High-Tech Boycotts

Yesterday, I blogged about research on the “Millennials”—the so-called DotCom generation.

I didn’t talk about one really fascinating finding: the tendency of DotCom’s to “vote” with their purchasing power, to boycott products when they disapprove of the company that makes them. As the authors noted, this behavior has not been studied—and it deserves attention.

This is a generation that has grown up in a commercialized environment, so it probably shouldn’t surprise us that so many of them are willing to “vote’ with their dollars. They see corporations as more powerful—and more dangerous—than government, and large numbers of them react by closing their pocketbooks to enterprises they disapprove of.

Now there is evidence that this mechanism for showing disapproval may be going to the next level.

The last couple of weeks, Facebook and other social media have been buzzing with news about a new “app” that will allow your smartphone to identify the company responsible for every item in your grocery basket. If it works, this is huge, because the labyrinthine nature of corporate ownership makes it very difficult to avoid enriching people you don’t like. (Who knew that the Koch brothers own companies that own other companies that produce  Bounce laundry softener sheets?)

File this one under “wait and see.” But it will certainly be interesting!

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Generations

I’ve been reading a book by several well-known scholars of civic engagement, “A New Engagement? Political Participation, Civic Life, and the Changing America Citizen.” It has been interesting for a number of reasons: the authors compare and contrast four cohorts—the generation prior to the Baby Boomers, which they call “the Dutifuls,” the Boomers, GenX and the youngest cohort—the one we tend to refer to as Millennials, but they dubbed the DotComs.

There is a lot of interesting material about the differences in civic and political attitudes and skills among the four cohorts. The researchers note one in particular that I have noticed in my own students—unlike the Dutifuls and Boomers, the DotComs are far more likely to participate in civic life than in political activities. They haven’t opted out, as so many of the GenX generation has, but they have directed their energies to volunteerism and nonprofit activities rather than politics and government.

The authors attribute this political “opting out” in part to the fact that the DotCom generation was socialized at a time when anti-government rhetoric was ubiquitous—when Reagan’s “government is not the solution, government is the problem” had become an accepted axiom. Other attributes of the DotCom generation, however, fly in the face of this tidy conclusion. DotComs are far more supportive of government activities and programs than the generations that preceded them, for example. They are more likely to label themselves “liberal,” and not just on social issues. They are more likely to support affirmative action and other government efforts to ameliorate inequality, and more likely to support government-provided healthcare and other social safety-net programs.

The researchers cautioned that it is difficult to know what portion of the differences they saw are generational attributes that are likely to persist, and what portion are “life cycle;” that is, attitudes that will change as they grow older, establish households, have children, etc.

We have an advantage over the authors. The book was written in 2003, and the research was conducted in the two or three year period prior to that. In 2013, some of the open questions can be answered, at least tentatively. The authors worried, for example, that youth voting turnout would continue to decline; as we saw in 2008 and 20012, it has increased. The inclusive attitudes of the DotCom cohort are largely responsible for the profound changes in the politics of same-sex marriage, and the increasing pressure for immigration reform.

It is still the case that DotComs disproportionately invest their energies in civic rather than political causes, however. If that changes—if this generation ever devotes as much energy to the political system as it does to organizations working to save the environment, address community problems, and help the less fortunate—look out! Things will change, and in my opinion, those changes will be for the better.

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Houston, We Have A Problem

I remember having a conversation about some intellectually limited legislators with a friend a few years ago; she said (somewhat bitterly) “the problem with the legislature is that it’s representative.” Her point was that we elect people who represent all of us–informed and not-so-informed, bright and not-so-bright.

If things were bad when legislative bodies were representative, they’re appalling when only some of us are being represented.

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Before We Believe the Hype…

It’s always newsworthy when some survey or other identifies Indiana as a good  place to do business–the media jump on the announcement, and whatever administration is in power trumpets the result as evidence that its economic development policies are working. (Pay no attention to the data showing slow-to-no job growth and wages well below the national average–we’re awesome, I tell you!)

Typically, these “surveys” are conducted by organizations with, shall we say, points of view. But they are eagerly accepted, at least by those who share that particular ideological perspective. So it was interesting to read this column by Neil Pierce on a research study conducted by Good Jobs First, debunking the entire “survey” enterprise.

“If there’s one thing people need to take away from our study,” says Greg LeRoy, executive director of Good Jobs First, “is that there’s no such thing as a state business climate. Businesses’ needs for various kinds of services and facilities vary too much.”

LeRoy makes a point that should be obvious: cities are what matter.

States aren’t the important entity that businesses should be looking at anyway. The real theater of action is the metro area. Metro areas in a state differ, he notes, and sometimes differ dramatically – in local property tax levels, in skilled labor, quality of infrastructure, schools and colleges, transportation linkages, and proximity to customers and suppliers. Tally those real-world conditions, he suggests, and one sees more of the truly significant factors that qualified site-selection experts advising companies actually look for, but which the raw state rankings miss.

Peter Fisher is a researcher with the Iowa Policy Project. As he notes,

All the studies have major technical faults. The Small Business and Entrepreneurship Council, for example, has a scale that gives states better scores for such features as low progressive tax rates, no state minimum wage, absence of family leave, fewer government employees, less government spending and no renewable energy mandates.

But as Fisher notes, the same scoring omits (and clearly fails to value) what’s likely to matter a lot more – the quality of public school and university programs, state investment in infrastructure, business incubators or entrepreneurship programs at public universities and state venture capital funding.

Whatever one may think businesses should value when making decisions about relocation, the proof of the pudding, so to speak, is in the results. When researchers compared the economic growth of states identified in the “good business climate” surveys with those not so identified, they found absolutely no difference in economic performance.

Evidently, a pro-business climate (as measured by these surveys) doesn’t translate into a state’s superior attractiveness to real businesses. It’s sort of like that gorgeous girl we all envied in high school, because we knew we couldn’t compete–all the guys would be drawn to her, like the moth to the flame. When we drag our husbands to the 25-year reunion, she’s still gorgeous–and still single.

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Scandal at the IRS

I’ve been reading a variety of reports about the allegations that the IRS singled out Tea Party tax exemption applications for extra scrutiny. So here are a few random observations, culled from those reports and accusations:

1) It’s worth noting that condemnation has been utterly bipartisan. Liberal blogs and Democratic commentators have been highly critical of politicization of the IRS. (Why do I think that, if this had happened during a Republican administration, the reaction at Fox “News” would have been considerably more defensive?) And let me be clear: if the IRS singled out any organizations for differential treatment based upon their politics, that was wrong. 

2) That said, what we are seeing is in significant measure yet another unanticipated result of the wrongheaded Citizen’s United decision. Citizens United allowed any organization of any kind to spend money out of its general treasury to run political ads. As Chris Hayes has noted, that decision brought about a pivotal moment for politics and taxes and campaign spending in this country and we’re still dealing with the fallout. Republican Karl Rove and Democrat Bill Burton used the Citizens United ruling in the run-up to the 2012 elections. Both of them used social welfare nonprofits to run overtly political ads; that allowed them to intervene in political campaigns without disclosing their donors. Others soon followed.

“Suddenly, the IRS starts getting a flood of new applications from other political groups and strategists saying, ‘Oh, oh, it turns out I too want to set up a social welfare organization that just so happens to be focused on taking the country back from Barack Hussein Obama. Now, here is the thing the IRS appears to have done unequivocally wrong, that we all agree was absolutely inexcusable. They reacted to all this by targeting one part of the ideological spectrum in looking at whether this flood of new applicants passed the smell test. Being skeptical about a new wave of wolves in sheep’s clothing invading the nonprofit game was entirely appropriate.”

3) As Hayes points out, Congress requires the IRS to review every application for tax-exempt status to weed out organizations that are partisan, political, or that generate private gain. Congress has imposed this requirement on the IRS, and its predecessor agencies, since 1913.  When it comes to 501(c)(4) organizations, the IRS is supposed to draw a distinction between groups that are “primarily engaged” in politics and groups that really are primarily engaged in “social welfare”—somehow “promoting the common good and social welfare of the community.”

4) The social welfare tax exemption is being used by existing 501(c)(4) organizations, including some very large ones, to promote partisan political interests—the very activity Congress has explicitly prohibited for a century. The New York Times ran a useful explanation  about this last Tuesday.

5) It is not an excuse, but it does bear noting that none of the organizations that the IRS subjected to improper levels of scrutiny was denied tax exempt status.

6)  Congress is demanding that the agency do more and more with less and less. As David Levinthal reported at the Center for Public Integrity, the IRS’ Exempt Organization Division–the division charged with the violations–processed significantly more applications in 2012 than it ever had. At the same time, the entire IRS was operating on a much-reduced budget, as a result of several rounds of Congressional cost-cutting.

“Over the last two years, government watchdog groups filed more than a dozen complaints with the Internal Revenue Service seeking inquiries into whether large nonprofit organizations like those founded by the Republican political operative Karl Rove and former Obama administration aides had violated their tax-exempt status by spending tens of millions of dollars on political advertising. The I.R.S. never responded… Because they purport to be engaged primarily in issue advocacy, not election advocacy, tax-exempt groups are not closely regulated by the Federal Election Commission. That task falls, instead, to the I.R.S., which can take years to investigate problems and is required to do so in strict secrecy… The tax code states that 501(c)(4)’s must operate “exclusively” to promote social welfare, a category that excludes political spending. “

The fact that the agency is understaffed does not excuse lawbreaking; what this revelation does, however, is point to systemic fiscal and managerial issues within the IRS that need to be addressed. Unfortunately, given the blood-lust of those in Congress who are intent upon using the IRS misbehavior for entirely partisan purposes, a carefully calibrated and deliberate review of agency operations is unlikely.

What the IRS should be doing is looking closely at every application. The politics of the applicant is irrelevant–but compliance with the rules governing tax-exempt status is anything but. Granted, those rules have been considerably complicated and confused thanks to Citizens United, but that makes competent, even-handed oversight more important than ever.

If Congress wasn’t so broken, this episode might lead to meaningful reform. I’m not holding my breath.

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