systemic corruption

The Net Neutrality Scam

You have probably seen some net neutrality scare tactics recently. The issues are complex and proposals to “guarantee” net neutrality usually promise to protect Internet users from a variety of evil ISP behaviors by authorizing the FCC to treat the Internet as a common carrier / utility, with powers to regulate and tariff (that is, price control) services. As is usually the case when powerful business and political interests are involved, the spin obscures more than clarifies.

First, let’s look at a reasonably neutral outline of the issues, from Open Secrets:

Net neutrality is the principle that all data on the Internet should be treated equally, not discriminated against based on platform, content, user or any other characteristic; ISPs may not create pay-to-play “fast lanes” that only some content providers could afford. Sounds simple enough, but the application of this axiom is technically and legally complex given the immense, intertwined — and sometimes competing — interests of ISPs, governments, and consumers in Internet industries and infrastructures

Debate over net neutrality in the U.S. has picked up in recent years, but it’s been an issue of worldwide contention since the early 2000’s. The US government has attempted to implement various strategies for regulation over this timeframe with little success. Net neutrality supporters believe that the government hasn’t gone far enough to protect individual freedom and security on the Internet; opponents fear that government intervention will hamper innovation and investment while increasing the costs of getting online.

Much of the recent debate has centered on the concept of paid prioritization. ISPs, such as Comcast, want content providers to pay them to deliver data faster. The ISPs claim that allowing these fast lanes is the only way they’ll be able to manage data efficiently and generate revenue to expand and improve Internet infrastructure. Opponents of paid prioritization, including content providers like Netflix and Amazon, assert that this kind of data discrimination will stifle the growth of fledgling companies that cannot pay to compete with developed corporations in the fast lanes. Advocates on both sides of the issue believe that additional costs will be absorbed by customers if their adversaries prevail. Paid prioritization is only a part of the Net Neutrality issue, but it has become the most prominent aspect of the public discussion.

By voting in February to regulate broadband communications like a utility under Title II of the Communications Act, the FCC effectively prohibited paid prioritization. The Title II statute prohibits “common carriers,” which ISPs are now considered, from creating “any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services.” Similar common carrier laws have been used to regulate monopolistic markets like the telephone and railroad industries. Additionally, Title II imbues the FCC with the authority to investigate any consumer complaints in the Internet market and requires privacy and fair use assurances from ISPs. Net neutrality supporters rejoiced at this decision, but opponents are not settling for defeat: Congressional attempts to reign in the FCC’s authority over broadband have commenced as the first wave of telecom litigation arrives

Furthermore, some proponents of net neutrality like Google worry that the broad Title II classification may promote unintended consequences that raise costs. This is because Title II, an expansive set of regulations, permits the FCC to impose tariffs and other forms of rate regulation that are looked upon unfavorably by the private sector. FCC Chairman Tom Wheeler has vowed to selectively enforce Title II authority in an attempt to minimize costs and negative externalities, but such assurances have not assuaged the concerns of those embroiled in the debate.

Proponents of net neutrality regulation emphasize fear that ISPs will abuse their customers by using their power over what is delivered to discriminate against content — in its simplest form, the fear that the sites *you* want to see and paid to access will be slowed in favor of others. ISPs are widely resented in much of the US where local municipalities — authorized by Federal law to allow only one cable TV company to operate in their territory — restrict entry of wired Internet competitors, leaving the average US citizen dependent on 1.5 broadband Internet providers, usually the incumbent cable TV operator along with a few less competitive alternatives like DSL from remaining telephone carriers. You are stuck with one company, and as a result the company is unresponsive, the standard model for a regulated monopoly utility, and gets a better return on money spent lobbying its regulators and buying political influence than it does from spending to satisfy customers.

No one is suffering from differential slowdowns at the moment — though many suffer from lower speeds and higher monthly bills due to lack of consumer choice. Because most have no alternative, cable companies can milk their customers and make high profits while failing to invest in new equipment and network capacity. Until recently these companies were generating so much cash on cable TV that they were able to reinvest in content providers by buying up TV networks, cable channels, publishing houses, and newspapers. So today we have Time Warner, soon to be swallowed by Verizon (which originated as a rollup of old Bell System companies), Comcast (which now owns NBC-Universal and its cable channels (including MSNBC, CNBC, USA Network, NBCSN, E!, and The Weather Channel), Charter-Spectrum-Brighthouse, Cox, and so on.

The giant and most hated of these is Comcast, with its reputation for unresponsive, DMV-like service, constantly rising prices, and occasional abuses of power to favor their own content over competitors’. Comcast is maneuvering to get net neutrality regulation tailored to its interests — this would prevent other ISPs from charging for access to its content, while allowing it to provide better service and access for its own services within its dominant network.

On the other side are major content providers who want a net neutrality that bars ISPs for charging them extra to guarantee quality of service (QoS) for their customers. Netflix, for example, is paid by customers by the month, and those customers suck huge amounts of streaming data through the system to their homes; if that data bogs down the network, ISPs either have to spend money on new capacity and charge non-Netflix users for it, or control use by capping data use or speed. While metering data and charging both originators and receivers for it at a very low rate might be the closest to economic fairness, asking big data sellers like Netflix, Amazon, and Google to pay something for their use is at least approximately fair. Of course these companies don’t want to pay unless all of their competitors (especially the in-house content generators of the ISPs) are required to.

So the big campaign to scare you into supporting the latest generation of net neutrality regulation is really a fight between big media and ISP companies to keep their own margins high and competitors weak. Notice the real underlying problem for consumers — limited choice of ISPs and local monopolies — isn’t addressed at all. Nearly every legislator at federal, state, and local levels gets some campaign funding from the media and ISP giants (as well as flattering news coverage that is a major advantage for incumbents), and by finding problems only where the big donors want them to look, they keep voters from understanding where the real problem is. This is much like the current battle to “repeal and replace” the ACA, which carefully neglects to address the biggest underlying problem, the cost and limited availability of medical services and treatments due to overregulation and cartelization of supply.

In the long run, beyond 5 years, technology will eliminate the local cable monopolies — wireless 5G and beyond will provide broadband data service in most locations at a reasonable cost. Google fiber rollouts have stopped and most companies with fiber optic ambitions have decided to scrap new installations as the high costs would have to be written off in a short time, which is why Verizon FIOS, a winning product where it was allowed to compete with coax-based cable TV, was never fully installed where authorized and has been sold off to other companies.

The giants are competing for advantage in a future marketplace by promoting regulation that benefits them or reduces competition. But in their focus on their interests, they are opening the door for broader FCC regulation of the Internet, which in the long run could be applied to wireless and as well and result in constant political warfare and control of what you see and hear. The excuse for FCC regulation in the New Deal era was to prevent a kind of Tragedy of the Commons in radio and television — since there was limited spectrum for signals and laissez-faire broadcasting would ruin it for everyone, Congress declared the spectrum a public resource, then promptly turned it into a property right by handing it out for free to TV and radio stations connected to the powerful (see, for example, how Lady Bird Johnson made LBJ a multimillionaire by using his political pull to get TV licenses.) FCC control came with regulations of content and suppression of minority political viewpoints, something many party politicians would like to see return. Already the incumbent social media giants like Facebook and Twitter are suppressing “dangerous” views, and countries like China are suppressing Internet speech to continue their control of public discourse. Even a small step in that direction like the current net neutrality proposals is dangerous.

Free people don’t need protection; they need freedom to change providers. Start by opening up competition in ISP services so any abuse can be dealt with by going with someone else. Don’t give unelected government regulators control of your feed.


Death by HR: How Affirmative Action Cripples Organizations

Death by HR: How Affirmative Action Cripples Organizations

[Death by HR: How Affirmative Action Cripples Organizations, in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. 

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat…. It is time to turn the tide against this madness and Death by HR is an important research tool…  All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.


More reading:

A Clinton Christmas Carol
“High Tech Under Diversity Pressure
Ban the Box, Credit Scores, Current Salaries: The Road to Hiring Blind
HireVue, Video Interviews, and AI Job Searches
“Death by HR” – Diversity Programs Don’t Work

Interstate Commerce: Trade Barriers Between States

Doctor sees patients via Internet

Doctor sees patients via Internet

Ilya Somin has a post at Volokh/WaPo about “foot voting” (people choosing to move to jurisdictions that have local governments that reflect their values or offer economic opportunities lacking in their current home areas.)

One phenomenon often discussed is migrants bringing their voting habits with them and voting into place local governments that duplicate the conditions in, say. California (they are said to “Californicate” the new area.) People who move because of economic opportunities may have no understanding that the existence of the better job opportunities and lower costs of living in the new place owes much to more enlightened, less business-suppressing tax and regulation in the new location. Since they never realized those business-unfriendly California laws were suppressing local opportunities that might have kept them there, they don’t modify the type of politicians they support and so begin the process of bringing Progressive political machines and micromanagement to their new homes.

Outside observers look a country like India and wonder why reform of internal trade barriers, which are relics of the pre-colonial states, are widely understood to be prosperity-enhancing, but progresses very slowly if at all. Products made in one Indian state can’t be sold to a customer in another without paying additional taxes or being blocked by local content regulations.

In the US, regulation of interstate commerce was intentionally made a Federal matter, making the US a free trade area. This aided in creating the world’s largest internal free market and allowed local industries to grow up specializing in one manufacturing segment to serve a national market — regions specialized in furniture, shoes, textiles, steel, and so on, aided by economies of scale and able to take advantage of local resources that gave them a national advantage. If each state had been able to put tariffs on incoming products or block shipments from other states by regulation, the nation’s growth would have been stunted.

But services and professions are still licensed by states and even smaller units. To braid hair or do massage in a town can require licenses from both state and local authorities, with professional guilds using such licensing to block competition. This prevents poor entrepreneurs from finding work providing services and increases costs of those services for poor consumers, all in the name of consumer protection.

At the higher end, doctors are cartelized and regulated by states as well as the Federal government, which runs the subsidies and residency schemes that keep production of new physicians expensive and restricted. Healthcare services that could easily be handled by less expensive technologists are often required to be provided only under a licensed doctor’s supervision, pumping up the incomes for even the worst doctors (who may use their credential to take jobs in prison or institutional settings where their record of incompetence is ignored because their license is valid.)

New technology that might allow low-cost Internet doctoring by out-of-state or even out-of-country physicians is blocked in most states. Concern for consumer health is always cited as the reason, even when poor consumers can’t afford to seek any face-to-face care for their health issues. It is apparently better to go untreated than to allow the poor to buy “good enough” services on the Internet. The inability of above-board, higher-quality companies to run such remote doctoring systems leaves the field open to bootleg quacks.

So even the US is not truly a free trade zone, since many services (cable TV, real estate, medicine, restaurants, schools) are heavily regulated by state and local governments, and outsiders trying to break in face high barriers to entry. Big companies can overcome the need to manage 50 or more different regulatory regimes, but smaller chains just starting out have to choose wisely and only expand in areas where the regulatory environment is more supportive.

Not surprisingly, the result is vigorous competition and lower prices in less regulated areas, and sluggish investment and higher prices in more-regulated areas.

It’s clear that Federalism (state and local control) applied to service regulations is costing the economy growth and raising prices in an era where barriers to travel and communication have come down. Medical, teaching, and real estate professionals should not have to undergo licensing in every jurisdiction where they might practice. Cities and towns should not be able to extract concessions from a monopoly cable TV-Internet provider which result in high prices and no local competition.

Perhaps we should thank those Progressives who battered the Supreme Court into submission and started making the case that every local economic decision could be regulated by the Feds, since even the tiniest decision locally has some effect on the national market, no matter how minuscule.

The Progressives opened the way, so now it would be constitutional to overrule all local and state licensing of professionals, insurance companies, and other services, which could now be much more competitive in a true free national market. So if they wanted to, Congress could rule all medical and communications services licensed in one jurisdiction to be sellable in others. nationwide insurance policies would provide travel flexibility and economies of scale, and these companies could provide services via Skype examination that would undercut local doctor and hospital cartels. Sick people in the Bronx projects could be “seen” and prescribed treatment and medication from doctors in low-cost South Dakota, say. “Oh, no!” cry the Progressives, “They could be quacks!” And the products sold in New York from manufacturers in South Dakota, Michigan, or even China could be fakes or defective. Yet we tolerate the free trade of goods because it is in the long run best for everyone, and the wholesalers and retailers of goods have an interest in keeping bad products out of their systems. And now that low-skilled manufacturing jobs are mostly outside the US, isn’t it interesting that professions and industries that benefit from barriers to trade in services — lawyers, doctors, communications giants, drug companies, public schools — resist any effort to open themselves up to competition.

In “Death by HR” I discussed one remedy — a “Freedom of Contract” Amendment to the Constitution to clarify the Common Law right of adults to contract with each other and service providers in any way they choose. If I choose to buy a product from a Chinese company, I deal with the risk and consequences. I should be allowed to buy services from anywhere I want — to have my skin lesions imaged to a doctor in Florida, to have the treatment done by medications from a pharmacy in Oregon, to have a local contractor handle any hands-on services, and so on. The key problem with many necessary services today is regulation and a resulting lack of low-cost options. This is especially true in medicine, which Obamacare only made worse by restricting practical treatment options to small geographic regions. The solution is radical deregulation.


Death by HR: How Affirmative Action Cripples Organizations

Death by HR: How Affirmative Action Cripples Organizations

[Death by HR: How Affirmative Action Cripples Organizations, in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. 

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat…. It is time to turn the tide against this madness and Death by HR is an important research tool…  All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.


More reading:

A Clinton Christmas Carol
“High Tech Under Diversity Pressure
Ban the Box, Credit Scores, Current Salaries: The Road to Hiring Blind
HireVue, Video Interviews, and AI Job Searches
“Death by HR” – Diversity Programs Don’t Work

The Tom Woods Show, Episode 817: “Death by HR”

[Death by HR: How Affirmative Action Cripples Organizations]

The Tom Woods podcast on Death by HR is here, and on Youtube here. We ran overtime a bit, but aside from editing out some lapses and timechecks, they ran almost all of our discussion.

I invented a new term, “reverse regulatory capture,” to describe how HR culture has generally come to accept the attitudes of the progressive regulators and labor lawyers toward much of their work. One of my editors told me when I used “Stockholm Syndrome” to describe the phenomenon that many readers would not understand what that term meant — here’s an explanation. Often used when talking about Patty Hearst, the heiress kidnapped by the Symbionese Liberation Army in 1974 who adopted the revolutionary name Tania and participated in bank robberies with them. Responding to someone who holds power over you by first pretending to adopt their values to avoid punishments, and eventually coming to truly believe them. HR has complied with government enforcement so long that its thinkers and educational programs have adopted the progressive values of the regulators.

I took his introductory comments as a blurb for the book:

“Interesting, cutting, incisive book about what’s really going on in HR departments in companies across the country.” — Tom Woods, senior fellow of the Mises Institute and host of The Tom Woods Show


The book is currently available in: trade paperback from Amazon, Barnes and Noble, and other bookselling web sites; Kindle ebook format from Amazon exclusively; and as an audiobook from Audible and Amazon.

Death by HR: How Affirmative Action Cripples Organizations

Death by HR: How Affirmative Action Cripples Organizations

[Death by HR: How Affirmative Action Cripples Organizations, in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. 

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat…. It is time to turn the tide against this madness and Death by HR is an important research tool…  All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.


More reading:

A Clinton Christmas Carol
“High Tech Under Diversity Pressure
Ban the Box, Credit Scores, Current Salaries: The Road to Hiring Blind
HireVue, Video Interviews, and AI Job Searches
“Death by HR” – Diversity Programs Don’t Work

Death by HR: Audio Introduction

Death by HR: How Affirmative Action Cripples Organizations

Death by HR: How Affirmative Action Cripples Organizations

[Death by HR: How Affirmative Action Cripples Organizations,]

The Tom Woods podcast will be doing a segment on Death by HR tomorrow, and when they send me the link I’ll put it up here so my readers can listen. I wasn’t familiar with his extensive writings or his career, but it’s impressive as seen in his Wikipedia entry. His current web site is here, and his podcast show is popular — old episodes are here. He’s closely associated with Peter Schiff and has him on frequently as a guest, and he recently started the Contra Krugman podcast — which uses the New York Times columnist Paul Krugman’s partisan writings on economics and current affairs as a foil to discuss more realistic economic ideas.

I enjoyed our discussion and was gratified that he supports the book. I did a practice segment a few days ago that turned out well enough that I’m posting it as a good short introduction to me as the author and the ideas in the book. Tom’s interview segment will be 15 minutes or so, and directed to a few areas of interest, so the focus is different — there’s not too much overlap.

So enjoy and pass on the audio of Jeb Kinnison introducing “Death by HR.”


The book is currently available in: trade paperback from Amazon, Barnes and Noble, and other bookselling web sites; Kindle ebook format from Amazon exclusively; and as an audiobook from Audible and Amazon.

Death by HR: How Affirmative Action Cripples Organizations

Death by HR: How Affirmative Action Cripples Organizations

[Death by HR: How Affirmative Action Cripples Organizations, in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. 

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat…. It is time to turn the tide against this madness and Death by HR is an important research tool…  All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.


More reading:

A Clinton Christmas Carol
“High Tech Under Diversity Pressure
Ban the Box, Credit Scores, Current Salaries: The Road to Hiring Blind
HireVue, Video Interviews, and AI Job Searches
“Death by HR” – Diversity Programs Don’t Work

“Death by HR” Released as Audiobook

Death by HR Audiobook Cover

“Death by HR” Audiobook Cover

After much work with narrator Joe Farinacci (who did such a good job with Avoidant) the Amazon/Audible audiobook of Death by HR is finally for sale at these links:

Amazon
Audible

Death by HR Introduction: HR Pushes Damaging Regulations Into the Enterprise

Death by HR: How Affirmative Action Cripples Organizations

Death by HR: How Affirmative Action Cripples Organizations

[The Introduction from Death by HR: How Affirmative Action Cripples Organizations, available now for Kindle and in trade paperback.]

Introduction

This book is about the new Age of Incompetence, with brain-dead, unaccountable employees holding sinecures at the heart of our government agencies and regulated institutions like banks and hospitals, protected by affirmative action and union policies. The rot is spreading as pressure from state and federal regulation of companies has increased, empowering an internal compliance bureaucracy — Human Resources (HR) — that has devalued the best job candidates and employees and promoted affirmative action and diversity over team productivity.

The result has been ever-more-costly failures and a steep decline in organizational performance. From the mortgage meltdown that brought down the world’s economy in 2008, to the disastrous launch of the healthcare.gov website for Obamacare, major segments of business and government in the US have grown more expensive and less competent over the past few decades. Billions of dollars of waste in government contracts for IT projects, boondoggle weapons systems, and deadly service failures at the VA are in the news every day. Public schools are widely seen as mediocre, and in the poorest urban districts they are failing to provide a decent education for the students who need good schools the most to make up for bad family backgrounds. Costs for regulated services like schools, colleges, medical insurance, drugs, courts, prisons, and infrastructure like roads and bridges rise far faster than inflation, while time to complete major projects stretches out to decades, and many fail completely and are cancelled after billions have been spent. And the rot is spreading as government pushes businesses to adopt similar employment policies, with HR enforcing government mandates that compromise competitiveness and give overseas companies the advantage.

This book will trace the factors that have hobbled growth and damaged organizational competence. Government regulation has led to HR departments that actively sabotage the hiring of the best candidates for jobs, with by-the-book mediocrities placed in positions of responsibility.

Silicon Valley and the tech industries are the next targets. If you’re a manager at a tech company, I’ll suggest some ways to protect your people from HR and its emphasis on credentials and affirmative action (AA) over the best fit for a position. Corporate leaders need to be sure their HR departments are managed to prevent infiltration by staff more interested in correct politics than winning products. And I’ll show why appeasement of diversity activists is a dangerous strategy that may make your organization a target for further extortionate demands….

Affirmative action policies have placed mediocrities at major decision points in most large companies, government agencies, and highly-regulated institutions like schools and hospitals. A small percentage of deadwood can be routed around, but over time feedback effects from the generalized lack of accountability and lowered standards for performance cripple the institution. This is the cause of the failure and extreme cost overruns of almost all large government projects and a tolerance for incompetence so long as policy manuals are followed to the letter. This effect is largest in government and public education, but also visible in larger companies where HR departments are coming to be staffed by progressives who believe in removing non-progressive thoughts and people from the workplace. In high tech, women and minorities dominate HR in part because companies wanted to balance their male-and-Asian-heavy engineering staff to make their numbers look better, but now are just realizing they’ve created an internal enemy to product quality and excellence in staffing engineering teams. (A corporate manager comments: “How do you know HR is lying? Their lips are moving…”)

This book will focus on the situation in the US, which was until recently more resistant to the bureaucratic disease and thus had a healthier economy and a more dynamic labor market than Europe. The onset of top-down sclerosis by Federal regulation and micromanagement has reduced US growth to the same stagnant levels seen in Europe, for much the same reason: educated by public schools to believe they need permission to do anything, young people stop trying to do anything, and wait for someone to help them. The increasing numbers of untouchable diversity hires in positions of responsibility has inhibited accountability, and the inability to fire employees after even the most egregious malfeasance has spread from civil service and union shops into major corporations —s ince some cannot be held accountable for incompetence, no one is; and the continuing presence of employees who coworkers know are shirkers, incompetents, or even criminals reduces the morale of those who are good at their jobs and work hard. The dysfunction varies by industry and company, with the worst-hit in heavily-regulated sectors like banking, education, and healthcare, where government either controls every element of the business or pays for most of the product. Sectors which until recently were relatively free of deadwood, like high tech, are now under attack by the diversity activists, who want more hiring of less qualified people to make high tech workforces more representative — which would mean discriminating against better candidates who are white, Asian, Indian, male, etc.

This book will also look at a few other countries that have tried various forms of affirmative action policies to demonstrate that while these places are culturally very different, the divisive and socially damaging long-term effects of AA preferences are visible in every country where it has been in place for longer than one generation.

Affirmative action — which substitutes the lower standard of “good enough” for “best” in hiring new employees, setting the bar low enough so that affirmative action hires can meet it instead of seeking out the most qualified candidate — is not the only labor regulation crippling organizational productivity. State and federal regulation and micromanagement of economic activity continues to increase, complicating and delaying every public and many private projects. Whole sectors of the economy are weighed down by regulation; new medical devices and drugs cost $billions to get through corrupt and scientifically-antiquated FDA studies and approvals processes, which results in high prices for new medical technology. Routine services like dental cleanings and hair braiding are illegal in many states unless done under supervision of a cartel of state-certified practitioners; four states even outlaw residential decorating services unless licensed. Hazards of toppling armoires aside, the state is easily captured by motivated business groups to outlaw new competition for their business, and under the pretense of protecting consumers, allowing professional cartels to charge much more for services.

Labor laws are similarly gamed by politically-influential unions and power-seeking bureaucrats. Minimum wage laws outlaw lower wages for unproven or new workers, and restrictions on firing as in Europe make it less likely companies will take a chance on hiring a full-time worker rather than a temp or contractor. The long-term result of Euro-style labor protection is Euro-style high unemployment, especially in young, inexperienced workers, who are thereby kept from ever gaining the experience that would make them valuable enough to hire despite the additional rules and costs imposed by the laws. People accept that education costs money and that students may be paid less for internships or even pay outright for classes, but forget that most occupational skills are acquired in the workplace, in the first years of employment. By outlawing lower wages and at-will employment, labor laws are keeping young people from important learning experiences and ruining their chance to start on a career ladder.

Until the Roosevelt administration and the New Deal, the Supreme Court had held back many attempts to regulate private business, ruling them unconstitutional overreaches. But after Roosevelt threatened to pack the court with new justices who would approve his regulatory agenda, the Supreme Court bowed to his wishes. In a series of cases, the newly Progressive-leaning Court expanded the Commerce Clause to allow federal regulation of almost all economic activity. In Wickard v. Filburn, 317 U.S. 111 (1942), the court ruled that a farmer could be fined for growing wheat on his own land for his own animals’ consumption because he would otherwise have had to purchase wheat in the market, which a 1938 agricultural control law regulated. After this, the court rarely found any Federal regulation of contracts or commerce to be unconstitutional, despite the clear intent of the framers that such Federal power over commerce was intended to prevent states from creating trade barriers and discriminating against the products of other US states.

As a result, laws and regulations on commerce of all kinds — and labor specifically — have expanded, and the staffing levels of Human Resources departments and administrations at colleges and hospitals have ballooned to meet bureaucratic requirements. Federal fingers are now in every pie, wasting resources and deadening initiative, since a lawsuit or negative attention from the NLRB, EEOC, Dept. of Education, HHS, EPA, and other enforcement agencies can destroy or damage a company or institution. HR and administrative staff approve of the progressive control agenda—which gives them power and status—and when free to drift leftward serve as an internal fifth column dedicated to enforcing progressive standards on their own organization and its workforce.

Companies serving an international market find themselves battling foreign companies who don’t have as many burdens, especially in Asia. The US advantage of a productive workforce and innovative technology is gradually worn down by the time and money spent fighting bureaucrats. Mediocre managements take current rewards for themselves but ignore the future, eventually failing. Foreign companies take over markets, one by one, as US companies dragged down by unions and mediocre key employees lose revenues and eventually abandon markets.

Governments have expanded the areas they control while the Civil Service, union, and affirmative action rules imposed on their workforces have reduced their effectiveness in their most critical functions. From deaths caused by bureaucratic malfeasance at the VA to killer cops rarely punished and kept on the payroll by the efforts of police unions, this lack of accountability makes it difficult to remove incompetent or criminal public employees and makes it impossible for even motivated elected officials to reform public services. The rising debt and costs for every public project mean failing services, rampant injustice, and decaying infrastructure are not being addressed. As a result, US competitiveness is declining vs. countries with better-managed public services. And public anger and cynicism as the years pass and each new group of elected officials fails to fix any of the problems they promised to fix is leading to a dangerous disregard for the law and a desire for a dictator who will sweep aside the checks and balances of a Republic.

Because there are so many examples of malfeasance and incompetence in government’s control of commerce and labor regulations, I was forced to leave most of that material for the next book, which will focus on government. Entire books have been written about the costly failures of the Drug War, public schools, affirmative action, and police militarization. This book will focus on the creeping spread of this atmosphere of consequence-free failure. The hubris of central planners and their capture by special interests, acting in concert with well-meaning but naive do-gooders who think they can vote their way to a better world, has brought us the diseases of socialism by taking away authority and accountability that let businesses succeed or fail. The pleasant-sounding ideal of equality of outcome — which killed hundreds of millions of people as the activating principle of Marxism-Communism — is actually the enemy of individual freedom, accountability, and achievement. The decline of excellence as a primary goal leading to profit and growth has not come because people like failure and mediocrity, but because they were sold a fairy tale about how government could make everything fairer and make everyone happy through the workings of laws and regulations. The result has been a lot more unhappiness and civil strife as the unintended consequences have swamped whatever good was intended. And the level of hypocrisy has risen as politicians promote the message that everyone is a victim and that someone else — “the 1%,” corporations, Republicans, foreigners, Muslims, blacks, the Koch Brothers, the Jews, whoever works as a scapegoat—is responsible for keeping them down.

High tech, one sector where the US led the world and generated immense new wealth, has now been targeted as the next area to be regulated. Activists and demagogues are attracted by money, and with more than half of the US private economy now controlled by government regulators, it was inevitable the parasites would look toward the remaining healthy sectors for their next fix. Calls for diversity quotas in tech company workforces, video game characters, and open-source software projects are early warning signs. HR departments in most tech companies serve as the political commissars of regulation, and HR departments in tech are staffed by lower-paid employees who have little understanding of the technology but a lot of interest in screening out even the best prospective employees who don’t fit the narrow diversity mold. Managers who want the best teams and the fastest, coolest products are resisting these HR apparatchiks, and I’ll show what you can do about it if you work in tech.

The next battlefield after high tech is discretion in hiring — which the activists believe must be limited to force employers to hire any candidate “qualified” for a job as soon as they apply. Only a few radicals are proposing this kind of blind hiring now, but continuing successes in getting firms to bow to their diversity demands will result in a list of new demands. Seattle has already passed an ordinance requiring landlords to rent apartments to the first applicant who qualifies — next what counts as qualified will come under their control, and government-sponsored Section 8 and protected class tenants will be deemed qualified no matter what their credit reports and criminal records show. And similar movements in hiring — supposedly to prevent discrimination by eliminating management choice of who to employ — are coming soon.

There are many people working hard in HR to promote the interests of their organization, but their efforts are often blunted by the prevailing HR culture that substitutes buzzwords and feel-good social goals for promotion of productivity and excellence:

…Most HR organizations have ghettoized themselves literally to the brink of obsolescence. They are competent at the administrivia of pay, benefits, and retirement, but companies increasingly are farming those functions out to contractors who can handle such routine tasks at lower expense. What’s left is the more important strategic role of raising the reputational and intellectual capital of the company — but HR is, it turns out, uniquely unsuited for that. Here’s why:

HR people aren’t the sharpest tacks in the box. We’ll be blunt: If you are an ambitious young thing newly graduated from a top college or B-school with your eye on a rewarding career in business, your first instinct is not to join the human-resources dance. (At the University of Michigan’s Ross School of Business, which arguably boasts the nation’s top faculty for organizational issues, just 1.2% of 2004 grads did so.) Says a management professor at one leading school: “The best and the brightest don’t go into HR.”

Who does? Intelligent people, sometimes—but not businesspeople. “HR doesn’t tend to hire a lot of independent thinkers or people who stand up as moral compasses,” says Garold L. Markle, a longtime human-resources executive at Exxon and Shell Offshore who now runs his own consultancy. Some are exiles from the corporate mainstream: They’ve fared poorly in meatier roles—but not poorly enough to be fired. For them, and for their employers, HR represents a relatively low-risk parking spot.

Others enter the field by choice and with the best of intentions, but for the wrong reasons. They like working with people, and they want to be helpful—noble motives that thoroughly tick off some HR thinkers. “When people have come to me and said, ‘I want to work with people,’ I say, ‘Good, go be a social worker,'” says Arnold Kanarick, who has headed human resources at the Limited and, until recently, at Bear Stearns. “HR isn’t about being a do-gooder. It’s about how do you get the best and brightest people and raise the value of the firm.”[1]


[1] “Why We Hate HR: In a knowledge economy, companies with the best talent win. And finding, nurturing, and developing that talent should be one of the most important tasks in a corporation. So why does human resources do such a bad job—and how can we fix it?” Fast Company, August 1, 2005. http://www.fastcompany.com/53319/why-we-hate-hr


Death by HR: How Affirmative Action Cripples Organizations

Death by HR: How Affirmative Action Cripples Organizations

[Death by HR: How Affirmative Action Cripples Organizations, in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. 

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat…. It is time to turn the tide against this madness and Death by HR is an important research tool…  All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.


More reading:

A Clinton Christmas Carol
“High Tech Under Diversity Pressure
Ban the Box, Credit Scores, Current Salaries: The Road to Hiring Blind
HireVue, Video Interviews, and AI Job Searches
“Death by HR” – Diversity Programs Don’t Work

Death by HR: Thiel, Trump, Palantir: Regulation as Partisan Weapon

Peter Thiel

Peter Thiel – Image by Dan Taylor.

Peter Thiel became a billionaire by co-founding Paypal (with the even-more-famous Elon Musk), then using the $55 million he received for its sale to eBay to invest in other startups, notably Facebook. He’s also becoming famous as a maverick, a gay iconoclast who spoke in support of Donald Trump at the 2016 Republican National Convention and has been suggested as a possible Trump Supreme Court pick. However unlikely that is, it would be at least interesting.

He gained more fame in his takedown of Gawker Media by funding Hulk Hogan’s privacy lawsuit against them, which I wrote about in The Justice is Too Damn High! — Gawker, the High Cost of Litigation, and the Weapon Shops of Isher.

The latest news is the Dept. of Labor’s suit against one of the companies Thiel founded, secretive Spook-connected unicorn Palantir, which uses big data analytics algorithms developed at PayPal to combat fraud. Palantir’s software is used by intelligence agencies, government, and industry to detect patterns of hacker and terrorist activity in big datasets. Since much of its revenue comes from government contracts, threats to end Palantir’s government contracts threaten its existence.

The Dept. of Labor (DoL) opened an investigation in 2010 to scan applications for a narrow set of jobs at Palantir to determine whether any bias in hiring was evident. In their filing, the DoL claims Palantir’s applicant pool was predominantly Asian, but those hired were mostly white:

For the QA Engineer Intern position, from a pool of more than 130 qualified applicants — approximately 73 percent of whom were Asian — Palantir hired 17 non-Asian applicants and only four Asian applicants … The likelihood that this result occurred according to chance is approximately one in a billion.

The unstated assumption is that statistical tests of “adverse impact” are good enough to prove illegal discrimination — that the applications of all protected classes were equally strong in the aggregate, and therefore the only acceptable outcome would be hiring in proportion to the applications received from each class of applicant.

This is self-contradictory, of course, since if the DoL wanted to they could claim statistics prove Palantir somehow discriminated against all applicants except Asians in attracting an applicant pool so disproportionately Asian compared to the local job market! And as Palantir states in its response, the DoL made no effort to determine how many of the applicants were even close to qualifying for the positions.

In Death by HR I wrote about the EEOC and its occasional use as a political tool to demonstrate an administration’s commitment to a protected class. Some scapegoat company is picked at random and a suit is brought despite a very weak case, so the government attorneys are often slapped down by annoyed judges.

This case starts to look like something worse — the intentional use of prosecutorial discretion to punish political enemies. Peter Thiel is the only Silicon Valley figure to publicly support Donald Trump, a fact which was known when the decision to file suit was made. We’ve seen an apparently corrupted decision not to prosecute Hillary Clinton for willful violations of secrecy statutes and other actions of the DoJ which demonstrate that Administration-connected figures can violate the law with impunity.

The Administrative State is largely unaccountable, shielded by Civil Service rules and employee unions in the Democratic coalition. With a president of their party, the bureaucrats are impossible to rein in using the budgetary authority of Congress, since any attempt to control them will be vetoed or result in the government shutdown faceoff. If the Administrative State grows bolder in favoring the party that feeds it through selective enforcement, there will be no turning back from the repressive superstate I wrote about in Substrate Wars.

The technology community should be alert to the dangers it faces in flirting with DC politicians. Google’s image is already being damaged by its favoritism toward Democrats, and Twitter has lost its freedom of speech cred by giving censorship authority to self-appointed social justice activists. Meddling in elections is a dangerous game, since even if you win, your partisan actions are remembered, and the regulatory state can come down on you when it’s run by a new administration.

The TechCrunch story is a typical writeup.


Death by HR: How Affirmative Action Cripples Organizations

Death by HR: How Affirmative Action Cripples Organizations

[Death by HR: How Affirmative Action Cripples Organizations, to be published Oct. 17th but available now for pre-order in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. Here’s the condensed version; view the entire review here.

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat…. It is time to turn the tide against this madness, and Death by HR is an important research tool…  All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.


More reading on other topics:

The Justice is Too Damn High! – Gawker, the High Cost of Litigation, and the Weapon Shops of Isher
Regulation Strangling Innovation: Planes, Trains, and Hyperloop
Captain America and Progressive Infantilization
FDA Wants More Lung Cancer
Corrupt Feedback Loops: Public Employee Unions