It is pretty well-established that the American academic community is disproportionately of the Left, and in fact tilts pretty strongly in many cases to the far Left / progressive side. People debate a lot about why this should be, but I think one contributing factor (but certainly not the only one) that I have never heard anyone discuss is the zero-sum game these academics must play in their own careers. I think that many of them incorrectly assume that all professions, and all of the economy and capitalism, is dominated by this same dog-eat-dog zero sum-game — remember, for most, academia is the only industry they have ever experienced from the inside. And once you assume that the whole economy is zero-sum, it is small step from there to overly-narrow focus on distribution of wealth and income.
One of the mistakes folks on the Left make about capitalism is to describe capitalism as mostly about competition. In fact, capitalism is mostly about cooperation, it’s a self-organizing process where people who don’t even know each other cooperate to deliver products and services, facilitated by markets and the magic of prices. Sure, competition exists but it is not the fundamental feature, but an enabler that makes sure the cooperation occurs as efficiently as possible. Capitalism in fact is about zillions of voluntary trades and transactions every day that each make both parties better off — or else both sides would not have agreed to it. Capitalism in fact is a giant positive sum game, a fact that many on the Left simply do not grasp.
Warren Meyer, “Does the Zero-Sum Nature of Academic Success Contribute to the Left-wards Bias of Academia?”, Coyote Blog, 2018-11-09.
May 29, 2021
QotD: Academia and capitalism
May 28, 2021
QotD: Declaring war on college
Stop the thing where high schools refuse to let people graduate until they promise to go to college. End draft deferment for people who go to college — hopefully there won’t be a draft, but do it anyway, as a sign that studying at college isn’t any more important than the many other jobs people do that don’t confer draft exemptions. Make universities no longer tax-exempt — why should institutions serving primarily rich people, providing them with regattas and musical theater, and raking in billions of dollars a year, not have to pay taxes? Make the bill that does this very clearly earmark the extra tax money for things that help working-class people, like infrastructure or vocational schools or whatever.
Scott Alexander, “A Modest Proposal For Republicans: Use The Word ‘Class'”, Astral Codex Ten, 2021-02-26.
May 16, 2021
Gambling machines have come a long way from the “one-armed bandit” days
This is another reader book review for Scott Alexander’s Astral Codex Ten, looking at Addiction by Design: Machine Gambling in Las Vegas by Natasha Dow Schüll. I’m incredibly risk-averse, so I’ve never even set foot in a casino, but from this review I do not regret my aversion one tiny little bit:
“Hiking the Las Vegas casinos” by davduf is licensed under CC BY-ND 2.0
Sometimes employees at Netflix think, “Oh my god, we’re competing with FX, HBO, or Amazon” … [W]e actually compete with sleep.
Reed Hastings
Randomness is addictive, in rats. B. F. Skinner learned that when he created his eponymous rat boxes. The boxes had levers that, when pressed, dispensed food pellets. Rats in boxes where one press resulted in one pellet pressed the lever when hungry. But rats in boxes where one press randomly resulted in no, one, or many pellets, became addicted to pressing the lever. That mammalian attraction to randomness lies at the heart of all gambling.
But machine gambling is not like other kinds of gambling. The book overflows with metaphors straining to describe how machine gambling is the supercharged version of table games like poker, blackjack, and roulette. Machine gambling is deforestation ruining the rainforest of diverse table games. Machines are invasive kudzu outcompeting and killing the native table games. Machine gambling is the crack cocaine to table games’ cocaine.
In about two decades, machine gambling went from being a side attraction to keep wives busy while their husbands played table games to the source of 85% of casino profits. You know how shopping malls have benches for husbands to sit on while their wives shop in stores? Imagine that those benches became the mall. (If you’re reading this in 2025, shopping malls were, uh, a collection of permanent pop-up stores under the same roof.)
The first time I went to Vegas, I knew a few tricks casinos would use to encourage me to gamble too much. I knew the hotel rooms were purposefully cheap, to entice me to visit Vegas. I knew casinos would have neither windows nor clocks, to help me lose my sense of time. I knew they would be full of bright lights and loud sounds, to overstimulate me. I knew nothing. Those tricks are old hat, as quaint as doilies. Machine gambling is a brave new world.
Machine gambling comes in the form of many games, but one example is enough to illustrate the pattern, so let’s discuss slot machines. Slot machines are games with reels with a variety of symbols on them, like cherries, diamonds, or the number 7. (Fun fact: fruit symbols were initially used on slot machines during the prohibition era to disguise them as gum vending machines.) The game is simple. The player spins the reels. If they land to show symbols in a row, the player wins. Because of their simplicity, these machines are favored by new gamblers and tourists.
Back when Moore’s Law was just Moore’s Prediction, slot machines were mechanical devices. The player would pull on a mechanical lever, which caused reels to spin. The reels would eventually slow down and then stop. The symbols in the middle of the screen when the reels stopped dictated whether the player won or lost.
Now, slot machines are digital. The lever, the reels, the symbols — they are all ones and zeros untethered from reality. This gives machine designers a terrifying amount of flexibility. They can optimize the game to maximize its addictivity.
May 6, 2021
Fallen Flag — the Northern Pacific Railway
Despite the vast land grants, the costs of building the railway eventually drove Jay Cooke, the original financial backer, into bankruptcy which was one of the major triggers of the financial disaster known as the Panic of 1873. The economic impact was widespread and was known — until the 1930s — as the “Great Depression”, and the US economy took several years to resume growth while other industrialized countries suffered the effects for longer.
NP reorganized by converting the bonds to stock, and the Lake Superior & Mississippi was reorganized as the St. Paul & Duluth. In 1881 control of the NP was purchased by Henry Villard, who also controlled the Oregon Railway & Navigation Co. and the Oregon & California Railroad. On Sept. 8, 1883, NP drove a last spike at Gold Creek, Mont., near Garrison, completing a line from Duluth to Wallula Junction, Wash. Northern Pacific trains continued on the rails of the OR&N to Portland, where NP’s own line to Tacoma resumed (it crossed the Columbia River by ferry from Goble, Ore., to Kalama, Wash.).
Even before completing the line at Gold Creek, NP began constructing a direct line from Pasco, Wash., over the Cascade Range to Tacoma. The Puget Sound area was beginning to grow, and NP wanted to reach it with its own line rather than rely on OR&N. Indeed, soon after the last-spike ceremonies, Villard’s empire collapsed and OR&N became part of Union Pacific (Southern Pacific got the Oregon & California). The Pasco–Tacoma line opened in 1887, with temporary switchbacks carrying trains over Stampede Pass until the opening of Stampede Tunnel in May 1888.
To help populate the railway’s claimed lands, colonization offices were established in northern Europe in the mid-1880s to attract immigrants to settle and farm along the right of way. Many Americans of German or Scandinavian ancestry can trace their roots back to these programs, which generally offered very cheap package deals for transportation to the United States along with parcels of land and other inducements.
Detail from an 1885 Rand McNally publication showing a “Shipper’s Guide To All Points On And Connections To the Northern Pacific Railroad, Its Branches And Connecting Lines”
Original scan from the Norman B. Leventhal Map Center at the BPL via Wikimedia Commons.
In 1901 Northern Pacific and Great Northern gained control of the Chicago, Burlington & Quincy by jointly purchasing approximately 98 percent of its capital stock. That same year James J. Hill and J. P. Morgan formed the Northern Securities Co. as a holding company for NP and Great Northern. The U.S. Supreme Court dissolved Northern Securities in 1904. In 1905 the two roads organized the Spokane, Portland & Seattle, which was completed from Spokane through Pasco to Portland in 1908. GN and NP attempted consolidation in 1927, but the Interstate Commerce Commission made giving up control of the Burlington a requisite for approval, a condition the roads found unacceptable.
In October 1941 NP purchased the property of the Minnesota & International Railway (Brainerd to International Falls, Minn.), which it had controlled for a number of years.
In image, Northern Pacific was the most conservative of the three northern transcontinentals. (Great Northern was a prosperous, well-thought-out railroad; the Milwaukee Road was a brash newcomer.) Bulking large in NP’s freight traffic were wheat and lumber. In the 1920s and 1930s NP suffered from smaller than usual wheat crops and competition from ships for lumber moving to the East Coast. Ship competition decreased during World War II, and postwar prosperity brought an increase in building activity and population growth to the area NP served. NP was the oldest of the northern transcontinentals and had been instrumental in settling the northern plains. It served the populous areas of North Dakota, Montana, and Washington. Its slogan was “Main Street of the Northwest,” and its secondary passenger train of the 1950s and ’60s was the Mainstreeter. Its flagship was the North Coast Limited, launched in 1900.
In 1956 NP and Great Northern again studied merger of the two roads, the Burlington, and the Spokane, Portland & Seattle. In 1960 the directors of both roads approved the merger terms. On March 2, 1970, NP was merged into Burlington Northern along with Great Northern; Chicago, Burlington & Quincy; and Spokane, Portland & Seattle.
April 30, 2021
Bill C-10, despite frequent government denials, would regulate user-generated content on the internet
Michael Geist continues to sound the alarm about the federal government’s bill to vastly increase CRTC control over Canadians’ access to information and entertainment options online, including the Heritage minister’s mendacity when challenged about how the CRTC’s powers will increase to censor individual Canadians in what they post to online services like YouTube:
Canadian Heritage Minister Steven Guilbeault and the Liberal government’s response to mounting concern over its decision to remove a legal safeguard designed to ensure the CRTC would not regulate user generated content has been denial. The department’s own officials told MPs that all programming on sites like Youtube would be subject to regulation, yet Guilbeault insisted to the House of Commons that user generated content would be excluded from regulation as part of Bill C-10, his Broadcasting Act reform bill.
However, based on new documents I recently obtained, it has become clear that Guilbeault and the government have misled the Canadian public with their response. In fact, the government effectively acknowledges that it is regulating user generated content in a forthcoming, still-secret amendment to Bill C-10. Amendment G-13, submitted by Liberal MP Julie Dabrusin on April 7th and likely to come before the committee studying the bill over the next week, seeks to amend Section 10(1) of the Broadcasting Act which specifies the CRTC’s regulatory powers. It states:
(4) Regulations made under paragraph (1)(c) do not apply with respect to programs that are uploaded to an online undertaking that provides a social media service by a user of the service – if that user is not the provider of the service or the provider’s affiliate, or the agent or mandatary of either of them – for transmission over the Internet and reception by other users of the service.
The amendment is a clear acknowledgement that user generated content are programs subject to CRTC’s regulation making power. Liberal MPs may claim the bill doesn’t do this, but their colleagues are busy submitting amendments to address the reality.
But it is not just that the government knew that its changes would result in regulating user generated content. The forthcoming secret amendment only covers one of many regulations that the CRTC may impose. The specific regulation – Section 10(1)(c) of the Broadcasting Act – gives the CRTC the power to establish regulations “respecting standards of programs and the allocation of broadcasting time for the purpose of giving effect to the broadcasting policy set out in subsection 3(1).”
April 15, 2021
QotD: The “evil” of profits
Ludwig von Mises, Planned Chaos, 1947.
April 8, 2021
Fallen Flag — the Duluth, Missabe & Iron Range Railway
The Merritt family of Minnesota (known as the “Seven Iron Brothers“) discovered a large iron ore deposit in the Mesabi Range and created the largest iron ore mine in the world (as of the 1890s) and tried to persuade the DMN to build a 70-mile rail connection to get their ore to harbour and out to the iron and steel foundries around the Great Lakes. The DMN was unwilling to commit, so the Merritt family borrowed money to build the line from, among other financiers, John D. Rockefeller. The line — called the Duluth, Missabe and Northern — got built and began operations in 1892, but the Merritts expanded too quickly at the wrong moment — the financial panic of 1893 — losing financial control and leaving ownership of both the mine and the railway in Rockefeller’s hands by 1894.
Charlemagne Tower sold the Duluth & Iron Range to Illinois Steel in 1887, which was succeeded by Federal Steel, then U.S. Steel. By 1901, both the D&IR and DM&N were under U.S. Steel control. USS upgraded both railroads with heavy rail and double track, ordered bigger locomotives and larger cars, and built sizeable shops and roundhouses at Proctor and Two Harbors.
In 1915 DM&N leased the Spirit Lake Transfer Railway, a link between DM&N at Adolph, near Proctor, and the Interstate Transfer Railway at Oliver, Wis., across from Steelton, Minn. The Interstate Transfer ran from Oliver to Itasca, in eastern Superior, giving the DM&N connections with large railroads including Northern Pacific, Chicago & North Western’s “Omaha Road”, and three members of the Canadian Pacific family: Minneapolis, St. Paul & Sault Ste. Marie (“Soo Line”); Wisconsin Central; and Duluth, South Shore & Atlantic.
DM&N and D&IR remained separate until January 1, 1930, when the DM&N leased the D&IR and consolidated operations. Then on July 1, 1937, the DM&N merged with the Spirit Lake Transfer to form the Duluth, Missabe & Iron Range Railway. DM&IR then acquired ownership of D&IR and Interstate Transfer, and they became part of the new corporation on March 22, 1938. Reminders of the two big predecessors remained in the DM&IR’s two operating divisions, named Iron Range and Missabe, made up primarily of the predecessors’ tracks.
The Great Depression drastically reduced ore traffic. In 1932, not a single all-ore train was run — the small amount of ore that had to be shipped was carried in mixed freights. World War II reversed the road’s fortunes, of course, and the postwar boom resulted in an even higher demand for ore, with an all-time tonnage record being set in 1953.
Missabe had minimal passenger service. Into the 1950s, handsome Pacifics pulled heavyweight steel RPOs and coaches, two with solarium observation sections. At the end of World War II, the Missabe still provided service between Duluth and Ely (Winton), and Duluth and Hibbing, with the Hibbing train connecting with one from Iron Junction to Virginia.
Duluth, Missabe & Iron Range M-3 locomotive no. 227.
Photo by “GavinTheGazelle” via Wikimedia Commons.
U.S. Steel spun off the DM&IR and its other ore railroads and shipping companies to subsidiary Transtar in 1988, selling majority control to the Blackstone Group. In 2001, DM&IR and other holdings were moved from Transtar to Great Lakes Transportation, fully owned by Blackstone, so for the first time in a century, DM&IR was no longer associated with U.S. Steel. On October 20, 2003, Canadian National announced it would buy Great Lakes Transportation, which also owned Bessemer & Lake Erie, Pittsburgh & Conneaut Dock Co. in Ohio, and Great Lakes Fleet, Inc. The purchase was finalized on May 10, 2004, and the independent Missabe Road vanished.
CN retired all but 10 of the SD40-3s, most of the SD38s, and all the rebuilt SD9s and 18s. Major locomotive work shifted from Proctor to other shops, and train dispatchers moved to Wisconsin, then Illinois. CN invested in new ore cars for the Missabe, gradually replacing those that dated to when steam still ruled the railroad. DM&IR existed on paper until December 31, 2011, when CN merged subsidiaries DM&IR and Duluth, Winnipeg & Pacific into Wisconsin Central.
April 3, 2021
QotD: When governments try to “help” small businesses
Love for small business is one of the few universals in American politics. In a 2018 Gallup poll, just 56 percent of Americans viewed capitalism positively; but 92 percent had a positive view of small business, and 86 percent viewed entrepreneurs positively. Government at all levels has policies intended to help small businesses, but there’s little evidence that these programs are effective — and even when bureaucrats try to help, they impede small-business creation by imposing new regulations. The New York City Business License and Permit index presents a daunting compendium of licenses and certifications that can be required to start a business in the city — such as the Esthetics License (needed if you want to “conduct beauty treatment”) and the Certificate of Fitness for Fire and Emergency Drill Instructor (necessary to “lead fire drills in buildings that do not require a Fire Safety Director”).
Such overregulation represents a second way that the deck gets stacked in the American economy against outsiders. The decline of American entrepreneurship is a discouraging trend of the last 30 years. In 2015, economist John Haltiwanger documented numerous signs of diminished business dynamism in the United States. In the early 1980s, he noted, America’s startup rate exceeded 13 percent, which meant that about one-eighth of all firms had just begun. The startup share fell to 10 percent near the end of the Clinton years and below 8 percent during the Great Recession. While no consensus exists about the causes of this dramatic drop, expanding business regulation is a plausible candidate.
Edward L. Glaeser, “How to Fix American Capitalism”, City Journal, 2020-12-13.
March 22, 2021
Apocrypha: Tour of the Kyrö Distillery
Forgotten Weapons
Published 21 Mar 2021While I was in Finland for Finnish Brutality 2021, I took a day to hitch a train ride up to Isokyrö, about 400km northwest of Helsinki. The Kyrö distillery was founded there in 2012, making single malt Finnish rye whiskey and several varieties of gin.
Their own video does a fine job describing the origins of the distillery:
But I wanted to get a look at the production process — and it’s impressively well set up! The rye is made in a pair of imported Scottish pot stills, and the gin uses a combination of pot and column distillation. They were kind enough to give me a tour of the whole place, so let’s have a look around!
They are distributed throughout the EU, and to a limited extent in the US.
(Apocrypha is a behind-the-scenes periodic series normally only available to Patreon supporters of Forgotten Weapons. Want to see more? Sign up to help support me directly at http://www.patreon.com/forgottenweapons)
March 18, 2021
The Hornby Story
Little Car
Published 27 Feb 2020Hornby Railways is a British model railway brand. Its roots date back to 1901, when founder Frank Hornby received a patent for his Meccano construction toy. The first clockwork train was produced in 1920. In 1938, Hornby launched its first 00 gauge train. In 1964, Hornby and Meccano were bought by their competitor, Tri-ang, and sold on when Tri-ang went into receivership. Hornby Railways became independent again in the 1980s, and became listed on the London Stock Exchange, but due to recent financial troubles, reported in June 2017, is presently majority owned by turnaround specialist Phoenix Asset Management.
The script for this video comes from Wikipedia:
https://en.wikipedia.org/wiki/Hornby_…
If you find issues with the content, I encourage you to update the Wikipedia article, so everyone can benefit from your knowledge.To get early ad-free access to new videos, or your name at the end of my videos, please consider supporting me from just $1 or 80p a month at https://www.patreon.com/bigcar
#hornby #hornbyrailways
March 17, 2021
The long-gone economic framework of print newspapers
In The Line, Peter Menzies explains the economic underpinnings of the newspaper world back in the “good old days” before first radio, then TV, and finally the internet took all the profits out of their model:
“Newspaper Boxes” by Randy Landicho is licensed under CC BY 2.0
We will hear a lot in the months ahead about who’s making money from news, so let’s get something straight: Even in the profit-soaked heyday of Canadian newspapers, no one made money from news.
That all ended about 100 years ago when radio — and then television — began delivering it for free.
Oh sure, the occasional ongoing news story would inspire people to buy more newspapers. But in my 30 years in that business the only event that did so in any significant way was the death and funeral of Princess Diana. Even then, after the extra cost of newsprint and distribution, the financial return was insignificant.
But mythologies die hard. People in newsrooms believed news made money — and apparently some still do — even when year after year, surveys of readers showed that there were lots of other things that sold and sustained newspapers.
Some people bought them because they were looking for a job. For others, it was a house, a plumber, a companion, a pet, a car or, really, almost anything else you can think of that might be needed. Classified pages were every town and city’s marketplace. That’s where you found stuff you had to get and bought an ad when you had something to sell or tell people about. It was where you announced the births of your babies, the graduations, engagements and weddings of your children and the deaths of your parents. The lives of communities were recorded in the classified pages of their newspapers.
After a glance at the headlines, many other readers’ first and sometimes only stops were the horoscope, comics, crossword (an error there generated far more calls than a rogue columnist ever could) and other pleasant distractions. For still more, it was the stocks listings, sports scores or recipes to which they were primarily drawn.
There were movie and entertainment listings — even a TV guide so you’d know where and when to find Seinfeld. On Thursdays, you might buy a paper just for the Canadian Tire flyer. On weekends, specialty sections discussed books and told tales of travel adventures well-supported by the latest deals advertised by travel agencies. Housing developers pitched their latest home designs in special real estate sections. And there were magazines. Honestly, there were.
It’s been literal decades since we last subscribed to a print newspaper, and nearly as long since I picked one up from a news stand. My mother is the last person I recall still depending on buying a physical newspaper — she only stopped buying a Saturday Toronto Star in the last year or so — but that was mainly for the TV listings. Back when I still occasionally travelled on business (also more than a decade ago, now), it was a nostalgic treat to find a copy of USA Today at the door of my hotel room in the morning.
March 15, 2021
Target is careful to only cite economic reasons for abandoning their downtown Minneapolis headquarters
Jon Miltimore explains why the Target corporate headquarters in Minneapolis will be given up — for reasons that go beyond the claimed success of the telecommuting encouraged by the 2020 pandemic lockdowns:
A building burning in Minneapolis following the death of George Floyd.
Photo by Hungryogrephotos via Wikipedia.
Target Corporation, the eighth largest retailer in the United States, announced in an email to employees on Thursday that it will be leaving the City Center, its primary downtown Minneapolis location.
Company officials cited improved remote work opportunities and less need for space as the drivers for the decision.
“In just one year we’ve proven that we can drive incredible results, together, from our kitchens and basements and living rooms,” said Melissa Kremer, executive vice president and leader of Target’s human resources operations.
Target, the largest employer in Minneapolis with some 8,500 corporate workers, says the 3,500 employees who work at the City Center will still have a “home base,” but it will be at another Minneapolis location or in the nearby suburb of Brooklyn Park.
A Story of Capital Flight?
On one hand, there is little reason to doubt Target’s explanation for abandoning its headquarters. Many anticipated that the pandemic would lead to a normalization of remote work.
“The future of work will be distributed,” Erica Brescia, the chief operating officer of Github, told the BBC last fall. “We’re going to see a big shift from office by default to remote by default.”
Part of that shift, it’s reasonable to assume, would be corporations moving away from high-end corporate real estate. Yet it also shouldn’t be forgotten (or ignored) that Target’s decision comes less than a year after Minneapolis suffered some of the worst riots in US history, prompted by the May 25 death of George Floyd.
The riots — which broke out after a video went viral showing police pinning Floyd, a 46-year-old black man, to the ground for nearly nine minutes before he died — caused an estimated $2 billion in damage.
Though Target made no mention of the riots in its announcement, last summer I noted that an abundance of evidence suggested that the economic damage of the riots would persist long after the wreckage had cleared.
March 11, 2021
Substack is “‘incredibly dangerous and damaging’ to ‘one of the few failsafes against anti-democratic maneuvers'”
At The Line, Matt Gurney discusses Substack in the light of extreme criticism by, among others, UCLA professor of information studies Dr. Sarah T. Roberts:
It wasn’t long ago that Jen Gerson and I wrote damn similar columns within days of each other. She was writing here, at The Line, and I was writing at my personal blog, Code 47. We both discussed Substack, the digital publishing company you’re reading at this very moment — The Line is currently hosted on Substack.
Or, if you prefer, Substack is a “a dangerous direct threat to traditional news media” and “a threat to journalism.”
That is the view of Dr. Sarah T. Roberts, a professor of information studies at UCLA, who unloaded on Substack (and some of those who use it) in a recent Twitter thread. You can read it here, and should, but for our purposes, Roberts argues that Substack is bad because it lets journalists who have come up through the traditional newsroom system bail on it, stop bothering with the trouble of an editor, “cash out” on the reputation they earned in newsrooms, and transform themselves from a “journalist” to that vastly lower order of life, “an opinion writer, at best.” Ouch!
Roberts makes an explicit appeal to her Twitter followers: do not pay for Substack content. Do not write for Substack. (She does carve out exceptions for purely personal blogs on trivial topics.) But Substack as a journalism venture is, in her view, “incredibly dangerous and damaging” to “one of the few failsafes against anti-democratic maneuvers … We really can’t afford to lose [journalism] right now.”
This is my summary of what she said — perhaps she’d quibble with it, which is why I’m encouraging you, all of you, to go read her original thread. Get it in her own words and judge for yourself if I’ve been fair.
Assuming I’ve passed your muster, like, yikes. Where to start?
Roberts is, of course, as entitled to her views as any one, and if she hates Substack with a fiery passion, that’s totally fine. And I think there is some truth to her argument, as Jen and I both noted in our earlier pieces: there no doubt are some people with big profiles, who built those profiles working for traditional newsrooms, who will bail on that job to go make money — maybe lots of money! — on Substack. This is a threat to legacy media organizations, who are more reliant than ever on a few key contributors, who serve not only as click magnets, but also human avatars of an outlet’s brand. Roberts’ argument is on the money here.
But the sum of what she left out of her argument is so gigantic that it practically warrants a Substack of its own.
March 8, 2021
Despite the rhetoric, judging by their actions the Democrats really hate the “gig economy”
Along with all the giveaways to favoured groups in the US government’s huge “relief” bill, there was a late change that will take the gig economy into a back alley and rough it up to the tune of about $1 billion in new taxes:
UBER 4U by afagen is licensed under CC BY-NC-SA 2.0
When the economy is struggling to recover from a pandemic and crushing government lockdowns, that’s probably the worst time to impose $1 billion in new annual taxes on the working class. But that’s exactly what a new provision quietly slipped into the Democrats’ sweeping $1.9 trillion COVID legislation would do.
“A last-minute insert by Democrats looking to offset the cost of their coronavirus aid package would send tax collectors into the gig economy, eventually costing Uber and DoorDash drivers, Airbnb hosts and others about $1 billion annually,” Roll Call reports.
Under current tax law, earnings data for gig economy workers only needs to be reported to the IRS once it reaches $20,000. This means that small earners pursuing gig work to supplement their income aren’t hit by crushing federal taxes. However, the Democrats’ provision would nearly eliminate this benchmark, and instead require all income above $600 to be reported to the IRS.
“The stiffer tax burden would be imposed while 10 million Americans are unemployed and more and more have turned to freelance and gig economy work to make ends meet,” Roll Call notes.
Indeed it would, and this would be disastrous for both workers and the economy.
This tax hike “adds a significant burden to gig economy and small business workers at the worst possible time,” according to TechNet spokesman Steve Kidera. One tax expert warned Roll Call that many struggling gig economy workers won’t be able to pay the higher taxes, and that IRS penalties “can destroy a person’s life.”
QotD: Wall Street
Fred Sched, Where Are the Customers’ Yachts?, 1940.
