Rent control

Californians Vote on Four Ballot Measures with Major Stakes for Liberty, Property Rights, and Justice

These votes could have a big impact on the nation as a whole, as well as California.

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The presidency and control of Congress are not the only things at stake in today's election. Voters in many states will also vote on a wide variety of ballot initiatives. None are more significant than those in California. Four of the ballot measures in that state have important implications for both the nation's most populous state, and the struggle for liberty,  equality, and property rights around the country.

Proposition 21 would authorize local governments to impose rent control on buildings that were first occupied more than 15 years ago. If there's one proposition that economists across the political spectrum agree on, it is that rent control decreases the quality and quantity of housing—exactly the opposite of what is needed in a state that already suffers from serious housing shortages. Don't take my word for the broad expert consensus on this issue. Take that of Paul Krugman. Right now, it looks like Proposition 21 will be defeated, as it is trailing badly in polls. If so, it could break the momentum of the growing national movement to expand rent control.

Instead of pushing rent control, California—and other states—should build on recent progress in cutting back exclusionary zoning. That is the best way to expand housing and job opportunities for the poor and lower middle class.

Proposition 22 would exempt app-based transportation and delivery drivers (like those work for Uber and Lyft) from California's terrible AB 5 law, which forces employers to classify these and many other "gig economy" workers as full-time employees. It thereby destroys large numbers of jobs by increasing the cost of hiring labor, and also eliminates the flexibility many gig economy workers value. The "yes" side on Prop 22 is narrowly ahead in recent polls, but it is far from clear whether it will pass.

If it does, it could be an important milestone for the nation as a whole. Bills similar to AB 5 have been considered in other "blue" states. Democratic presidential candidate Joe Biden has endorsed the terrible idea of imposing such a policy nationwide. While I think Biden is, overall, a lesser evil than Trump, the prospect of a nationwide AB 5 is one of the worst aspects of a potential Biden administration. If Proposition 22  prevails even in deep-blue California, Biden and other Democratic leaders might well decide to shelve the idea of taking AB 5 national, for fear of the political risks of doing so. Such a result might also deter efforts to imitate AB 5 in other states.

Proposition 16 would reverse Proposition 209 (passed in 1996), and permit racial and gender preferences in admissions to California universities and the hiring of employees and contractors by state and local government. My wife Alison Somin (who works for the Pacific Legal Foundation), has written about the danger posed by Prop 16 here and here (one of the articles is coauthored with her colleague Wen Fa). As Alison explains, Proposition 16 would open the door to sweeping racial and gender preferences that go far beyond just narrowly targeted preferences for individuals that have suffered racism and sexism. It would even allow California universities to discriminate against women, in favor of men, in order to achieve what they see as a better balance between genders.

This analysis by UCLA law professor Rick Sander—who describes himself as a "a dyed-in-the-wool liberal Democrat, [and] a very early supporter of Barack Obama's presidential bid," also makes many good points. As he emphasizes:

If Prop. 16 passes, the most likely immediate victims of discrimination in California will be Asian Americans competing for spots at the University of California. Many progressives, it seems, are upset that Asian Americans are "overrepresented" relative to their numbers in the high school population, at schools like Berkeley and UCLA.

I could imagine why a white supremacist would be upset about this, but why would anyone else? Have we forgotten that Asian Americans were the main victims of state-sponsored discrimination in California in the early 20th century? Have we forgotten that white conservatives imposed quotas on Jews at Ivy League schools in the 1920s and 1930s because they, too, were "overrepresented" relative to their numbers in the general population? Are those the legacies we want to restore in 2020?

Both Alison and Sander also explain why Prop 16 isn't necessary to expand opportunities for African-American and Hispanic students, and how it might actually undercut their progress by creating educational "mismatches."

In my view, there should be a strong presumption against any use of racial and ethnic discrimination by the state, whether it be racial profiling in law enforcement, ethnicity and race-based immigration restrictions, or the kind of seemingly "benign" racial preferences authorized by Prop 16. But even if you don't take as hard a line on such matters as I do, you still have good reason to oppose Proposition 16.

Prop 16 is currently trailing badly in polls, and looks like it will be defeated. If so, it could be a major setback for racial preferences nationwide. If the idea is defeated in very liberal California, based in large part on opposition from moderates and Asian-Americans, and tepid support among Hispanics (who seem close to evenly divided on the measure), it might lead the national Democratic Party to reconsider whether it really wants to push affirmative action so aggressively.

Finally, Proposition 15 would partially repeal Proposition 13 (passed in 1978) and allow local governments to impose higher property taxes on commercial property. In general, I oppose funding government through taxes on immobile assets, as opposed to income, as taxation of the latter is more subject to interjurisdictional competition facilitated by taxpayers' ability to vote with their feet. In addition, Prop 13 has near-iconic status, and a successful effort to (partially) roll it back could inspire imitation in other states. The polling on Proposition 15 is close (with "yes" narrowly leading), and it is difficult to say which side will win.

In sum, much is at stake in these four referendum initiatives in the Golden State. Hopefully, voters will make the right decisions.

NOTE: As indicated above, my wife Alison Somin has been involved in efforts to oppose Proposition 16. Her employer, the Pacific Legal Foundation, has represented plaintiffs in litigation challenging the constitutionality of AB 5. I do not have any financial stake in either effort, and my views on both issues are ones I have held since long before Alison took a position at PLF in May of this year. But I nonetheless disclose this information for the sake of transparency, and to avoid any imputation that I'm somehow hiding a conflict of interest.

NEXT: Protests, Roadways, and Liability

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  1. Proposition 22 would exempt app-based transportation and delivery drivers (like those work for Uber and Lyft) from California’s terrible AB 5 law, which forces employers to classify these and many other “gig economy” workers as full-time employees. It thereby destroys large numbers of jobs by increasing the cost of hiring labor, and also eliminates the flexibility many gig economy workers value.

    I guess that’s one way to explain Prop 22 (and the business model of Uber at al. more generally)…

    1. Right. We all know that gig workers take gigs because they want flexibility, and not because they haven’t been able to find steady and secure employment. Who cares about stability and security?

      1. Why do you assume all gig workers are a monolith? I know two individuals who in fact drive for extra cash and love the flexibility.

      2. Funny story. A bunch of off duty cops were hiring on as extra security at a concern venue. Just for a couple concerts a year…

        Then they needed to be “reclassified” as employees.

      3. “steady and secure employment”

        Will Uber etc. exist if they have to treat everyone as an employee? Pay is only one aspect, a number of increased costs are involved. Worker comp, unemployment insurance, liability insurance, compliance costs.

        If the gig job disappears, is the worker better off with nothing?

        1. Bob, maybe it’s not an either or. Maybe there can be enough regulations to protect workers but not so much that it shuts down the gig economy.

          And even if not, my underlying point is can we please dispense with the fiction that most gig workers are gig workers because they want to be.

          1. Have you asked them this? Do you know it for a fact?

          2. If they don’t want a gig job, why are they working one?

            I live in an area where before the pandemic there were “help wanted” signs all over the place – it seemed that most fast food outlets had one. Yet there are plenty of Uber and Lyft drivers here. If they want a job where their employer sets their hours and fires them if they don’t show up, why didn’t they take one of those jobs instead?

            1. And how many of those are full time jobs with benefits that pay enough to live on? A gig job may well be better than a part time job flipping burgers.

              1. Why would a gig job be better than being considered a full employee? (I see, because it pays more)…

                Why would you take that choice away from them? Eliminate their ability to have a gig job, and instead they “have” to take that flipping burgers job.

                Seems mean.

                1. That’s a false choice; we can do both. And you’re looking at the wrong end of the pyramid.

                  At the top of Uber, Amazon and other gigs are people who are making millions, who even with better protections for gig workers, would still make millions. Just not as many. Why is it so important to you that some CEO not be forced to live on ten million a year rather than twenty million a year (poor baby!) so that his gig workers will be able to meet basic needs?

      4. One of my co-workers is a gig worker, delivering food. He does it on his work commute and at lunch, to earn money outside his family budget for splurging.

        He’s not looking for steady work, he has that already. He’s looking for some extra dough that he doesn’t have to actively schedule around or do a lot of paperwork for.

  2. “a better balance between genders.”

    I am shocked and appalled, Ilya, that you did not write “AMONG genders.”!!

    ????

    1. Since gender is fluid, I suppose more females (by sex) will suddenly identify as men (as a gender)? In order to improve their chances, of course, of getting into college.

  3. While I think Biden is, overall, a lesser evil than Trump, the prospect of a nationwide AB 5 is one of the worst aspects of a potential Biden administration.

    If that’s about as bad as it’ll get, that sounds pretty good to me.

    Or are people really supposed to be outraged that businesses that make millions off the “gig economy” might have to treat their de facto employees as employees?

    As for Prop 16, in case you didn’t notice, most states don’t have a comparable state amendment. So California would be as open to racial discrimination as… most of the rest of the US. Oh, shivers down my spine.

    When you over-sell things like this, it damages your credibility.

    1. When workers sign up as contractors, knowing they are signing up as contractors, why is it any of your or the government’s business to tell them they were wrong?

      Why can’t you and the state just leave people alone?

      1. By that logic, why have a minimum wage at all? If you’re going to have a minimum wage law, companies shouldn’t be able to buy themselves a legal loophole to get around it.

        1. “why have a minimum wage at all?”

          No good reason. It reduces employment and the cost of living just increases in response, leaving the worker no better off.

          1. You might be disappointed to learn that vast numbers of empirical papers have been written about both proposition, and have overwhelmingly rejected both hypotheses.

            1. No, they haven’t.

              1. I guess we’re going to have to disagree about the state of reality, then.

              2. (I was going to send you a literature review, but there are basically more literature reviews and meta-studies on the effect of the minimum wage than there are original studies on many other important issues. So here, pick your own.

      2. First-off, I didn’t actually endorse any positions here. Whether the props pass or fail isn’t going to be nearly as big a deal as Somin wants you to think.

        Second-off, “rose by any other name” and all that jazz.

        Third-off, we saw what happened when the state turned a blind-eye towards folks signing away whatever rights the boss wanted them to. We have things like OSHA, child labor laws, union rights, and so-on now, because what we saw was pretty fucking awful.

      3. “Or are people really supposed to be outraged that businesses that make millions off the “gig economy” might have to treat their de facto employees as employees?”

        1. Not everybody wants to be treated like an employee.
        2. They don’t have to treat them as employees. They can terminate the relationship, as happened to many freelance writers when the law passed.

        1. 1. Not everyone wants to make $7.25 per hour. O, wait…
          2. They don’t have to treat them as employees. They can terminate the relationship, as happened to many employees when the law passed. O, wait…

          1. “They can terminate the relationship, as happened to many employees when the law passed. O, wait…”

            Sigh. Fine, as happened to many freelancers when the law passed. Better?

            1. My point was that the effect of minimum wage laws (and similar) on employment is slim to none, as far as any empirical studies have been able to tell.

        2. And some people want to sell themselves into indentured servitude, or sign “no-compete” contracts that mean they can’t go work for a competitor after quitting.

          California doesn’t allow either of those contracts either.

          1. “And some people want to sell themselves into indentured servitude, or sign “no-compete” contracts that mean they can’t go work for a competitor after quitting.”

            None of those things are on the ballot.

            1. And outlawing unconscionable contract terms is not the same as a politically-motivated policy preference to help your entrenched taxi service and union buddies, no matter how many sequins you punch onto it with your Ronco sequin stamper.

    2. “As for Prop 16, in case you didn’t notice, most states don’t have a comparable state amendment. So California would be as open to racial discrimination as… most of the rest of the US. Oh, shivers down my spine.”

      Most states don’t NEED a comparable state amendment, not being quite so devoted to racial discrimination as California. And if there weren’t any prospect of such discrimination in California, why would they try to repeal the prohibition against it?

      Well, once again we have evidence that it isn’t the state’s voters who are devoted to racial discrimination, just the state’s politicians: Prop 16 went down in flames.

  4. As a classical conservative I agree with the post, except that I would like to point out that the drive for policies such as racial preferences has evolved out of the discrimination that conservatives championed for decades and who fought against, in some cases with physical violence the attempts to end discrimination through civil rights legislation.

    The birth of initiatives such as Prop 16 is the result of conservative efforts, particularly in the 1950’s and 1960’s to prevent government from ending discrimination against individuals based on race and religion. Looking historically, the conservative movement has been on the wrong side of history on discrimination and has much to answer for.

    1. Sorry the word you’re looking for there is progressive. Eugenics was a progressive movement.

      1. The Rockefeller Institute promoted Eugenics back in the 1920s and 1930s. The Rockefeller Institute still promotes the same outcomes (population control and eradication of The Poors) only with better marketing. Today its called “Pro Choice” and “Reproductive Rights”.

  5. Many progressives, it seems, are upset that Asian Americans are “overrepresented” relative to their numbers in the high school population, at schools like Berkeley and UCLA.

    I could imagine why a white supremacist would be upset about this, but why would anyone else? Have we forgotten that Asian Americans were the main victims of state-sponsored discrimination in California in the early 20th century? Have we forgotten that white conservatives imposed quotas on Jews at Ivy League schools in the 1920s and 1930s because they, too, were “overrepresented” relative to their numbers in the general population? Are those the legacies we want to restore in 2020?

    For some, the horror wasn’t that government has this power. The horror is who uses it, and as long as it is in the right hands*, it’s ok.

    * The right hands is defined as the hands attached to the same body as a charismatic demagogue.

    1. History offers no succor to those whistling past the graveyard, assured of the finally-achieved eternal going forward rightness of democratic control of tyrant tools, now ok for safe use by the stimulated masses.

      1. …or, more specifically, their stimulator.

  6. Yeah …. I don’t think that your facile explanation of Prop 22 (and the so-called “gig” economy) really explains the whole thing very well.

    Under the law, there is a substantial difference between independent contractors and employees. What you call the “gig” economy is basically certain companies (such as Lyft and Uber) trying to exempt themselves from the rules that all other companies in America have had to deal with. If you want to start a local company that drives people around, you have to hire employees. But if you want to stiff the working class, you call it a high-tech company that uses underwear gnomes to make profits and because it’s a part of the “gig” economy therefore … REASONS … doesn’t have employees.

    I kid, but only slightly. Look, I personally believe that the rules (especially some involving the FLSA and attendant state law) can be too inflexible, and that there can be business models that don’t fit perfectly into the rules. But companies like Uber have been exploiting people, and flouting the law, and when finally called to task – just try to get the rules changed.

    It’s not like America is known for its overly-generous packages for employees as it is. In the end, I think this is a much more difficult issue, and I am somewhat torn on it myself.

    … but the one thing I do know is that the next person who calls this the gig economy probably doesn’t need to feed their family based upon holding down multiple gigs.

    1. But Loki…

      What if you want to have some musicians play at your venue?

      What if you want to temporarily bring in some off duty cops to provide security?

      What if you want someone to write a couple articles for your blog?

      1. I am truly confused by your comment. You self-identify as a lawyer, right?

        So you know that there is, in fact, an ENTIRE BODY OF LAW that deals with just this subject? You can discuss agency law, and master/servant, and then look at the various law in jurisdictions, or perhaps the applicable federal tests (usually the DOL, most often from FLSA cases, and the IRS, because of course).

        To answer your questions-
        1. Musicians who play at a venue (for a concert or a series of concerts, for example) are not employees.

        2. Again, not an employee.

        3. A couple? Not an employee.

        These have been simple answers to (assumedly) bad-faith questions.

        1. Except AB5 classified all of these types of people as employees…

          1. Did it? Are you sure? Or are you just repeating something you heard.

            1. It is. See below.

      2. Now, if you were a attorney who knew this area of the law, you would have been clever and said,

        “But Loki, what about Exotic Dancers?”

        And I would have had to say, “Yeah, that one is complicated, but probably employee.”

        1. The real problem here is, you don’t know the law (AB5).

          It really falls under an interesting test. This test assumes that workers are employees unless the company that hires them can prove the following three things.
          1. The worker is free to perform services without the control or direction of the company.
          2. The worker is performing work tasks that are outside the usual course of the company’s business activities.
          3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

          So, a concern venue is in the business of providing entertainment. A band of musicians provide entertainment. The musicians are thus considered employees.

          See below

          https://www.latimes.com/california/story/2019-09-22/skelton-ab5-employment-law-independent-contractors-gig-economy

          1. Yes. It is the ABC test.

            This isn’t brain science. I’m guessing that, as a lawyer, you probably tell people, “Read the law and the cases, not stupid LA Times articles.”

            Right? You are an attorney.

            Right?

            1. Well, you didn’t seem like you knew what you were talking about, so I gave you the more simplified, easy to read, version.

              Here, since you didn’t read the article.

              “Newsom signed the bill last week without inviting in reporters, avoiding pesky questions about why some workers gained exemptions and others did not.
              Those exempted included doctors, lawyers and insurance brokers. Some healthcare workers, musicians and independent truckers were among those who weren’t.”

              So yes, Musicians were classified as employees under AB5. Contrary to your previous assertions.

              1. No. That’s not true.

                Stop bellowing yourself.

                You literally just quoted an opinion piece that was written right after the bill was passed, with a parade of horribles, that ends by castigating Democrats and Labor.

                I was kidding before, but now I’m serious.

                You aren’t really a lawyer, are you.

                1. It is true.

                  In fact, it was so severe, that “some” Musicians managed to get an exemption from AB5, via an amendment on April 17th of 2020. (Keep in mind AB5 went into effect on January 1st). But some musicians did not. (And if it wasn’t true at all, why did an amendment need to be passed months later?).

                  Here’s more

                  https://www.law.com/therecorder/2020/05/04/the-music-industry-receives-relief-from-ab5/#:~:text=quickly%20became%20illuminated.-,After%20over%20a%20year%2Dand%2Da%2Dhalf%20of%20lobbying,niche%20in%20the%20California%20economy.

                  The issue is, you don’t really know the law, nor the ramifications.

                  These are facts. You’re entitled to your own opinions, but not your own facts.

    2. “But companies like Uber have been exploiting people, and flouting the law, and when finally called to task – just try to get the rules changed.”

      People in a Democracy petition to have the rules changed? What’ll they think of next, freedom?

      1. First, I wasn’t referring to just this petition. If you are unfamiliar with Uber’s past, I suggest you familiarize yourself.

        Wait … I know you. Don’t bother.

        Second, I am fully aware that the vast, vast majority of initiatives fall into categories:
        1. Completely stupid ones. These are the ones that the idiots propose. At least they come from a good place, but they are usually profoundly stupid.

        2. Rent-seeking. These are the ones that the corporations and their lobbyists push through. They have the benefit of not being stupid or unlawful, with the disadvantage of usually being complete corporate welfare.

        Which is why I vote No. On everything.

        1. Good thing there wasn’t any rent-seeking involved in AB5 in the first place!

          1. Oooh! You so knowledgeable!

            So, I’m sure you can explain the impact of AB5 and why it was passed, and what the prior California Supreme Coirt ruling (the ABC test) meant, and, of course, the various litigations under the federal standard and the interplay of how the various political appointments in the DOL have influenced that (and what might happen moving forward).

            Or maybe read my OP and see what my perspective actually is.

            Or, you know, be as clever as your mom de plume.

            1. “Oooh! You so knowledgeable!”

              Thanks, Loki! But don’t worry, you’re almost as knowledge about as I am! But it’s too bad you’ll never be as clever as my nom de plume.

              1. Naw. You’re just a moron I don’t engage with because (altogether now) I either like nor respect you.

                I find you stupid, crude, and misogynistic – and that is on your best days.

                Isn’t there a busy street for you to play in somewhere?

                1. “I find you stupid, crude, and misogynistic – and that is on your best days”

                  What the fuck do I care what some stupid asshole thinks?

                  And make no mistake, Loki, you are both stupid, and and asshole.

    3. Death to entrenched taxi interests and the politicians who protect them.

    4. “I do know is that the next person who calls this the gig economy probably doesn’t need to feed their family based upon holding down multiple gigs.”
      You have that right. Lift and Uber do mean to exploit their drivers. AB5 has really screwed writers and other artists who do very occasional work. Yet there was nothing in P 22 to eliminate that negative effect. The reason was obvious (no money from companies like UBER). It was unfortunate that P 22 did not propose an outright repeal of AB5

      1. “Lift and Uber do mean to exploit their drivers.”

        Free market capitalism is about exchanges where both sides think they got the better of the deal, both sides are exploiting the other. If both sides don’t think they’re better off with the deal than without, it doesn’t happen.

  7. Time to let CA be its own country. Doesn’t need to be a drain on America any longer.

    1. I think California would probably wish you good luck getting that $400 bn in Federal tax money somewhere else. It’s not like the Federal government would spend a lot less money on the armed forces or on Federal welfare programmes without California.

      1. The Federal Government spends nearly that in CA, all costs considered.

        1. It does. But I’d bet dollars to doughnuts that a big chunk of that goes to military bases, naval bases, etc., and defence procurement, none of which a more-Red-State-dominated US would do less of.

          1. Good luck preserving that CA income when it is all foreign earnings.

            1. Nobody thinks Californian independence is a good idea, but that doesn’t make California, in Jimmy’s words, “a drain on America”. (America which apparently doesn’t include California in his mind.)

      2. That was one reason that CA got much less relief from the tax cut of 2017 than most other states.

  8. Ilya,
    Off-topic but on the chance you haven’t seen it, you may be interested in Robin Hanson’s latest Overcoming Bias blog post “Why Abstaining Helps,” for the obvious reason.

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