An Angry Kremlin Faces New Rounds of U.S. Sanctions - New York Times

An Angry Kremlin Faces New Rounds of U.S. Sanctions

By Neil MacFarquhar
Aug. 12, 2018

MOSCOW — From Moscow to Washington to capitals in between, the past few days showcased the way President Vladimir V. Putin of Russia nimbly exploits differences between the United States and its allies — yet also accentuated where he falls short.

President Trump had barely finished catapulting a belligerent tweet at Turkey on Friday, doubling the tariffs on its steel and aluminum exports to the United States, before Mr. Putin was on the phone with his Turkish counterpart, President Recep Tayyip Erdogan.

Mr. Erdogan, whose country is a NATO member, soon crowed that Turkey’s growing economic and military relations with Russia “make us stronger,” while he fulminated against the “economic war” waged by Washington.

Yet for all the strategic success Mr. Putin has had — including diminishing NATO and the European Union by bolstering populist governments in Europe as well as Middle East autocrats — one key goal has eluded him.

Mr. Putin has failed to persuade or pressure the West to lift successive waves of American and European economic sanctions imposed on Russia since its 2014 annexation of Crimea. In fact, the State Department threatened last week to enact yet another round of such measures, just days after the United States Senate brandished its own.

The European Union, some of whose members had signaled in the past few years that they were ready to consider granting Moscow some relief, has similarly held tough on sanctions, especially in the wake of the British government’s finding that Russia was responsible for an attempted assassination on British soil using a banned nerve agent.

The failure to make progress in freeing the Russian economy from the sanctions is a setback for Mr. Putin both at home and abroad.

In Mr. Trump, Mr. Putin and some in the Kremlin thought that they had a get-out-of-sanctions-free card. Despite the lack of concrete agreements, the first summit meeting between the two leaders, in Helsinki, Finland, last month, reinforced Russian expectations that the American president would fulfill his campaign promise to mend ties.

“Many hoped that the Helsinki summit would reset U.S.-Russia relations, and if not help lift the existing sanctions, then at least avoid further rounds,” Maria Snegovaya, a United States-based Russia analyst and columnist for the Vedomosti newspaper, wrote in an email.

Much to the Kremlin’s dismay, however, the Trump administration has developed into a kind of Pushmi-Pullyu of the diplomatic world, acting toward Russia something like the two-headed llama of Dr. Doolittle fame. One head, in the form of Mr. Trump, repeatedly promises improved ties with Moscow, while the other, representing senior officials in his own administration and bipartisan sentiment in Congress, growls about new sanctions and other chastisements.

In Moscow, the policy zigzags prompted both confusion and anger as the Kremlin floundered to respond.

“People are bewildered because they keep getting very mixed signals about the state of relations,” said Andrei V. Kortunov, the director general of the Russian International Affairs Council, a research group that advises the Kremlin.

The Kremlin’s standard response since the Crimea annexation has been to rally Russians around the flag, depicting the country as a besieged fortress. After four years, however, ordinary Russians find that formula tiresome, analysts said, and Mr. Putin’s declining popularity can be attributed partly to his inability to mend fences with the West.

“People are saying, ‘Please maintain Russia as a great power, but not at the expense of our income,’ ” said Lev D. Gudkov, the director of the Levada Center, an independent polling organization. “When they started to sense that Putin’s foreign policy became too expensive, the attitude began to change and the sense of irritation is growing.”

After the Helsinki summit meeting, 42 percent of Russians in one poll said they held a favorable view of both the United States and Europe. That is the highest level since Moscow reclaimed Crimea.

At the same time, Mr. Putin’s approval rating, still elevated by Western standards, has been sinking. In July it dropped 15 percentage points, to 64 percent from 79 percent, according to a Levada poll. The survey of 1,600 people had a margin of error of around three percentage points.

A poll released on Friday by FOM, the Public Opinion Foundation, which often works for the Kremlin, showed even lower numbers. Just 45 percent of respondents said they would vote for Mr. Putin in a presidential election now, a five-year low, while the number who expressed distrust in him jumped to 35 percent from 19 percent in May. The poll, conducted this month, surveyed 3,000 respondents with a margin of error of 2.5 percentage points.

Mr. Gudkov, the Levada pollster, cited several reasons for the suddenly more favorable view of the West.

Presient Trump and Mr. Putin had their first summit meeting in July, in Helsinki, Finland.CreditDoug Mills/The New York Times
First, hundreds of thousands of lively foreigners flooded Russia in June and July for the World Cup. State television, a virtual monopoly, dropped its habitual xenophobic attacks during those weeks, which came just before the July 16 summit meeting between Mr. Putin and Mr. Trump.

More important, the changing view of the West reflects a general exasperation with domestic problems including plans to overhaul pensions, higher taxes, and several years of rising prices in tandem with decreasing incomes, Mr. Gudkov said.

“It is a way for people to say it is time to end this confrontation,” he said.

Initially, it seemed that the Helsinki talks opened the door for lower-level diplomats, military officers, intelligence agents and other experts to begin discussions about Russian-United States cooperation on at least a few issues, including the wars in Syria and Ukraine, international terrorism and nuclear proliferation.

“We would slowly start moving out of this hole that we have dug for ourselves,” Mr. Kortunov said.

Instead, Mr. Trump’s cozy attitude toward Mr. Putin backfired at home and the confrontation deepened.

First, the United States arrested a Russian citizen, Maria Butina, on charges of acting as an unregistered foreign agent.

Then a bipartisan group of senators, dismayed that Mr. Trump had not publicly confronted Mr. Putin over Russia’s election meddling, released draft legislation that would limit the operations in the United States of Russian state-owned banks and that would impede their use of the dollar. Passage of such a bill would impose some of the most damaging sanctions yet.

On Wednesday, the State Department said it would impose new sanctions by the end of August in response to the attempted assassination in March of a former Russian spy living in England, Sergei V. Skripal, and his daughter, Yulia Skripal. American law mandates such sanctions, with a second stage possible later this year, after any attack using chemical weapons.

The August sanctions, targeting goods related to national security, are expected to have little effect because such trade is so low anyway.

The banking sanctions threatened by the Senate are far more serious. Some Russian analysts see the lighter sanctions emerging from the State Department as an attempt by the Trump White House to head off a new, far more damaging round, and to make Mr. Trump look tough on Russia before the November midterm elections.

In either case, Russia has only limited means to respond without bruising its own economy — existing sanctions, including those imposed by Europe, have already damaged economic growth.

On Thursday, the prospect of new sanctions pounded the ruble, which dropped to its lowest level against the dollar in two years. Share prices in Moscow also plunged. The market turmoil prompted sensational headlines in the Russian news media like “The Ruble Drowned in a Wave of Sanctions.”

The sudden dashed expectations for improved ties and the lack of options in response clearly angered and frustrated senior officials, who ratcheted up the rhetorical flourishes about United States seeking not just to punish Russia, but to destroy it.

Igor Korotchenko, the editor of the Russian magazine National Defense, reflected the attitude of Kremlin hard-liners who are always suspicious of the United States when he dismissed the idea that the sanctions were merely a symptom of domestic American politics.

“It’s an attempt to destroy the modern Russian state,” he said on a heated television talk show.

Dmitri A. Medvedev, the unpopular prime minister, suggested an economic war was brewing and threatened retaliation. “It would be necessary to react to this war economically, politically or, if needed, by other means,” he said.

The Kremlin and the Russian Foreign Ministry responded in more measured tones, saying that the new, “unfriendly” measures contradicted at least the spirit of the Helsinki meeting.

“You can expect anything from Washington now, it is a very unpredictable international actor,” said Dmitri S. Peskov, Mr. Putin’s spokesman.

The immediate problem, for the Kremlin, is how to respond. It denies any involvement in the actions outside Russia’s borders that prompted the move, like the hacking of  Democratic Party emails or the poisoning of the Skripals.

Russia has largely skirted the fallout from previous sanctions, and it has the example of countries like Iran, which survived such measures for decades.

Yet each new round feeds the concern that they will be harder to escape, said Aleksandr Morozov, co-director of the Boris Nemtsov Center for the Study of Russia in Prague.

“Now they are in a diplomatic vacuum,” he said.: “It is not clear where and how even minimal contacts can be moved.”

Follow Neil MacFarquhar on Twitter: @NeilMacFarquhar.

Reporting was contributed by Ivan Nechepurenko, Lincoln Pigman and Sophia Kishkovsky from Moscow, Steven Erlanger from Brussels, and Gardiner Harris from Washington.

Man says Nazis were socialist, gets schooled by history writer - Independent

Man says Nazis were socialist, gets schooled by history writer
Posted August 10, 2017 by indy100 staff in tech 
UPVOTE 
            
'Nazi' is the short name. The full name for the 'Nazi' party was the "National Socialist German Workers' Party" ("Nationalsozialistische Deutsche Arbeiterpartei" in German).

The fact that the far-right party contained 'socialist' in the name was a rebranding gambit to draw workers away from communism and into populist nationalism.

Despite this, the populist nationalists that support the likes of Donald Trump, regularly take the oportunity to remind modern day liberal or left-leaning critics of white-supremacists and neo-nazis that 'Socialism' was included in the Nazi party name.

Hitler's party positioned as a left-wing organisation based on his rhetoric, rather than his actions, espoused in the 1920s and 1930s to disenfranchised workers frustrated with what they perceived as a two-tier society.

Neither left or right wing want to be known as the side of the political spectrum that Hitler was on, and both sides would argue he was on the other, politically speaking.

One such incident occurred recently on Twitter.

Ian Miles Cheong
✔
@stillgray
 Nazis were socialist. https://twitter.com/laurilove/status/897051235244810240 …

2:41 PM - Aug 17, 2017

Mike Stuchbery, a teacher and writer whose passion is History, sought to correct the misconception.

This is quite a long dressing down and is a little foulmouthed. You've been warned.

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
 Ok, dickhead, I did this politely to someone else earlier, but now I'm going to rinse you. Prepare.

Ian Miles Cheong
✔
@stillgray
Nazis were socialist. https://twitter.com/laurilove/status/897051235244810240 …

4:46 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_
Yeah, the Nazis called themselves the 'National Socialists', and they even nicked some (incredibly benign) socialist policies...

4:49 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_
It is, however, a total misnomer, it's like the World Series, or Democratic People's Republic of Korea, or 'ethics in gaming journalism'.

4:51 AM - Aug 18, 2017


Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_
The Nazis were fascists. Indisputably. They drew their ideology from Italy's fascists, who arose in reaction to the Left.

4:55 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_
The Italian Right, @stillgray, still mired in 19th century thought, could not tackle the explosion in left-wing organization.

4:57 AM - Aug 18, 2017


Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
Mussolini gives us the first fascist platform - national/racial superiority, rearmament & expansion, and consolidation of capital.

4:58 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
The Italian Fascists appropriated, wholesale, Roman imagery, such as the 'fasces', to evoke renewed national pride & a sense of superiority.

5:01 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
The Italian Fascists sought, @stillgray, to expand & reclaim historically Italian lands (mirroring a large portion of the old Roman Empire).

5:07 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
After nicking some socialist economic policies (public works & spending), fascist government formed corporate cartels, enriching the few.

5:10 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
Hitler & his Deutcher Arbeiter Partei mates see this and decide that they need to steal support from actual socialists, @StillGray...

5:13 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
...so the DAP rebadge themselves as the NSDAP... Socialism still being a relatively new ideology. It's like adding 'e-' to a product name.

5:16 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
Otherwise, they were fascist - 1. Saw themselves as racially/nationally superior, 2. Wanted rearmament & expansion, 3. Consolidated capital.

5:19 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
1. Do I really need to go into their views on race & their feelings towards the Jews?

5:21 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
2. Do I really need to go into their designs on a 'Greater German Reich'?

5:25 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
3. The Germans used socialist economic policies, before retreating to a corporate cartel base. Companies like Krupp made $$$.

5:27 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
The actual socialists who emerged after Marx wanted three things - 1. Removal of classes.  2. World socialism. 3. Distribution of capital.

5:32 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
There was a huge gap between rich & poor in Tsarist Russia. The Bolsheviks sought to eliminate this division (yes, by violent revolt).

5:34 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
After they succeeded, the Bolsheviks wanted to take the Revolution worldwide. Heard of 'Comintern'? No race, no nations, only socialism.

5:43 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
3. As for redistribution of capital, do I really need to explain the difference between collectivisation & cartels, Mr Tax  Haven?

5:45 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
So, you see, @stillgray there's a big fucking difference between fascism and socialism, in that they're COMPLETE FUCKING OPPOSITES.

5:50 AM - Aug 18, 2017

Mike Stuchbery 💀🍷
✔
@MikeStuchbery_
Replying to @MikeStuchbery_ @stillgray
So, if you're peddling this 'munuhmunuh NAZIS ARE SOCIALISTS' bullshit you're either massively dense or an evil prick.

5:51 AM - Aug 18, 2017

U.S. budget deficit this year already 21% higher than last year - CBS News

 August 10, 2018, 4:25 PM
U.S. budget deficit this year already 21% higher than last year

The federal government racked up a $76.9 billion deficit in July, with increased government spending and tax cuts keeping the country on track to record its biggest annual deficit in six years.

The Treasury Department reported Friday that in the first 10 months of this budget year:

The deficit totaled $684 billion, up 20.8 percent from the same period last year.
Revenues are up only 1 percent this year, the increase held back by a big drop in corporate tax payments.
Spending is up 4.4 percent, reflecting a big boost Congress approved earlier this year for domestic and military programs and the rising costs of financing the debt.
The Trump administration last month sharply revised upward its deficit estimates, projecting annual deficits will once again top $1 trillion in the 2019 budget year, climbing to $1.1 trillion, and remaining above $1 trillion for three years.

For the current budget year, which ends Sept. 30, the administration is now projecting a deficit of $890 billion. That would be up 33.7 percent from last year's deficit of $665.8 billion.

The only other period when the federal government ran deficits above $1 trillion was for four years from 2009 through 2011. That's when the Obama administration was using tax cuts and increased spending, along with support for the banking system, to combat the 2008 financial crisis and Great Recession, the worst economic downturn since the Great Depression of the 1930s.

President Donald Trump succeeded in getting Congress in December to pass a tax cut of $1.5 trillion over the next decade, fulfilling a longtime Republican goal of cutting the corporate tax rate. It reduced the rate from 35 to 21 percent although most corporations had used various methods to reduce the actual rate they paid under the previous law to below the 35 percent figure.

Friday's monthly budget report showed that over the past 10 months:

Corporate taxes are down 20 percent — $55 billion — from the same period a year ago.
Individual tax receipts are up 2 percent as a result of more people working as unemployment continues to fall. (The December tax legislation also cut individual taxes although Democrats have said most of that benefit will be seen by the wealthiest taxpayers.)
Revenues have totaled $2.77 trillion while spending has totaled $3.45 trillion, both record amounts for the first 10 months of a budget year.
The increases in spending for the 10-month period included $36 billion more for Social Security and $26 billion more for Medicare, the government's two biggest benefit programs, reflecting rising costs as the baby boomer generation retires. Defense spending was up $27 billion.

Interest on the national debt was up $50 billion. Half that amount went to the higher payments Treasury is making on securities that guard against increases in inflation, and the other half reflecting rising interest rates and a growing amount of debt that must be financed.

The $76.9 billion deficit for the month of July compared to a deficit of $42.9 billion in July 2017. The government has run a deficit in July in 62 of the past 64 years.

Indra Nooyi, Pepsi’s First Female CEO, Is Stepping Down - TIME

Indra Nooyi, Pepsi’s First Female CEO, Is Stepping Down

Posted: 06 Aug 2018 06:28 AM PDT


Indra Nooyi is stepping down as chief executive officer of food and beverage giant PepsiCo Inc., handing the reins to a top lieutenant in a transition that will draw attention to the dearth of prominent female CEOs in corporate America.

Nooyi, 62, will leave the role in October and remain chairman until early 2019. Ramon Laguarta, 54, who has been a candidate to take over since a promotion last year to president, will be just the sixth CEO in the 53-year history of the company.

Nooyi, who is from India, is the first foreign-born CEO of Pepsi and the first woman to lead the chips-and-soda behemoth, whose revenue topped $63 billion last year. Her departure thins the ranks of female CEOs running S&P 500 companies and comes at a time when Pepsi’s North American beverage unit is stagnating amid a general decline in soda consumption. In 24 years at Pepsi, including 12 as chief executive, she has helped the Frito-Lay unit grow in a challenging industry and added healthier drinks and snacks to a portfolio that includes Cheetos and Mountain Dew.
“I’ve had a wonderful time being CEO, but at some point you sit back and say, look, it’s a responsible move to effect an orderly transition and to have somebody else take over the leadership of this company,” she said in an interview. “Being a CEO requires strong legs and I feel like I ran two legs of a relay race and I want somebody else with nice strong legs and sharp eyes to come and lead this company.”

Rising Star
A 22-year Pepsi veteran, Laguarta ran the Europe Sub-Saharan Africa division before becoming president last year, overseeing global operations, strategy, public policy and government affairs. A Barcelona native, he worked at lollipop maker Chupa Chups before joining Pepsi.

Nooyi attended graduate school at Yale University and joined Purchase, New York-based Pepsi in 1994 as head of corporate strategy, rising to the CEO job in 2006. At the time only a handful of women ran major U.S. companies.

Nooyi faced down activist investor Nelson Peltz, repelling a bid to break up the company, and has guided Pepsi through a tricky stretch as shifts in how U.S. consumers eat and shop have bedeviled the largest food and beverage companies in the world.

“Indra’s legacy is that she’s figured out in a difficult environment that she could run a great company and drive great results and do good at the same time, while having long-lasting impact as a leader and global icon,” said Blair Effron, co-founder of Centerview Partners, an investment bank and advisory firm that’s worked with a range of consumer giants including Pepsi.

Developing Talent
As she ponders her next chapter, Nooyi said she’ll possibly take a vacation, in addition to watching the New York Yankees baseball team, and, she quipped, “listen to some music, take a walk in the woods.” She hasn’t thought through potential next steps, but at a time when global progress on promoting more women to CEO positions appears to have stalled, she plans to help develop more talent to ensure that women are represented in the top ranks of corporate America.

“I think people like me, after we leave privileged CEO jobs, I don’t think we can go silent,” she said. “We have to keep fighting the good fight to develop women, to mentor them, to support them, so that we can get more highly qualified women — and there’s plenty of them — into the boardroom, into C suites and into the ultimate CEO job. My job is in fact just beginning once I leave PepsiCo because I can do things now that I was constrained to do when I was CEO of the company.”

Female CEOs
The departure of Nooyi drops the number of women CEOs in the S&P 500 to 24, according to data compiled by researcher Catalyst, which advocates for more women in executive positions. The list was last updated July 13. Kathy Warden is scheduled to become CEO of Northrop Grumman Corp. in January, which would bring the total back to 25.

The packaged food industry in particular has witnessed several key female executive exits in the past year. Campbell Soup Co. CEO Denise Morrison abruptly departed in May, while former Mondelez International Inc. CEO Irene Rosenfeld handed over the reins of the Oreo maker in November.

Like many CEOs in a divisive political era, Nooyi has found herself a part of political discussions. She described herself at a conference as a supporter of Hillary Clinton in the 2016 election but congratulated Donald Trump for his victory and was part of his short-lived business advisory council.

No Politics
During an era when a businessman occupies the White House and corporate leaders including Mark Cuban and Howard Schultz are mentioned as potential presidential candidates, Nooyi said she doesn’t see a future for herself in politics.

“I think there are business leaders who like politics and there are business leaders who’d be lousy at politics,” she said. “I happen to be in the second group, and so I just want to make sure that whatever I can do behind the scenes to help any cause, I will — that makes sense for me. But politics no, not for me.”

Nooyi is leaving the top job at Pepsi at a time when overall soda consumption has dropped to its lowest level in more than 30 years as consumers try to avoid sugary drinks. That’s led Pepsi and competitors to try to diversify into new products perceived as healthier, and to market zero-sugar versions of their soft drinks and retool their diet beverages.

Diet Diversion
But there have been stumbles. A high-profile bid in 2015 to reformulate Diet Pepsi led to lower sales, and the company revived its old formula a year later. Nooyi told investors last month that Diet Pepsi is performing well again, but Coca-Cola Co. has won more attention this year for its revitalization of Diet Coke.

A ballyhooed 2012 joint venture with German dairy giant Theo Muller to sell yogurt in North America fizzled four years later due to slow sales. Pepsi was rebuffed in 2016 in its attempt to take a major stake in Chobani, the Greek-yogurt maker. The company pushed into the dairy case with the 2011 purchase of a majority stake in Wimm-Bill-Dann Foods OJSC, Russia’s leading branded food-and-beverage company.

The company’s Frito-Lay unit remains a snacking powerhouse with brands like Tostitos, Doritos and Lay’s chips dominating grocery-store shelves. Big Food companies have lost billions in revenue in recent years as consumers gravitate to more natural products made by smaller upstarts. But Frito-Lay, while not immune to the shifts, has defended its turf, controlling about two-thirds of the U.S. salty-snack market.

Hummus, Juice
Nooyi has also worked to appeal to modern snacks. Frito-Lay has versions of 11 core chip brands without artificial ingredients, aiming to break out of the traditional snack aisle and get into organic grocery stores. Products such as Sabra hummus and guacamole, Naked cold-press juices and Lipton Pure Leaf tea have bolstered results.

During Nooyi’s time leading the company, Pepsi shares rose about 80 percent, while rival Coca-Cola has more then doubled, as has the S&P 500.

Pepsi shares rose 0.7 percent as of 8:18 a.m. in New York on Monday before the start of regular trading.

Nooyi said under her tenure Pepsi considered and passed on large transactions that could have dramatically altered the company. “Everybody says, ‘Hey, do a transformative deal, it will put you in the neon lights,’” she said. “The issue is that we’ve got to derive value from large transformative deals. And we didn’t find one that would create shareholder value.”

Now, Laguarta prepares to take the reins at a tricky time for the company, with pressure ramping up to ignite growth, particularly in the North American beverage unit.

“Ramon is the product of a responsible development and succession plan,” Nooyi said. “He’s had a birds-eye view of the whole company and what kind of disruptive moves we would have to make, disruptive productivity, to take us to this next era of growth for this company.”

Law Professor: Progressives Are Regulating Away the Equality-Boosting Benefits of Uber, Airbnb and Google - TIME Business

Law Professor: Progressives Are Regulating Away the Equality-Boosting Benefits of Uber, Airbnb and Google

Posted: 10 Aug 2018 10:22 AM PDT

Progressives are singling out technology companies for new regulations. For instance, in New York, the City Council has just voted to cap the number of ridesharing vehicles for services like Uber and Lyft, and may require that drivers earn a minimum amount. Last month, California imposed costly and complex regulations on the voluntary exchange of data with such services as Facebook and Google. But progressives also argue that inequality is the defining issue of our time, and these regulations hamper these companies’ contributions to reduce such inequality.

Goods and services available at no cost boost equality, because most people can enjoy them. Facebook and Google provide search, maps, and connections that benefit billions of people. Once a consumer pays for an internet connection, they get such services at what an economist would call a marginal cost of zero. And these free services are valuable, as shown by the ever increasing amount of time people spend using them.
To be sure, in return for these benefits, we give up personal data that provide profits to companies like Facebook and Google because they can then sell targeted advertisements. But taking account of the data’s value underscores the equalizing force of the services provided by the tech giants. The wealthier a user is, the more valuable his or her data. Thus, many people of modest means are getting a substantially greater net benefit than the wealthy.

Ridesharing services are not free, but they nevertheless democratize the amenities of transportation, providing a better life to those who are not part of the one percent. The very rich have traditionally enjoyed chauffeurs who are available to give them a quality ride anywhere at moment’s notice. Ridesharing services provide a good approximation of a chauffeur at the touch of an app, even in the rain or in an unfamiliar town. More generally, a defining characteristic of being very wealthy has been having servants at beck and call. The sharing and gig economies create information infrastructures to make providers seamlessly available when the middle class needs them most.

Those providing these innovations gain benefits as well. For instance, ridesharing drivers get advantages that medallion taxis drivers don’t. Since some have few fixed costs, using the app they can make stop and start decisions as they please, which allows them to more easily take care of family or pursue other activities. Economists have estimated that this amenity is worth as much as 40 percent in addition to their dollar earnings.

Airbnb similarly promotes equality because it allows people of modest means to monetize their single greatest asset: their home. In contrast, rich people’s wealth is already monetized, as it is often predominantly in securities. But before Airbnb, it was hard for most people to find a market to rent a spare room or their entire home when they were on vacation.

But new progressive regulation will reduce these benefits. For instance, proposals to treat ridesharing participants as employees would reduce the flexibility that permits the supply of rideshares to expand at a moment’s notice to meet demand. Requiring Uber and Lyft drivers to earn a minimum amount is likely to raise prices, shrinking the service’s benefits to both passengers and drivers. Similarly, restrictions on Airbnb make it much more difficult for people to earn income from their most valuable asset.

Meanwhile, If other jurisdictions follow California’s recent legislation and impose complex and costly regulations on the voluntary exchange of data for services, it will reduce the incentives of companies like Google and Facebook to provide further free goods to the world. Thirty years ago, accessing all the world’s information for free with the click of a mouse was the stuff of science fiction. We cannot predict the innovative free services of tomorrow — but they too are likely dependent on the stream of income that tech companies get from aggregating our data.

Similarly, as the gig and sharing economies expand from ridesharing and room sharing to rent a chef or handyman, they more broadly distribute the personal services that once were the sole province of the rich. But targeting this economy with new regulations reduces further gains for equality.

To be sure, the information technology component of services should not immunize companies from general laws. If Airbnb hosts are discriminating against guests on the basis of race, they should be fined. If Uber is misleading its drivers into renting cars at bad prices, that practice should be prohibited. Facebook and Google, like other companies, should be forced to disclose to consumers exactly the terms to which they are agreeing. But targeting these companies with special regulation helps their competitors and harms not only efficiency, but equality.

But the progressive yen to regulate the information economy ignores an essential truth: information technology helps equalize consumption. We cannot eat the same apple or live in the same house, but we can all benefit from the same information, be it the information on the internet or the network of drivers and short term rental properties that the sharing economy provides. Innovation in information delivery will continue to have important leveling effects if regulation gets out of the way.