Seattle’s 50,000 School Kids Are Odds-On Favorite to be Last on the Planet to Unmask

When A demands something of B and withholds the freedoms of C to get it, don’t we call that a hostage situation?

Since 2020, the United States has been uniquely aggressive in its masking of public schoolchildren. Most of Europe never required masking in schools. In fact several European health agencies explicitly advised against it for elementary school-age kids. The World Health Organization also advised against masking children Kindergarten-age and younger.

In the United States, few areas have been more aggressive in masking than reliably deep-blue Washington State. As state after state ended all mask mandates in January and February 2022, Washington held out for weeks. Finally, Governor Inslee, who still hasn’t relinquished State of Emergency Powers, joined the crowd to allow indoor masking to be optional in public spaces starting March 12th, 2022.

But this relaxation of mandates didn’t apply to public schools. Governor Inslee left the policies for unmasking up to each school district, as informed by their local public health directives.

In a nod to each County’s power dynamics and local conditions and bargaining agreements between the schools and teachers unions, he let each district fight it out at the district/county level.

Predictably, just as with remote schooling, the school districts with the most powerful left-leaning (and arguably outright leftist) unions are now demanding that the student-harming interventions continue. This is despite any evidence of efficacy, or that mandatory masking is worth the harm it imposes.

Sorry kids. At this writing, no date for you to uncover your face is set. You must mask-up 6 hours per day, 5 days per week, indefinitely. The far-too-powerful teachers unions are lobbying for forced masking to continue until “at least May 1st 2022,” an arbitrary date untethered to any kind of concrete conditions, measures or goals. And Seattle Public Schools, for its part, has conceded that any change to the mask guidance requires “bargaining with our labor union partners.”

Seattle’s 50,000 K-12 students are my odds-on pick to be the very last kids on the planet, literally on planet Earth, to be permitted to go mask-optional.

Perhaps Los Angeles Public Schools will pull out a late “victory,” as LA Unified is still pushing back on a date, but even California bellweather San Francisco finally caved to public pressure and set March 12th as their mask-optional date. (More on Los Angeles here.)

To be sure, you can find some scattered parental support for King County teachers unions’ position. Just drop by a Seattle Public Schools parental group on Facebook or even a school board meeting, and you’ll see one or two speakers argue for continued compulsory masking. But with tens of thousands of parents on the other side, they are in an extreme minority. Add to this that there is a strong feeling among some parents I’ve heard from online that their child will be retaliated-against if they speak out against the wishes of this powerful union.

Let’s be clear. The only institution demanding the continued forced masking of 5-18 year olds in King County’s Public Schools are the teachers unions. You’re not hearing this pressure from a broad coalition of parents or students. You’re not hearing it from the Governor. You’re not even hearing this demand come from health agencies organically.

Think about that. Your kid might want to go mask-optional. They have done all things asked of them by adults over the two years of this highly disruptive pandemic.

But because there exists a highly organized, well-funded institutional lobbying group, it probably won’t happen until some arbitrary date. This force is paid for, ultimately, by our tax dollars. This body is not a scientific body. Nor does it offer any evidence the forced masking intervention is effective, or certainly not the path of least harm, when you factor in all the downsides of masking. They don’t offer evidence this policy reliably lowers case-counts or hospitalization when employed in school settings. I really marvel at that. Any kind of illusion that they’re looking out for your student’s mental health, enjoyment, achievement, opportunity or outcomes should be shattered at this point.

Look. We don’t have to guess. We have now run thousands of natural experiments in this nation, and around the world, over two years. Through it all, there is not a single school district you can find which, when it went unmasked or even mask-optional, experienced any noticeable upticks in hospitalization, or even major outbreaks tied to the unmasking decision. Why is that? Should we follow the science, or nah? Do we expect students not to notice?

The mechanics of this are somewhat complex. There’s a State Level order which is expiring March 12th. There’s a County level order which is also expiring March 12th. There’s a Department of Health Face Covering Guidance which is also expiring March 12th.

Regarding that Department of Health order, last week, the heads of local teachers unions here in King County, Washington sent the letter below to Interim County Director of Public Health Dennis Worsham and chief medical advisor Dr. Jeffrey Duchin, lobbying to keep the mask-mandate in place for school kids through “at least May 1st.” See if you can spot the citation of any scientific studies in their advocacy:

But this still leaves the contract between SPS and the union, outlined by the Memorandum of Understanding (MOU) between Seattle Public Schools and the Seattle Education Association (SEA). It mentions masks/masking/mask 21 times. Thus, the reason Seattle kids will be required to mask-up deal with a contractual agreement between two other parties. Rumor has it that bargaining has begun this week (and just this week) on relaxing these terms, but this could well open up a new can of worms, as SEA will likely “demand” things in return for “conceding” and “allowing” students and families to make their own choices on masking.

Got that? Party A wants something from B, and so they’re withholding something from C to get it. Don’t we call that a hostage situation?

Turning back to the union letter above, for months and months these same leaders no doubt urged us to “follow the science” when setting policy. Yet they don’t cite a single study which shows that mask mandates in schools change outcomes, certainly not to the extent that they are worth reductions in social connection, learning loss, or even just enjoyment of school.

Typically, the way to reduce scientific uncertainty in situations like this is to conduct randomized cluster trials. Two randomized cluster trials have been done regarding masking, and neither of them say that mandating masks is a statistically significant way to reduce hospitalization or spread. Dr. Tracy Beth Hoeg has been looking at two very similar and nearby school districts: Fargo ND and West Fargo ND — one required masks and one did not — comparing case rates. The results do not make the mask-mandaters case very strong:

The UK government commissioned a close look at the efficacy of masks in school settings. It failed to identify any clear evidence in favor of this practice.

But the teachers unions have their own reasons. Their stated “rationale” focuses on:

  • “First, we believe it could result in significant anxiety for many students, families and educators, and exacerbate the mental health crisis for them.”
  • “Second, we believe the negative impacts of lifting the mask mandate would be most heavily felt by our Black, Indigineous and People of Color communities as well as by people with disabilities.”
  • “Finally, we believe it could result in a significant number of students and/or educators choosing to go on leave, which would worsen our current educator staffing shortage and unusually high number of student absences”

The first reason these “educators” cite is that somehow making masking optional “could exacerbate mental anxiety.” Any studies to back that up? And if it is even true, whose fault is it that somehow returning to normal is anxiety-producing?

The risk to kids is low. It always has been. Since the start of the pandemic, over two full years, the CDC notes that the number of 0-17 year olds who have died with COVID (not even due to COVID) is 865, as of this writing. That’s out of 74 million kids in that age group:

It’s not like the danger of severe outcomes posed by COVID is higher here. King County’s vaccination rate is among the very highest in the nation, with 95.6% of those 12 and older receiving at least 1 dose, and 87.8% who have completed vaccination series.

This is the county that teachers unions characterize as risky to unmask before “at least May 1st”

The teachers unions insist that somehow letting kids and their families decide whether to mask up or not doesn’t “center the need of BIPOC communities.” What? Can you help me understand that? Where is it decided that all people of certain identity groups wish their kids to remain masked? If you want to make an identity-based argument, surely it should start with the fact that minority students’ test scores have dropped the most alarmingly during the two years of interruption of schooling? And another major disparity of outcome is between public and private schools — soon, they will be able to compare the mask-free private schoolers with the mask-wearing public schoolers. What signal does that amplify? Do the adults think that kids don’t notice, or talk about it with their friends?

The actions these teachers unions are taking here decrease enjoyment of school and widen disparities of outcome. Already, Washington State families have pulled kids out of public schools during the pandemic — enrollment levels are down more than 4% from 2019. Between October 2019 and October 2019 alone, 39,000 fewer students enrolled in public school in Washington State. Parents are choosing private school, homeschooling, or to leave the state. It’s already likely to result in a $500,000,000 hit to school budgets. The longer we keep kids from normalcy, the more this will increase.

The Seattle Educators Association one of the unions which demanded that teachers get priority vaccination but then kept schools closed more than just about any other district in the nation. In fact, even while they were lobbying for vaccination priority, 74% of them said that even full vaccination wasn’t enough to return to in person learning.

Survey results in February 2021 from Seattle Education Association

What happened next was that the Seattle Education Association and the Seattle Public School Board together kept kids locked out of in person learning longer than just about any district in the nation. Predictably, math and other test scores dropped at a record pace for ‘20-21. The teachers unions who were pushing hardest for prolonged remote schooling haven’t even acknowledged this was a mistake.

Meanwhile, adults (including many teachers) will go to grocery stores, restaurants, bars and more… entirely unmasked this spring. Sorry kids.

There is direct evidence that masking reduces the ability to be heard and understood. After 2 years of social isolation, restoring connection matters. Burden of proof is on those who demand this intervention, not on those who want to make it optional.

A better approach

We have known for some time now that one-way masking works. A well-fitting N95 or KN95 is nearly as good as multi-way masking. Masking should be optional, and everyone’s choice should be respected.

These are the adults we have hired, and that we taxpayers pay, to help educate the next generation. They should be concerned with student outcomes, but these outcomes are not looking good. After two full years of interruption of schooling, why is it that the mask mandates are still on those least at risk? Prolonged social isolation is sure to lead to higher dropout rates, poor academic performance, even suicide ideation.

Once we allow the kids to go unmasked, we need to look into just how it is that we’ve allowed these labor unions to hold tens of thousands of kids social connection, music, theatre, sport, academic excellence back. A child gets maybe twelve years tops of childhood. Adults fighting amongst one another for power has ripped away two of those twelve years for an entire generation of Seattle-area kids. Truly, and I mean this sincerely: shame on us for allowing it to continue.

Growing Number of Firms Take Action on Russia-Ukraine

Here’s a current list of what some major corporations are (and are not) doing vis-a-vis Russia’s invasion of Ukraine as of Friday, March 4th 2022. This is rapidly changing, of course, and I cannot guarantee I’ll be keeping it up-to-date. Be sure to double-check their latest policies.

As Russia’s attack on Ukraine heads into its second week, corporations around the world are taking unprecedented action. Here are some of the more notable actions as of this writing. This is changing rapidly, and far from comprehensive; I encourage you to verify directly with the companies what their current policy is.

UPDATE, March 5th 2022: Visa just announced they are suspending all Russia operations.

Want the latest? Here’s a preformatted Google query you can use: (“suspends” + “russia” + “ukraine”). Drag it to your Favorites and glance at it every now and then. Pretty remarkable.

Apple: The global tech leader has paused product sales in Russia. It’s limited access to its mobile payment service Apple Pay. It has disabled traffic and live updates Apple Maps. And on its App Store, it has restricted the availability of Russian state media apps, including RT and Sputnik, for download outside Russia.

Microsoft: President and Vice Chair Brad Smith stated on Friday that Microsoft is “horrified, angered and saddened” by the images coming in from the war in Ukraine, and condemns the action as unjustified and unlawful. It suspended all new sales of Microsoft products and services in Russia. In addition, they have already blocked cyberattacks and pledged continuing work with Ukraine on cybersecurity.

Oracle is halting its Russian operations.

Exxon has announced it is halting its Russian oil operations, and it will “make no further investments in the country.”

Boeing has ceased providing parts, maintenance and technical support services to airlines in Russia. Boeing has also closed its offices in Moscow and in Ukraine’s capital of Kyiv.

Nike is its closing stores and pausing operations in Russia.

Meta: The rebranded social network that owns Facebook, Instagram, and WhatsApp restricted access to RT and Sputnik within the EU and prohibited Russian state media from running ads or monetizing on its platforms anywhere in the world. Facebook also refused to stop fact-checking and labeling content from Russian state-owned news organizations — a move that the country called “censorship.”

Amazon has not yet said it is altering operations, but has pledged $5 million in donation to on-the-ground organizations, and will match up to $5 million more in employee donations.

Alphabet: Google’s parent company has removed Russian state-funded media, including RT, from its news-related features and the Google News search tool. It also paused Russian state media services’ ability to monetize through Google Ads on its websites and apps. In addition, it has banned Russian state media from using Google tools to buy ads and from placing ads on Google services, like Gmail. Google Pay, the company’s digital wallet, blocked several Russian financial institutions from its network. Google temporarily disabled Google Maps live traffic data in Ukraine, following reports it was being used to track the movements of Ukrainian civilians and soldiers.

A widely circulated photo on Twitter appears to have confirmed that Google Pay and Apple Pay have been restricted:

Source here.

IKEA has shut its 17 stores in Russia and is suspending exports and imports in and out of both Russia and Belarus.

Cogent Communications, a major long-haul Internet provider, said today it will begin shutting down Russian customers’ access to its services. This will be effective Friday March 4th, 12PM Eastern time. The CEO said their decision was swayed by signs that Cogent’s network may have been used in carrying out some cyberattacks.

SpaceX‘s Starlink terminals arrived in Ukraine on Monday, the country’s vice prime minister confirmed.

Ford has closed its three plants in Russia indefinitely.

T-Mobile has extended waiving international long-distance and international roaming charges for calls made to/from US and Ukraine, Belarus, Hungary, Moldova, Poland, Romania, and Slovakia for T-Mobile and Sprint postpaid consumer and business customers through March 9, and T-Mobile Prepaid and Metro customers through March 9. They are also making two text-to-give codes available to two specific non-governmental organizations (NGO’s), which can be found here.

General Motors has suspended operations in Russia.

Jaguar Land Rover, Aston Martin and Rolls-Royce have halted deliveries of vehicles to Russia.

Twitter has restricted ads and other content from Russian state media.

Meta and YouTube have restricted content from certain Russian media outlets.

At this writing, McDonalds, Starbucks, PepsiCo and Coca Cola have not announced any changes to sales in Russia, and are under increasing pressure from activists online. Some have announced they are donating food to those in Ukraine.

Shell announced it would end its $3 billion partnership with Russian state energy company Gazprom.

Netflix said it would not broadcast 20 state-run propaganda channels in Russia, defying a Russian law on “must-carry” channels.

In the world of sport, FIFA and UEFA have suspended Russian clubs and national teams from all competitions. The International Skating Union, the body which runs that sport around the world, declared that no Russian or Belarus athletes shall be invited to competition. Skiing, rowing, badminton federations have all banned Russian and Belarusian participation. Major tennis bodies have not yet restricted competitors from Russia.

BP said it is divesting its $14 billion stake from Russian oil giant Rosneft over the invasion.

Disney, Sony and Warner Bros. are pausing planned film releases in Russia.

J.P. Morgan Asset Management suspended trading in two of its equity funds with Russian ties, per a spokeswoman.

France’s Societe Generale warned on March 3rd that Russia could strip the French bank of its local operations and assets. Their $20 billion exposure in Russia is among the largest of Western banks.

FedEx and UPS have suspended shipments into Russia.

Half of the world’s container ships will no longer go to and from the country.

Airbnb announced free accommodation for 100,000 Ukrainian refugees. The company said that more than 25,000 people had visited the link for hosts since. Several consumers are using Airbnb to send money directly to “hosts” in Ukraine and neighboring countries.

New HHS Reporting Guidelines Risk Stoking Greater Worry About Pediatric COVID

The department of Health and Human Services is dropping the requirement that hospitals report daily COVID deaths, yet adding a bunch of pediatric metrics which will make pediatric problem look much larger.

On January 6th 2022, the Department of Health and Human Services (HHS) made significant changes to the guidelines by which hospitals report COVID-related statistics. New fields were added, and several fields were dropped. HHS mandates that these new changes be complied with by February 2nd. But these changes don’t seem benign to me — they risk misinterpretation and overstatement of the level of worry we should have about serious COVID in America’s youngest. And two full years into the pandemic, HHS missed yet another easy, obvious opportunity to help us better distinguish between worrisome and non-worrisome cases.

HHS has required that hospitals report key indicator data for a long time. They make adjustments to what is required from time to time. That, in and of itself, is not new. What is new is that they are now requiring several additional fields related to pediatric patient statistics that in aggregate risk the creation of alarming new headlines in a month or two, specifically about pediatric COVID. At the same time, HHS is also dropping the requirement that America’s hospitals report daily COVID-19 deaths. Yes, you read that right; it’s a very surprising directive; we’ll get to that in a moment.

The net result of these changes is that it is we will likely soon see media reports along the lines of “Pediatric COVID Hospitalizations Rise Alarmingly,” and “Pediatric ICU Beds Near Capacity,” when the underlying truth is that worrisome COVID among our youngest adults has been, and remains, extremely low — at the level we should worry about seasonal influenza.

What new data does HHS now want? They’re highlighted in blue in the screenshot below [source: COVID-19 Guidance for Hospital Reporting and FAQs (]

COVID-19 Guidance for Hospital Reporting and FAQs (

Needless to say, the downstream impact of overstating the severity of pediatric cases can be very significant. It “bolsters” the case for unnecessarily prolonged mandates, school and college restrictions, elimination of activities, mandated boosters, masking, and yanking yet more childhood away from those who have always been least at risk of severe outcomes. Kids have inarguably already paid an enormous price in their childhood and mental health toward COVID mitigation, and it’s important that we get the most accurate picture of risks to them to chart the path of least overall harm. This reporting change and the downstream misinterpretations are quite likely to prolong it.

The risk to 0-18 year-olds of severe outcome due to COVID is exceedingly low. At this writing, of the more than 850,000 Americans who have died with or from COVID, the number of 0-18 year-olds who have died with or from COVID stands at fewer than 900. Kids are at greater risk of dying from suicide and vehicular accidents than COVID. They’re not at zero risk, but their infection fatality rate due to COVID is below 0.003%. Every day, when we drive our kids on the highway, we’ve decided that the risk/reward tradeoff is worth it, and that while highway danger is present, it’s not so alarming as to keep everyone home forever.

Overall, risk of fatality due to COVID is lowest for our youngest. Luckily, we as a society now generally understand that. But we still greatly overestimate just how age-weighted COVID is.

Number of COVID-19 deaths in the US as of January 12, 2022, by age. Keep in mind that this is death WITH COVID, not necessarily DUE TO COVID.

The New York Times visualized CDC mortality risk data this way, back in May of 2021:

But now, because hospitals are being required to report pediatric ICU beds and the number of pediatric patients in ICU with COVID, it will tend to make for easy, alarming click-bait headlines.

How so? Well, let’s say you’re operating a medium-sized hospital. More than a year ago, your hospital wisely instituted a policy during this infectious pandemic: all admitted patients are to be tested for COVID, regardless of whether they show symptoms.

That’s precisely as my own local hospital has instituted (see purple highlighted text); I encourage you to take a moment to check your own:

UW Hospital Tests All Admitted Patients. Stop for a moment, and check your own local hospital.

That’s a wise policy; I have no problem with that.

But here’s how that, plus the new metrics above, add fog. Let’s say you have 5 ICU beds dedicated to your pediatric wing. A recent icy weekend has caused four of those beds to be occupied: two by kids with broken bones for serious injury, one for a grave car accident, and one who has presented for appendicitis. Note that zero of them presented to the hospital because of COVID, but upon mandatory routine testing, it was detected that four of them are asymptomatically COVID-positive because there’s an outbreak in your region at the moment.

Your accurate reporting to HHS, under these new guidelines, will be that 80% of your pediatric ICU beds were taken up by COVID patients. Now, sum that same scenario up from thousands of hospitals across the country, and render it on a nice-looking dashboard. Journalists from around the country will read the dashboard and rush to their media feeds with semi-accurate but extremely misleading headlines: “80% of Pediatric Beds Taken Up By COVID Patients,” or “Alarming Rise in Serious COVID Cases in Young Adults.” Animated infographics will show that pediatric COVID is on a sharp rise because, at a minimum, hospitals weren’t required to break out this data before. Scary infographics will course through social media, and be trotted out by the largest teachers unions and other “let’s close the schools” advocates.

Most maddeningly, HHS is entirely passing up an easy opportunity to actually differentiate between worrisome cases and non-worrisome cases. It’s as simple as this: Did the patient present to the hospital because of COVID-like symptoms, or not? Doctor, nurse or even patient — check a box. Then, allow the slicing and dicing based upon that key variable. Yet here we are, two years into this pandemic, and HHS is not even attempting to ask hospitals to start reporting whether patients are in the hospital because of COVID, or whether they incidentally tested positive.

It’s not like this is some kind of secret revelation, unknown to officials. People like me have been pointing the “with vs. from” distinction out for more than a year. And finally, even Dr. Fauci admitted in late December 2021 that these two conditions, incidental vs. causal, are quite different, explaining it as though it were a new concept:

It’s not just what HHS is adding, it’s what reporting requirements they are dropping. I want to draw your attention to these five in particular:

HHS is removing the requirement that hospitals report the prior day’s death with COVID-19. Daily deaths will still flow through to the CDC via a separate process, but removing daily death counts will make it much harder to separate worrisome cases from non-worrisome cases, because we won’t be able to see infection-fatality-rates for same-hospital data. We also won’t be able to know that zero patients are on ventilators, for instance — another (old) indication of severity.

Note too that HHS is shielding from reporting the need for hospitals to disclose anything about staffing shortages — both the quantity and explanatory fields. It cannot go unnoticed that a substantial cause of many staffing shortages (NPR) at hospitals and elsewhere has been the imposed mandates that they be vaccinated. More here (Business Insider, and here (WSJ).

So, why these changes? As always, I must ask — who benefits by obscuring this picture? I have some hypotheses. But I’ll leave that exercise for now, to the reader.

The Filter Bubble, Lenses and Belonging

Being willing to update one’s prior assumptions in the face of new evidence is the essence of learning. If you haven’t changed your mind on something important in the past five years, check your filter bubble.

My friend and long-time Pacific Northwest journalist Joel Connelly penned a thought-provoking piece this morning, “Distress: I’m Watching Friends Fall for Inexplicable Conspiracy Theories.” In it, he reflects upon the regrettable turn that several of his friends have taken, embracing right-wing conspiracy theories. I agree with very much of his piece, but it gave me a moment to reflect upon Blue Shibboleths and Red Shibboleths, and offered some response in the comments. Those thoughts are expanded upon below.

With rare exception, members of Team Red don’t want to confront Red Shibboleths (stolen election, QAnon, anti-vaxxers, that January 6th was somehow benign, etc.) The excommunication costs are very high. Just witness Ted Cruz’s pathetic groveling on FOX a few nights ago. Or tune into Glenn Youngkin’s and Ron De Santis’ nuanced dance with Trump, doing everything to stay close to his base, but never directly calling him out on his many lies and bullying attempts.

So, mostly, we agree. But the beef I sometimes have with pieces like Joel’s are that members of Team Blue, long-ago convinced that They Are Science Itself, too often don’t even want to acknowledge that there are any Blue Shibboleths at all. Usually, the formula involves invoking “QAnon” to show their comparative adherence to the truth.

But eventually, the whiplash arrives. The camera zooms out. We get to see the unedited video, and we realize that the initial portrayals weren’t quite as we were told. Or in other contexts, thousands of natural experiments are run in the real world, and cloth masks, which for months we elevated into a tribal signifier of our very righteousness and compassion, don’t seem to stop or even slow the spread of an aerosol-borne virus. Or multiple large-scale studies (1, 2) start to trickle in which show that vaccination does not in fact durably reduce transmission, entirely undermining the ethical justification for vaccination mandates, vaccine passports and forced-masking of extremely low-risk young adults.

[N.B., I support vaccination, and am fully vaccinated and boosted myself, as is my family of five. It’s a step we can take that very clearly seems to lessen the risk of severe outcomes. But I do not support that they be mandated. I support informed choice.]

The question is, what do we do in the face of new evidence? Do we double-down and seek the comfort of our tribe, or are we willing to update our priors, and change our minds? And what is preventing us from this change-of-mind? It’s not solely mental inertia. It’s desire, too. Desire to belong, yes, but also avoidance of the pain which is sure to follow if someone dares to confront the momentum and belonging of one’s own tribe.

Belonging is an essential human need. That’s why solitary confinement is among the cruelest punishment.

We in America have destroyed many of the cultural institutions of belonging, from churches to scouting to national pride to even, at times, the family itself. Opportunities for belonging have changed. Today, the greatest sense of belonging comes from cultural affiliation and political tribes, which are increasingly one and the same. Virtue-signaling is a way to say “See, I’m one of you. I belong with you, and you belong with me.” But for far too many of these churches of belonging — you’ve got to buy into the whole enchilada or none at all. Technology has been all too happy to oblige. It’s never been easier or more effortless to wall oneself into an information silo, where no contravening fact may penetrate, and you’re engulfed by information affirming both your correctness and your righteousness.

So, I’m independent, and have been all my life. It’s lonely, but one great luxury of never donning the red or blue jersey in the first place is that we can look at the -evidence- for and against something, and update our priors based on new evidence. In fact, updating our prior assumptions in the face of new evidence is, I’d argue, the very essence of learning. We feel no compunction to buy into the entire panoply of ideas. It’s liberating. It allows me to support both responsible gun control legislation and more clearly assess actuarial risk to, say, K-12’s to advocate for paths of their least harm, even in a pandemic. It allows me to initially support masking and even remote schooling in March 2020, but then look at the data from areas which did not do these interventions along about June 2020, and admit that I was wrong, and come to the conclusion that this was not the path of least harm, and that we should update our approach.

Many popular Red Shibboleths and Blue Shibboleths really need to be put to the “does it stand up to the preponderance of the evidence?” test. For me, the evidence from November 3rd, 2020 onward pretty thoroughly confirms that Joe Biden is our duly elected 46th president:

Despite dozens of legal efforts, there’s still no credible evidence whatsoever that the election was “stolen” in any way. And evidence debunks essentially all the whacky, corny, absurd shibboleths at the heart of QAnon.

But facts are stubborn things, and they don’t favor team red or team blue.

The preponderance of the evidence suggests that the Steele “Dossier” was a political hit job, initially undertaken by a Republican Trump opponent but then expanded upon by the Clinton campaign. And then, somehow, this completely unsubstantiated document found its way into the highest levels of the FBI and consumed much of the blue press — and therefore us — for three full years, until Robert Mueller was finally able to say there was nothing really there, there. No collusion.

The preponderance of the evidence also strongly suggests that the greatest pandemic in our lifetime may very well NOT have sprung spontaneously from wildlife, but perhaps accidentally from a lab in Wuhan. Twenty-plus year NYT Science writer Don McNeil’s piece is well worth a read, if it’s escaped your own filter bubble: “How I Learned to Stop Worrying And Love the Lab-Leak Theory.” I don’t know how anyone can read that piece, or many others on this subject (or the book “Viral,” by Matt Ridley and Alina Chen), and not come to the conclusion about where the preponderance of the evidence. Proof beyond a reasonable doubt? No, not yet. Preponderance.

Accidents happen, even hugely consequential ones. Just as it was important to know precisely how Chernobyl happened, it is vital to know how the worst crisis in world health came to be. And in that process, we have to ask the questions that we still haven’t yet gotten good answers to, such as, how, precisely, did US gain of function research techniques from UNC and elsewhere find its way to Wuhan, despite an explicit moratorium against it? After following the evidence pretty closely, it’s not clear to me that Dr. Fauci deserves his fiercely-defended hagiographic status, because he’s been very unwilling to open the books on just how this happened. And he’s not been forthright about it in Congress.

There’s also very substantial evidence (also here and here) that Fauci worked with Collins at NIH to shut down reasonable scientific debate about a different mitigation strategy than the one he favored. Is that what a scientific researcher should do, or should he rather invite reasonable scientific debate in the open? In particular, if you think Fauci has been nothing but a saintly actor, read this piece from one of Fauci’s targets, Stanford MD/PhD Dr. Jay Bhattacharya, co-author of the Great Barrington Declaration.

I think the “focused protection” model Bhattacharya advocated shouldn’t have been tarred and shut down from public discourse. In fact, in hindsight, a pretty strong case can be mustered that it was, in fact, the path of least overall harm.

So no, I’m not sure those who criticize Fauci deserve to be tossed in with the crazies — that’s just not what the evidence currently suggests.

Open Letter to Seattle City Council Regarding Bill 120247 (Diversion and City Attorney’s Office)

The council is trying to place unprecedented restrictions on the City Attorney’s office, without even knowing what the most important outcome metrics are of the approach it is demanding.

Correction since publication: A deeply civically informed friend noted privately to me that Council’s proposed action on Monday relates to pre-filing of charges (i.e., whether to decline or file charges), not post-filing diversion programs such as LEAD. This is despite the fact that the Bill, 120247, mentions LEAD multiple times. My friend’s clarification is a very important distinction, and one I misunderstood. This rushed Council bill has almost nothing to do with LEAD specifically as a program; and this should be considered when reading the original note below. But it doesn’t obviate the essential point: Council is setting up historic new constraints on the City Attorney — likely tying funding to decisions to decline/file/divert. This despite the fact that they do not seem to demand transparent, regular quarterly reporting on the most important metric (recidivism) for our biggest diversion program.

They are clearly setting up constraints for the City Attorney to dictate how big a role they want prosecution or credible threats of prosecution (broadly) to play in our justice system. At the same time, they seem utterly incurious about the hard comparative metrics of the most significant and highest-profile non-prosecution diversion investment and tradeoffs we’ve made to date. Ideologically, many Councilmembers are committed to further reduction of prosecution of low-level offenses, and they no longer have a City Attorney who vehemently agrees in all cases. Such decisions — to prosecute alleged offenders or divert them into other non-prosecutorial programs — have always been the role of the City Attorney, and should remain so. That none of us — neither the public nor City Council — actually know the annual change in recidivism rates of our largest formalized diversion program participants on an ongoing transparent basis remains emblematic that the Council majority is driven more by ideological certitude than comparing what works and what doesn’t, and when. Perhaps Council can focus on first quantifying regular, transparent reporting metrics on such efforts before constraining what another department should do with respect to the prosecution-diversion tradeoff.

December 11, 2021

Dear Seattle City Council Members:

I have a simple question for you. What has been the recidivism rate of Law Enforcement Assisted Diversion (LEAD) program participants, for 2016, 2017, 2018, 2019, 2020 or 2021? You, the City Council, who repeatedly fund this program and laud its effectiveness, do not know. No one does, as the consultant report on LEAD clearly indicated. Perhaps it’s very effective at reducing repeat offenses. But perhaps it isn’t. Maybe it reduces recidivism for some kinds of offenses but not others. Maybe it robustly reduces recidivism for the young but not the old, or maybe the addicted but not the well. Or maybe it’s entirely the other way around. We don’t have the metrics to know.

Heavily aligned academic research and 2019 followup based on a snapshot of seven-year old data suggested LEAD did reduce recidivism in a 316-person cohort, compared to a synthetically modeled comparison group. But reality is different than modeling, and since that time, all kinds of parameters of the program have changed, including levels of law enforcement participation, consequences for veering from the program’s requirements, who is eligible for the program, program staffing, which offenses qualify, and much more. I fully acknowledge there is other evidence directionally supporting diversion programs, and that’s great. I do believe such programs can work well in certain circumstances, and so does the new City Attorney, as she has repeatedly made clear.

But shouldn’t we know for sure where it’s effective, year by year, and where it’s not?

Even though you do not even know Seattle’s recidivism numbers, or when specifically LEAD clearly works to reduce recidivism and when it doesn’t, you’re clearly setting up new constraints on decisions which used to be under the purview of the City Attorney’s office. Even more astonishingly, you don’t even insist that such diversion programs which you wish another city branch to favor report overall participant recidivism quarterly as a requirement for continued funding.

Is there any more important metric than recidivism for whether such programs deliver for the community compared to, say, criminal prosecution, mandated treatment or drug court?

This coming Monday, in a rushed vote, you will be deciding to place new reporting — and likely commensurate funding — restrictions on the new, incoming City Attorney, which you never have done before.

Prosecutorial discretion is up to… the prosecutor. Your appalling decision here is a clear attempt to hamstring the duly elected City Attorney before she has even taken office. You have an ideology, and you want it enacted, regardless of whether we have clear evidence in Seattle that it’s the best way to reduce repeat offenses, or when and where.

The City Council’s fast track bill to be voted on Monday subjects City Attorney Elect Ann Davison to unprecedented City Council oversight. In the 100-year history of the City Attorney’s office no previous (male) attorney has faced this kind of pre-emption of their powers.

The bill goes against the voice of the voters, who voted Pete Holmes and his policies out. Nicole Thomas-Kennedy and her decriminalization policies were also voted down. The people have spoken. Some on the City Council may disagree, but you are supposed to represent the wishes of your constituents.

At a minimum, you owe the citizens clear understanding that the heavy emphasis on diversion you continue to insist upon actually does make neighborhoods safer. The research that is trotted out to justify this is based on data that is now more than seven years old. Program parameters have changed dramatically, including who participates, what criteria is used, what interventions are used, what follow-up is done, and more. Yet you, the City Council, cannot even concretely report to the citizens the most important metric for this program: the recidivism rates for the program participants.

As the Seattle Times put so clearly: “The city attorney, not the council, is elected to handle misdemeanor cases in Seattle. Yet the bill would impose the council’s ideas about which cases go to courts and which are diverted into community programs.

Voters elected Davison to get on top of the nearly 4,000 cases that Pete Holmes allowed to accumulate without prosecution. Let her do her job, figure out whether LEAD works and where with actual data (not just clever story-based marketing), and focus on the many other urgent tasks of the SCC. At a bare minimum, if you are so fond of the diversion program, don’t you owe it to constituents to know the recidivism results? Start there.


Lewis touts new report on JustCARE program… but maybe he shouldn’t. (UPDATED) (, with link to consultant’s report on LEAD

Seattle Times:

Seattle City Council’s power play undermines City Attorney-elect Ann Davison | The Seattle Times

Sent to:,,,,,,,,,


Ann Davison’s Email to Council this week:

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Inflation Shoots to 40-year High

This is new for a whole lot of Americans. The last time inflation was this high, you hadn’t ever heard of the term “e-mail.”

The Department of Labor announced this morning that the Consumer Price Index for All Urban Consumers (CPI-U) increased 6.8% before seasonal adjustment for the 12-month period ending in November 2021. That’s a little more than twice the annual average of the past 15 years. This condition is new for about a hundred million working Americans. Consider that the last time America’s annual inflation was this high, you hadn’t ever heard the term “e-mail.” Millions of American households are under pressure, and therefore so are Democrats just as 2022 midterm campaigning is set to begin.

The CPI-U is an index that attempts to estimate the cost of a basket of goods and services approximating the spending of metropolitan-area consumers, who collectively represent about 92% of all Americans.

On an unadjusted basis, the line items which soared most dramatically over the period were petroleum-based energy (both gasoline and natural gas), vehicles, particularly used cars and trucks, and food, especially meat.

Making spring, summer and fall headlines, gasoline prices have shot up 58.1% over the last twelve months, the largest increase since 1980.

On the positive front, increases in rent and shelter were relatively modest, and medical care commodities and services thankfully rose very slowly.

Washington State and the West

The Department of Labor provides a Western regional breakout, which includes Alaska, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon and Washington. Our region’s inflation was just under the national average; prices are up 6.5% from one year ago. Gasoline prices were the West’s single biggest contributor to escalating prices, and all items minus food rose 4.8% over the year. Three of the biggest reasons for inflation in the Western US were meat (+15.4%), natural gas (+21.6%) and transportation (+19.7%.)

At the heart of several of these line-items are carbon energy prices. Taken as a whole, Energy prices rose 30.0% over the past 12 months, its largest 12-month increase since September 2005. Gasoline prices rose 49.6% in the West, and now sit at their highest level since September 2014.

Chart 1. Over-the-year percent change in CPI-U, West Region, November 2018-November 2021

American goods aren’t just more expensive for Americans, but for the rest of the world, too. In late November, the Bureau of Labor and Statistics reported that prices for U.S. exports rose 18% for the twelve months ending October 2021. That’s the largest increase since they began publishing the index (1984.) Such price hikes to the rest of the world may reduce consumption from American goods in the future, as these record-high spikes will surely offer a stronger incentive to consuming nations to produce and buy their own goods where they can.

This is new territory for a lot of Americans. True, we’re not yet in era of double-digit increases per the late 1970’s, but roughly 7% is closer to double-digit inflation than it is the recent-past 2%-3% range. You have to go back nearly four decades to see these rates, which means that most working Americans haven’t ever seen such high increases in prices before, and that brings with it huge political ramifications.

Chart via the Wall Street Journal, December 10, 2021

Even if you received a 5% pay raise this year, your daily budget lost ground (5% – 6.8% = -1.8% change in real earning power), assuming the basket of goods and services you buy are roughly equal to that which underpins the Consumer Price Index.

Inflation can be thought of as a particularly pernicious form of regressive taxation, hitting low-income households hardest of all. High-income consumers who could waltz through a Whole Foods, unbothered about prices in 2019 won’t feel much impact from nearly 7% inflation. But if you’re watching every penny, this hits very, very hard.

Inflation is therefore very often political poison to the party in charge. NPR has the receipts. After Republicans lost the White House and got wiped out in Congress during the mid ’70’s Watergate era, they were reduced to barely one-third of the seats in both houses of Congress. Despite this, President Carter, saddled with a combination of bad luck of new-found OPEC cartel muscle and some poor messaging and decision-making exacerbating inflation, saw inflation rise from 6.5% in 1977 to 18% during his re-election run of 1980. With prices soaring, the Fed sharply hiked interest rates at the worst time for him, bringing on a major recession just in time for the re-election. And Reagan won in a landslide.

Today, OPEC is less powerful, and not the primary cause of our woes. What’s behind these sharp increases? They’re more likely the result of a perfect storm:

  • Massive injections of federal spending in two waves (first during the Trump administration and again at the start of the Biden administration)
  • Monetary easing by the Federal Reserve, lowering interest rates making borrowing cheaper
  • Executive office decision-making regarding energy, such as halting gas pipelines, and placing limits on exploration, which reduced the pace of American energy production
  • Supply-chain woes, exacerbated by a variety of factors (high demand, clogged ports, lack of truck chassis, new regulations and limits placed on offloading)
  • Increased pricing power by large corporations, as small businesses struggle relatively more during the pandemic
  • Increased consumer demand

The Fed has two primary governing legislated mandates: they are to promote price stability and full employment. When the pandemic hit, correctly predicting major disruption to economic activity, the Federal Reserve opened the floodgates.

How? The Fed’s primary way to do so is to adjust interest rates. The Fed sets both the rate at which banks can borrow amongst themselves (the “fed funds rate”) and also the rate at which banks can borrow directly from the central bank of the United States (the “discount rate.) By setting these two interest rates, the Fed can make money “cheaper” or “dearer” to borrow. A rock-bottom interest rate allows corporate and individual borrowers to invest and acquire on the cheap. A higher effective interest rate tends to put the brakes on borrowing and overheated economic activity.

When the pandemic hit in the first quarter of 2020, the Fed dropped the short term interest rate to near zero. The rationale was that businesses and individuals would need capital to stay afloat, pay workers, and make it through hibernation.

Why doesn’t the Fed always keep interest rates this low? Three of the big negative consequences to doing so are:

  • They hurt fixed-income investors looking for low-risk investments, particularly seniors. When was the last time you bought a Certificate of Deposit? CapitalOne offers a 5-year CD at 1% per year. Any takers?)
  • It can overheat an economy, leading to inflation.
  • Too-low interest rates can encourage over-leverage and lead to bubbles which pop.

Warren Buffett once spoke to my section at business school, and a classmate of mine asked him about the leveraged buyout (LBO) craze of the early 90’s. Buffett responded “Debt can be good, and debt can be bad. I like to think about debt akin the following proposition: I’ll pay you $20,000 to mount a sharp dagger on your car’s steering wheel. If you think you’ll only be driving on smooth roads, you’ll take that bet. But if you don’t…”

By the way, LBO’s still exist, and are simply called “private equity” now. Private equity firms basically amass capital on the cheap, then buy out companies, ramping up debt, and hoping and expecting to pay for their investment several times over by better operations and higher multiples.

And even through the pandemic, these deals continue to motor along: “Private Equity is Smashing Records with Multi-Billion M&A Deals“, Bloomberg, September 2021.

Value of Private Equity Deals in the United States from 2011 to 2020
Source: Statista

Meanwhile, Congress authorizes spending, and they’ve passed two measures during the pandemic, from the first stimulus during the Trump administration to the bipartisan infrastructure deal signed into law on November 15th, 2021.

Where to from here?

It compounds problems for Dems; high inflation is political poison for the party in office. Not only is a weakened budget highly unpopular (duh!), but high inflation will accentuate a major philosophical divide in the party between its two major factions. Progressives and Moderate Democrats have very different economic films playing in their minds about how economies work or do not work. The progressive wing favors a path which involves more government largesse for struggling families — yet more spending on top of that already promised. They will also argue vehemently for continuation of eviction bans and imposition of rent-control in many cities. Yet at the same time, moderates like Senators Joe Manchin (WV) and Kristen Sinema (AZ) will interpret it as a clear signal that additional multi-trillion dollar federal spending is highly unwise, especially when we haven’t even fully spent the prior stimulus funds yet. Meanwhile, high gas and grocery prices are catnip for a sniping GOP; the attack ads are writing themselves with every fill-up.

The pressure is on the Fed to raise rates, which will make borrowing more expensive and often is stock-market bubble-bursting in nature. At a minimum, it will likely put the brakes on large-capital projects like factory-building, private equity M&A, home-buying and construction. In non-pandemic scenarios, the federal reserve’s typical reaction to the prospect of inflation would have been to raise interest rates by now. Hiking interest rates makes money “more expensive” to borrow, thus tapping the brakes on the economy. But thus far, the Fed has done nothing of the kind. However, interest rates will rise soon — in September 2021, the Fed signaled it could hike rates “six or seven times by the end of 2024,” and it’s expected to speed up the end of bond-buying (the “tapering” of its quantitative easing).

Passage of “Build Back Better” is now more at risk than ever. A solid argument can be mustered that we haven’t yet spent all the money from the two existing stimuli, and that the last thing we need is yet more borrowing and federal largesse. When your constituents are feeling price hikes everywhere, it’ll be easy for the opposition to make the case that trillions more spending shouldn’t happen. Inflation also erodes the political capital of the president, who repeatedly promised he’d “shutdown the virus, not the economy.”

Momentum will grow for a return to normalcy. High inflation during a pandemic places greater pressure on governors and the executive branch to justify the potential economic impacts of intervention. But it’s fraught with conflict, because we don’t have a shared vision of how to best respond. While Reagan made hay of “stagflation” of the Carter era to win in a landslide in 1980, we should recall that the enemies were mostly outside our border: OPEC and the Iran Hostage Crisis were unifying to Americans. Today, we face inflation with wildly varying strategies, and nothing close to national consensus or unity. The GOP is rather unified that a highly interventionist stance toward COVID should end, but within the Democrat party, there are wildly varying views as to how to best respond.

This is likely to make a divided society even more divided. Unlike the 70’s, when OPEC and Iran presented us with easy, unifying foes, people are arriving at different diagnoses of how we got here, and which dragon needs slaying.

Today, major institutions like Governors, Congress, teacher unions, and the press are viewing the pandemic through very different lenses. It is harder than ever to get to a national consensus as to how to best respond. We were told for months that inflation is transitory, but now are told that it doesn’t really matter what you call it. We are told even that inflation is somehow good. Senator Elizabeth Warren casts inflation primarily as an oligopoly problem (looking at you, Big Chicken) and clamors for trillions more federal subsidy to Americans. Other leaders in her own party think a strategic pause in stimulus spending is in order. And the Republicans, out-of-power, have it easy. They need only hawk t-shirts festooned with a fuel pump and “Let’s Go, Brandon.”

For me, I think it’s time to recognize the connection between our responses to the pandemic and the economic impact on millions of Americans. Public policymaking is about resource allocation and minimizing harm. We have been extremely focused at one type of harm, but not broad-eyed enough at multiple types of harm. Let’s face it: COVID-zero is not going to happen. The virus and its variants are now endemic. I’m not saying we need to throw caution to the wind — sensible measures are still in order — but we need to have a much better sense of how elevating fear and continually teasing more remote schooling, and more labor-pool-restricting mandates have major impacts on our society.

We now — mercifully, miraculously — have vaccines and antivirals, and we can and should protect the vulnerable. But society itself should seek to return to normalcy.

Putting aside vaccination, which clearly help reduce the worst outcomes (hospitalization and mortality), it’s actually rather difficult to muster a case the interventions we’ve taken have been incredibly effective and linked to reductions in per-capita hospitalization or mortality, when you compare intervention regimes across the states. Democrats, in particular, seem very unwilling to let that reality sink in, and if they don’t change course soon, they will likely see what happened in Virginia last month on a national scale, come November 2022.

Public policy is about resource allocation and tradeoffs. Doing more of A often means you get less of B. In a pandemic, resource allocation is ideally driven with a framework (yes, a very subjective one) about the best way to reduce overall expected harm. At the beginning of the pandemic, we had massively wide “beta” on what the expected harm might be. Two years on, with vaccines and antivirals, and knowledge of the relative weakness of efficacy of non-pharma interventions, we should turn our attention to other harms we are imposing in the calculus.

In the state of Florida, we have Governor Ron DeSantis pushing back on vaccine and mask mandates. Yet in New York, we have Governor Hochul issuing statewide edicts which foreclose all elective surgery. Those of us who believe that we are reaching — or have already reached — the endemic stage of COVID favor a quicker return to normalcy, or at least clear offramps as to when we will be able to do so. Businesses and schools plan on long-lead time. It’s important that the metrics be stated, and there’s no excuse that they not be. The public and media don’t even seem to be demanding off-ramp metrics.

Thus far, we don’t even have the off-ramps, and there’s a huge psychological impact to that. If you’re a parent of a K-12 student in a blue state, you know intimately what I’m talking about. It’s time for us to get clear on when we can move on from a crouch. Some of us believe that the non-pharmaceutical interventions (NPI’s) we’ve imposed, which include remote schooling, lockdowns, supply chain headaches, workforce reductions, forced masking for K-12’ers, concomitant mental health crises, lack of childcare, etc. are now imposing far more collective harm than we can justify. There is little clear connection to reduced hospitalization or death with respect to these interventions. What evidence does exist might have been justifiable in a period of so much fear, but we are now a bit smarter, and should update our priors, and think more broadly about total societal harm, and ways to reduce it.

The Democrats best hope is that some leader emerges to make such a case, before the November fate is sealed. But they will have a heavy lift. They’ll have to bring most of the party, and the media, to that entirely new mindset, or at least remind them that a return to normalcy is a big part of what they actually ran on last year, before a surprise win of all three branches of government in the Georgia Senate runoffs filled their eyes with visions of sugarplum.

Twitter’s New CEO and Freedom of Speech

What does the changing of the guard at Twitter suggest about free speech online?

This first appeared in Seattle’s Post Alley on December 9th, 2021

On its face, Jack Dorsey’s resignation as CEO of Twitter last week was just another rearrangement of the Silicon Valley furniture, albeit an outsized one, given Dorsey’s iconic stature. At a different level though, the move opened a new chapter in the debate about social media platforms, regulation, the future of the internet, and ultimately how we define and allow free speech.

As the Jack Dorsey era of Twitter Inc. came to a close, a ten-year Twitter veteran, Parag Agrawal, formerly its Chief Technical Officer, took the helm. Agrawal’s appointment portends a faster-moving company. But it may also signal an even more algorithmically filtered, boosted and suppressed conversation in the years to come.

How so?

Imagine you had an algorithm which could instantly calculate the health or danger of any given tweet or online conversation. For instance, it might look in on a substantive, respectful debate amongst career astrophysicists and assign positive scores of 4852325 and climbing, but evaluate a hateful, racist tirade at -2439492, trending lower and lower.

Wouldn’t such an algorithm be something you could use to make Twitter conversations healthier? Couldn’t it also be used to block bad actors and boost desired, good-faith discussion, thereby reducing harm and promoting peace? The man who once championed this tantalizing, risky idea within Twitter is its new Chief Executive Officer, Parag Agrawal.

So what, you say. But therein lies a fierce and philosophical battle raging about how free speech should be defined, measured, protected and even suppressed online.

Twitter has become the dominant tool for the world’s real-time news consumers and purveyors — which in a sense, is all of us. It has been especially useful for journalists, particularly in the understanding of and reporting upon real-time news events. It’s become highly influential in politics and social change. And as a result, the CEO of the Internet’s real-time public square is far more than a tech executive. Ultimately, he and the people he appoints, pays, and evaluates, cast the deciding vote on consequential questions, such as: what news, political and scientific discussion are allowed to be consumed? What are we allowed to know is happening right now? Who determines what can be expressed, and what cannot? What gets boosted, and who gets booted?

Dorsey stepped down via an email to his team on November 29, 2021, posting it to where else but his Twitter account. He wrote that being “founder-led” can be a trap for a company, and he wanted Twitter to grow beyond him. He expressed “bone deep” trust and confidence in successor and friend, Agrawal.

But there were likely other reasons behind his decision too. Dorsey’s been public about wanting to spend more time promoting Bitcoin; he’s called being a Bitcoin missionary his “dream job.” There’s also the small matter that his other day-job has been running Block Inc., (formerly known as Square), the ubiquitous small-business payments processor, which is now worth more than $80 billion and employs more than 5,000. Adding to the incentive: Dorsey also owns a much bigger personal stake in Block than he does in Twitter.

A final, less discussed contributor might be simmering investor dissatisfaction. Twitter’s stock price is languishing in the mid $40’s, the same trading range it had eight years ago:

Snapshot taken December 9th, 2021

And its user numbers, while growing, have not shown the rapid growth many investors expect. Twitter’s user growth has been small compared to Facebook, Instagram and TikTok.

Activist investors Elliott Management and its ally Silver Lake Partners own significant stakes in Twitter, and they pushed for new leadership and faster innovation. According to Axios, while Elliott Management resigned its board seat in 2020, it demanded and got two things in return: new management, and a plan to increase the pace of innovation. Also looming large are regulator moves, debates over user safety and privacy, and controversy over moderation.

Agrawal has impressive technical chops. He earned a BS in Computer Science and Engineering from the prestigious Indian Institute of Technology (IIT), then earned a PhD in Computer Science at Stanford University in 2012. He’s worked in brief stints at Microsoft Research, AT&T Labs and Yahoo before joining Twitter in 2011, rising through the ranks over ten years. He’s led their machine learning efforts, and he’s been intimately involved in a research project called “BlueSky,” which is a decentralized peer to peer social network protocol.

Agrawal has moved quickly, shaking up Twitter’s leadership team. Head of design and research Dantley Davis is stepping down — the scuttlebutt is that Dantley demonstrated an overly blunt and caustic management style that rubbed too many employees the wrong way. Head of engineering Michael Montano is also departing by year’s end. Agrawal’s lines of authority are now more streamlined; he has expressed a desire to impose more “operational rigor.”

“We want to be able to move quick and make decisions, and [Agrawal] is leading the way with that,” said Laura Yagerman, Twitter’s new head of corporate communications. Agrawal’s swift change in key leadership positions suggests that Dorsey didn’t leave entirely of his own volition.

While Dr. Agrawal brings deep technical experience to the role of CEO, most outside observers are focused intently on his viewpoints regarding free speech and censorship.

Every day, voters, world leaders, journalists and health officials turn to Twitter to exchange ideas. As I write this today, the public square is pondering the dangers (or potentially nascent optimistic signs) of a new COVID variant. Foreign policy twitter is abuzz about troops massing on the Ukraine’s border and China’s activities in both Hong Kong the China Sea. Law Enforcement Twitter is asking the public for crowdsourced detective work on the latest tragic homicides.

What they all have in common is this: these stories often come to the world’s attention via Twitter. Twitter decides which types of speech should be off-limits on its platform. They say who gets booted, and what gets boosted. In other words, they have a big role in defining the collective Overton Window of online conversation. Ultimately, Twitter’s moderation policies, algorithms and (for now at least) human editorial team decide what can and cannot be said, what gets amplified, and what gets shut down.

Further, our world increasingly conflates the concepts of internet “consensus” and truth. So how do we go about deciding what information is true, and what is gaslighting? Which sources will Twitter deem “credible” and which untrustworthy? What labels will get slapped on your tweets?

The CEO of Twitter has an enormously powerful role in determining what does and doesn’t come to the public’s attention, what catches fire and what does not, and who is anointed with credibility. Agrawal knows this intimately; it’s been a big part of his work for the past several years. Twitter’s servers process nearly one billion tweets every day. And usage has swelled to nearly 220 million daily active users, with few signs of slowing:

More important, perhaps, is the highly influential nature of these users. Seth Godin called such influencers “sneezers of the Idea Virus.” Watch any cable TV news channel for more than fifteen minutes, and you’re likely to encounter someone talking about what someone has tweeted. Indeed a very high number of politicians, journalists, celebrities, government and policy officials use Twitter regularly, either to spread, consume or evaluate information. Twitter’s moderation policies can act quickly to fan an ember, or snuff it out.

During Dorsey’s tenure, Twitter came under withering fire for too-hastily suppressing and blocking views. It’s also come under fire for the opposite reason — not being fast enough to block and remove misinformation (for instance “Gamergate,” and later “QAnon” and communication surrounding January 6th.)

Most recently, concern over Twitter’s moderation policies and blocking/amplification/suppression been fiercest from civil libertarians, the right, and center-right. Among the examples:

  • In October 2020, just weeks before the presidential election, Twitter blocked the New York Post for weeks for its explosive scoop on Hunter Biden’s laptop. Twitter first said the ban was because the materials were hacked, though to this day, there is no definitive proof they were obtained that way. Subsequent reporting by Politico this year independently confirmed the authenticity of several of those emails. The New York Post was prevented from participating on Twitter for weeks leading up to the 2016 election. Dorsey later apologized for this blocking, calling it a “total mistake,” though he wouldn’t say who made it.
  • Twitter locked the account of the Press Secretary of the United States for retweeting that Biden laptop story.
  • In October 2020, Twitter suspended former Border Patrol Commissioner Mark Morgan for tweeting favorably about the border wall.
  • Twitter temporarily banned and then permanently suspended Donald Trump, a sitting president of the United States, citing his repeated violations of terms of service, specifically its Glorification of Violence policy. Yet Twitter does not ban organizations like the Taliban, nor does it suspend world leaders who threaten the nation of Israel’s existence; they generally only remove individual tweets.

Even before several of these incidents above, in a 2018 interview at NYU, Dorsey admitted that Twitter’s conservative employees often don’t feel comfortable expressing their opinions. And he conceded both that Twitter is often gamed by bad-faith actors, and that he’s not sure that Twitter will ever build a perfect antidote to that gamification. In 2020, a massive hack exposed the fact that Twitter has administrative banning and suppression tools, which among other things allow their employees to prevent certain topics from trending, and which also likely block users and/or specific tweets from showing up in “trending” sections and/or searches.

As Twitter’s influence rose, these decisions caused consternation among some lawmakers, Dorsey was pressed to sit before multiple Congressional hearings, in which he’s asked about these instances and more:

One big issue is “bots,” (short for robots), which are automated programs which use Twitter’s platform and act as users. They amplify certain memes by posting content to Twitter, liking and retweeting certain content, replying affirmatively to things they are programmed to agree with, or negatively to things they are not, etc. They are a great example of how Twitter, in its “wild west” initial era, often let its platform be manipulated.

Twitter’s initial response was slow; one has to remember that bots help amplify usage numbers which in turn might help create a feeling of traction (and or ad-ready eyeballs.) But bots are often designed with malicious intent to skew the public’s perception of what’s catching fire, or to add credibility to false stories. Since 2016, Twitter has gotten more aggressive about cleaning out bots, and in 2018 greatly restricted use of their application programming interface (API.) Earlier this year, after years of hedging, Twitter finally decided to take aggressive action to de-platform the conspiracy fringe group QAnon, suspending 70,000 accounts related to that conspiracy movement, after the January 6th riot at the United States Capitol. Dorsey regretted that this ban was done “too late.”

The justification for these interventions often centers around harm. Or perhaps more accurately, it centers around what Twitter’s human and algorithmic decisionmakers judge in the snapshot moment to be “harmful.”

What’s Agrawal’s attitude about free speech? While some civil libertarians and commentators on the political right initially cheered Dorsey’s departure, that enthusiasm quickly cooled. That’s because Agrawal has in the past signaled very clearly that he believes Twitter’s censorship policy should not be about free speech, but about reducing harm and even improving peace. You can get an idea for Agrawal’s philosophy in his extended remarks with MIT Technology Review in November 2018:

“[Twitter’s] role is not to be bound by the First Amendment, but our role is to serve a healthy public conversation and our moves are reflective of things that we believe lead to a healthier public conversation. The kinds of things that we do about this is, focus less on thinking about free speech, but thinking about how the times have changed. One of the changes today that we see is speech is easy on the internet. Most people can speak. Where our role is particularly emphasized is who can be heard. The scarce commodity today is attention. There’s a lot of content out there. A lot of tweets out there, not all of it gets attention, some subset of it gets attention. And so increasingly our role is moving towards how we recommend content and that sort of, is, is, a struggle that we’re working through in terms of how we make sure these recommendation systems that we’re building, how we direct people’s attention is leading to a healthy public conversation that is most participatory.” (Emphasis added.)

In 2010, he tweeted:

The double-negative is a bit cryptic, but one interpretation of this is that book banning might be not only acceptable but relatively desirable if it increases societal peace. This sentiment is most definitely not aligned with those who believe, as I do generally, that the best antidote to speech with which you disagree is more and better speech.

As one wag put it, “I’ll be happy to ban all forms of hate speech, as long as you let me define what it is. Deal?”

More of Agrawal’s outlook can be discerned from his November 2018 interview with MIT Technology Review. For some time from 2015 to about 2018, he and the rest of the technical team at Twittter put great effort into determining whether the health of any given public conversation can be scored algorithmically. But thus far, that effort appears to have yielded disappointment. Yet Agrawal seems undaunted in this quest.

Agrawal’s Holy Grail of algorithmic scoring of the “health” or potential “harm” of a public conversation isn’t yet fully possible. Thus, they employ humans to curate discussion, and block, ban, suppress and promote (through sorting) certain expressions over others. Now, given that human editors are expensive, Twitter focuses them on a few subjects. Agrawal specifically names pandemic response and election integrity as two areas which he deems most appropriate for such intervention. Yet let’s keep in mind he also clearly believes that automated algorithmic “scoring” of healthy conversation is both possible and desirable.

Our approach to it isn’t to try to identify or flag all potential misinformation. But our approach is rooted in trying to avoid specific harm that misleading information can cause.

Dr. Parag Agrawal, Twitter’s new CEO, MIT Technology Review November 2018

While controlling discussion to promote peace might seem to be an unalloyed good, it’s not at all clear that a harm-reducing, peace-promoting Internet public square is also necessarily a truth-promoting one. For one thing, truth doesn’t care about its impact. And it isn’t always revealed right away. Our understanding and interpretation of facts change over time. It seems increasingly often that things which we once “knew” to be certain are suddenly revealed to be quite different. Would such an algorithm optimize for the wrong things, leaving us less informed in the process? These and other conundra confront Twitter’s new CEO, who took office last week.

In a way, Agrawal’s appointment as Twitter CEO can be seen as an important waypoint in the Internet’s transformation from techno-libertarianism to a much more progressive worldview with a willingness to use a heavier hand. Anti-establishment civil libertarians used to typify many Internet and tech leaders’ outlook. Yet quite steadily over the past decade, a progressive worldview has grown dominant. While one side values free speech and civil liberties as paramount values, the other believes societal peace, equity, and least “harm” trump other goals. And for some, if free speech needs to be sacrificed to achieve it, so be it. Throughout his tenure, Dorsey himself has shown elements of each philosophy.

Agrawal may be a technocrat progressive. In 2017, he donated to the ACLU so it could sue President Trump in 2017. He has also likened religion to a pyramid scheme:

Yet Agrawal it would be highly inaccurate to characterize Agrawal as a censorship extremist. He advocates more open access to Twitter’s archives through Application Programming Interfaces (API’s), and more third-party analysis of what’s discussed on the platform.

One hopeful sign is that Agrawal has already experienced his own “my old tweets have been taken greatly out of context” moment immediately after being made Twitter’s new CEO. Critics on the right seized on this October 26th 2010 tweet of his, suggesting it somehow demonstrates that he’s equating white people with racists:

But as he quickly explained, “I was quoting Asif Mandvi from The Daily Show,” noting that his intent was precisely the opposite. Agrawal was joking about the harm of stereotypes. He was of course not making a factual statement, but using sarcasm to make a larger point.

As someone who tends to side more with civil libertarians with respect to free speech, I hope he remembers that it was his ability to respond and clarify and respond with more speech which helped convey his true feelings and much more clearly convey the truth that went beyond the first 280 characters. Wasn’t it best for him that he could quickly dispel a controversy and continue to engage, and wasn’t banned due to some lower-level employee determining his first tweet caused harm under at least one subjective interpretation?

Perhaps the central conundrum is that content moderation is impossible to get perfectly “fair” or least-harm-imposing. No algorithm or human will be able to make the correct decision at every moment. Thus, guidelines need to exist which define an optimal content moderation policy. For that, you need the platform’s leader to define what should be optimized via such a policy. Truth? Liberty? Fairness? Viewpoint Diversity? Peace?

Back to the thought-exercise which started this piece. Would everyone score the “harm” of a given conversation the same way, or the credibility or intent of the speakers? Obviously, we wouldn’t. Algorithms — especially machine learning algorithms — are tremendously powerful, but they also can give an illusion of objective authority. In reality, they’re only as good as their data training and evaluation sets, and those evaluation sets have explicit goals. Each desirable metric chosen to optimize (Peace, Truth, Viewpoint Diversity, etc.) would yield very different algorithms. And the result would be very different content moderation, amplification and suppression policies.

Agrawal’s view will likely evolve, but for the moment, he appears to prioritize what he considers “healthy conversation” and avoidance of “harm.” It is how he actually defines health and harm which will be very important indeed. For it will determine what we know to be true, and from whom we hear.

Jack Dorsey’s resignation letter concludes with this statement: “My one wish is for Twitter Inc. to be the most transparent company in the world.”

That would be most welcome. But they have a very long way to go indeed. Godspeed, Dr. Agrawal.

Children: Vectors of COVID Spread?

A new study from the UK suggests that children are not, in fact, significant vectors of COVID risk.

How much would you say that having one or more young, unvaccinated children (0-11 year olds) in the household increases the household’s risk for COVID?

Well, luckily we have some empirical data on that.

A massive BMJ study of 12 million people from the UK found that the increase in COVID risk is a whopping 0.01%-0.05% in the household if you’ve got a child 0-11 in the household. The numbers are similar to those living with 12-18 year olds.

Not only were increases in COVID very small, but this did not translate into materially increased risk of COVID-19 mortality.

Can we perhaps stop treating children as second-class vectors of spread? When will their social, educational and emotional needs matter enough to be paramount again?

New Book Argues That Our Approach to Homelessness Won’t Work

Why are west coast cities suffering through a seemingly intractable growth in homelessness? What can we learn from the relative successes of Amsterdam, Lisbon, Miami and even New York City?

This first appeared in Post Alley on November 22nd, 2021.

By the time you read the subtitle, “Why Progressives Ruin Cities,” you know that author Michael Shellenberger pulls no punches. He explores a vexing, urgent question: Why have San Francisco, Seattle, Los Angeles, Portland — wealthy, progressive cities each — experienced such intractable and rapidly-growing homelessness crises in the past decade? Why have each of these politically liberal, environmentally-conscious cities with enormous financial resources suffered worsening and intertwined crises of addiction, public encampment, needles and deteriorating public safety, and political gridlock — despite spending ever more?

It’s been more than six years since Seattle Mayor Ed Murray declared a state of emergency on homelessness. That year, the King County One Night Count found 3,772 individuals living outside and unsheltered. In 2020, it had risen to 11,751 people experiencing homelessness, with 47% of those unsheltered. And, despite more than $1 billion spent on homelessness every year regionally according to the Puget Sound Business Journal and even more donated in affordable housing pledges by Jeff Bezos, Microsoft, and others, we still don’t feel much closer toward a model which works.

Released in October, San Fransicko has broken into the top three reads on Amazon in the Civics & Citizenship category. Though it focuses on the Bay Area, policies in Seattle are similar. Shellenberger indirectly asks the Seattle reader to consider whether the progressive policy approach — harm reduction, housing first, affordable housing, and a victim-centric lexicon — leads toward measurable progress? If not, will it ever?

Two decades ago, the author was a conventional progressive on these topics. Today, Shellenberger is criticizing progressive orthodoxy in the environment and homelessness. His 2020 treatise, Apocalypse Never, is a broadside against what he considers “climate alarmism.” In that book, Shellenberger advocates for more nuclear power and more technological and pragmatic approaches to environmental challenges, bringing data to the argument about which forms of energy can most efficiently reduce CO2 emissions.

San Francisco City Hall and city square. Photo from the Los Angeles Times, May 7, 2021

In San Fransicko Shellenberger takes on three of the most heavily-defended tenets of the west-coast approach toward homelessness.

First, he argues that homelessness is principally an addiction and mental health crisis masquerading as an affordability crisis. Put another way, and this is central to his thesis — it’s not primarily about affordability. To this assertion, he brings considerable data, showing how pure housing-only programs fail to reduce homelessness. He explains how public housing advocates have largely shut down much-needed investment in shelter.

He asks the reader to ponder whether growth in tents is at least in part because they’re the least-costly way to live with no rules, in proximity to drug markets and a community of users. And he names the ever-more addictive drugs doing increasing damage: first opioids, then heroin, fentanyl, and now a new and extremely addictive form of methamphetamine which brings with it much more frequent and lasting mental crises. Drug overdose deaths have hit a record high in the United States, with more than 100,000 dying in the past 12 months. Sam Quinones’ excellent piece in The Atlantic about this new methamphetamine echoes Shellenberger’s central thrust here.

Second, Shellenberger takes on “housing first,” the highly popular intervention policy in west coast cities which prioritizes secure housing and “barrier-free” (i.e., requirement-free) living. Once a fierce advocate for housing-first policies, the author is now convinced the policy momentum itself has overshadowed the ultimate goal. He walks the reader through Amsterdam’s history in policymaking, which once had similar barrier-free models, but has in the past decade adopted a much more empirically successful approach. The “Amsterdam Way” emphasizes earned housing and compassionate enforcement over the “housing first” model. Shellenberger dives in to study methodology to question several of the academic efforts which have claimed efficacy of housing-first.

In interviews subsequent to the book, he’s posed the thought exercise: “If someone who is addicted to methamphetamine is given $200, are they likely to voluntarily spend it on their own treatment, or more drugs?” Shellenberger’s point: if we believe it’s the latter, we’re saying the housing-first — which too often is housing-only — model won’t work.

Third, Shellenberger argues against city-only programs. He notes that in a mobile and free society, no city-specific approach would work in the absence of a broader regional or statewide strategy. He advocates the establishment of a new statewide agency, “Cal Psych,” to handle a broad range of mental wellness services.

The book is at its best detailing the success stories of other cities. Shellenberger holds up Amsterdam, Lisbon, New York City, and Miami as cities to consider as much better models than the failed west-coast models. The chapter “Let’s Go Dutch” focuses on Amsterdam, a city not that much bigger than San Francisco (or Seattle, for that matter), and makes a very strong case for adopting their policy slate. This includes earned housing based on entering treatment programs if addicted, a crackdown on open-air drug dealing, an individualized and well-coordinated plan for every individual, and ample social services.

In the 1980s, Amsterdam had major problems with open-air drug-dealing and homelessness. Crucially, Shellenberger argues, Amsterdam’s courts, service providers, and families helped coordinate an individualized plan for everyone, and linked permanent housing benefits to milestones along the way. That is, rather than housing-first, those addicted first get less-desirable government shelter, but must earn permanent housing. They rely upon family support when available, enforced bans on public encampment, and ample counseling and psychiatric care services.

There are no signs yet that San Francisco will change course. In July, Mayor London Breed pledged $1 billion to house the homeless, after the city experienced a surprise windfall driven in part by federal stimulus spending. District Attorney Chesa Boudin has decriminalized many misdemeanors, and there’s a strong push to reduce police budgets.

Seattle features prominently in a chapter called “Legalize Crime.” Shellenberger recounts the Capitol Hill Autonomous Zone (CHAZ) in June of 2020 and the progressive wave of decriminalizing misdemeanor crimes. And he discusses the mismatch between progressive ideals and actual outcomes.

That people can and should be called upon to do more is central to Shellenberger’s thesis. A former progressive, Shellenberger describes a new, aggressively guarded belief system, which he calls “Victimology.” Such a doctrine plays a central role in discussion of the addiction and homelessness crises and the advancement and protection of failing dogmas. He argues that progressives have become far too invested in the idea that addicts are only victims with no obligation to a greater society, and that nothing can nor should be asked of any of them. In a related blog post, he explores this victimology through Moral Foundation Theory. Shellenberger argues that while espousing such a belief system may signal compassion, it rarely delivers it.

Does individual responsibility have a role in this urgent conversation? Do people experiencing homelessness and the larger community share mutual responsibilities? Shellenberger argues strongly: yes, they do.

The late neurologist, author and Holocaust survivor Dr. Viktor Frankl wrote compellingly about the need for responsibility to balance liberty in any functioning society. Before his death, Frankl called specifically for a “Statue of Responsibility” on the West Coast, to complement the Statue of Liberty on the East Coast. There’s even a campaign for it. After you read San Fransicko, you might be inclined to rethink our approach toward homeless policymaking.

Post-note: There’s a good discussion with the author here:

Will the “Billionaire Tax” Survive?

A new billionaires’ wealth tax is gaining momentum, but few have pondered the complexities, downsides and likely Constitutional challenges.

This piece first appeared in Post Alley on October 27th 2021.

A new plan, captained by Democratic Oregon Sen. Ron Wyden, would tax the unrealized gains of America’s richest — which amounts to about 700 billionaires. It is perhaps the most narrowly focused tax proposal in U.S. history. The plan popped onto everyone’s radar last week amid the scramble to fund Biden’s ambitious social infrastructure plan. Some notable Washingtonians are sitting upright and paying close attention, since the founders and early employees of Amazon, Microsoft, McCaw, PACCAR, Starbucks, and more call the Seattle area home, as do several very wealthy real estate developers, team owners, and venture capitalists.

But the rapidly-developing proposal faces tremendous headwinds, starting with the extremely fragile political unanimity required for passage. Sen. Joe Manchin, for instance, is already dubious. But assuming it passes, the new tax is certain to face immediate and well-funded legal challenges about its constitutionality. Thus the plan would ultimately be decided by a Supreme Court that is sympathetic to conservative arguments.

In the unlikely event it passes and meets constitutional muster, there are still several thorny unintended side-effects that might arise: Would capital flee, as it has when Europe experimented with wealth taxation in multiple times past? And in a stock market crash or an Enron-like or Lehman Brothers type scandal, would American taxpayers accept the federal government crediting back to billionaires hundreds of millions of dollars?

The biggest immediate obstacle is the hard political reality that it only takes a single legislator to object.

This means all 50 Democrats need to be willing to risk being primaried by one or more billionaire-funded candidates a year hence. We might well see potential objections from states with billionaires like New York, Texas, Florida, Massachusetts, California, and here in Washington state. There appears to be zero Republican support for this idea, and already, there are clear rumblings that some Dems aren’t fans of the idea. Signs have emerged of waffling in the House, including Rep. Richard Neal (D-MA), chair of the powerful tax-writing Ways and Means Committee.

Speaker Nancy Pelosi (D-CA) tried to signal optimism this past weekend: “We will probably have a wealth tax.” (Note that “probably.”) The proposed tax shines and sparkles to some, but tends to look thornier once the realities are explored.

Though the plan seems to have come out of nowhere for many Americans, Sen. Ron Wyden, chair of the Senate Finance Committee, has been working with his staff on the idea for several years, and published the framework for it in 2019.

There have been some big changes from that 2019 plan. Wyden’s original 2019 proposal had a much lower threshold: you’d have been in this select group if you had either either $1+ million in income, or assets of at least $10 million in each of the prior three years. The fact that a much lower threshold was central to the original plan bolsters Elon Musk’s criticism that this is just the camel’s nose in the tent, and that very soon, the plan would affect many more Americans.

Another big change is the rate itself. Instead of taxing these gains at ordinary income rates as the original 2019 plan proposed, the latest proposal is to tax them at 23.8%. You can see more details of the emerging plan in Wyden’s announcement on Tuesday.

Image by Clker-Free-Vector-Images from Pixabay

We’ve arrived at this juncture quite suddenly. While generic proposals to “tax the rich” have been part of the overall messaging from Democrats for several years now, the specific details for taxing the unrealized gains of billionaires have not really been in the broad political zeitgeist until the second week of October, 2021. And just as rapidly, the idea is fading.

How did we get here? President Biden and his allies in Congress are trying to thread a very difficult needle. On one hand, they have pushed an historic $1.5-$3 trillion combined “Build Back Better” agenda. Progressives led by Rep. Pramila Jayapal (D-Seattle) insist that a major social spending package be part of the overall agreement on the Senate-passed infrastructure bill (as was agreed to when the traditional infrastructure bill first passed the Senate), and thus far Biden and the Democratic leadership seem to agree on holding the infrastructure bill hostage.

Yet at the same time, Biden has promised his bold spending plan will cost zero dollars to anyone earning under $400,000 per year.

These parameters are fundamentally at odds with each other.

Biden is convinced that Congress will find revenue to pay for $1-$3 trillion in new spending which does not impact the vast majority of Americans’ wallets or life savings. And, for the blissful summer months of agenda-dreaming, that seemed somewhat more possible, as a great deal of this was assumed to come from substantially hiked tax rates on corporations and upper-income households. But a few weeks ago, Sen. Krysten Sinema (D-AZ), (and perhaps other backstage legislators) officially nixed any substantial hikes in corporate and individual income taxes, taking this option off the table.

And so it was that Democrats quickly resurrected and repackaged Sen. Wyden’s “Treat Wealth Like Wages” plan from 2019, taking aim at the unrealized gains of billionaires.

How The Billionaire Tax Would Work

Reports by the Wall Street Journal and Washington Post suggest that the billionaire tax would apply only to tradeable or liquid assets, at least initially, and only tax those 700 or so people with net worth of at least $1 billion. Presumably, those reasonably close to $1 billion in wealth might also have to prove or attest somehow that they are not over that threshold.

Image by Patrick Pascal Schauß from Pixabay

“Unrealized” gains are appreciations in value which only exist on paper. That is, they’ve not yet been “realized” or converted into cash, which typically happens when the assets (e.g., stocks or bonds or real estate) are sold. Under current US tax law, only realized gains are taxable, and they are taxed at different rates, depending upon whether the owner holds it for less than a year (a “short-term capital gain or loss”) or at least a year (“long-term capital gain or loss.”) A deduction is allowed for gains on sale of primary residences (currently $250,000).

Long-term capital gains — gains on those securities held for at least a year — are currently taxed at a maximum of 20%, which is substantially below today’s 37% top ordinary income marginal rate. (The capital gains rate is bumped up to 23.8% in Wyden’s latest proposal.) Short-term capital gains are taxed at the same rate as wages and ordinary income are taxed. So, if you’re a day-trader, for instance, you’re paying wage-level, ordinary-income tax on any gains.

Thus, current tax policy generally favors holding capital assets for more than a year, and offers favorable treatment to income earned from investing versus wage labor. The economic argument for such preferred treatment of long-term capital gains is that it incentivizes investing, particularly for long-term periods. Capital put at risk for long periods of time is necessary to build innovation, employ people, and create wealth.

The spread between high-net-worth households and the rest of America has widened considerably over the past three decades, and it’s most extreme at the very top. According to the advocacy group Americans for Tax Fairness, the total wealth of U.S. billionaires grew by $1.3 trillion during the first 11 months of the COVID epidemic — a 44% increase. And companies which have benefitted from the pandemic — significantly the digital ones — have seen their founders’ wealth soar. Jeff Bezos alone is a staggering 86% richer than just one year ago; his wealth currently stands at approximately $194 billion, and that’s after a very sizable divorce settlement. Bezos still owns approximately 10% of Amazon, the company he founded in Bellevue in 1994 and led as CEO through earlier this year.

Like Bezos, a great many of the billionaires on the 2021 Forbes List earned their billions by risking capital, effort and time to start a company, successfully holding on to large ownership stakes in them. The Seattle metropolitan area alone has at least eight billionaires, most associated either directly or indirectly with the creation of companies like Amazon, Microsoft, and Starbucks.

Amazon’s stock appreciation by itself does not generate realized income for Bezos. But his large holdings do afford him access to low-cost securitized loans and other many benefits, even if he chooses not to sell at any given moment. (Should this tax pass and head to the courts, expect the government to argue that this increase in wealth “generates income” because of the increased capacity to borrow against it.)

This ballooning of wealth is the juicy target. But take a breath. Taxing people like Bezos faces several implementation challenges:

  • Is it Constitutional, only to be struck down by the Supreme Court?
  • How do you value privately-held businesses?
  • Who decides the valuation of non-liquid assets? Wyden’s proposal would distinguish between “tradeable” and “non-tradeable” assets. His plan said that if the asset in question is not “tradeable” you’d pay capital gains tax on sale, because that’s when the market value is known, but you’d also pay another “lookback charge” to account for the “privilege” of delaying those payments. This rate is set at 1% plus the IRS short term borrowing rate.
  • Could billionaires manipulate who owns the assets, spreading out the holdings among many?
  • Will the favored treatment of “non-tradeable” assets create enormous incentives to make non-tradable something “tradeable”? Investment banks would be happy to assist; they’re good at securitizing and complexifying things, as we all found out with the derivatives-fueled housing crisis of 2008.
  • Generally, when taxes are imposed, you get less of what’s taxed. What happens when you treat wealth like wages?

The plan being discussed hurriedly by Congress would require only a few citizens (those with $1 billion in liquid assets or more) to tax their tradeable-asset holdings, calculate the appreciation on those holdings, and pay a capital gains tax of 23.8% on it over five years. In future years, the owner takes a tax credit for any mark-to-market loss, or pays an annual tax on the paper gain. When the time came to actually sell the asset, the final amount owed would be the remainder of the gain not taxed, or a credit or refund if the asset lost value.

Democratic legislators certainly count on its popularity. After all, a tax that only 700 or so billionaires would have to pay sounds at first like the elusive perfect policy, since taxing billionaires on their wealth is understandably popular with a majority of Americans. Cynics know that the most popular tax is “any tax someone else has to pay.”

Over the past five years, both CNN and New York Times have tested the idea of a wealth tax on those with assets of $50 million or more. Both found majority support — 54% in the CNN poll, and 61% in the Times poll. But neither poll attempted to explain the constitutional and implementation hurdles, nor did they explain that the current proposed tax would reduce estate taxes dramatically.

How much might such a plan raise? (Let’s put aside for a moment the reality that virtually every billionaire would search for and likely discover multiple ways to minimize their liability.) Though the Congressional Budget Office has yet to score the plan, House Speaker Nancy Pelosi estimated Sunday on CNN that the tax would raise $200 billion to $250 billion. On the upper bound, the total wealth of U.S. billionaires is approximately $4.2 trillion as of March 2021, so she’s figuring that the government would be able to harvest about 6% of the total.

Let’s sanity-check Pelosi’s stated estimate. There’s a surprise gotcha. We have to subtract out the enormous reduction in estate taxes that would result. Today, when a billionaire dies, up to 50% of their overall wealth might be hit with taxation before being passed along to heirs. (Moreover, there would likely be substantial and negative impact on high-billionaire-count state budgets like Washington state, should this plan pass, given our relatively high estate tax. The federal government would have already scraped much of this windfall away.)

In this sense, the Wyden plan simply accelerates estate taxes into the current year. When you subtract out the estate taxes that would be avoided by such a plan, you start to get closer to Pelosi’s stated estimate of $250-350 billion, or “10% of what’s needed to pay for the social safety net package,” as she stated on CNN.

And how might these sophisticated billionaires (and their tax attorneys) respond? There are many options: to divvy up ownership, to renounce citizenship, to securitize and obfuscate holdings, or to seek more private and less tradeable tax havens for wealth. Wyden’s proposal attempts to cut off each of these loopholes, but there are many more.

SpaceX Founder and Tesla Chairman Elon Musk took to Twitter this past week to note that Congress won’t wait long before changing the threshold, so citizens need to protest. Musk’s warning has history on his side. When the first U.S. income tax was passed in 1913, it was just 1% on those earning the equivalent of about $80,000 today, rising to 6% on those earning the equivalent of $13 million today. People earning less than the equivalent of $80,000 paid nothing. The percentage has increased 30-fold since then, and the thresholds greatly lowered.

We can also be certain that there would be forceful legal challenges of this tax. There is a strong argument that wealth taxes are unconstitutional, since the Constitution explicitly requires that “all direct taxes be equally apportioned among the States” (Article I, section 9, clause 4.) This equal-apportionment clause, if applied here, clearly blows up the whole thing, since the location of wealth of billionaires is entirely up to them, and is far from “equally apportioned among the states.” The only hope of advocates is to convince the Supreme Court that this isn’t a direct tax at all, a tough sell.

Some say that we pay property tax on real estate, so why aren’t wealth taxes also legal? It’s legal for states and counties and cities to do it, but it is not constitutional for the federal government to do so. Indeed, when the United States federal income tax was passed in 1913, Congress agreed that it might not be constitutional, and so it also passed the 16th Amendment in 1913, which reads: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” Paper gain is not “income” to an individual until it is actually converted into cash. You can read more legal skepticism of the constitutionality of this plan from Jonathan Turley in this article in The Hill.

Regardless of whether you can muster an argument that it’s constitutional, the only opinions which will ultimately matter on this have the last names Alito, Gorsuch, Kavanaugh, Coney-Barrett, and Roberts. Pick any two of these who will find this a permissible “income” tax, and not a a direct tax, and therefore constitutional.

Another worry: the unintended consequences go on and on. Had this plan been in place in 1995, what might have happened to, say, Enron CEO Jeff Skilling’s tax payments to and from the federal government? Skilling presumably would have paid enormous sums, hundreds of millions of dollars, into the IRS as Enron stock rose from 1998 through 2001. Then, when it all came crashing down, and he had stock worth $0, would we taxpayers then reimburse him hundreds of millions of dollars? Assets decline in value all the time, sometimes all the way to zero. Major airlines are a great example of large entities going into and out of bankruptcy.

Anolther consequence: Such a tax would create strong incentives to make “tradeable” securities “non-tradeable.” We would likely see many more companies go or stay private, which arguably would hurt American workers who have benefitted from employee stock plans. From a billionaire’s perspective, there would be yet another incentive to avoid the public market altogether, because as a private firm, you could better ensure those shares aren’t “tradeable.” Wealthy founders might scurry to divvy up their holdings to family members and new owners before such a law goes into effect, so that no individual taxpayer meets the billionaire trigger threshold. (Wyden’s proposal does attempt to derail that loophole.)

The best kind of tax is always the one that others have to pay. But now that this plan has entered the public discussion, expect even more detractors to emerge.

Warns Rep. Jim Himes (D-Conn) in expressing his concerns to The Wall Street Journal: “There are 20 other better ways and more workable ways to get the wealthy to pay their fair share.”