Domestic Policy – Page 8 – The Wrongologist

New Legal “Doctrines” Help Supreme Court Push Farther Right

The Daily Escape:

Sunset, midtown Manhattan viewed from the Williamsburg Bridge – March 2023 photo by Mike Davis

Plenty of ink has been scrawled or printed describing how the Supreme Court (SCOTUS) has navigated its way into being the supreme executive branch of our government. The SCOTUS has long been a bastion of Conservative thought in America, but since gaining its 6-person supermajority, we’re seeing them bring forward novel legal concepts to help move decisions towards the Right’s agenda.

The best example is the Court’s majority creating new “doctrines” to help deliver rulings that their clients on the Right argue for. Prior to embracing “the major questions” doctrine and the “Independent state legislature” doctrine, Conservative members of the court used to insist on “textualism” to achieve their goals. Textualism says that when interpreting the Constitution, judges should confine themselves only to the words of the Constitution. Originalism says that if the words are unclear, then judges need to consult historical sources to determine their meaning at the time of ratification.

But we’re now seeing cases where a statute’s words aren’t delivering a decision that the Supremes are aiming for, so using these new doctrines give them a pretext for breaking their own rules.

That’s how they blew up the EPA’s Clean Power Rule. Eight months ago, SCOTUS first invoked the “major questions doctrine” in a majority opinion, using it to limit the Environmental Protection Agency’s power to address climate change.

Last week, the court seemed ready to use it again, to kill Biden’s proposed student loan relief. More on the new “doctrines” from the NYT’s Adam Liptak: (brackets by Wrongo)

“On the last day of the 2021-22 Term, the Supreme Court handed down a decision on “the major questions doctrine” and [agreed] to hear a case presenting “the independent state legislature doctrine” – neither of which had been called “doctrines” there before.”

The rationale behind the major questions doctrine is the contention by the Justices that the agencies must receive explicit direction from Congress to address a particular issue if action by the agency is of political or economic significance. Conveniently, this “doctrine” gives the Court’s Conservative supermajority a tool to achieve their preferred outcomes when textualism doesn’t get them there.

Liptak quotes Allison Larsen, a law professor at William & Mary:

“The phrase was used just once by any federal judge before 2017, and in only five federal decisions — at any level of court — before 2020,”

But you guessed it, the turning point in 2017 was when Justice Brett Kavanaugh, then a judge on the US Court of Appeals, used the term in a dissent. More from Professor Larsen: (brackets by Wrongo)

“[Using] the word ‘doctrine’ to describe the major questions concept was first used by law professors and then bandied about on blogs…and used as a rallying cry in opinion pieces and programming by those seeking to challenge the administrative state….In 2016 — long before it was anointed a ‘doctrine’ by the Supreme Court — the ‘major questions doctrine’ was featured by name in the annual Federalist Society conference,”

Interestingly, at Kavanaugh’s Supreme Court confirmation hearings, Sen. Amy Klobuchar (D-MN) asked him about the doctrine, calling it “something else that you (Kavanaugh) came up with.” Liptak reports that Kavanaugh responded vaguely that the “major questions doctrine is rooted in Supreme Court precedent.”

In his 2017 dissent, Kavanaugh conceded that “determining whether a rule constitutes a major rule sometimes has a bit of a ‘know it when you see it’ quality.” That’s some real Wavy Gravy right there.

Back to the EPA case: Chief Justice Roberts wrote that the Court’s use of the term was unexceptional:

“It took hold….because it refers to an identifiable body of law that has developed over a series of significant cases all addressing a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”

Turning to the student loan debt relief case, in the oral arguments, Roberts argued that since loan relief is expensive, it must be authorized by Congress. But as Justice Elena Kagan said in the same oral argument, “Congress could not have made this much more clear, adding, “We deal with congressional statutes every day that are really confusing. This one is not.”

Welcome to 2023, where when cases come out the way the Conservative justices want, it’s just fine. But if the legal text gets in the way, the “major questions doctrine” allows them to make the explicit text disappear because they’re willing to engage in bad faith readings of statutes to get the job done.

So much for the rule of law.

If under a Republican president, when the Supremes need to find a sweeping executive branch authority to justify a Conservative wet dream policy, they’d find it without even a whiff of self-reflection.

Will we ever make up the ground now being lost to the decisions by these ideologues?

Monday Wake Up Call, North Carolina Edition – March 6, 2023

The Daily Escape:

Early blooming Bradford Pear trees, near Cana, VA – March 2023 photo by Lee Ogle

North Carolina is in today’s news for two reasons: First, North Carolina Republicans, who control the state legislature, announced a deal to expand Medicaid under the Affordable Care Act. North Carolina would be the 40th state to expand Medicaid after a decade of Republican resistance.

From the WaPo:

“The deal marks a stark turnaround for Republican leaders that played out over years in North Carolina and in states across the country, as more and more governors and legislatures expanded Medicaid to low-income residents.”

NC’s governor, Democrat Roy Moore will sign the bill if it gets to his desk. Passage would extend Medicaid coverage to 600,000 of the state’s poor citizens. Dozens of rural hospitals in NC closed during Covid, so maybe it dawned on NC’s Republican Party that dead constituents have a difficult time voting for them.

As with other states, this will allow North Carolina, at no cost to the state government, to give health insurance to the state’s working poor. The federal government will pay for 90% of the cost, and the rest will be covered by a new tax on hospitals and insurance companies.

Wrongo wrote about how the Medicaid expansion was a great source of revenue to state governments here. The NC House Speaker, Republican Tim Moore said that since the federal government will pay North Carolina a $1.8 billion bonus if expansion passes, the GOP was motivated to sign on.

The extra money is part of the 2021 stimulus package signed into law by Biden, that offered signing bonuses to states that expanded Medicaid. In NC’s case, $1.8 billion. Biden reacted:

“This is what I’m talking about….That’ll be 40 states who’ve expanded. 10 more to go.”

It’s doubtful that any other states will sign on this year.

Shouldn’t Red states be taking care of their residents? Instead of wasting time with anti-trans bills and anti-woke bullshit? But that’s too much to expect.

A second North Carolina story involves a case in front of the US Supreme Court, Moore vs. Harper. Last fall the Supremes heard this case about the “Independent State Legislature Theory“. The case started out as a challenge to a Republican-gerrymandered voting map that the NC Supreme Court ruled was unconstitutionally partisan.

NC’s GOP then appealed to the US Supreme Court, arguing that the Constitution’s election clause gives state legislatures freedom to do whatever they decide about their own elections, and that no court can intervene in that. A decision was expected in June, 2023.

But the Supremes may not get a chance to weigh in, since the case is back before the NC high court. Why you ask? Well the NC Supreme Court is elected. And in November, the Republicans won a majority of the seats on the court.

Unsurprisingly, the court decided to review two cases that were decided against Republicans. What’s remarkable is the extent to which NC Republicans are willing to go in order to take control over the outcome of elections away from voters. And they’re not even trying to be covert about it.

On February 3, the NC Supreme Court granted a petition to rehear the case. That means the state supreme court may reconsider a case that is already in front of the US Supreme Court.

On March 2, the US Supreme Court asked for a supplemental briefing. They’re asking the NC Republicans, (the plaintiffs that originally challenged the maps), and the Biden administration to submit supplemental briefings about what effects the state court’s reconsideration might have on the Supreme Court’s ultimate decision.

So the legal jousting about voting rights in North Carolina continues. Maybe the state’s decision to embrace Medicare expansion after a decade means that we simply have to wait for the GOP to come around to an idea that most Americans favor. In the case of voting rights, Wrongo suggests continuing the fight, not waiting.

Time to wake up America! The Biden administration won’t be sending free money to the states to get them to embrace universal voting rights. That may have worked with Medicare, but not with voting rights.

To help you wake up, watch, and listen to Roy Rogers play “Walkin Blues” from his video “Slide Guitar For Rock & Blues” on a 12 string resonator guitar. Rogers makes it his own, and the playing and vocals are terrific:

This is dedicated to our friend Rene S, who also plays a mean guitar. “Walkin Blues” is a blues standard that’s been recorded countless times, often with different lyrics. Son House, Robert Johnson, Muddy Waters, Eric Clapton and the Grateful Dead all have their own versions.

Sunday Cartoon Blogging – March 5, 2023

Not sure who buys their drugs at Walgreen’s but this seems like a bad management decision:

“The nation’s second-largest pharmacy chain confirmed Thursday that it will not dispense abortion pills in several states where they remain legal — acting out of an abundance of caution amid a shifting policy landscape, threats from state officials and pressure from anti-abortion activists.”

It seems that Republican state attorneys general in about 24 states wrote to Walgreens in February, threatening legal action if the company continued distributing the drugs in their states.

These abortion pills are the nation’s most frequently used method for ending a pregnancy.

The company subsequently told the states that it will not dispense abortion pills either by mail or at their brick-and-mortar locations in those states.

This is where America is at: Large corporations are doing more to obstruct access to abortion than the law requires. On to cartoons.

Women’s history month at the Supreme Court:

Wrongo and Ms. Right watched the Oscar-nominated movie “Women Talking” last night. It’s message is that women should no longer accept things they cannot change; that it’s time to change the things they can’t accept. Like the Dobbs decision.

Tennessee outlaws drag. And they’re so pro-life that they want to execute any woman who gets an abortion.:

Make facts your weapon:

Disney today:

Dilbert exits:

Jimmy’s with us for a little while longer:

Saturday Soother – March 4, 2023

The Daily Escape:

Superstition Mountain area, AZ – March 2, 2023 photo by Teresa Arbisi

What does freedom mean to you? Lexington, a columnist who writes about America in the Economist, says that American politicians on the right and left are groping for a new definition of what it means:

“Democrats and Republicans are competing over which party is the true defender of freedom in American life, but the claims of both have become muddy. What the debate really illuminates is how far the parties have drifted from decades of consensus about liberty in American economic and social life, without yet articulating where they are headed, if they know.”

Lexington says that as evidence of the Republicans’ commitment to freedom, they are for gun rights. The Democrats usually point to abortion rights or voting rights. But the crux of today’s battles are about how history should be taught, what pronouns people should use, and whether governments should coax investment managers to include corporate behaviors in their analysis of investments.

We see that there’s a new willingness on the part of Republicans to inject the state into what freedom means.

Lexington says that Harvard’s Michael Sandel, in his 1996 book “Democracy’s Discontent”, traced in the wake of the New Deal how Americans made peace with centralized governmental power by embracing a concept of liberty that maximized the individual citizens’ freedom to pursue their own ends, with an economy that encouraged consumption. The implicit agreement was that:

“The government would deliver economic growth and Americans would debate how to distribute it, but politicians would stay out of questions about individuals’ values or notions of the good life. In one sign of this shift the Supreme Court in 1943 blocked local governments from compelling schoolchildren to salute the flag.”

This idea of government staying out of the way of individual freedom used to be a core assumption of American politics, but not so much today. Two examples: Florida’s governor DeSantis has trouble squaring his agenda that includes enhancing the state’s control over local schools and substituting its judgment for that of corporations over how to serve their customers.

DeSantis signed a law tightening restrictions on what materials teachers can use, prevented cruise-ship companies from requiring passengers to be vaccinated and sought new government control over Disney because he disapproved of its exercise of speech.

This week, a Florida state senator introduced a bill that would make bloggers who write about DeSantis, and other members of the Florida executive cabinet or legislature register with the state or face fines.

Whatever you make of these policies, what’s happening in Florida is miles away from any definition of freedom.

Second, Lexington points to Sarah Huckabee Sanders, the governor of Arkansas. In her rebuttal to Biden’s State of the Union speech, she said she was a defender of free speech, while boasting she had banned the “derogatory term LatinX in our government”. Wrongo never uses the term either, but did Huckabee Sanders understand the contradiction between her actions and what freedom of speech means?

The Republicans are saying words about freedom that no longer square with the concept, while groping for definitions that they can’t articulate without losing much of America. Take for example, this quote from DeSantis’s new book, “The Courage to Be Free”:

“At the end of the day, the re-mooring of the constitutional ship of state will provide the needed foundation for the reinvigoration of a society rooted in freedom, justice, and the rule of law.”

What exactly does THAT mean?

This is a great time to introduce you to Anat Shenker-Osorio. She’s the founder of ASO Communications, and an expert on political messaging. Shenker-Osorio says we need to be thinking about freedom as freedoms, plural. And to see it as a concept that the Left needs to reclaim from the Right, who use it as a tribal signifier.

She says the Left focuses too much on what they are against. Thus, what the Left stands for gets lost in the noise. She thinks that freedom must be a contested value between the Parties.

If you think about it, the Right have fought against every major effort to extend freedom to more people. Isn’t it funny how deeply anti-communist Florida along with the deeply anti-communist Republican Party keep doing things to constrain freedom? Aren’t these the hallmarks of state socialist regimes?

On to the weekend and our Saturday Soother. It’s our time to forget about ideas that make our heads hurt; like what freedom means. Let’s try to center ourselves after another week of terrible news. Here on the Fields of Wrong, the first robins have arrived. They’re searching among the patches of snow for those early bugs that will soon be everywhere. We’re also getting our latest late winter snowfall, so good luck finding bugs for the next day or so.

Let’s start off by grabbing a chair by a south-facing window. Now watch and listen to Yo Yo Ma perform “Song of the Birds“. It’s a traditional Catalan tune and was a favorite of Pablo Casals, but the composer is unknown. Ma plays this piece often.

Casals often played it to protest war and oppression, particularly after he fled Franco’s Spain. He played it in 1961 at the White House for John F. Kennedy. Here Ma performs it live at KCRW in Los Angeles:

What To Do About Social Security and Medicare

The Daily Escape:

Lupine and poppies, near Glendale, AZ – March 2023 photo by Marion Cart

From Joe Perticone:

“Social Security and Medicare are headed for insolvency—that’s just a mathematical, demographic fact. But when it comes to addressing the problem, there’s virtually nothing the two parties actually agree on. For years, Republicans have waffled between proposing cuts and kicking the can down the road.”

Republicans are correct that Social Security (SS) and Medicare (M) are marching toward insolvency. But they trip over their own feet with their proposals to save them. Republicans are wrong to think they can solve the solvency questions without raising taxes. Once the Republicans take taxes off the table, they’re left without any real solutions to propose.

The Biden administration has done a good job in pre-emptively going after Republican’s ideas about cuts in Social Security and Medicare benefits. The result is that the GOP is squabbling between themselves and scrambling to come up with a plan they could take to the public.

It’s not just the federal debt that should be discussed. Dr. Donald Berwick head of Medicare and Medicaid during the Obama administration wrote in JAMA: (emphasis by Wrongo):

“A total of 41% of US adults, 100 million people, bear medical debts. One of every 8 individuals owes more than $10,000. In Massachusetts, 46% of adults say they skip needed care because of costs. As of 2021, 58% of all debt collections in the US are for medical bills.”

The WaPo explains why people who live in the American South have bad credit scores. It turns out that neither race nor poverty were the deciding factors. It was medical debt:

“Of the 100 counties with the highest share of adults struggling to pay their medical debt, 92 are in the South, and the other eight are in neighboring Oklahoma and Missouri…”

But why the South? Yes, as a region, it’s unhealthy. But there are several Northeastern states where residents struggle with chronic health conditions but have good credit. One thing that stands out is the lack of Medicaid:

“…a recent analysis in the Journal of the American Medical Association…found that medical debt became more concentrated in lower-income communities in states that did not expand Medicaid after key provisions of the Affordable Care Act took effect in 2014.”

So bad health and bad credit are because of Republican governors’ refusal to expand Medicaid to cover more poor people. Leave it to the south to show a MAGA future for all of us: undereducated, unhealthy, and neck-deep in debt.

Saturday Soother – February 25, 2023

The Daily Escape:

Death Valley sunset, Death Valley NP, CA and NV – February 2023 photo by Leila Shehab Photography

From the NYT:

“To Democrats, the train derailment and chemical leak in the hamlet of East Palestine, Ohio, is a story of logic, action, and consequences: Rail safety regulations put in place by the Obama administration were intended to prevent just such accidents. The Trump administration gutted them.

To Republicans, East Palestine is a symbol of something…more emotional: a forgotten town in a conservative state, like so many others in Middle America, struggling for survival against an uncaring mega-corporation and an unseeing government…”

If you follow FOX news you can be forgiven for thinking that the federal disaster relief teams just got around to dealing with the hazardous materials spill in East Palestine, Ohio.

Actually, those federal teams have been on the scene since it happened.

Republicans are trying to make a political meatloaf out of Biden’s visiting Ukraine rather than visiting Ohio. Or why it took Pete Buttigieg three weeks to visit the site. Even the East Palestine mayor Trent Conaway said Biden’s trip to Eastern Europe was “a slap in the face.” But if Biden had visited, you know the mayor would say he had better things to do than shepherd around a bigwig.

Their message is that Democrats are indifferent to working-class voters.

But maybe there’s something under the surface of these politics-as-usual arguments. The derailment presents issues that Republicans rarely like to grapple with: Corporate power and a clear need for government regulation.

What may be brewing is a new and different message by the GOP’s populist wing, one that breaks with Party orthodoxy and targets corporate America. And Norfolk Southern, owner of the derailed train and also behind a clear lobbying effort to keep the government from improving rail safety, is a big and very easy target.

Vox quotes Saurabh Sharma, the president of American Moment, a public policy organization that aims to influence young conservatives to become more populist:

“I think that this tragedy that happened in East Palestine is an opportunity for Republicans that have been looking for opportunities to distinguish themselves from the neoliberal set in the party to do so.”

The execrable JD Vance was in East Palestine with Trump, and told Axios afterwards that figures like Trump, Tucker Carlson and himself recognize that East Palestine residents and those like them were the GOP’s voters:

“The three of us, in our own ways, recognized instantly: This is fundamentally our voters, right? These are sort of our people. It’s a reasonably rural community. It’s been affected by industrialization,” Vance said. “These are the people who really lost when we lost our manufacturing base to China, And these are the people who are going to be forgotten by the media unless certain voices make sure that their interests are at the forefront.”

Wow, Yale grad Vance, trying to speak mid-western English says: “This is fundamentally our voters, right?”

The question is: Can Republicans build an economic populist base within their Party? It’s clear that Trump deserves criticism from the Democrats over the accident, since it’s easy to connect the derailment to Trump’s deregulation of ineffective train braking systems, the cause of the accident. That means Trump wouldn’t be exempt from political attacks by economic populist Republicans.

Conservatives like Jon Schweppe, the director at the American Principles Project, a conservative think tank, tried to link a few ideas together:

“There is a growing sense that all of these corporations are against us — not only are they trying to screw us over on the woke stuff, but generally, they just don’t care about ordinary people.”

The American Principles Project is virulently anti-woke, anti-trans and anti-voting rights. Can they also be anti-corporations? And how close are they to mainstream Republicans?

Can the East Palestine accident cause Republicans to embrace truly populist issues? Would the GOP tie corporate graft and greed to bureaucratic incompetence and Democratic indifference? They seem to fit easily within existing Tucker Carlson messaging.

BTW: All of it also fits very easily into Democratic messaging.

But let’s forget about who’s woke or, how will the second year of the Ukraine war go? It’s time for our Saturday Soother, when we disengage from the world as completely as possible and focus on finding a calm state to prepare us for the week to come.

Here in the Mansion of Wrong, we spent time upgrading our internet service to fiber optic. That wasn’t the promised slick changeover touted by the provider, but it’s finally working.

To get soothed, settle in a big chair by a south-facing window and watch Lang Lang play Debussy’s “Suite Bergamasque, or Clair de lune”. This performance was part of an album launched in Paris on Valentine’s Day, 2019. Listen as Lang Lang performs on a boat cruising along the Seine while you enjoy Paris at night:

Monday Wake Up Call – February 20, 2023

The Daily Escape:

Oatman, AZ on Route 66 – February 2023 photo by Laurel Anne Lindsay

Some of you may have heard about a study called “The Hidden Tribes of America” by the group More in Common. It’s trying to understand the forces driving political polarization in America today. They classify the American electorate into seven distinct groups, they call “Tribes”.

But their key conclusion is that most people don’t belong on the far left or far right: (brackets by Wrongo)

“…the largest group that we uncovered in our research has so far been largely overlooked. It is a group of Americans we call the Exhausted Majority…representing a two-thirds majority of Americans, who aren’t part of the Wings….most members of the Exhausted Majority aren’t [simply] political centrists or moderates. On specific issues, their views range across the spectrum.”

“But while they hold a variety of views, the members of the Exhausted Majority are also united in important ways: They are fed up with the polarization plaguing American government and society….. [they] are so frustrated with the bitter polarization of our politics that many have checked out completely….. they aren’t ideologues who dismiss as evil or ignorant the people who don’t share their exact political views. They want to talk and to find a path forward.

This chart from the study graphically illustrates the seven tribal groups of the American populace. As you can see, there is a left-wing group that is about 8% of the US population. And there are two right-wing groups that equal about 25% of Americans. That leaves four groups in what the authors call the “Exhausted Majority”. They are 67% of the American populace.

Here are some demographic characteristics of the seven groups:

Progressive Activists: younger, highly engaged, secular, cosmopolitan, angry.
Traditional Liberals: older, retired, open to compromise, rational, cautious.
Passive Liberals: unhappy, insecure, distrustful, disillusioned.
Politically Disengaged: young, low income, distrustful, detached, patriotic,
Moderates: engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
Traditional Conservatives: religious, middle class, patriotic, moralistic.
Devoted Conservatives: white, retired, highly engaged, uncompromising,

Wrongo identifies as one of the Traditional Liberals, their description rings true.

The authors say that in their research, this tribal membership predicted differences in Americans’ views on various political issues better than demographic, ideological, and partisan groupings. You can read or download the whole study here.

An “Exhausted Majority” may be a positive political development. Wrongo spends nearly every day thinking that there are just two opposing camps. And that they each view each other with fear and loathing, refusing to listen to anything that doesn’t fit their existing narrative. As we’re entering the next presidential campaign, it’s good to know that Wrongo’s view of our polarization might be well, wrong.

Is the “Exhausted Majority” merely a new response to our dysfunctional politics? Wrongo isn’t alone in thinking that what’s wrong with our country will take decades to overcome. Faced with that, people start to look for quick fixes, or a way to stop listening to the wrangling. And you don’t have to be unaligned with either Party to share this sense of exasperation.

The people described in the “Exhausted Majority” are similar. It’s also true that for most people, politics isn’t the be-all-end-all of their lives. They’d prefer that the business of government didn’t require their involvement. They’re trying to get their kids educated, and to keep them safe. They prefer to see political compromise happen without needing to be involved.

But if you can walk away from politics when it frustrates you, then you’re in the lucky minority:

There are large numbers of parents who have discovered that their child is addicted to opioids.
There are many people who had lost their health insurance when they were laid off.
Many sent their daughter to college in the South only to learn that she no longer has any reproductive rights.
Many are worried that books are being taken from public school libraries.
Some fear that they may lose the right to vote.

These people can’t simply throw up their hands and walk away. Only political action will help them. We all know that the political radicals are irredeemable. We also know they make the most noise, but they’re a minority.

The fed-up people on both sides and in the middle have to find a way to take the country back from the radicals, instead of allowing ourselves to be herded into existing opposing camps.

Time to wake up America! We can’t simply drop out. There’s too much at stake. Democrats need to find candidates and a message that can motivate an additional 5%-15% of the “Exhausted Majority” to vote with them. To help you wake up, watch, and listen to the RedMolly band play a very nice cover of Richard Thompson’s “Vincent Black Lightning 1952”. It’s a surprise how beautifully it adapts to a bluegrass idiom, and the dobro work makes it:

“Vincent Black Lightning” is one of the most perfect songs ever written. We saw Thompson perform it live at Tanglewood last summer.

GOP Attacks ESG Investing Rule

The Daily Escape:

Lake Sammamish, Issaquah, WA – February 2023 photo by Everything Washington

Are you following the Republican war on ESG? ESG stands for Environmental, Social, and Governance, key criteria that may impact a company’s market valuation and its business behavior. ESG has become a red line for Conservatives, who argue that companies that follow it are failing to live up to their fiduciary duty to maximize profits for investors.

The jury is still out on whether ESG investing delivers the same, better, or worse returns. But, despite any definitive evidence, Republicans hate ESG investing. From Semafor’s Liz Hoffman:

“Last year, Republican-controlled legislatures began passing laws blacklisting state investment funds from doing business with money managers that pushed what they deemed to be liberal agendas, like boycotting gun manufacturers and mining companies. BlackRock, run by Larry Fink, an outspoken supporter of so-called ESG principles, has taken the brunt of the pressure, with at least 10 states pulling their money from his firm or threatening to.”

For the many Republican state governors, treasurers, and attorneys-general who joined in, it’s turned out that several hadn’t done their financial homework before joining the culture war. Some failed to calculate the financial cost of their ideological stance. Semafor cites a few examples:

Indiana’s budget office found that a bill forcing state pension funds to divest from “woke” money managers would cost $6.7 billion over the next decade in lower-than-market returns. That also would force retirees to increase their paycheck contributions.
Executives in one of Kentucky’s retirement funds argued with the state’s treasurer that a recent law requiring them to pull money from BlackRock and 10 other firms seen as hostile to the energy industry would violate their duty to get the highest returns for pensioners.
A 2021 Texas investment blacklist cost municipalities an additional $303 million to $532 million in bond interest, according to a study by University of Pennsylvania. JPMorgan, Citigroup, and other banks left the state after the law was passed, leaving less competition for bond underwriting. That raised interest rates about 40 basis points.
North Dakota voted down, 90-3, a Texas-style bill that would have required the state treasurer to prepare a blacklist of financial firms that have committed to reducing carbon emissions, but would have stopped short of banning state investment funds from doing business with them.

Hoffman concludes that:

“Owning the libs turns out to be expensive.”

There are always trade-offs between principles and profits. Whether Republican politicians decide the political value of the fight offsets the lost profits is another question. This will at some point become a question for voters, who are the taxpayers and pensioners effected by these decisions.

In one way the GOP has already won a battle in the culture war on ESG. BlackRock has changed its marketing to tout its investments in fossil fuels. It also deployed new technology that allows investors to cast their own ballots in corporate elections instead of outsourcing their votes to the firm. Black Rock hopes these moves may blunt criticism that they are pushing a progressive agenda.

But the GOP isn’t giving up on fighting ESG. Politico is reporting that Sen. Mike Braun (R-IN) has offered a joint resolution under the little-known Congressional Review Act (CRA) to overturn the Department of Labor’s recent rulemaking on ESG investing. The new rule took effect on January 30.

The rule allows fiduciaries to take ESG factors into consideration when choosing retirement investments. It potentially impacts the retirement savings of 152 million American workers whose accounts are governed by the Employee Retirement Income Security Act, or ERISA. From Braun:

“You cannot direct funds…to ESG. You’ve gotta go for whatever is going to give you the best financial return….That doesn’t mean that someone couldn’t choose to tell their broker to invest in ESG.”

Braun has 60 days to gather a majority in the Senate to overturn the rule. His has all 49 Republican Senators and Democrat Sen. Joe Manchin. If Braun can get 51 votes in the Senate, and given that the House is controlled by Republicans, the new rule would go away.

OTOH, a study by Penn State found that 70% of registered Republicans surveyed opposed government interference in ESG investments, higher than Democrats with the same position (57%). From Forbes:

“This exposes an irony at the heart of the ESG culture war: right-wing critics are seeking to actively interfere in decisions made by investment professionals about how to safeguard their clients’ money. In any other context, they’d be up in arms about the very thing they’re doing here.”

How silly to expect consistency from the GOP. We’ll see if Braun can find another Democrat in the Senate to join the Republican culture war on ESG.

Ohio’s Airborne Toxic Event

The Daily Escape:

Roan Mountain, NC – February 2023 photo by Spencer Carter. Roan Mountain has the largest naturally growing gardens of Catawba rhododendrons in the world.

Back on February 3, a Norfolk Southern (NS) train carrying hazardous materials derailed near the town of East Palestine, Ohio. Federal investigators say a mechanical issue with a rail car axle caused the derailment. After several days of underreporting, we now know what happened.

Here are some facts: The derailment included 50 cars, 20 of which carried toxic materials, 14 of those contained vinyl chloride. The subsequent fire burned for three days. Then there was a “controlled release” of poisonous gas. And finally, effects of the poison were felt on locals, their animals, and local waterways.

The axle problem is important since it is the cause of all the hardship in East Palestine. Trains use steel wheels on steel rails because they produce 85+ % less friction than rubber truck tires do on roads. The contact point of a wheel on the rail is about the size of a dime. Compared to trucks, trains are cheaper (4 cents vs 20 cents per ton-mile in the US), and more sustainable: One ton of freight can be moved over 470 miles on a single gallon of diesel fuel.

But sustaining that economic advantage requires the railroads to maintain all that steel in good working order. Otherwise if things go wrong with a train that’s 4.5 miles long, they can go very, very wrong. And reporting seems to indicate that NS didn’t maintain its steel wheels correctly.

Also, the derailed NS train was not classified as a “high-hazard flammable train,” despite its hazardous and flammable cargo. Such a classification would have lowered its speed and affected its route. From Lever News:

“Though the company’s 150-car train in Ohio reportedly burst into 100-foot flames upon derailing — and was transporting materials that triggered a fireball when they were released and incinerated — it was not being regulated as a “high-hazard flammable train,” federal officials told The Lever.”

Apparently when current transportation safety rules were first created, a federal agency sided with industry lobbyists and limited regulations governing the rail transport of hazardous compounds. That decision effectively exempted many trains hauling dangerous materials including the NS train in Ohio, from the “high-hazard” classification and its more stringent safety requirements.

Generally, workers want safety and the bosses want money. Safety requires additional time, more workers, and money. Deregulation contributes to the lack of safety. Using vinyl chloride in a chemistry lab requires safety equipment. Tank cars containing thousands of gallons of it should require more than the government apparently thinks is safe.

Wrongo always looks at the politics in these sorts of industrial disasters because they are usually caused by the economics created by politics.

Given how dangerous these chemicals are, and given how they are used and transported, we have to expect accidents like this to happen. But the government should be able to tell us whether the current accident rate is higher or lower than expected, and if higher, what should be done to correct the problem.

We trust the bureaucrats that make the rules to balance safe operations against the risk of an airborne toxic event like this. Wrongo’s brief look into this one incident doesn’t evidence that kind of trust. It appears that the bureaucrats who make the rules on railroad safety were influenced by the industry and wrote a rule that puts the economics for the railroad industry ahead of public safety.

These issues exist everywhere in the relationship between industry and government. There’s always pressure by the industry on the bureaucrats to deregulate. In a man-made disaster, that can place greater burdens on the communities, like just happened in East Palestine.

This is what the Michael Lewis’s book “The Fifth Risk” is about: People who go to school, get extensive training and then work in obscure corners of the government. Lewis talks about how important these people are, and how for decades they’ve been denigrated, vilified, and ignored, largely by Republicans.

This is another area in which the GOP is awful in a completely lopsided way to Democrats.

The existence of corporations who can impose risks on the rest of us is what happens when there is unequal political power. We need a state with a strong regulatory system to protect us. The state must build regulatory regimes for chemical spills that shift the risks back onto those who create them.

NS in this case, has said that they will be fully responsible for the damages caused in East Palestine.

That’s encouraging, but how does that little town with a population of less than 5,000, or even the state of Ohio hold NS to their word?

It’s Impossible To Buy A $200k Home Anymore

The Daily Escape:

Mt. Hood sunrise – February 2023 photo by Mitch Schreiber Photography

Happy Valentine’s Day for those who celebrate! If you don’t celebrate, find someone or something to give a little bit of love to.

In all of the hype about the Super Bowl and Rihanna’s halftime show, you may have missed that homes selling for less than $200k have basically disappeared in America.

John Burns, a real estate consultant, reports that they are now 0% of the new home market. They were 40% of the market 10 years ago. Burns also says that $500k+ new homes have grown from 17% of the market to 38% of the market during Covid. He provides this handy chart showing how average home prices have changed since 2010:

At the same time, sales of homes going for $500k or more (red line) have shot up from less than 10% to nearly 40% of the new homes market and represent the largest share of new home sales.

This isn’t great for Millennials looking to buy their first homes, or for retirees who have to downsize. It also explains why many first-time homebuyers are angry.

It’s not only the $200k and under segment that has fallen off a cliff. New homes going for between $200k – $300k now make up just 11% of the total, down from 80% of all new home sales in the year 2000.

Ben Carlson shows Federal Reserve new home price data going back to 2000 that breaks down new homes price points more clearly. He says that those being sold for $750k and up have gone from less than 1% to more than 10% of the market.

A few reasons for the shifts: First, we’re not building enough new houses anymore. Second, we’ve seen changing tastes drive demand toward larger homes, helping move the market to a new floor in home prices. Inflation didn’t help either.

We overbuilt in the 2000s housing bubble, and that led to more than a decade of underbuilding ever since. There was a brief spike during the pandemic housing craze but that has abated with mortgage rates rising so rapidly in the past year.

In 2002-2006, we were building around 120,000 new homes per year. In 2022, it was more like 65,000 units per year. Tastes have changed as well. Houses today are substantially larger than they were in the 1950s, 1960s, and 1970s.

In his book The Fifties, David Halberstam talks about how the housing market played a huge role in the rise of the suburbs following World War II. Then houses were about 1,300 square feet. In the 1970s, the median size of a new home in the US was 1,525 square feet. Today it’s around 2,500 square feet.

Tastes have changed. People want bigger houses. They want open floor plans for entertaining, bigger bedrooms with more bathrooms, and more storage space for all of their stuff.

It’s also true that homebuilders aren’t incentivized to build starter homes anymore. In the 1950s the government helped out the troops and their families. With the GI Bill, the federal government took some of the risk that homebuilders wouldn’t be able to find mortgages for all the new houses they were building.

Local zoning regulations have made it difficult to get approvals to build new homes. So builders have moved upmarket in home size to justify those upfront expenses. Starter homes aren’t as profitable as they once were.

There’s a big change in the buyer’s market as well. The WSJ quotes John Burns: (emphasis by Wrongo)

“You now have permanent capital competing with a young couple trying to buy a house.” Burns estimates that in many of the nation’s top markets, roughly one in every five houses sold is bought by someone who never moves in.”

The Atlanta Journal-Constitution in an article last week entitled: “American Dream For Rent: Investors elbow out individual home buyers. Metro Atlanta is ground zero for corporate purchases, locking families into renting’. The Journal says a generational housing shortage, inflated construction costs and a surge in consumer demand all contributed to the historic rise in prices.

But there’s little doubt that a flood of cash from institutional investors has exacerbated it. They quote Maura Neill, a realtor in Alpharetta:

“They go after every listing under $500,000…it’s like clockwork…The property gets listed and, sight unseen, they make offers within an hour.”

This is late-stage capitalism at work. Young working couples are increasingly shut out of buying homes. America is failing them. It would be helpful for families to build equity by purchasing homes instead of renting.

Pricing families out of home ownership carries risks to a cohesive society.

We should have a federal tax policy that disincentivizes ownership of multiple single-family homes, by investment funds. The way to remedy this is to steer investors to other assets that don’t directly impact individual welfare to the same degree as single family housing.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Domestic Policy

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