the immigrant’s passage to find the newcomer at the dock on Ellis Island. While illegal—indentured servitude having long been outlawed[ii]–the practice was so widespread that one labor union official testified in 1912 that “more than 8 in 10” of the million immigrants who’d entered that year had a job waiting from an employer that paid for the newcomer’s passage.[iii] Others came as illegal stowaways aboard ships or unlawfully crossed the border from Canada, as CBS Evening News Anchor Nora O’Donnell recently discovered her Irish grandfather had done in 1924.[iv

According to the Brookings report, these “illegal” European immigrants faced few if any repercussions. In part, that was because there was little or no immigration enforcement, but even among those who were caught, few faced deportation. Migrants who entered unlawfully before the 1940s were protected by statutes of limitations and– in the 1930s and 1940s– by grants of amnesty. And before 1976, the government was extremely unlikely to deport parents of US citizens–the “anchor baby” accusation is a recent invention.

There weren’t restrictions on the ability of immigrants to access public benefits until the 1970s, and Brookings reports that it wasn’t until 1986 that it became unlawful to hire an undocumented immigrant.

In sum, from the early 1900s through the 1960s, millions of predominantly white immigrants entered the country unlawfully, but faced virtually no threat of apprehension or deportation. Businesses lawfully employed these immigrants, who were eligible for public benefits when they fell on hard times.

Times have certainly changed. Undocumented people today, most of whom are Latino and/or other people of color—are treated very differently. They enjoy none of the privileges  that were accorded to previous generations of white immigrants as a matter of course.

The toughening of immigration laws coincided with a shift of immigration from Europe to newcomers from Latin America, Asia, and Africa,[x] often in the context of racialized debates targeted mainly at Latinos. Researchers have documented how through the 1960s, racialized views of Mexicans shaped law and bureaucratic practice.

The report goes on to describe the increasingly draconian policies that followed the change in immigrants’ skin color. I encourage you to click through and read the entire, depressing  exposition.

Watching Derek Chauvin murder George Floyd was a horrific example of official disregard for the life of someone perceived to be different and thus lesser.  As a society, we need to send a message that such behaviors by individuals cannot be tolerated. But the larger challenge we face is the pressing need to ferret out the multiple ways in which similar attitudes have infected the structures of our laws and policies, and the multiple, less-visible ways those structures continue to harm not just the people being marginalized but also the country as a whole.

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It Isn’t Just Tax Rates

A new study has found that at least 55 of America’s largest companies paid zero taxes last year, despite making billions of dollars in profits. It’s infuriating.

As the New York Times reports, that 2017 tax bill eagerly passed by Republicans in Congress and signed with great fanfare by the former guy, reduced the corporate tax rate to 21 percent from 35 percent. On top of that gift,

dozens of Fortune 500 companies were able to further shrink their tax bill — sometimes to zero — thanks to a range of legal deductions and exemptions that have become staples of the tax code, according to the analysis…

Twenty-six of the companies listed, including FedEx, Duke Energy and Nike, were able to avoid paying any federal income tax for the last three years even though they reported a combined income of $77 billion. Many also received millions of dollars in tax rebates.

As Bernie Sanders has reportedly noted, if you paid 135 for a pair of Nike shoes, you paid more for them than Nike paid in taxes.

The Times article has a list of the most profitable companies that paid no taxes last year.

Publicly traded corporations have to file financial reports, and those reports include the amounts they’ve paid in federal income taxes. When challenged about their ability to avoid paying taxes, most respond that they “fully comply” with the laws. Which is undoubtedly true. (Okay, maybe not for those with accounts in offshore tax havens…Although that tactic is more common among filthy rich individuals than corporations…)

It’s relatively simply to “fully comply” with tax provisions (aka “loopholes”) that are  intended to encourage socially useful behaviors like investing in clean energy or modernizing aging equipment.

The $2.2 trillion CARES Act, passed last year to help businesses and families survive the economic devastation wrought by the pandemic, included a provision that temporarily allowed businesses to use losses in 2020 to offset profits earned in previous years, according to the institute.

Several of these deductions and credits are justifiable. Others, much less so.

I agree with Elizabeth Warren, who has been quoted as saying that giant corporations with billions of dollars of profit shouldn’t be able to pay $0 in federal taxes. According to the Times, today’s tax avoidance strategies include a mix of old standards and what the report calls “new innovations”. It’s hard to argue, for example, for the social benefit of allowing companies to save billions of dollars by characterizing the purchase of discounted stock options by their top executives as a loss, which they then deduct.

The Biden administration announced this week that it planned to increase the corporate tax rate to 28 percent, and establish a kind of minimum tax that would limit the number of zero-payers. The White House estimated that the revisions would raise $2 trillion over 15 years, which will be used to fund the president’s ambitious infrastructure plan.

Supporters say that in addition to yielding revenue, the rewrite would help make the tax code more equitable, requiring individuals and companies at the top of the income ladder to pay more. But Republicans have signaled that the tax increases in the Biden proposal — which Senator Mitch McConnell of Kentucky, the minority leader, called “massive” — will preclude bipartisan support.

Individual taxpayers have long had to contend with the Alternative Minimum Tax. That provision was created in the 1960s, with the goal of preventing high-income taxpayers from using various deductions and credits to avoid the individual income tax. There’s no reason why a similar mechanism shouldn’t apply to corporate giants using provisions of the tax code to avoid paying any taxes on massive profits.

Meanwhile, It would be illuminating if a Congressional committee were to examine the credits and deductions allowed by the current tax code, and eliminate those that no longer make much sense. (Some never did.)

If nothing else, it would be interesting to see how the Republican supporters of these provisions would defend them.

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I And We

The other day, someone posted the following to my neighborhood listserv:

“An anthropologist showed a game to the children of an African tribe… He placed a basket of delicious fruits near a tree trunk and told them: The first child to reach the tree will get the basket. When he gave them the start signal, he was surprised that they were walking together, holding hands until they reached the tree and shared the fruit! When he asked them why you did that when every one of you could get the basket only for him! They answered with astonishment: Ubuntu. ‘That is, how can one of us be happy while the rest are miserable?’ Ubuntu in their civilization means: (I am because we are). That tribe knows the secret of happiness that has been lost in all societies that transcend them and which consider themselves civilized societies.”

“I am because we are.” When you think about it, that’s pretty profound. In western cultures, it might be considered a way of understanding long-term self-interest.

The post especially resonated with me because I get so annoyed by all the evidence of very short-term self-interest displayed by people who clearly don’t understand how much they depend upon what I like to call “social infrastructure.”

I still recall a discussion with one of those “self-made”businessmen in which he insisted that anyone willing to work hard could succeed, that what I identified as barriers were really just excuses for sloth. I responded that, if that were the case, there evidently were no “hard workers” in the slums of India or Bangladesh. Surely, the rather obvious lack of social and physical infrastructure wasn’t their problem…

I don’t know what keeps so many people from understanding the various ways that social systems operate to enable or deter individual prospects. That “self-made” man was tall, White, college educated, with parents who had also been college educated (and at a very selective college). I assume his social circle simply didn’t include people without the means to access higher education, or people from “bad” neighborhoods or marginalized groups, and he obviously lacked the imagination and/or empathy needed to understand the realities of people unlike himself.

Are there lazy people in every society? Sure. Are there people who lack the skills and/or ambition to succeed (however one defines success)? Of course. In a functional society, the object should be to provide a floor, a starting-line beyond which individuals can go as fast and far as their talents take them. Equality of opportunity–not equality of result– is the goal, but equality of opportunity requires a reasonably level starting-place and an absence of invidious discrimination.

Think of life as a footrace.

If I’m running a race and several of the people competing with me are required to carry ten-pound sandbags on the run, I have an unfair advantage over them. If none of us are made to tote those sandbags, but contestants of color, or those with different sexual orientations or religions are only allowed to start the race five minutes after the rest of us, most of them will be unable to make up the difference.

Removing those impediments is no guarantee that everyone running will get to the finish line at the same time–or at all. But they’ll participate in a race and society that gives its citizens an equal opportunity to go as far as their individual gifts and hard work will take them.

And that takes us back to the insight captured by the post to the listserv: individuals do better, and are demonstrably happier, in a supportive society that looks out for everyone. In the long term, a fair and humane society is in our individual self-interest.

Ultimately, ubuntu is wisdom. Good people really cannot be happy in a society where substantial numbers of other people are miserable.

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