Tackling the Fake Account Challenge, Anti-Trump Economy, and Bitcoin Over Bolivars

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Here’s What You Need To Know

This week, Facebook provided to Congress more than 3,000 ads that ran during the 2016 presidential election. These ads are linked to a Russian ad agency and were turned over to the House and Senate intelligence committees, as well as the Senate Judiciary Committee, as part of the tech company’s cooperation with the investigation into potential Russian meddling in the election.

Facebook is not the only tech company facing scrutiny. Twitter and Google are also cooperating with the probe, and the result of this scrutiny thus far is an increasing public awareness of online influence, fake social media accounts, and automated internet “robots”, or “bots” for short. Taken together, these unfolding developments present a challenging reality at the intersection of technology with government, business, and politics.  

Whatever the outcome of the investigation into Russian election meddling, the issue of fake social media accounts is one that business leaders and policymakers will need to grapple with. No matter what steps social media companies take to deter these accounts, they are likely to be a fact of life for some time, if not forever. With that in mind, as we often say at Delve, what you don’t know can hurt you, so here are three important lessons for tackling the fake news challenge before it undermines your interests:

  1. Know These Fake Accounts Exist: Fake social media accounts are not a new phenomenon. There were more than a dozen services selling fake Twitter accounts as long ago as 2013; Facebook has been responding to claims since at least 2014alleging that it gave “fake likes” to companies in exchange for advertising dollars; and Twitter accounts were used in 2015 by supporters of Mexican President Enrique Nieto to push back against political opponents and diminish unfavorable narratives. When you see a new meme or line of messaging beginning to trend, you need to step back and understand that it is in someone’s interest to promote that messaging beyond its organic interest.
  2. Know Who’s Behind Them And Why: Web traffic is a valuable commodity, whether as a tool to drive advertising revenue and demonstrate popularity, or as a means to further a political objective. While one Facebook imposter account was traced back to the Russian government as a means of stirring chaos in the United States, companies, bands, and even the U.S. State Department have paid companies to artificially inflate their social media followings and create an echo chamber effect artificially.
  3. Leverage This Information: Business leaders and policy makers need to understand the challenges posed by fake social media accounts, which pose serious political and reputational risks for companies and causes. Fake accounts already exist and are creating perceptions that may not stand up to scrutiny; investors are already questioning the effects that fake accounts have on advertisers and the values of social media stocks; and companies have already been caught – and their brands damaged – by creating fake accounts to try and shape a narrative online. Indeed, fake accounts are in many ways the latest method in a longstanding tradition in Washington and other influence capitals of creating anonymous, anodyne-sounding coalitions to promote messages and undertake advocacy for and against business and policy concerns. If business leaders and policymakers wait to achieve an information awareness about these accounts, the ability to prepare for and mitigate the risks they bring will be greatly diminished – and may raise the costs for eventual recovery from them.

Fake accounts will remain a major issue in the news, and their activities and consequences will continue to impact businesses and create challenges for policymakers. In looking at these facts, and by using the three lessons outlined above, one can better understand the risks that fake accounts pose and be better prepared to craft a strategy to protect one’s interests and make the most of the opportunities that present themselves in these uncertain times.

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DUELING ECONOMISTS AND THE MINIMUM WAGE

Does the minimum wage hurt job creation? In finding the answer to this question, University of California-Irvine Professor of Economics David Neumark writes that this debate “often reduces to dueling economic studies.” Almost on cue, Berkeley Professor Michael Reich challenged Neumark’s suggestion that his criticism of a study on Seattle’s minimum wage increase harming low-wage workers may have been driven by ideological, rather than empirical, motivations.

At issue for Neumark is that the methodology often used in studies cited by minimum-wage supporters, in which workers in geographic areas nearby are used as the research control group, is attacked by those same supporters when the Seattle study shows low-wage workers being harmed. Neumark, who believes the effects of minimum wage changes can be masked by broader trends or policy differences in different geographical regions, closes with this advice for one who attempts to evaluate further studies on the issue: “understand not only what the research says about public policy, but also who the messenger is.”

CAN LOCAL JOURNALISM BE SAVED?

As big newspapers like The New York Times and Washington Post profit and hire more journalists, local journalism continues to decline and shed jobs. Enter Report For America (RFA), which aims to reinvigorate local journalism by placing 1,000 journalists in local newsrooms over the next five years. Calling the crisis in local journalism a “crisis for our democracy,” RFA will select emerging journalists and connect them with newsrooms in need. Fifty percent of the journalists’ salary will be paid by RFA, which is funded by Google News Lab and private donors, with the remaining half being split between the local newsroom and local donors.

While RFA will increase the pipeline of personnel flowing to local newsrooms, the crisis confronting journalism may not be one of personnel, but rather one caused by the lack of a sustainable business model. Therefore, unless local newsrooms find a wealthy benefactor or alter their business models, this surge of journalists alone is unlikely to save local newsrooms.

THE ANTI-TRUMP ECONOMY

The political ecosystem in opposition to President Trump is booming. Termed the “anti-Trump economy” by The Washington Post, this ecosystem includes everything from director Rob Reiner founding a Committee to Investigate Russia, to former Obama staffers’ Pod Save America podcast tour selling out 6,000-seat venues, to liberal groups MoveOn.org and Indivisible holding a joint conference call with 60,000 participants – a number now enshrined in the Guinness Book of World Records. Flush with cash and support, liberal groups are using these resources to expand their activism.

Yet for all the motion, there has been very little electoral progress thus far. With the high-profile Democratic losses in special elections in Georgia and Montana, it remains to be seen whether this grassroots enthusiasm will be enough to overcompensate for the Democrats’ inability thus far to connect with voters beyond their extreme base.

A WILD AND “CRAZY GUY?”

In an effort to better understand the American President, and why top officials like Secretary of State Tillerson and Defense Secretary Mattis publicly contradict him so often, North Korean officials have been quietly reaching out to Republican-linked policy analysts and ex-officials for meetings in neutral locations. The situation has since gotten more confusing as President Trump took to Twitter to tell his Secretary of State to “save his energy” instead of trying to negotiate with North Korean officials.

The tweet came just one day after Tillerson said the U.S. had direct lines of communication to Pyongyang. However, in light of the President’s urging of staff to portray him as “a crazy guy” in trade talks as a means of gaining leverage in negotiations, Trump’s actions regarding North Korea may be viewed instead as a calculated extension of the Madman Theory of international relations.

LAWYERS WITHOUT FACTS

A recent letter signed by faculty of Georgetown’s law school highlighted the importance of using facts as the foundation of any public affairs initiative. In advance of Attorney General Jeff Sessions’ appearance at the school to discuss free speech on college campuses, 30 faculty members signed a public letter lecturing Sessions for perceived “hypocrisy” on the issue. Among the examples cited by the faculty included the Justice Department prosecuting an activist for “laughing” during Sessions’ confirmation hearing and his supposed directive that the Department of Justice would not pursue federal investigations into police shootings of unarmed black men.

Both accounts do not stand up to scrutiny. The U.S. Attorney’s office in charge of prosecuting the disruptive activist was overseen by an Obama appointee, and while many characterized it as being prosecuted for laughing, in reality, according to prosecutors she “grew loud and more disruptive” after police tried to “quietly escort” her from the hearing, “eventually halting the confirmation hearing.” In regard to the latter charge, Attorney General Sessions has said that his department will “hold accountable” any law enforcement officer who violates civil rights by using excessive force – and indeed extracted a guilty plea from an officer accused of doing just that. Instead of galvanizing support for their perspective, the faculty’s trouble with the facts may instead have undermined their cause.

BITCOIN OVER BOLIVARS

An extreme cash shortage is creating serious problems for the people of Venezuela, and in a country where a third of the population does not have a bank account, cash is essential for survival. When people do get their hands on Venezuelan currency, Bolivars, runaway inflation ensures that it is almost entirely worthless.

Enter Bitcoin, the internet cryptocurrency that locals are now using to pay for lunch and other daily needs. Venezuelans are increasingly relying on Bitcoin as the Bolivar continues to tank. While not without criticism, Bitcoin’s ability to help people function economically in places where government-backed financial instruments have faltered may well lead to the first “Bitcoinization” of a sovereign state.

The Great Shakedown, You Are Where You Live, and Knowing What’s Disclosed

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Here’s What You Need To Know

With a strong stock market and a political agenda that includes tax reform, repealing and replacing the Affordable Care Act, and reducing regulations, Wall Street banks and investors are optimistic about the future of the U.S. economy. However, as a result of their settlements with the Obama Administration in the aftermath of the 2009 financial crisis, Wall Street’s big banks are incidentally funding the opposition to the very policies they support.

Intended to assist individuals who lost their homes in the housing crisis, some of the Department of Justice (DOJ) and Department of Housing and Urban Development’s (HUD) $640 million in settlement funds have instead been dispersed to Democratic activist groups who were not victims of the crisis, but were selected to “provide assistance to [consumers] and communities most in need of help.” Bank executives, industry groups, and policy experts alike have expressed concern regarding the usage of these funds – which resemble a “slush fund” for third-party groups selected by the executive agencies – because they seem to be going towards policy advocacy rather than helping victims.

Here are three examples of nonprofit groups that were selected by Obama’s DOJ and HUD to receive settlement funds collected from Wall Street banks – and how these groups may be misusing these funds:

1.     The National Council Of La Raza – Rebranded as UnidosUS, this controversial Latino-rights group received $1.5 million in bank settlement funds from the Obama Administration. After coming out strongly in opposition to Republican efforts to repeal the Affordable Care Act, this group organized large rallies targeting vulnerable legislators in a successful effort to kill the bill.

2.     National Urban League – This African American advocacy group received at least $1.2 million in bank settlement funds and attacked the Republicans’ alternative to the Affordable Care Act as “un-American, un-healthy, and un-caring.”

3.     National Community Reinvestment Coalition – At the forefront of opposing the regulatory repeal of provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as blocking the privatization of Fannie Mae and Freddie Mac, this liberal advocacy group received $2.6 million in Obama-era settlement funds.

In a change of policy meant to remedy this practice going forward, Attorney General Jeff Sessions announced the DOJ would no longer set aside settlement funds for third-party interest groups or political allies, and that settlement funds will only be used “to compensate victims, redress harm, and punish and deter unlawful conduct.” Yet, the Consumer Financial Protection Bureau (CFPB) – which is currently led by an Obama Administration holdover – continues to donate from its Civil Penalty Fund to third-party groups, with entities as varied as the Government Accountability Office and the Independent Community Bankers of America calling for increased transparency and reform.

By bringing the scope of this “shakedown” to light, those who are skeptical of Obama-era financial regulation and enforcement efforts are wagering that an educated citizenry will find the practice distasteful and become more sympathetic to their arguments for repealing or at least revising them. There is evidence that this may be a sound strategy, and barring any change in CFPB Director or settlement policy, understanding how settlement funds are being used – and to what end third-party interest groups may be benefitting – will be a crucial part of this issue going forward.

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YOU ARE WHERE YOU LIVE?

Economic opportunity in America is more closely tied to one’s location than ever before, and people living in the most distressed zip codes are finding less opportunity and a widening gap between them and people living in the most prosperous areas. Technological disruption has only exacerbated this schism, and with fewer businesses starting up than shutting down, especially outside major metropolitan areas, this regional inequality contributes to a large number of Americans facing hard times and feeling left out in today’s economy.

Noted urbanist Richard Florida, who in 2002 predicted a resurgence in city centers due to a new class of creative “knowledge workers,” proposes federalism as a means of creating solutions to this growing economic segregation. With people being left behind in zip codes throughout different regions of the country, Florida suggests that giving power from the federal government back to local actors is the best way to help create areas that are more inclusive economically.

IF THERE’S A WILL…

Is this week the last chance Republicans have to repeal Obamacare? The media would have you believe it is. Even Speaker Ryan has said that the most recent vehicle for this goal, the Graham-Cassidy health care bill, is the “best, last chance to get repeal and replace done.” However, long-time Congressional health policy aide Chris Jacobs argues this view is based on a Senate parliamentarian’s ruling that is not binding and has no precedent.

The central question in this ruling is whether so-called reconciliation instructions, which allow for the Senate to expedite legislation dealing with fiscal issues, expire. Because there is no precedent and the parliamentarian’s ruling on this issue is not binding, a majority of Republicans themselves can set the precedent going forward by voting to pass repeal legislation beyond September 30th. Alternatively, they can also choose to pass a new budget with reconciliation instructions once the previous one expires, although that may interfere with tax reform efforts. Whatever the way forward from here, Jacobs contends Republicans have more time to finally deliver on their seven years of promises to repeal Obamacare – if only they can muster the political will to do so.

THE MISEDUCATION OF UNCLE SAM

In the continuous debate regarding how to improve educational outcomes for impoverished and minority students in the U.S., the ideas commonly focus on government policies such as affirmative action, quotas, and lower admission standards. However, at BEAM – a nonprofit in New York City whose mission is to create pathways for underserved students to enter into STEM fields, the focus is not on government but rather on helping students “fall in love with math.” By identifying and nurturing underserved students with the raw ability to succeed in high-level mathematics, BEAM demonstrates that part of the solution to the most difficult public policy challenges may not be through government – but through a strong and vibrant civil society.

KNOWING WHAT’S DISCLOSED

Despite a law banning Members of Congress from insider trading in the wake of an explosive 60 Minutes report, legislators and their staffers continue to buy and sell stocks of companies that have interests before their committees. This revelation can be gleaned from reviewing Personal Financial Disclosure (PFD) forms, which are publicly available and required of all Members of Congress, as well as Congressional aides making above a certain salary.

In addition to information about their incomes, assets, and liabilities, aides must also disclose most financial transactions, such as stock trades made during the year by them, their spouses, and dependent children. While legislators and their staffs may deny any insider knowledge driving their investment decisions, knowing what public information is available to the media, watchdog groups, and engaged citizens is crucial to proactively mitigating the damage from any investments that – if legal – can be perceived as improper.

A NEW DEBT TRAP?

Long considered a cornerstone of the American Dream, home ownership is no longer viewed as an essential part of it. The Great Recession caused by the housing “bubble” remains fresh in many Americans’ minds, and especially for millennials, the experience of coming of age during the financial crisis created skepticism regarding the benefits of home ownership. Adding to this skepticism is the fact that millennials, who used to be considered in the prime age range to buy a home, carry an estimated $1 trillion in student loan debt.

In an effort to encourage millennial buyers to purchase a home that they are putting off because of this debt, homebuilders and mortgage companies are creating a program, backed by Fannie Mae, to cover up to 3% – up to $13,000 – of a buyer’s outstanding debt. Loftium, another homebuyers’ assistance program, is offering buyers up to $50,000 for a down payment in exchange for continuously listing an extra bedroom on Airbnb for several years and giving a majority of the income to Loftium. Even so, these moves to increase home ownership may create new challenges to be solved. Besides concern that assistance programs will drive up home prices, they may also ultimately contribute to luring homebuyers into a new debt trap by making it easier for them to accumulate new debt.

Getting by With a Little Help From Friends, Mystery in Cuba, and Is UBI No BFD?

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Here’s What You Need To Know

These days, individuals and groups with cases before the Supreme Court are getting by with a little help from their friends. In fact, over 90% of cases that the Supreme Court hears attract at least one amicus curiae – Latin for “friend of the court” brief. That is a more than 800% increase since the 1950s, and a 95% increase since 1995.

Amicus briefs are a tool for individuals or groups that have an interest in – but are not a party to – a case that allows them to provide an outside perspective to be considered by the judge. As the primary way for interest group participation in the judicial system, and in an effort to prevent well-funded litigants from stacking the deck in favor of their interests, the Supreme Court and federal appeals courts have required friends of the court to disclose if their brief was written by a party in the case or whether they were paid to do so.

However, recent headlines have brought to light hidden ties to big investors behind amicus briefs. Here are some of the questions raised by the lengths that well-funded litigants will go to in order to get around disclosure requirements:

  • Why Are There Disclosure Requirements? The purpose of the disclosure requirements are to make clear if a filer is a party to a case or being paid by the party to submit their brief.
  • What Tactics Are Being Used To Get Around Disclosure Rules? In one instance, a major law firm wrote an amicus brief on behalf of a nonprofit that supported their client’s interests and recruited a different lawyer to be “involved for five minutes” and sign her name to it, thereby avoiding the need to disclose their involvement. In another example, a consulting firm recruited allies to file briefs on behalf of their client’s interests and obfuscated their involvement by diverting payments through other entities in order to help their clients succeed.
  • Why Are These Tactics Being Used? Litigants and others use amicus briefs not only to influence the court, but to influence public opinion as well. When coupled with a press release and media strategy, it creates an artificial perception of wide-range support that generates buzz on behalf of their cause.
  • What Does The Way Forward Look Like? With the proliferation of this tool, those involved in public policy battles that involve the courts need to know the full nature of what they are up against. That includes following the money, uncovering hidden motives, and understanding who is really behind amicus briefs and other influence efforts. Such competitive intelligence builds a stronger foundation for a successful public affairs strategy.

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IS UBI NO BFD?

This week, former Vice President Joe Biden pushed back against Universal Basic Income (UBI) as he launched the Biden Institute at the University of Delaware. In a blog post, Biden painted UBI as a “government check with no strings attached,” and instead insisted on building “a future that puts work first.” In particular, he suggests education, workplace benefits and protections, and support for communities burdened by transformation. Due to the technological disruption in the 21st century, UBI has been gaining steam as a solution to inequality and unemployment among titans of Silicon Valley, as well as by voices on both the left and right.

Biden’s focus on the value of work as part of the solution to technological disruption, rather than on a “government check” through UBI, is in stark contrast to Bernie Sanders, who has repeatedly called for guaranteeing a “minimum standard of living” to all Americans through government action. The Democratic party has not always stood for just another “government check,” as demonstrated by FDR’s work programs and Clinton’s support of welfare reform. Whether Biden’s views are an appraisal of the passing scene in his role as an elder statesman, or a sign that someone is starting to push back on the party’s leftward lurch, remains to be seen.

“BREXIT” OR “BRICS – IT”?

 The “BRICS” nations of Brazil, Russia, India, China, and South Africa are thought to represent the future of the global economy. However, a look at the performance of 74 world economies since the turn of the century shows that a number of smaller countries like Vietnam, Bangladesh, Uzbekistan, and Sudan have outperformed larger countries like Brazil, Russia, and South Africa.

While China and India have seen dynamic growth, much of the promise of the “BRICS” – which make up 40 percent of the world’s population and more than a quarter of its land – remains unfulfilled. In an age where Britain is leaving the European Union, Angola’s economy is outperforming Brazil’s, and tensions are rising between “BRICS” members over policy disputes, the durability of the “BRICS” coalition will be tested.

FREEDOM TO GET SUED ACT?

Lawsuits over public records have traditionally been a means of last resort for parties seeking public records from government under the Freedom Of Information Act (FOIA) and its state and local equivalents, but now some government offices are flipping the script, using legal action as a defensive measure to deter requests. Instead of simply confirming or denying public records requests, governments are using lawsuits to stonewall requests for embarrassing or otherwise sensitive information. Even if records are ultimately released, the requester is responsible for legal costs and the government’s actions can intimidate others from requesting records.

Open records laws at all levels of government have been effectively used by watchdogs, journalists, researchers, and individual citizens in order to gain the release of documents and public records. While government officials who have sued requesters say that it’s best for courts to legally determine if records should be released, this trend has concerned freedom-of-information advocates and raises questions about the potential for abuse. With the IRS targeting scandal still fresh in memory and with concerns about civil forfeiture in the news, an ordinary citizen being ensnarled in a legal battle “against a public entity with almost inexhaustible resources” may highlight the need to implement new steps to ensure citizens can hold governments accountable.

MYSTERY IN CUBA

At least 21 American diplomats stationed in Havana, including the top official in charge of security, have been affected by a “blaring, grinding noise” in the middle of the night that has resulted in hearing loss, speech problems, and memory troubles over the past few months. The top U.S. diplomat has called these occurrences “health attacks,” but what is causing them, and who is behind them, remains a mystery.

The Castro government denied involvement, and with Canadian diplomats among the victims as well, even though their government has had cordial relations with Cuba for years, U.S. officials are focusing their investigation on rogue Cuban elements or other state actors. The U.S. embassy remains open as the investigation continues, but concern for the safety of American diplomats may require the U.S. to close the embassy – resulting in further uncertainty regarding U.S.-Cuban relations as President Trump rolls back some of President Obama’s steps toward détente with the Caribbean nation.

LESSONS FROM AMAZON’S WONDERLUST

In announcing its decision to open a second headquarters outside of Seattle, Amazon sent more than 100 municipalities scrambling across the U.S. and Canada to compete for a $5 billion campus and 50,000 new well-paying jobs. This announcement caught Seattle by surprise, and has prompted soul-searching in the city to determine ways to encourage state, local, and business leaders to promote policies that enable companies’ growth.

High-tax and wage policies, rapidly rising housing costs, and traffic congestion are among the frustrations driving Amazon’s search for a “stable business climate for growth and innovation.” Yet in its search for cities willing to give it the most generous corporate tax breaks, which includes cities with deep fiscal challenges, Amazon is tempting state and local leaders to put taxpayers on the hook, which could result in the same high-tax policies they are fleeing in the first place.

Declaring an Opioid Emergency, Trudeau’s Art of the Deal, and Will AI Crown a “Ruler of the World”?

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Here’s What You Need To Know

In late July, the President’s Commission on Combating Drug Addiction and the Opioid Crisis, led by New Jersey Governor Chris Christie, issued a preliminary report recommending, among other steps, that President Trump declare the opioid abuse epidemic as a national emergency. A couple weeks later, President Trump stated he was likely to do so. Although the President offered no additional details, his comments were widely interpreted as accepting this recommendation. However, over a month later, the President has yet to act and the Administration is still debating the proposal internally.

Declaring a national emergency would do little to change current policy by itself, but the move would provide various members of the executive branch with new powers under either the Public Health Service Act or the Stafford Act (which governs federal disaster response efforts) that could be used at their discretion. Many in the media are presenting this action as a no-brainer, but is it actually a good idea?

Here are the main arguments for declaring a national emergency:

  • It Would Allow The Administration To Free Up Greater Resources: Current law limits the extent to which the Federal Emergency Management Agency (FEMA) and the Department of Health and Human Services (HHS) can redeploy its budget and personnel to help tackle this issue. In addition, Medicaid restricts at what hospitals some drug users can receive treatment. Declaring an emergency would allow the President to authorize FEMA to direct some of its budget towards the crisis, while letting HHS Secretary Price redeploy public health workers to serve addicted populations and waive these Medicaid rules.
  • It Would Allow The Administration To Increase Access To Critical Medications: Currently, patients must have a prescription to access a drug called naloxone that can reverse overdoses. In addition, doctors must have special certifications to prescribe drugs like methadone and buprenorphine, which help reduce cravings and withdrawal symptoms. Under a national emergency, the HHS Secretary would have the authority to waive restrictions for patients and doctors on these types of drugs.
  • It Would Increase Pressure On Congress To Act: Last year, lawmakers passed a bill to expand funding for opioid programs, but only included half the money President Obama requested. The commission argues that if President Trump declares a national emergency, Congress will also want to show it is taking action, forcing them to “focus on funding and empowering the executive branch even further.”

Here are the main arguments against declaring a national emergency:

  • It Would Divert Resources From Other Priorities: Money taken out of FEMA’s budget would have to be taken from other important areas, such as FEMA’s disaster relief fund. As Hurricane Harvey and Irma have shown, it is difficult to anticipate when major disasters will strike and depleting these funds could make it more difficult to respond when these events happen. Redeploying public aid workers would also remove these workers from other critical work, such as AIDS outreach.
  • It Would Lead To An Unnecessary Expansion Of Executive Power: Emergency declarations have historically been used to tackle temporary problems that are contained within a specific place like hurricanes, earthquakes, and the Zika virus. In contrast, the opioid crisis is spread across the entire country and likely will never be completely eradicated. Doing so in this case could establish a new precedent where presidents feel compelled to declare emergencies in response to every problem. The result would be to permanently give the President powers that were designed to only be temporary.
  • It Would Create A False Sense Of Action: Declaring an emergency may sound bold, but the funds it would free up would only be a small Band-Aid relative to the scale of the problem. FEMA’s Public Health Emergency Fund has an annual budget of only $45 million; in comparison, the 2016 21st Century Cures Act allocated $1 billion over two years to the problem of opioids. If the public views a national emergency declaration as sufficient, it could undermine the urgency for further legislative action.

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TRUDEAU’S ART OF THE DEAL

President Trump has repeatedly attacked the North American Free Trade Agreement (NAFTA) as creating an uneven playing field for American workers. Now Canada seems to be flipping the script on him. As part of the second round of NAFTA renegotiations in Mexico City earlier this month, Prime Minister Trudeau’s government argued right-to-work laws in 28 U.S. states are putting unionized Canadian workers at an unfair disadvantage, pushing the Trump Administration to pass legislation nullifying them.

Canada likely understands the improbability of a Republican Congress doing so, or these states allowing such an agreement, and is attempting to create leverage for other issues like quotas for U.S. dairy products and environmental standards by making a demand Trump cannot possibly fulfill. This development shows that renegotiating trade deals are not just an opportunity for the U.S. to improve its economic standing, but also opens the door for partners to extract concessions as well.

MAKING CRYPTOCURRENCIES LESS CRYPTO

Initial coin offerings (ICOs) to raise funds for cryptocurrencies like bitcoin have grown dramatically in recent years, and governments have begun to express concerns over their use for money laundering and terrorist financing. Last week, China’s central bank announced it was suspending ICOs until the government could develop a regulatory framework for the market.

This decision follows an SEC ruling in July that classified cryptocurrencies as securities, opening the door to criminal charges for anyone holding unregistered offerings. In addition, Singapore’s central bank recently issued a warning about the dangers of ICOs, while Russian authorities made arrests for the first time over the exchange of bitcoin into rubles. With governments cracking down on the market, look for increased calls for international cooperation to develop a common global regulatory framework on this issue.

OUR SELF-FULFILLING GROWTH STAGNATION?

Conventional wisdom since the 2008 financial crisis has insisted that a 3 percent growth rate for the United States is unrealistic. Yet, former Senate Banking Chairman and economist Phil Gramm and US Policy Metrics’ Michael Solon argue that if we lost 3% growth, we lost it for the first time only very recently, noting “America enjoyed 3% growth for so long it’s practically become our national birthright.”

When you retrace our steps, Gramm and Solon suggest, you will find a growth slowdown attributable to an Obama-era “tidal wave of new rules and regulations across health care, financial services, energy and manufacturing [that] forced companies to spend billions on new capital and labor that served government and not consumers,” all of which can be reversed. In addition, although the country is aging, the number of working-age Americans dropping out of the labor market has been the major driver of the declining workforce participation rate. If their argument is correct, the greatest risk to the U.S. economy may be that the status quo is accepted as the new normal and becomes self-fulfilling.

TESLA EXPOSED

Florida Tesla owners in the path of Hurricane Irma who had opted for a 60 kilowatt hour battery option instead of the longer range 75 kilowatt battery option (which costs thousands of dollars more) got a happy surprise as they evacuated: Tesla remotely extended the battery range of their vehicles to help them reach safety. While the company was praised for unlocking the additional battery range, it also raised serious questions. T

he cars these customers had purchased could always have gone that extra distance, because regardless of which battery option customers purchased, Tesla gave them a battery capable of 75 kilowatt hours anyways, but used software to prevent those paying for a 60 kWh version from using the extra storage their car’s battery possessed. With the lines increasingly being blurred between hardware and software, particularly on something as impactful as a means of transportation, Tesla’s business practice could bring increased regulatory scrutiny and potential reputational challenges that will have effects on other industries utilizing “smart” technologies that are artificially limited for those who cannot afford the higher price tag.

WILL A.I. CROWN A “RULER OF THE WORLD”?

While Russia continues its military buildup in the Arctic, President Putin signaled yet another front where a resurgent Russia may challenge the West: Artificial Intelligence (AI). Speaking to a group of Russian students, Putin said, “Whoever becomes the leader in this sphere will become the ruler of the world.”

From automating cyberattacks that currently require dozens of highly skilled personnel, to further eroding trust through the forgery of audio and video material, to improving the precision of aerial drones, AI will be integral to the future of warfare for geopolitical adversaries like Russia and China. However, non-state actors like hackers are weaponizing AI as well. With most AI advances occurring in the private sector and academia, experts are proposing ways to apply AI to U.S. national security policy. However, it remains to be seen whether U.S. policymakers will take Putin’s comment seriously and ensure we are leveraging, protecting, and improving on the AI knowledge that already exists outside of government.

The Rise of Antifa, a Federalist Answer on Immigration, and Replacing Leslie Knope​

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Here’s What You Need To Know

In April 2016, the Department of Homeland Security and the FBI issued a confidential joint intelligence assessment labeling a leftist extremist group named Antifa – short for anti-fascists – as “domestic terrorists,” predicting they would engage in violence with radical right-wing organizations.

A few weeks ago, this group finally began to capture the public’s attention as fights broke out between Antifa and white supremacists in Charlottesville. However, even before this incident, Antifa protestors have repeatedly engaged in violent behavior over the past several years in places like Berkeley, Washington D.C., New Orleans, Portland, Chicago, and Philadelphia. This has included beating innocent people, attacking police with clubs, setting cars on fire, smashing windows, and other destructive activity.

In the wake of this violence, there’s been much discussion and debate in the media about what Antifa is and how serious of a threat they pose. So, we want to give a clear, factual view of their history, how they operate, what they believe, who is funding them, and why they are becoming a more significant threat:

  • Where Did They Come From? Antifa can be traced back to an alliance of German Communists and Social Democrats that was founded against Nazism during the Third Reich. In the 1980’s, drawing on this legacy, a loose collection of groups called the Anti-Fascist Action (AFA) was formed in Britain to often violently oppose far-right wing movements. This activity inspired left-wing punk fans in the United States to follow suit by creating their own anti-fascist groups.
  • What Do They Believe? Antifa is primarily comprised of communists, socialists and anarchists. However, their common cause appears to be sowing chaos, attacking police, and shutting down speech from people they disagree with. One Antifa group in Washington advocates for acts of vandalism just to make middle class people “feel a little less safe,” while another in Philadelphia holds workshops called “Our Enemies in Blue,” which celebrate violence against police. Antifa claims they are working to stop fascists and white supremacists, but they often go after events that clearly do not fall into that category, including San Francisco’s “Liberty Weekend,” which was organized by an Asian American and explicitly forbade extreme elements from joining.
  • How Are They Organized? The movement is largely decentralized, and represents more of an amalgamation of loosely affiliated groups throughout the country than any single, unified organization. However, particularly on the West Coast, there are some local bodies, such as Rose City Antifa in Portland, that are more well-organized and active online.
  • Who Is Funding Them? One significant player funding Antifa elements is George Soros, the world’s wealthiest hedge fund manager and a major donor to Democratic and leftist causes. Soros played key roles in crashing the British pound during “Black Wednesday” in 1992 and the Thai Baht during the 1997 and 1998 Asian Financial Crisis.
  • What Is Different Now? The growth of Antifa coincides with growing support from many, especially younger people, for shutting down speech they determine to be hateful or otherwise unacceptable. A 2015 Pew Research poll found 40 percent of Millennials support limiting free speech that is offensive to minorities, although this strain of thought often extends to more mainstream individuals engaging in reasonable  debate. This attitude is especially evident on college campuses where protestors have shut down speaking engagements from conservative speakers like Charles Murray and Condoleezza Rice. In addition, the perception among many on the left that Trump supports fascists has also fueled the surge in Antifa activity. In the three weeks before Trump was inaugurated, NYC Antifa’s Twitter following nearly quadrupled.

Given their growing prominence, Antifa members and those emulating their tactics are likely to be a factor in protests for years to come. As a result, it’s important to separate myths from facts when it comes to analyzing the history, behavior, and activities of these types of extremist groups. Once they are understood, it’s possible to better identify when protest movements may be evolving into something more dangerous.

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JOURNALISTS’ TWITTER BUBBLE?

Many have argued that the rise of news consumption through social media is increasingly creating distinct ideological echo chambers across the political spectrum. Yet, this change may not only impact which news the public hears about, but also how news is shaped in the first place. Data scientists at the University of Northeastern recently analyzed the Twitter accounts of 1,000 journalists, finding a correlation between the political leanings of the people these journalists follow on Twitter and the ideological bent of the news content they produce.

It is unclear to what extent the journalists’ choices on who to follow on Twitter are changing the nature of their news coverage or simply reflect their pre-existing biases. However, this study shows that even journalists often become caught in echo chambers, and those seeking to influence journalists must understand how to break through these news bubbles.

IS FEDERALISM THE ANSWER FOR IMMIGRATION POLICY?

Immigration has long been seen as an issue over which only the federal government has jurisdiction over, but a new proposal seeks to delegate parts of this authority to the states. U.S. Senator Ron Johnson (R-WI) recently introduced the “State-Sponsored Visa Pilot Program Act,” which would allow for around 500,000 foreign guest worker visas to be managed and doled out by states, allotting at least 5,000 visas per state with the rest divided up by population. States would also be given the discretion to determine the skill levels or industries that would be eligible.

This flexibility would allow states like Wisconsin (where thousands of manufacturing jobs remain unfilled) and California (where millions in crops have gone unharvested due to the lack of workers) to fill labor shortages; states with higher unemployment rates could opt out of the program. In addition, it could defuse some of the divisive nature of immigration by letting red states and blue states choose their own approach. As a result, Johnson’s bill could be a way to help close the gap between Democrats who support expanding immigration and Republicans who favor states’ rights.

THE THREAT OF GREEN TERRORISM

Jamie Bartlett – a journalist whose focus is how technology impacts terrorism and radical political movements – claims terrorism from the environmental left is the next major threat. Although militant environmentalism is nothing new, Bartlett argues these “green” activists are increasingly turning to illegal and violent tactics due to a rising grievance culture and frustration with what they deem as the ineffectiveness of peaceful methods.

Bartlett provides tangible evidence to this trend, pointing to the violent activity on display during the Dakota Access pipeline (DAPL) protests, a recent terrorist attack on civilians by a radical environmentalist group in Brazil, and a report from the Department of Homeland Security warning of the potential for more attacks on energy infrastructure.

During the DAPL standoff, we at Delve saw this rising problem firsthand when we had the opportunity to help North Dakota law enforcement push back against false claims of police malpractice and reveal the attacks on people and property from many of the protesters. As we did in North Dakota, it is critical to monitor activists and anticipate their actions to protect people and assets in the energy industry and beyond.

WILL CHATBOTS REPLACE LESLIE KNOPE?

A great deal of socioeconomic debate in recent years has centered on the impact of automation on private sector employment. However, because government often lags behind, there has been less discussion on how technological developments could affect public sector jobs.

In recent months, cities like Kansas City, North Charleston, and Los Angeles have begun installing automated chat platforms or chatbots to guide residents through the process of requesting or accessing public services online, reducing costs and improving accessibility of services and information for taxpayers. Kansas City is even using a Facebook chatbot to answer questions on how to navigate its open data portal. Just as taxi cab drivers fought car sharing services in several cities, will public sector unions fight against adoption of these types of technologies that threaten their membership?

FREE SPEECH V. PROPERTY RIGHTS ON SOCIAL MEDIA

A legal battle between LinkedIn and a data mining start-up called hiQ could have major ramifications for what is considered public on social media. HiQ built its business around scrapping data from public LinkedIn profiles, but in June the networking site sent them a cease-and-desist letter demanding they stop this activity. The letter argued hiQ was violating the Computer Fraud and Abuse Act (CFAA), which was passed in the 1980s to criminalize hacking. In response, hiQ sued LinkedIn, asserting the right to access public profile data is protected by the First Amendment.

Last week, a U.S. District Judge issued an injunction in favor of hiQ. But the ruling did not address whether their activities constituted copyright or trespassing under the CFAA, and the case is likely to continue to higher courts. Regardless of the case’s outcome, it highlights how outdated many of the laws governing the internet are and how difficult it is for companies to navigate them to ensure they are engaging in lawful practices.

I’LL TAKE A LOAN WITH MY RIDE

Consumers in countries without reliable banks and financial institutions are now finding these services through an unlikely source: ride-sharing companies. As many as 2 billion people throughout the world lack access to traditional financial services. Many of these same people in countries like Kenya and Indonesia increasingly have access to smartphones, though, and use ride-sharing platforms.

As a result, many ride-sharing companies in these countries, such as South East Asia’s Grab, have seized on this opportunity by allowing their customers and drivers to use the app as an “e-wallet” to pay restaurants, retail establishments, and other vendors. This trend follows other tech companies like Ali-Baba and WeChat using their platforms to become the dominant payment processors in China. If tech companies are successful with dual- or multi-use features of their platforms in the developing world, look for them to seek opportunities to complete in developed countries in the long term.

NAFTA Talks, Enviro Attacks Go Low, and How Real News Becomes Fake​

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Here’s What You Need To Know

At a Tuesday rally in Arizona, President Trump said current efforts to renegotiate the North America Free Trade Agreement (NAFTA) are likely to fail, and “we’ll end up probably terminating NAFTA at some point.” The Mexican peso plunged in response to his comments. But, is this really a reflection of the status of negotiations, or is the President just posturing to gain leverage and/or appeal to his political base?

Only a few days before Trump’s comments, representatives from the three NAFTA nations concluded the first round of negotiations, where they outlined their preliminary positions. Here are some of the key issues they discussed that could potentially hold up a deal:

  • Made In North America: The Trump Administration is pushing to increase the percentage amount that any finished product must contain of North American materials to qualify as exempt from tariffs under NAFTA. Trump also wants to create a minimum threshold for U.S.-specific materials to help close its trade deficit with Canada and Mexico. This rule is particularly important for the auto industry, where cars must contain at least 62.5 percent American, Canadian, or Mexican materials. While the other Canada and Mexico have expressed a willingness to tighten these rules, both nations voiced strong opposition to creating nation-specific standards.
  • Bi-National Courts: During the original NAFTA talks 30 years ago, then-Canadian Prime Minister Brian Mulroney walked away from negotiations until the Americans agreed to include a provision called Chapter 19. This rule created binational panels to settle complaints of trade violations, moving cases out of the domestic court system. The Trump Administration wants to abolish Chapter 19, arguing it infringes on America’s judicial sovereignty. However, Trudeau’s government has so far maintained Canada’s “red line” on this issue. Mexico has been somewhat critical of Chapter 19, but does not support moving these cases into domestic courts. While it may be possible to reach an agreement on updating these bi-national panels, it appears unlikely Mexico and Canada will consent to the U.S. demand to scrap it entirely.
  • Dairy Wars: In April, President Trump attacked Canada’s quotas on U.S. dairy as a “disgrace,” arguing these trade restrictions have hurt U.S. farmers. In negotiations, his administration is pushing for the elimination of these quotas. However, Canadian Prime Minister Justin Trudeau has already pushed back against this demand, pointing out that the U.S. has a $400 million dairy surplus with Canada. Since this system of quotas is deeply entrenched in Canada, it seems implausible they will be willing to concede much ground in this area.

Round two of negotiations is scheduled for the first week of September in Mexico City, with five more rounds expected to take place into early 2018. While it remains unclear if these issues can be overcome, political considerations in all three countries may drive their leaders to try to get a deal done sooner rather than later.

With Mexico’s presidential election in the spring and the U.S. midterms next fall, both Trump and Nieto may be less willing to make politically risky concessions during their respective campaign seasons. As a result, the next few months will likely be make or break for whether this bid will be successful, and if Trump’s threats are to be taken seriously, whether NAFTA can persist into the future at all.

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WILL THEY CALL IT THE DRAVIS RULE?

Attacks on high-level presidential appointees have long been standard political practice, but environmental groups are taking this practice to the next level, targeting lower-level Trump staffers for doing nothing more than serving in government. The National Resources Defense Council (NRDC) reported on the hiring of an obscure EPA staffer named Samantha Dravis, claiming she was as an “enemy” of her agency, even though she’s merely leading a standard bureaucratic review that was also done by the Obama Administration.

Green groups have already submitted over 100 Freedom of Information Act requests demanding access to her daily schedule and email. The New York Times parroted these attacks, recently publishing a picture of Dravis on their front page and suggesting she was “a vehicle for corporate donors” in her past job without citing any actual evidence. This new threshold of acceptable attacks contributes to the increasingly coarse civic environment and discourages qualified candidates from seeking to serve in government.

FOLLOWING THE MONEY  

Throughout every election cycle, campaigns on both sides are placed on the defensive for accepting contributions from controversial or ethically questionable sources. A recent article in Roll Call blames this problem on the difficulty of vetting donors, arguing it’s “an impossible job” because of the sheer number of people who give money to a campaign, the challenge of differentiating between individuals with the same name, and the difficulty of vetting people who are not publicly well-known.

However, this ignores how technological advances can be used to efficiently capture the criminal history, web presence, social media activity, and previous campaign contributions of donors. After this information is collected and organized, it becomes possible to sort out who is who and to identify any issues associated with more obscure people. By devoting the proper resources and expertise to vetting donors, campaigns can put out these fires before they get started.

BRAIN DRAIN U.S.A.

Much of the recent debate on immigration reform has focused on how many visas should be given to highly-skilled immigrants. But what if the U.S. cannot keep the highly-skilled immigrants it already has? Several countries are attempting to lure these workers – especially academic researchers – back from the U.S. Established in 2011, China’s fast growing Thousand Talents program provides generous incentives – like relatively high salaries, free medical care, instant tenure, and eligibility to purchase property at discount rates – for Chinese academics who studied in foreign universities to return home.

This year, Canada introduced a Global Skills Strategy program to process 80% of foreign work permit applications from highly-skilled workers within two weeks, while French President Emmanuel Macron started a campaign designed to attract U.S. climate scientists to France. If these initiatives are successful, other countries may launch efforts targeting critical industries like tech, which could place in jeopardy the competitive advantage of Silicon Valley and the U.S. economy.

TECH INDUSTRY’S HUMAN RIGHTS HYPOCRISY

Major tech companies like Apple, Amazon, and Google, have been espousing politically liberal values at home, while complying with the demands of authoritarian governments abroad. Many of these corporate leaders have issued statements criticizing President Trump’s policies on immigration, transgender individuals in the military, and the Paris Climate agreement, all on the basis of concerns over human rights.

However, the companies they lead have a long history of complying with Chinese government censorship of internet freedom and helping to build the country’s cybersecurity infrastructure that may be used to gather personal information on political dissidents or to steal proprietary trade secrets. These same corporations have also helped crack down on internet freedom in places like Russia and Iran. Balancing business objectives with reputational goals is difficult for any multi-national corporations, but disconnects between domestic policy rhetoric and corporate practices abroad can undermine companies’ credibility in such “values” discussions.

A MEDICARE TOURISM WIN-WIN?

AEI Scholar Andrew Biggs is promoting a plan he claims can help tackle two seemingly unrelated policy challenges at once: rising Medicare costs and Puerto Rico’s financial troubles. Biggs suggests compensating Medicare patients who travel to Puerto Rico for significantly cheaper care half the difference between the cost of a procedure on the mainland and on the island. He argues this idea would not only save the government money by encouraging Medicare enrollees to seek out cheaper procedures, but also boost the Puerto Rican economy by increasing medical tourism.

As an ancillary benefit, the proposal could also help address Puerto Rico’s current doctor shortage by creating more jobs for these and other health care workers. As more controversial health care reforms fail to gain traction even as healthcare costs keep rising, look for more of these types of proposals to emerge seeking non-partisan “win-win” opportunities.

HOW REAL NEWS BECOMES FAKE

Lost in the debate over the proliferation of fake news stories is how changes in the presentation of real news are altering the public’s perception of reality. According to writer Tobias Rose Stockwell, the rise of news consumption through social media has increased the incentive of media outlets to write sensationalized headlines to attract clicks and advertising revenue.

However, since many users only read headlines, this limited picture often becomes the de facto perception of the real story. Add in algorithms that target these headlines at users based on their existing biases and fears, and the result is a formula for the rapid spread of half-truths. As a result, having the facts on hand and understanding how individuals and groups are using social media networks to spread misinformation is critical to push back against false narratives.

Silicon Valley Imperiled, Activists’ Hidden Organizing Tool, And The Obama-Trump Vocabulary​

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Here’s What You Need To Know

Wall Street has long been unpopular with the public, making the financial industry a punching bag for politicians on both sides of the aisle and a frequent target for increased regulation and bureaucratic scrutiny. In contrast, Silicon Valley’s traditional reputation as young, innovative, and benevolent has made it a tougher target for critics. We may, however, be reaching an inflection point that will change that perception and endanger the industry’s plans for the future.

The positive view of Silicon Valley has been predicated on an implied social contract, in which, similar to TV and radio before it, “we get free access to an enormous amount of information, in exchange for which we know we’re going to get bombarded with some ads.”

As this model has shifted to collecting the personal information about the habits and preferences of customers, it has led to increased public discussion in recent months about this industry’s flaws and questioning of whether these companies can be trusted.  Simply selling products to the general population was one thing; recent developments, however, have made this bargain seem much more ominous.

Behind this increased skepticism is also the awareness that the economic divide between Silicon Valley and the rest of the country continues to grow. While some in tech have accumulated a record net worth,  the average American’s income has stagnated. The industry celebrates the age of entrepreneurship and start-ups, but business births have declined overall.

Many leaders in the tech industry have responded to this concern by proposing a universal basic income (UBI) to support workers who lose their jobs through automation. Yet, this idea, as well as the industry’s general support for immigration policies that increase competition and drive down wages in the labor pool, only reinforces the view of Silicon Valley as out-of-touch elitists throwing the crumbs of their success to the rest of the country.

With the public developing greater fear and suspicion of both the culture and technology coming out of Silicon Valley, the tech industry is increasingly vulnerable to activist pressure and government intervention on a range of issues. These are just a few of the developing challenges to the tech industry:

  • Anti-Trust Challenges: While much of the focus on anti-trust tech challenges in Europe, there is a quietly emerging backlash to tech mergers and acquisitions in the United States. A growing chorus of academics and think tanks have begun questioning whether tech companies like Amazon, in particular, but also Apple, Microsoft, and others, have become too big, while new advocacy groups  have launched to focus on this issue. Even President Trump recently attacked Amazon as a “monopoly.” These factors are adding fuel to the fire for activists, who are looking to exert pressure on politicians and regulators to more forcefully take on these companies.
  • Too Big To Trust: Following the election, tech firms like Google and Facebook have increasingly come under fire for how they treat fake news and offensive speech on their platforms, with some demanding they do more to remove this content, and others attacking their attempts to do so as censorship. The concerns reflect fears that these companies can use their market power and control over the free flow of information to promote or disrupt political agendas. Many argue the subconscious biases of the engineers who design computers ensures certain views are favored over others. Regardless of how these companies approach the issue, they are likely to face a backlash and perhaps calls for state intervention from at least one side of the political spectrum.
  • Gender And Racial Bias: A paradox of the tech industry is that although many of these firms preach diversity, they continue to be largely made up of white males. This dynamic leaves Silicon Valley vulnerable to pressure from activists and the possibility of government intervention to crack down on perceived bias against minorities. The decision of the Labor Department earlier this year to sue Google to obtain its employee compensation data for the purposes of investigating any possible gender gap is just one example of how government may assert itself. In addition, stories from this year documenting dozens of allegations of sexual harassment against tech VCs shows the industry has yet to grapple with the extent of this issue, and could push it further away from the tech-savvy “woke” demographic whose support and goodwill the industry needs.
  • Economic Disruption: Earlier this year, Microsoft founder Bill Gates proposed taxing robots to slow the speed of automation, replace tax revenue losses from diminished employment, provide assistance to displaced workers, and fund jobs in sectors where human skills are required. This idea was driven by the fear of artificial intelligence (AI) displacing workers in both a wide range of industries, from truck driving to financial advising. As this technology continues to develop, it is likely to lead to even more calls for government to contain the impact of AI or halt its progress altogether.

With these and other emerging challenges, we may be approaching an inflection point that could fundamentally change the relationship between the tech industry, the government, and the public. If the industry fails to preempt or adjust to this new political and policy environment, Silicon Valley may become the new punching bag.

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WHERE DID MANUFACTURING WORKERS REALLY GO?

Politicians from both parties routinely pledge to bring back lost manufacturing jobs, which have declined by nearly 30 percent over the past 17 years. Yet, according to an analysisfrom the St. Louis Federal Reserve Bank, manufacturing workers are choosing to leave this sector as often as they are being laid off.

This trend raises questions with important policy implications about whether workers are finding better opportunities in other sectors or dropping out of the workforce for other reasons. While policymakers often use topline economic data to validate their political ideologies, a far deeper dive into the data is needed to understand the source of these economic trends and how policy should be designed to respond to them.

TWITTER’S HIDDEN ORGANIZING TOOL

A Twitter feature introduced in 2015 that lets groups of people privately message each other appears to have revolutionized the way activists coordinate and amplify their messaging. During the campaign, many Trump supporters began using the tool to pick up new followers, share content to retweet, and coach each other on social media strategies.

However, because of its hidden nature, many experts failed to understand what was causing the surge in activity in support of Trump and largely attributed it to bots. As more activists attempt to replicate the success of this strategy, sophisticated monitoring strategies will be necessary to understand and reveal the coordination occurring away from public view.

ITALY’S TAX REFORM MOMENTUM

Italy has one of the largest and most deeply entrenched welfare states in Europe, but too many people remain impoverished. Those who aren’t feel overtaxed,  in part because they actually are. A new proposal from Italian think tank called Istutito Bruno Leoni (IBL) has been making waves in the Italian media by offering a straightforward way to would tackle both of these issues at once by limiting the government’s spending to 25 percent of GDP (it’s currently 43.5 percent of GDP), and preventing the government from taking more than 25 percent of individuals’ income each year.

By presenting the reform in this broad framework that emphasizes increased economic freedom for all Italians, it allows the public to understand the common-sense reasoning behind the plan, and avoids getting the debate bogged down in details. As Republicans look to pass their own version of tax reform, the success of “Twenty-five for all” in capturing Italy’s attention offers a lesson in the importance of focusing the public on the big picture purpose of reform efforts.

WHEN FACTS COME LAST

The New York Times recently sounded the alarm with a page one story claiming federal scientists feared the Trump Administration would prevent a forthcoming report on climate change from becoming public. The problem with the Times’ narrative was that a draft version of the report had been available for public comment since January. Although The New York Times later issued a correction, the story had already traveled far and wide.

The egregious mistake is just another in a series of instances this year where the paper, as well as many other mainstream outlets, have pushed sensationalist headlines before doing the necessary due diligence on their own reporting. In today’s fast-moving news cycle where increasingly unchecked bias can easily lead to bad journalism, having the facts on hand is critical for organizations to prevent falsehoods from becoming accepted truths.

THE OBAMA-TRUMP VOCABULARY

Many would assume that Presidents Trump and Obama are polar opposites in their rhetorical approach when speaking to Americans. However, an analysis from researchers at the University of Minnesota looking into hundreds of presidential speeches found that by some measures, the two leaders’ language choices have more in common with each other than all of their post-World War Two predecessors.

Obama and Trump both use first-person pronouns, as well as uncompromising language like “must” and “need,” far more than prior presidents. This change may be indicative of a long-term trend of the public looking for more assertive and confident rhetoric from the president. However, it may also reflect that in this more narcissistic culture, our politicians have become more focused on virtue signaling than concrete policy achievements.

The Facts on the RAISE Act, What’s Killing Retail, and the 100% Renewable Fraud​

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Here’s What You Need To Know

Last week, President Trump endorsed the RAISE Act, legislation sponsored by Senators David Perdue (R-Ga.) and Tom Cotton (R-Ark.) that would be the most significant reform of the U.S. immigration system since the 1965 Immigration and Nationality Act. There’s a lot of exaggerations from both supporters and critics of the bill circulating in the news and in social media, so here are the facts on the RAISE Act:

  • Limitations On Family-Based Sponsored Immigration: Under current law, U.S. citizens can sponsor their spouses, children, siblings, and parents to come into the country, and lawful permanent residents (LPR) can sponsor their spouses, minor children, and adult unmarried children. As a result, family-based immigrants are the largest category of legal immigrants. The RAISE Act would limit both citizens and LPRs to family-based immigration sponsorship of only spouses and minor children.
  • Limitations On Refugee Admittances: The President currently maintains the authority to adjust refugee levels at their discretion. Under this structure, refugee admittances have varied from 50,000 in 2012 to 85,000 in 2016 under President Obama. It went back down to 50,000 this year as a result of an executive order Trump signed in January. The RAISE Act would limit this presidential discretion by making the 50,000-cap permanent.
  • Elimination Of The Diversity Lottery: One way individuals gain legal status is through a so-called “Diversity Lottery” that grants 50,000 green cards each year to immigrants from countries that comprise a low percentage of total admittances. The RAISE Act would abolish this program.
  • Elimination Of Per-Country Caps: Under current law, no country can get more than 7 percent of green cards in any capped category of legal immigration. The RAISE Act would remove this limit so that applicants compete as individuals rather than by nationality.
  • Institution Of A Merit-Based Points System:  Under the RAISE Act, applicants for U.S. green cards would be assigned based on a quantitative system, with points based on age, education level, English ability, whether they have a job offer, the salary of any job offer, any major achievements, and potential investments. If they met a minimum level of points, applicants would be eligible to apply for a visa. This change would make the U.S. immigration system more like other countries with similar points systems, such as Canada, Australia, and New Zealand.

The net effect of all these changes would be to cut legal immigration in half within a decade and prioritize higher-skilled immigrants over lower-skilled immigrants. The bill appears to have little chance of passing in its current form as a result of strong opposition from Democrats and skepticism from many Republicans.

However, it is possible that the bill could be an opening bid in negotiations for a bipartisan compromise down the road. With these facts in hand, the question remains if reducing such legal immigration will be good for the country and economic growth.

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ACTIVISTS PAY FOR CREDIBILITY

The environmental lobby is paying outside consultants to pass off attacks advancing their agenda as unbiased. A new report written by “a well-regarded electronics engineer and consultant,” accuses the hardware tech industry of diluting green standards by stacking boards that determine whether or not a tech product should be labeled “green” with their cronies, and recommends replacing these board members with non-profit leaders and academics.The report was commissioned by the Repair Association, which represents exactly the types of people they suggest placing on these boards. This dynamic shows the importance of monitoring these type of tactics to respond to misleading attacks before they gain traction and reveal the true motives of the groups promoting them.

WHAT’S KILLING RETAIL?

Amazon is often blamed for declining sales and employment in the retail industry. But, a new analysis from Denver-based investor Vitaliy Katsenelson shows that although the company has contributed to this trend, Amazon only accounts for 1.5 percent of total U.S. retail sales. So, who or what else is to blame for retail’s decline? Among several factors, Katsenelson points to increased spending on new technology like smart phones and rising health care costs diverting consumer income away from the retail industry. In addition, he contends Millennials are less willing to spend money on fashion than previous generations. Other potential factors for this change are increased spending on travel and restaurants, and a natural market adjustment from the excessive growth of retail in the 1990s. It’s easy for disruptive enterprises to be scapegoated for painful structural changes in the marketplace, but it is important to analyze the data before concluding their innovations are really to blame.

STRENGTH TRUMPS RHETORIC IN THE MID-EAST

Many pundits and political analysts expected that President Obama’s outreach efforts to the Muslim world would help improve relations with the Middle East; some of those same analysts predicted President Trump’s proposed Muslim ban would strain our relations with these countries. Yet according to Lebanese Prime Minister Saad Hariri, Arab leaders largely prefer President Trump over his predecessor, arguing Obama’s inaction in Syria, concessions to Iran, and early withdrawal from Iraq empowered Russia and Iran to reassert their influence in the region. Hariri also suggested these failures contributed to the rise of ISIS. In contrast, President Trump has outlined a clearer and more decisive approach by speaking in unambiguous terms about terror and taking a tougher line on Iran. This effort shows that clear policies and consistent direction, even amidst unhelpful rhetoric and tweeting, are preferable in diplomacy over inconsistent actions and seeming appeasement.

“HARMONIZING” EURO-TAXES

While Congress prepares to debate proposals to make America more competitive in the global economy, France and Germany are working together to “harmonize” the tax structures of all European nations, which for some countries would mean raising their taxes. Both countries are planning on presenting specific proposals that would move the EU towards a common tax structure, all in the name of cracking down on American corporations like Google that flock to low tax havens in Europe and gain an advantage over European counterparts in higher tax countries. This change would likely involve France and Germany gradually lowering their relatively high corporate rates (around 33 percent) in exchange for other countries like Hungary (at 9 percent) and Ireland (13 percent) gradually increasing their relatively low corporate rates. If this plan moves forward, it not only has implications for America’s potential competitive advantage over Europe; anti-EU populists in low-tax nations could use it to build the case for their own Brexit, arguing the alliance is taking too much sovereignty away from their countries.

THE 100% RENEWABLE FRAUD

Dozens of mayors throughout the country, including from Los Angeles and Portland, have committed to generate 100% of their electricity from renewable sources by 2035. However, Charles McConnell – a former Assistant Secretary of Energy under the Obama Administration – notes “there’s no method to designate electrons on the grid as originating from one source or another” because power generated by oil or wind travel along the same pathway. This means cities are paying to generate any extra renewable energy sold back to grid (on the backs of local taxpayers, of course), claiming it cancels out whatever fossil fuel-generated electricity they use. This fudging of the numbers is another example of how digging beneath flashy headlines can often reveal things are often not what they appear to be.

OPEC’s Diminished Cartel, the Constitutionality of Twitter Blocking, and the Declining Business Birth Rate

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Here’s What You Need To Know

After hitting all-time production highs in 2016, this January, the 14-nation Organization of the Petroleum Exporting Countries (OPEC) – as well as several non-OPEC oil producers – agreed to cut oil output by 1.8 million barrels per day. Although oil prices rose slightly above $50 following the agreement, in May they fell into the mid $40s and have stayed in this range since then. Only three years ago, prices were as high as $90 a barrel.

This past Monday, the cartel met in Russia to address the failure of this agreement. Yet, despite more tough talk, including pledges to cap production from Saudi Arabia and Nigeria, oil prices budged only modestly.

Only a few decades ago, OPEC’s oil embargo brought the U.S. economy to a standstill. Now the organization’s ability to influence the energy market has greatly diminished, and here are the main reasons why:

  • It’s The Fracking: Fracking allows the recovery of gas and oil from shale rock through the injection of water, sand, and chemicals. In recent years, the combination of this technology with horizontal drilling and other technological developments has made it possible to reach previously inaccessible fuel. These advancements have resulted in surging U.S. petroleum production. U.S. production increases in 2016 alone were estimated to cost OPEC countries $76 billion. Other non-OPEC countries, such as Canada, China, and Argentina, have also increased production from fracking, although not to nearly the same extent as the U.S. As the output of these countries rises, OPEC’s share of the overall market decreases, naturally hampering its ability to manipulate prices.
  • It’s The Exemptions: In the deal earlier this year, OPEC exempted Libya and Nigeria from any cuts in production because of the economic challenges both countries currently face from internal conflicts. However, production in both countries has surged recently. In May, Libya’s output increased 210,000 barrels a day from the previous month to 760,000, while Nigeria’s increased from 100,000 to 1.7 million. OPEC made slight progress on this front during the Russia summit earlier this week by securing a pledge from Nigeria to eventually cap its production. However, this concession will only go into effect once Nigeria can sustain an output of 1.8 million barrels a day, which likely will not occur for some time.
  • It’s The Cheating: Cartel agreements to limit output are much easier to secure in principle than enforce in practice. According to J.P. Morgan Chase & Co., Iraq and the United Arab Emirates are not complying with their pledges. In addition, Ecuador recently announced they would not abide by OPEC’s decision because of budget challenges. Following the Russia summit, OPEC released a statement demanding “all participating producing countries must promptly reach full conformity.” But it appears unlikely this type of shaming will have a major effect.

Although OPEC can have some impact on moving prices – at least in the short-term – the cartel has clear limitations. OPEC sends mixed messages about its production policies, has no way to enforce member countries to follow their rules, and its share of the petroleum market continues to decline. This will not only have global economic impacts in the months to come; watch for potentially significant political impacts within and among each of the member nations in the Middle East.

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HOW AI CAN MAKE FAKE NEWS LOOK REAL

The proliferation of fake news through social media and other platforms has been a growing concern in recent years, and a recent University of Washington experiment shows how advancements in artificial intelligence (AI) could exacerbate it. Researchers used algorithms to manipulate the mouth movements of President Obama in several different videos, syncing those mouth movements with various audio pieces.While being able to alter a person’s lip movements to match an audio track is nothing new, this development trains itself to match any potential variety of sounds based off existing videos of that person. This technology could be used by fake news disseminators to make videos of an individual saying something out of context or, through an impersonator, to say something they may have never said at all. As the sophistication of these hoaxes increases, even mainstream media outlets may have difficulty distinguishing real from fake, and may have to adjust their processes to avoid amplifying false content.

CAN DEMS’ DEFICIENCIES BE FIXED WITH DIGITAL?

Following the 2016 election, Hillary Clinton argued the Democratic National Committee’s “mediocre to poor” data and digital operations was partially to blame for her loss. To make up for this deficit, former top aides to President Obama and Hillary Clinton recently founded a startup incubator called Higher Ground Labs, raising money to invest in new digital tools to help Democratic campaigns.The organization has already raked in $2.5 million, and will announce the first ten campaign tech startups it will invest in by August. Yet this strategy of emphasizing digital tools could convince Democratic leaders that enhanced technological capabilities can make up for the lack of a compelling national message or other structure deficiencies they have when it comes to driving voters to the polls.

THE CONSTITUTIONALITY OF THE TWITTER BLOCK

The Knight First Amendment Institute recently filed a lawsuit against President Trump in a Manhattan federal court, claiming top government officials blocking other users on Twitter could be a violation of the first amendment. The group argues that when the President and other high ranking members of his Administration block members of the public from seeing and interacting with their Twitter accounts, this blocks citizens from participating in an open public forum, and therefore infringes on their right to free speech and expression.The plaintiffs compare these social media accounts to town halls and open school board meetings that individuals cannot legally be excluded from because they hold dissenting viewpoints. If the suit is successful, the precedent could raise further questions about when the social media presence of a public official is private and when it can be subject to public records requests.

THE DECLINING BUSINESS BIRTH RATE

A new study from the Economic Innovation Group suggests the falling rate of business births may at least partially explain many of our current economic woes like decliningworkforce participation and stagnant wages. Their analysis shows the number of U.S. companies going out of business was greater than the number of businesses being created for the first time on record during the Great Recession.Even in the recovery period from 2010 to 2014, the firm birth rate, or the rate at which new businesses enter the marketplace, was nearly five times lower than the recovery in the mid-1980s. The conclusion is similar to a different study we noted in March, which found that the firm birth rate has been declining every year since 2008. The findings once again underscore the importance of implementing a policy framework that encourages investment and entrepreneurship.

NYC’S PET-SITTING CRIME SPREE

While demand for pet sitters is growing nationally, New York City is still enforcing a largely unknown rule banning anyone from taking money to care for an animal outside a licensed kennel. At least two apartment residents were fined $1,000 for the “offense” last year, and the City has warned the creators of an app connecting pet owners with pet-sitters that they are breaking the law.The Health Department argues the regulation is necessary so that they can inspect the facilities to ensure they are sanitary and the animals are being treated well. But the rule likely jeopardizes the health and safety of pets by making it more difficult for owners to find care. The ban is another example of how bureaucracies can become mindless when legislators fail to update antiquated rules.

The Venezuelan Referendum, Academic Influence, And Trump’s Fake News Personas ​

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Here’s What You Need To Know

Last month, Venezuelan President Nicolas Maduro ordered a July 30th vote to elect a constituent assembly to oversee the drafting of a new constitution. However, as reported by Reuters, the country’s main opposition parties have criticized the idea of a constituent assembly “as a sham designed to keep … Maduro in power.” In fact, these opposition parties held an unofficial national referendum last Sunday where more than seven million people turned out – representing about 37% of Venezuela’s total electorate – although the government condemned the vote as illegal.

With less than two weeks to go before Maduro’s constituent assembly election, here’s a summary of what has happened so far, how Venezuela got here, and what to watch for in the coming days.

  • What Was In The Opposition’s Unofficial Referendum? The referendum asked three “Yes” or “No” questions related to Maduro’s July 30th vote: (1) whether to reject the proposed constitutional assembly, (2) whether to request the military uphold the current constitution, and (3) whether to call for new presidential elections before Maduro’s term ends in 2019. Over 98 percent of the people who participated chose “Yes” on all three questions. Although the outcome is skewed because government supporters did not participate, the significant turnout and overwhelming result handed  the opposition parties a symbolic victory.
  • What Led To This Political And Social Crisis? Since he took power in 2013, Nicolas Maduro has continued Hugo Chavez’s policies of moving the country towards a dictatorship. Maduro’s government has muzzled the freedom of the press, effectively dissolved the elected legislature, and allowed police to kill protestors. Many Venezuelans fear Maduro will use the constitutional assembly to consolidate his powers, and saw the unofficial referendum as a last-ditch effort to delegitimize Maduro’s moves and save what they have left of their democracy.
  • Why A Crisis Now? The catalyst that has added fuel to this fire has been the economic devastation brought about by the exposure of the government’s failed socialist policies to the collapse of oil prices. Venezuela’s significant oil reserves had been sustaining its economy when prices were high. While Venezuela was the wealthiest country in South America just 16 years ago, it is now among the poorest. Inflation hit 800 percent and GDP shrunk 19 percent last year. As a result, most Venezuelans now lack sufficient access to everyday necessities like food, medicine, and even toilet paper.
  • What Happens Next? Despite the opposition’s referendum, Maduro has pledged to proceed with the July 30th vote. However, the opposition parties have organized a 24-hour nationwide strike, trying to pressure Maduro to abandon his plans. Meanwhile, the Trump Administration has threatened to impose new sanctions against Maduro’s government if he holds the vote, penalties that could accelerate the country’s economic collapse. Given these tensions and the violent attacks by the government, it is possible this conflict could accelerate the conflict into civil war or result in an even more aggressive crackdown by Maduro. Regardless of the result, Maduro’s determination to proceed with his push for more dictatorial power is devastating and dangerous for the Venezuelan people.

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ACADEMIA AS INFLUENCE TOOL

There have long been relationships between corporations and think tanks, with the former providing financing for the latter for potentially favorable studies on policies they support. But as outlined in a recent Wall Street Journal investigative story, Google has taken this type of “academic influence campaign” to new heights, financing hundreds of research projects from several university researchers that have defended the company’s practices.

As a company that has had its market practices under scrutiny from regulators, both here and abroad, Google’s lobbying team created “wish lists of academic papers that included working titles, abstracts and budgets,” and then searched for authors to complete them. The program shows how in a time when corporations are increasingly using nontraditional methods to advance their interests, being able to identify the true motivation behind an organization or project is even more important to help policymakers and other influencers sort truth from fiction.

HOW SANCTIONS AGAINST RUSSIA COULD HELP RUSSIA

Last month, the U.S. Senate overwhelmingly passed a bill expanding sanctions against Russia for its alleged interference in the 2016 election. However, according to Wolfgang Ischinger, former German ambassador to the U.S., some parts of this legislation could actually strengthen Russia. The bill extends sanctions to energy ventures in any country where Russian firms are at all involved, potentially jeopardizing projects that could ultimately serve as an alternative to Russian energy.

For example, the sanctions would stall the two-thirds of Kazakhstan’s oil exports that are shipped through the Caspian Pipeline Consortium because a Russian firm has a 31% stake in the pipeline. The bill shows how legislation designed to make strong statements can often have large and unforeseen consequences.

LOCAL COMMUNITIES GRAPPLE WITH COST OF OPIOID CRISIS

The national opioid crisis has hit nearly every part of this country, both in urban and rural areas. As this tragedy deepens, local communities are struggling to pay for programs that are necessary to respond. Two examples are the growing cost of the administering the drug Narcan, which can reverse the effects of opioid overdoses, and cleaning up the increased number of used needles polluting public areas like parks, baseball diamonds, trails, and beaches.

Many local officials are even considering harsh measures to keep costs down, such as making overdose survivors pay for Narcan or cutting the drug off from individuals who have overdosed on opioids more than once. Whether or not political leaders, local and national, can shift their attention from opioid addiction management to prevention will determine if these policies can be avoided and if a health crisis will become a fiscal crisis across the country.

TRUMP’S FAKE NEWS PERSONAS

A new analysis from Snopes reveals how “false allegations and misleading claims” are shaping public perception of President Trump. According to the report, false narratives driven by the media leveled against the President largely draw from and feed into critical personas of him as either an international embarrassment, a tyrant, a bully baby, or a buffoon.

Since so many of Trump’s critics see him as fitting into one of these categories, these fake stories quickly gain widespread traction and further reinforce the original view, even when the reports are misleading or turn out to be untrue. Many of these reports have even gained prominence in mainstream outlets, such as Politico and Buzzfeed. This vicious cycle reveals how – in an age of segregated media bubbles – confirmation bias can fuel falsehoods and further disconnect media coverage from the truth.

IMPACT OF E-COMMERCE ON E-MPLOYMENT

Conventional wisdom dictates that the move from retail towards e-commerce is making it more difficult for lower skilled workers to find jobs. But, a new report from economist Michael Mandel contradicts this view, arguing the net impact of e-commerce has created 321,000 jobs and raise wages 30 percent in the retail industry. He claims other economists have failed to calculate the true impact of e-commerce by excluding jobs in places like fulfillment centers and distribution warehouses.

However, it is impossible to know whether Mandel is correct because it is unclear how many general warehousing jobs are directly or indirectly connected to e-commerce. Regardless, as e-commerce increasingly comes under scrutiny for its impact on blue-collar employment, the industry will likely use his and similar findings to deflect criticism.