Kevin Drum - January 2014

How Silicon Valley Conspired to Pay Workers Less So That CEOs Could Make More

| Sun Jan. 26, 2014 10:32 PM EST

A while ago I read—but only vaguely processed—some coverage of a government antitrust action being taken against several big Silicon Valley companies who had agreed not to hire each other's employees. But until reading this Mark Ames story at Pando, I had no idea how widespread the conspiracy was. This was no mere informal gentlemen's agreement. It was a dogged, rear-guard fight against the rising wages of top engineers in the Valley:

That DOJ suit became the basis of a class action lawsuit filed on behalf of over 100,000 tech employees whose wages were artificially lowered — an estimated $9 billion effectively stolen by the high-flying companies from their workers to pad company earnings — in the second half of the 2000s. Last week, the 9th Circuit Court of Appeals denied attempts by Apple, Google, Intel, and Adobe to have the lawsuit tossed, and gave final approval for the class action suit to go forward.

....The companies argued that the non-recruitment agreements had nothing to do with driving down wages. But the court ruled that there was “extensive documentary evidence” that the pacts were designed specifically to push down wages, and that they succeeded in doing so. The evidence includes software tools used by the companies to keep tabs on pay scales to ensure that within job “families” or titles, pay remained equitable within a margin of variation, and that as competition and recruitment boiled over in 2005, emails between executives and human resources departments complained about the pressure on wages caused by recruiters cold calling their employees, and bidding wars for key engineers.

....The companies in the pact shared their salary data with each other in order to coordinate and keep down wages — something unimaginable had the firms not agreed to not compete for each other’s employees. And they fired their own recruiters on just a phone call from a pact member CEO.

....Just before joining the wage-theft pact with Apple, Google’s human resources executives are quoted sounding the alarm that they needed to “dramatically increase the engineering hiring rate” and that would require “drain[ing] competitors to accomplish this rate of hiring.” One CEO who noticed Google’s hiring spree was eBay CEO Meg Whitman, who in early 2005 called Eric Schmidt to complain, “Google is the talk of the Valley because [you] are driving up salaries across the board.” Around this time, eBay entered an illegal wage-theft non-solicitation scheme of its own with Bill Campbell’s Intuit, which is still being tried in ongoing federal and California state suits.

Read the rest for more, including emails from company executives who were apparently stupid enough to put a lot of their scheming down in discoverable form. These guys may have been high-flying heads of the new digital economy, but their attitudes toward tight labor markets were as old as time: They all figured the free market is great, as long as no one tells the workers about it.

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In Remarkable Turnaround, Republicans Officially Denounce NSA Phone Surveillance

| Sat Jan. 25, 2014 1:21 PM EST

This is easily the most remarkable story of the year so far. As you read it, keep in mind that this is not about a resolution from some fringe libertarian group. It's about a resolution from the Republican National Committee, the very embodiment of establishment conservatism:

In a jarring break from the George W. Bush era, the Republican National Committee voted Friday to adopt a resolution demanding an investigation into the National Security Agency’s spy programs.

According to the resolution, the NSA metadata program revealed by former NSA contractor Edward Snowden is deemed “an invasion into the personal lives of American citizens that violates the right of free speech and association afforded by the First Amendment of the United States Constitution.” In addition, “the mass collection and retention of personal data is in itself contrary to the right of privacy protected by the Fourth Amendment of the United States Constitution.”

....This is, to put it mildly, a new position for the Republican National Committee. When the New York Times revealed that the NSA had wiretapped American citizens without warrants in late 2005, the RNC used their 2006 winter meeting to strongly defend the program’s national security value.

....This time around, per Orrock’s resolution, the RNC is declaring that “unwarranted government surveillance is an intrusion on basic human rights that threatens the very foundations of a democratic society and this program represents a gross infringement of the freedom of association and the right to privacy and goes far beyond even the permissive limits set by the Patriot Act.”

I get that politics is politics, and the grass always looks browner when the other party occupies the Oval Office. And there are plenty of liberals who are less outraged by this program today than they were back when George Bush and Dick Cheney were in charge of it.

But holy cow! The RNC! Officially condemning a national security program that was designed by Republicans to fight terrorism! This is truly remarkable. We are indeed living in Bizarro world these days.

Friday Cat Blogging - 24 January 2014

| Fri Jan. 24, 2014 3:58 PM EST

Right Wing Decides D'Souza Indictment Is All About Obama Getting Revenge On His Enemies

| Fri Jan. 24, 2014 3:41 PM EST

Me, writing yesterday about Dinesh D'Souza's indictment for campaign finance fraud:

If this turns out to be true, he's in trouble....Alternatively, it could be a godsend, something he can milk forever as proof that he's being hounded by Obama administration thugs determined to shut down their conservative critics.

Ben Dimiero runs the tape this morning:

Matt Drudge tweeted that the indictments against D'Souza and former Republican Virginia Governor Bob McDonnell are evidence that Attorney General Eric Holder is "unleashing the dogs" on "Obama critics."....On her radio show this morning, Fox contributor Laura Ingraham claimed that "we are criminalizing political dissent in the United States of America....The indictment "is more about stifling political dissent and intimidating other people from speaking out than it is about any real serious allegation of wrongdoing."....An article on FoxNews.com includes the suggestion from a "close colleague" of D'Souza's that the indictment is "selective prosecution" in the first sentence.

....Rush Limbaugh joined the chorus on his radio show, claiming Obama's Justice Department is "trying to criminalize as many Republicans and conservatives as they can." Meanwhile, Fox Nation is using Drudge's tweet and a few other articles on conservatives sites to ask readers to "sound off" on whether there is "A COORDINATED, VAST LEFT-WING CONSPIRACY."

So there you have it. It looks like godsend is the winner.

Republicans Are Trying to Build a Better Primary

| Fri Jan. 24, 2014 2:22 PM EST

Jonathan Bernstein reports on Republican efforts to shorten the primary season:

If all goes according to plan, the result will be votes in the first four (“carve-out”) states — Iowa, New Hampshire, Nevada, South Carolina — in February, followed by votes in rapid succession in March and April, with the primary season finishing up in May. That’s a lot more compressed than the January-to-June schedule of the past few cycles.

....The 2012 cycle, the theory goes, just went on too long, with eventual nominee Mitt Romney taking too many shots from other candidates. My feeling, however, is that the hits Romney took almost certainly didn’t matter for the fall campaign. The real lesson of 2012 that Republicans should worry about is that virtually any crank, no matter how little qualified for president, can have a very good two weeks....It’s essentially the stories of Michele Bachman, Herman Cain, Newt Gingrich, and Rick Santorum in 2012.

By compressing the calendar, you increase the danger that a mediocre or worse candidate could get hot at just the right time and wrap up the nomination before the party has time to stop it....The March crunch could get so momentous that it overwhelms the rest of the schedule. In other words, if crunch time in March takes on the air of a de facto national primary — even one spread out over two or three weeks — it could mean trouble.

I agree that compressing the actual voting might not matter much. These days, primary campaigns start early: we'll almost certainly have several declared candidates by early 2015 and a full field by the middle of the year. Those guys are going to be out on the trail taking shots for a very long time no matter what. Besides, primary season is almost always effectively over by March or April anyway, even if there are a few Ron Paul-esque stragglers who refuse to concede for PR reasons. It rarely lasts more than 14 or 15 weeks.

So what about Bernstein's theory that the real problem is that a compressed schedule runs the risk of a fluke win by a fringe candidate? I'm not so sure about that either. The clown show of 2012 was truly sui generis, something that's never really happened before. And I'm not so convinced that any of the fringe folks would have had better odds in a compressed primary season, as he suggests. Sure, they each got hot for a week or two, but they typically got hot in one or two states. I don't think they could have replicated that performance if they'd been competing in lots of different states at once.

But I could be wrong! Generally speaking, my advice to both parties is simple: Make your primaries as similar to a general election as possible. That would mean, for example, ditching the Iowa caucuses, since the kind of retail politics that win in Iowa are irrelevant to success in November. What you want is a candidate that can raise lots of money; appeal to lots of people; and has a good media presence. That's what wins general elections these days, and a successful primary season is one that gives the advantage to those qualities. The quaint notion that New Hampshire is a great place to start because it's a small state and gives everyone a chance is ridiculous. No modern political party should want a process that gives everyone a chance. They should want a process that brutally winnows out the vanity candidates and narrows the field to folks who know how to win on the big stage.

It won't happen because it would require the parties to play massive hardball with the Iowas and New Hampshires of the world, something they won't do. But they probably should.

Fox News Just Can't Get Americans to Buy Into Benghazi Conspiracy Theories

| Fri Jan. 24, 2014 1:09 PM EST

Steve Benen alerts me today to this hilariously loaded question in a recent Fox News poll:

Do you know what's most hilarious about this? Even with question wording that practically demanded the answer they wanted, only 49 percent of respondents played along.

Give it up, guys. If you're looking for evidence that the American public just doesn't buy the cover-up conspiracy, this is it.

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Microsoft Might Finally Have a Winner in the Tablet Market. But Is It Too Late?

| Fri Jan. 24, 2014 12:11 PM EST

Microsoft announced pretty good earnings yesterday:

As the tenure of Microsoft Chief Executive Steve Ballmer winds down, the company delivered a surprise of the pleasant kind on Thursday when its second quarter earnings came in stronger than expected. Among the more notable items, the company said sales of its troubled Surface tablet doubled to $893 million from $400 million in the first quarter.

That's interesting. Obviously a billion dollars is still small potatoes in the overall tablet market, but it's possible that this means Microsoft may have finally turned a corner. I haven't used the new Surface tablet, but I did buy a Dell Windows tablet a few weeks ago and I've been pleasantly surprised by it. The combination of Windows 8.1 and Bay Trail processor technology seems to have finally produced a Wintel tablet that's truly usable and—potentially, at least—popular.

The app ecosystem is obviously still anemic compared to iOS or Android, but I managed to find apps to replace every single one on my Android tab, and they mostly work really smoothly. Performance is good; touch implementation is good; and of course, I also have easy access to a standard Windows desktop to run any Windows apps I want.

On the downside, although the UI is fairly slick once you learn the basics, I can't say that it really has any huge advantage over iOS or Android aside from access to Windows desktop apps. That might make it a winner for business users, but I don't know how many other consumers care about this anymore. If you mainly read Kindle books and update your Facebook page, it doesn't really offer anything you can't get elsewhere at a lower price.

Still, I think Microsoft has finally created a viable tablet. The only question is whether they're too late.

New Battery Technology Might Make Solar Power More Practical

| Fri Jan. 24, 2014 11:52 AM EST

I ran across an item last night about a new kind of battery that might be a breakthrough in the knotty puzzle of storing solar power during the day for use at night:

“Now we have a good chance of solving that problem,” says Michael Aziz, a materials scientist at Harvard University in Cambridge, Massachusetts. His solution is a flow battery that packs a high energy density with no need for the expensive metals found in other models.

....The most advanced commercial flow batteries rely on vanadium ions....“The problem is, vanadium is really expensive,” says Aziz....Over the past few decades, researchers have investigated many other chemical systems, and ruled all but a handful out. “The periodic table has been pretty well picked over,” says Aziz. “So we’ve introduced the world of organic chemistry to this problem.”

His battery’s anode uses a solution of sulphuric acid containing a type of organic compound known as a quinone. The quinone is cheap and needs no catalytic urging to react with protons to form a higher-energy hydroquinone, thereby charging the battery. Aziz teamed this half of the flow battery with a well-known partner: a cathode that alternates between bromine and hydrobromic acid.

How about that? Back in 1977, Mike and I played tennis together at Caltech. Now he's saving the world with applied physics and I'm, uh, I'm....

Right. Enough about that. Anyway, if it works out, we'll all have 500-gallon tanks of quinones buried in our yards someday to store the power from the solar cells on our roofs. Cool.

If CEOs Think Consumer Demand Is a Problem, They Should Demand Economic Policies That Address It

| Fri Jan. 24, 2014 2:27 AM EST

The Wall Street Journal reports that American CEOs are worried about the lousy state of consumer demand:

Chief executives at top companies expect to face a series of pitfalls over 2014, including wage stagnation in the developed world, uneven growth in the developing world and looming cuts in the U.S. health-care sector.

....In the U.S., executives highlighted wage stagnation and underemployment as undermining demand for their goods and services. For instance, although car sales have helped prop up overall growth in the U.S., Renault-Nissan CEO Carlos Ghosn said the 15.7 million cars sold there last year was still below the level reached in 2007.

Alan Clark, chief executive of beer giant SABMiller PLC, said in an interview that growth for premium light beers, which make up a quarter of the U.S. market, is still slow because of higher unemployment or underemployment rates among beer drinkers.

....The problem of passing along high costs to employees also looms large. "It is not a solution to pass (health-care) costs on to the working class, who haven't seen real wage increases," said Bernard Tyson, chief executive of Kaiser Permanente.

This seems very sensible. Wage stagnation and unemployment are huge challenges for companies that make consumer products—which, eventually, includes just about every company in the world. So why aren't these CEOs clamoring for economic policies that might actually address this?

The Administration's Attitude Toward Edward Snowden Might Be Softening Slightly.

| Fri Jan. 24, 2014 2:14 AM EST

This is interesting:

Attorney General Eric H. Holder Jr. said Thursday that the United States was willing to discuss how the criminal case against Edward J. Snowden would be handled, but only if Mr. Snowden pleaded guilty first.

....The attorney general reiterated that the United States was not willing to offer clemency to Mr. Snowden, the former National Security Agency contractor who has leaked documents that American officials have said threaten national security. “Instead,” Mr. Holder said in response to a question at the university’s Miller Center, “were he coming back to the U.S. to enter a plea, we would engage with his lawyers.”

That's neither the clemency nor the amnesty that Snowden's supporters want, and Holder gave no indication of just what kind of plea the Justice Department might accept. It's also notable that a guilty plea would preclude a trial in which Snowden could mount a public case for his actions.

Still, this seems like a slight softening of the government's stand. Maybe.