Tuesday, April 2, 2019

Embracing Inclusive Capitalism Plus within The California Green & Gold Deal as Newsom leads

Economics and politics.

As noted in our Progressive Pacific Message website:

The late George Wallace, Alabama Governor and 1968 Presidential candidate pictured at the left, gained notoriety for tapping into an anti-intellectual bias that many politicians have used (though the quote shown is somewhat inaccurate as he said: "Pointy-head college professors who can't even park a bicycle straight ....").

That anti-intellectual bias, particularly when coupled with racial prejudice and/or class distrust, makes it is difficult to explain to far too many Americans the complex history that created the 21st Century United States....

In understanding both economics and politics, and more particularly how through human behavior they interface and interact, we run headlong into the different views of those "intellectual" types Wallace called "pointy-head" who inhabit the halls of universities and think tanks.

In the series of posts here The lack of comprehensive political economy goals will create concurrent pecuniary and environmental disasters for U.S. Gen X and all future generations the subject of economics and politics in the context of human behavior has already been explored. In this post we're going to look at an evolving ideology among Democrats that could effectively challenge the dominant right-wing ideology of Neoliberalism.

Gavin Newsom  proffered a robust vision of what is needed to address California's problems:
“Guaranteed health care for all. A ‘Marshall Plan’ for affordable housing. A master plan for aging with dignity. A middle-class workforce strategy. A cradle-to-college promise for the next generation. An all-hands approach to ending child poverty.”
And yet, Newsom is facing a complex struggle to alter how we think, even in California. To give you some insight into this, the following extensive quote from A Crowd of Computer Scientists Lined Up for Bill Gates—But It Was Gavin Newsom That Got Them Buzzing: California governor Gavin Newsom wows a crowd of distinguished computer scientists, educators, and other Silicon Valley luminaries at Stanford Human-Centered AI symposium:

    And then, after a few more rounds of research presentations, came California governor Gavin Newsom. Newsom took the podium to give a 5 p.m. speech—a last minute addition to the agenda—after sitting in the audience listening to at least half of the afternoon’s presentations.
    I’m not sure the attendees expected anything more from California’s new governor than a repackaged stump speech; they stayed out of curiosity, politeness, and, perhaps, because the reception wouldn’t begin until Newsom finished.
    But Newsom, speaking with no notes, had them at hello. Or, if not exactly hello, close: Newsom kicked off his remarks by bluntly stating what most Silicon Valley denizens think about the state government.
    “California,” Newsom said, “is at the cutting edge of technology of 1973,” pointing out that the state’s Division of Motor Vehicles can’t even figure out how to access credit cards.
    “I heard a conversation here talking about the technical illiteracy of people in my profession,” he said. “It is true.”
    At that point, the crowd went silent. The usual rustles—of people shifting in their chairs, reaching for water bottles, pulling out cellphones, or opening laptops to check email—stopped cold. Newsom had their attention and kept it. He didn’t seem like an alarmist—although he did say the word “anxiety” over and over. He didn’t seem like a tech hater—he came off as someone who personally loves technology but can understand why it is freaking some people out. His talk focused on technology’s dark side, yet came off as hopeful.
    “There is a lot of anxiety out there,” Newsom said, “and fear out there, and it’s real.”
    Newsom began rattling off statistics, speaking rapidly without notes. “I read [PricewaterhouseCoopers]: 38 percent of jobs will be automated in the next 15 years. Then I relax because Bain comes out and says just 25 percent of the jobs in the next 20 years. Then Oxford says, that’s an old study, that 47 percent is only in 702 job categories, not all job categories. Then I got James [Manikya], which says it’s just 60 percent of current jobs that will be just 30 percent augmented.”
    With that kind of conflicting information flying around, Newsom asked rhetorically, “what do you want me to do as a policymaker?”
    Turning from statistics to recent anecdotal evidence about the disruption caused by AI, Newsom said, “I remember how excited we all were when we read about a company named Otto that drove those 46,000 cans of Budweiser in Colorado in a driverless truck. Then I met with Teamsters—they didn’t think it was that exciting.”
    “I remember reading about Knightscope,” he continued. “One of the folks that work there said about the technology, these are robotic units that replace security guards. He said, ‘no pensions, no workers comp, no complaining.’ Whoa.”
    And, Newsom said, consider robotic hamburger-maker Momentum Machines (now called Creator). “It’s going after 3.5 or 3.6 million fast-food workers…and the CEO of that company said our job is not to make employees more efficient, it’s to ‘obviate the need for them.’ Oh.”
    “I was excited, finally went to Amazon Go. They have one in San Francisco. Fascinating. But there are 3.4 million cashiers who don’t think it’s that fascinating. What the hell do we do with them?”
    How to address the workforce disruption AI is bringing? Retraining is part of it, but it will take bigger investments than those proposed so far, and it’s not just about retraining. “It’s not enough to teach you to code at 60 years old,” he said.
    The state of California is not yet prepared to deal with the kinds of changes AI will bring, Newsom said, but he indicated that he’s hopeful that some of the people assembled through this newest Stanford organization will be able to help figure it out.
    “We can’t play small ball anymore, we can’t play on the margins. [This] requires an order-of-magnitude change. We need your guidance, your counsel, and your empathy as well. We need to be educated on the world we are living in, on how real this change is, what machine learning is, what deep learning is…this language is new to us.
    “The world we invented,” Newsom said, “is competing against us; we have to invest in maintaining our lead.”
    All these changes, these new technologies, he indicated, are what is producing anxiety, and a mounting techlash.
    “The techlash is real, in ways I shudder to even communicate,” Newsom said. “When I have people who embrace technology talking about data frackers, that’s a pejorative; it’s not just about privacy, or about some version of GDPR, it’s about real animus that’s being created in this winner-take-all world.”
    Afterwards, the normal postconference chatter converged onto a single path. “What did you think of the event?” I heard person after person say. “Well-organized, the tech talks were pretty good, a bit arm-wavy, but what can you expect at the beginning of something like this,” were the general answers. And then there would be a pause, followed by someone saying, “But what about Gavin?”
    “Gavin. Yes. Wow,” was the typical response, or something along those lines.
    “He pulled out statistics that he clearly really understood, hadn’t just memorized, faster than I could, and it’s my field!” said one attendee. “And he had no notes!”
    “He listened to the panels, and then synthesized it all into a coherent speech on the fly. How does he do that?” said another.
    “The guy is just really, really smart,” I heard over and over, often with a note of surprise.
    “He was optimistic,” one attendee told me, “but he also warned us. And he was right to do that.”

Because of technology, you can watch his 30 minute speech:

There were several conferences at Stanford that day and Newsom spoke at more than one. And he offered insight into his thoughts on economic ideology:

    Gov. Gavin Newsom is taking a different path from those progressive 2020 Democrats who are tacking left and steering clear of the “capitalist“ label. On Monday, where he spoke at back-to-back Stanford business conferences, Newsom urged his party, as well as the business and investment community, to embrace “inclusive capitalism” — one that boosts development, housing and infrastructure that, he argues, will benefit state residents at every income level.
    “I’m an entrepreneur. I believe in innovation. ... I believe in putting private capital to work. I believe in the entrepreneurial spirit that defines the best of this nation,’’ Newsom said in an interview with POLITICO. And Newsom said there was no doubt he was a fan of capitalism. “I think in an aspirational framework. So I believe very, very much in that camp,’’ he said. “And of course, it defines much of my life as well, someone who has the privilege of creating a lot of jobs in this state.”
    Asked about the recent progressive Democratic push that has some in his party shying away from defining themselves as “capitalist” in the 2020 presidential contest, Newsom — who, with partners, owns the PlumpJack wine and entertainment empire — said his party should not avoid the term. “I think, frankly, the Democratic party could do well to reenergize that debate ... having an entrepreneurial mind to solve problems, and engaging the private sector in solving those problems.”
    “Frankly it surprises me that it’s even controversial,’’ he told POLITICO. “Inclusive capitalism,” he said, means “we’re all in this together. It’s not just growth for growth’s sake. It means bringing a number of people along ... that we were going to have an economic growth and inclusion agenda.”

But Newsom isn't adhering to the existing pointy-headed intellectual version of "Inclusive Capitalism" in which as explained in Wikipedia (emphasis added:)"...Companies and non-governmental organizations can sell goods and services to low-income people, which may lead to targeted poverty alleviation strategies, including improving people’s nutrition, health care, education, employment and environment, but not their political power."

Rather, Newsom is the face of what we will term here as Inclusive Capitalism Plus, to borrow the "plus" from Bill Maher:

    [Maher] was referring to the countries ranked highest in the 2019 World Happiness Report including Finland, Denmark, and Norway, which are all "socialism-friendly." The United States was ranked 19th, despite low unemployment and crime rates.
    Instead of socialism replacing capitalism, Maher said socialism's influence in addition to capitalism could ease crushing economic pressures like healthcare.
    "The right has a hard time understanding the concept that we don't want 'long lines for bread' socialism," Maher said. "We want 'you don't have to win the lotto to afford brain surgery' socialism."
    "Happiness isn't only about what you have, it's also what you don't have to worry about," he added. "Turns out, freedom from the fear of ending up in a tent below the overpass is a really great freedom. It's called peace of mind."

Sometimes people forget that as explained by Wikipedia: "Socialism is a range of economic and social systems characterised by social ownership of the means of production and workers' self-management, as well as the political theories and movements associated with them." That is contrary to the entrepreneurial spirit Newsom discussed. But government taking steps to make healthcare affordable, even "single payer", is not socialism. If all the hospitals and clinics were government owned and run, that would be socialism.

Inclusive Capitalism Plus means first to not get too distracted in the philosophical questions and debate presented in the Wikipedia entry on Inclusive Capitalism. The real problem within the capitalist world is identifying the long-term value associated with a business engaging in society and the environment where no short-term income or asset growth can be identified. In fact, one of the problems with the current view of success is that all the measurements used to evaluate a company are short-term and don't quantify damage done to society and the environment.

The Coalition for Inclusive Capitalism is engaged in an effort titled the Embankment Project for Inclusive Capitalism (EPIC) which has produced and initial report worth reviewing. But that doesn't deal with the "Plus" meaning governmental intervention which the State of California under Newsom will be working on.

In the 21st Century, the Plus is complicated. The Democrats under Jerry Brown in 2012 did the most obvious thing - have the voters raise the income tax on high earners. That was/is controversial.

We saw headlines like Millionaires Flee California After Tax Hike from Forbes.  But the article just tells us that "California lost an estimated 138 high-income individuals following passage of the Proposition 30." Well, maybe that's true.  But as the Los Angeles Times told us more recently High taxes be damned, the rich keep moving to California.

The thing is both articles can reflect facts. But the Los Angeles Times article contains the facts about the tax that underlie the choices people make. If you were a millionaire earning certain kinds of income from out-of-state sources, selecting another state to be your primary residence might have been the logical choice. But if the bulk of your earnings come from California sources - like Silicon Valley tech companies - the state will tax that income and will go after you to get the taxes. In that case moving won't help.

On the other hand, tax policy can be used to achieve public policy purposes. Examples include the following California tax credits among available targeted credits:
  • California Competes Tax credit, which is allocated and certified by the California Competes Tax Credit Committee, is available for businesses that want to come to California or to stay and grow in California;
  • College Access Tax credit, which is allocated and certified by the California Educational Facilities Authority, is available for taxpayers who contribute to the College Access Tax Credit Fund;
  • Donated Agricultural Products Transportation tax credit, offers 50% of the costs paid or incurred for the transportation of agricultural products donated to nonprofit charitable organizations;
  • New Donated Fresh Fruits or Vegetables tax credit offers 15% of the qualified value of the donated fresh fruits or vegetables made to California food banks, based on weighted average wholesale price;
  • Enterprise Zone Hiring tax creidt which is a hiring credit for employeres in an enterprise zone;
    New Employment tax credit, a credit available for a taxpayer that hires a full-time employee and pays or incurs wages in a designated census tract or economic development area, and receives a tentative credit reservation for that full-time employee.
As quoted above, Newsom intends to have the State develop programs on the following broad subject areas, addressing issues as the Plus :
  • Guaranteed health care for all. 
  • A ‘Marshall Plan’ for affordable housing. 
  • A master plan for aging with dignity. 
  • A middle-class workforce strategy. 
  • A cradle-to-college promise for the next generation. 
  • An all-hands approach to ending child poverty.
Which brings us back to the idea of  Inclusive Capitalism Plus  as a key component of  The California Green & Gold Deal . In California one focus is going to be on impacts of technology - both beneficial and detrimental.

Let's back up to the Newsom speech at the AI symposium quoted above which included the following:

    Newsom kicked off his remarks by bluntly stating what most Silicon Valley denizens think about the state government.
    “California,” Newsom said, “is at the cutting edge of technology of 1973,” pointing out that the state’s Division of Motor Vehicles can’t even figure out how to access credit cards.
    “I heard a conversation here talking about the technical illiteracy of people in my profession,” he said. “It is true.”

What he didn't say is that most of those in his profession in Congress have the technical literacy of typical voters who first put them in office. (Yes, that "typical voter" likely includes you. Being able to use a "device" and its "Apps" well is similar to driving a car well - in the latter case you're not an auto mechanic and in the former case you're not technology literate.) And so this headline appears No longer a political winner: Silicon Valley is a minefield for 2020 hopefuls. The writer notes:

    Even as tech entrepreneurs say the hearings lawmakers are holding in Washington to berate companies like Facebook and Google have done little more than highlight how ill-prepared Capitol Hill is to regulate the sector, they are chastened by the problems that have been exposed. Their posture toward regulation is no longer resisting it at all cost. Many are eager to see the giant firms that have generated the most unwanted attention forced to improve their business practices.
    “It displays a total lack of intellectual curiosity about the digital revolution,” said Khanna, a progressive who has championed an “internet bill of rights” and antitrust rules opposed by some of the big firms in his district. Candidates should be focused on spreading the innovation economy to struggling parts of the country, rather than attacking it, he said. The companies, unlike Wall Street firms, remain extremely popular with voters, he added.
    “It’s a mistake in the candidate messaging,” Khanna said. “They are disconnected from what people in Middle America want. Those voters want to partner with tech leaders to create economic opportunity. I have been with them in these places. Often, the tech leaders are treated like rock stars.”

Fortunately we in California have Newsom to lead us into the next decade even as we benefit from policies put in place in the last two decades - green energy and internet regulation.

For instance, using an Inclusive Capitalism Plus  approach has allowed California to lead on Climate Change policy issues such as significantly shifting the electrical consumption in the worlds 5th largest economy to renewable energy sources. Yes, some problems have resulted, not the least of which is too much green energy at certain times. But that's what happens as we experiment with innovative technology.

And California is providing leadership in the process of regulating the internet which in a Union controlled by the reactionary right of Trump's Deplorables has led to such headlines as New California Internet Neutrality Law Triggers US Lawsuit.

Another headline from 2018 was California just became the first state with an Internet of Things cybersecurity law which includes, among other things, those chatty little devices with microphones, speakers, and even video screens and cameras we have around the house for convenience. As noted in that article: "While the rule is only state-wide, any device-makers who sell products in California would pass the benefits on to customers elsewhere. Several Internet of Things-related bills have been introduced in Congress, but none have made it to a vote."

Probably because California is both a Progressive Pacific State and home to Silicon Valley it can offer a long list of regulations designed to address 21st Century problems including, but not limited to:
  • Anti-Phishing Act of 2005 This law prohibits “phishing,” the act of posing as a legitimate company or government agency in an email, Web page, or other Internet communication in order to trick a recipient into revealing his or her personal information.
  • Computer Spyware This law prohibits an unauthorized person from knowingly installing or providing software that performs certain functions, such as taking control of the computer or collecting personally identifiable information, on or to another user’s computer located in California.
  • Cyberbullying This law defines bullying as one or more acts of sexual harassment, hate violence, or intentional harassment, threats, or intimidation, directed against school district personnel or pupils, committed by a pupil or group of pupils. Bullying, including bullying committed by means of an electronic act, as defined, including a post on a social network Internet Web site, is a ground on which suspension or expulsion may be based.
  • Library Patron Privacy Protects a library patron’s use records, such as written records or electronic transaction that identifies a patron’s borrowing information or use of library information resources, including, but not limited to, database search records, borrowing records, class records, and any other personally identifiable uses of library resources information requests, or inquiries.
  • California Online Privacy Protection Act  This law requires operators of commercial web sites or online services that collect personal information on California residents through a web site to conspicuously post a privacy policy on the site and to comply with its policy. The privacy policy must, among other things, identify the categories of personally identifiable information collected about site visitors and the categories of third parties with whom the operator may share the information. An operator is in violation for failure to post a policy within 30 days of being notified of noncompliance, or if the operator either knowingly and willfully or negligently and materially fails to comply with the provisions of its policy.
  • Personal Information Collected on Internet This law applies to state government agencies. When collecting personal information electronically, agencies must provide certain notices. Before sharing an individual’s information with third parties, agencies must obtain the individual’s written consent.
  • Privacy of Personal Information Held by ISPs Although not specifically targeted to on-line businesses, this law requires all nonfinancial businesses to disclose to customers, in writing or by electronic mail, the types of personal information the business shares with or sells to a third party for direct marketing purposes or for compensation. Businesses may post a privacy statement that gives customers the opportunity to choose not to share information at no cost.
  • Reader Privacy Act Protects information about the books Californians browse, read or purchase from electronic services and online booksellers, who may have access to detailed information about readers, such as specific pages browsed. Requires a search warrant, court order, or the user’s affirmative consent before such a business can disclose the personal information of its users related to their use of a book, with specified exceptions, including an imminent danger of death or serious injury.
  • Reproductive Health Care, Online Privacy This law protects the personal safety of reproductive health care providers, employees, volunteers, and patients by prohibiting the posting of any such person’s home address, phone number, or image on the Internet, under specified circumstances.
  • Safe at Home Participants, Online Privacy This law provides participants in the Secretary of State’s confidential address program, Safe at Home (for victims of domestic violence or stalking and reproductive health care providers, employees, and volunteers) with the right to demand the removal if their personal information, including home address and phone number, from online search engines or databases, and imposes related obligations on the operators of such search engines and databases.

A few other states have adopted laws regulating technology. But few former slave states have done anything and the Red State members of Congress have pretty much prevented any meaningful regulation of the tech industry. The concept of "Inclusive Capitalism" confuses these folks and the "Plus" is an anathema.

The point here is that Californi since the beginning of the 21st Centurya has had a policy orientation similar to that more recently offered by the European Union: "As the EU relies on science, technology and innovation to secure its present and develop its future, reflecting on and anticipating societal impacts arising from current narratives embodied in EU policy is essential to ensure trust among citizens."

Unfortunately, California will have to battle the Union Army of the Red States as explained in the New York Times (emphasis added):

    In Silicon Valley, Google, Facebook and other tech companies have been working for months to comply with the new [European Union] rules, known as the General Data Protection Regulation. The law, which lets people request their online data and restricts how businesses obtain and handle the information, has set off a panic among small businesses and local organizations that have an internet presence.
    Brazil, Japan and South Korea are set to follow Europe’s lead, with some having already passed similar data protection laws. European officials are encouraging copycats by tying data protection to some trade deals and arguing that a unified global approach is the only way to crimp Silicon Valley’s power.
    Europe is determined to cement its role as the world’s foremost tech watchdog — and the region is only getting started. Authorities in Brussels and in the European Union’s 28 member countries are also setting the bar for stricter enforcement of antitrust laws against tech behemoths and are paving the way for tougher tax policies on the companies.
    The region’s proactive stance is a sharp divergence from the United States, which has taken little action over the years in regulating the tech industry. Most recently, the Trump administration has sought to cut taxes and roll back regulation, while pursuing an increasingly protectionist tack to shield tech companies from competition from China.

Another Times article noted:

    California has passed a digital privacy law granting consumers more control over and insight into the spread of their personal information online, creating one of the most significant regulations overseeing the data-collection practices of technology companies in the United States.
    The new law grants consumers the right to know what information companies are collecting about them, why they are collecting that data and with whom they are sharing it. It gives consumers the right to tell companies to delete their information as well as to not sell or share their data. Businesses must still give consumers who opt out the same quality of service.
    The legislation, which goes into effect in January 2020, makes it easier for consumers to sue companies after a data breach. And it gives the state’s attorney general more authority to fine companies that don’t adhere to the new regulations.
    The California law is not as expansive as Europe’s General Data Protection Regulation, or G.D.P.R., a new set of laws restricting how tech companies collect, store and use personal data.
    But Aleecia M. McDonald, an incoming assistant professor at Carnegie Mellon University who specializes in privacy policy, said California’s privacy measure was one of the most comprehensive in the United States, since most existing laws — and there are not many — do little to limit what companies can do with consumer information.

This is how using  Inclusive Capitalism Plus  will expand  The California Green & Gold Deal  to benefit future generations.

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