November 18, 2017

Archives for November 9, 2017

Does A Rising Tide Still Float All Boats?

The world’s post-WWII economic surge was founded on the idea that macroeconomic advances benefit everyone equally — i.e., that “a rising tide lifts all boats” (a phrase widely attributed to JFK, which his speechwriter apparently borrowed from a local New England chamber of commerce). This idea is a hallmark of the neoliberal economic model.

Whether the aphorism still holds today is predictably a subject of highly polarized economic debate — see, e.g., this June 9, 2014 LA Times article. My own research leads me to conclude that the idea worked powerfully for decades, began to break down in the 70’s and 80’s (as we’ve seen in prior posts in this series), and since then has begun to fail as remarkably as it once succeeded.

This week and next, I’m going to quote extensively from Work, Power, and Status in the Twenty-First Century (2016), by Ryan Avent, a senior editor and economic columnist for The Economist, whose analysis runs like this:

  • Neoliberal economic policy did in fact lift all boats from the early post-war years through its heyday in the 70’s and 80’s.

The last generation, during which the digital revolution’s first powerful effects made themselves felt, was an era of remarkable political moderation and consensus. The period began, in the 1970s and 1980s, with a liberalizing impulse across a broad range of countries . . . As global markets integrated, politics in most rich democracies coalesced around support for market-oriented economies, global openness and progressive social goals. It was a pleasant sort of era for the cosmopolitan, technocratic elite: the believers in the notion that the market, lightly tended, offered the best route to global prosperity and peace.

  • It especially raised national economies and benefited the wealth and income of individual wage-earners — especially where government-centric models such as social democracy and communism had previously been in charge.

[T]he nature of economic growth shapes political priorities . . . Political momentum for economic liberalization in the 1970s and 1980s emerged as typical voters lost confidence in the ability of the more statist economic policies to raise long-term living standards.

The outcome of that liberalization differed substantially across countries. In China and India, liberalization delivered on its promise. In China, especially, a generation of rapid growth succeeded in elevating a large middle class out of poverty. China’s economic pie grew massively.

  • But in the past few decades, continued allegiance to neoliberal policy has had the reverse effect, especially in the USA and other nations where it was most entrenched, resulting in disproportionate benefits — i.e., rapidly growing economic inequality.

In the rich world, things worked differently. In 2014, the inflation-adjusted income of the typical American household was just 7 per cent higher than it was in 1979. By contrast, the income of a household in the 95th percentile of the income distribution grew 45 per cent over that period.

  • Since the 80’s, the “lifts all boats” paradigm has not kept pace with the altered economic dynamics brought on the technological revolution, resulting in a shift in wealth creation and sustainable income away from wage-earners.

[T]he world economy operates on a framework very much rooted in an industrial, scarcity-bound world. The interaction of that world with the technological advances of the digital era have landed labour in a trap. The digital revolution generates fantastic labour abundance; that abundance contributes directly to downward pressure on the wages of the typical worker. It also reduces the bargaining power of labour relative to other, scarcer factors, allowing those factors to capture outsize share of the gains from growth.

  • Continued allegiance to the paradigm is currently undermining the concept of working for a living.

We now have new economic challenges, and the former labor/wage model is no longer producing equitable results. Job-based economic security and prosperity is being left behind.

Low pay for the great mass of workers is distributionally unfair. It undermines support for the market-based economic system that enables sustained economic growth.

We might not care so much about these inequities if the digital revolution were reducing the costs of all the many things the typical household wants to buy, from steak dinners to adequate housing to a top-flight university education. But cost reductions have so far been highly uneven: massive for some things, such as digital entertainment, completely absent for others, such as homes in nice neighborhoods.

This analysis essentially restates that of economist Guy Standing, which we looked at over the past two weeks.

Arent concludes by saying, “This process will not end without a dramatic and unexpected shift in the nature of technology, or in the nature of economic institutions.” Change on that level means shifting long-standing, deeply entrenched societal paradigms. More on that next time.

 

Kevin Rhodes is on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. His past blog posts for the CBA have been collected in two volumes — click the book covers for more information.

Colorado Court of Appeals: Heat of Passion Jury Instruction Impermissibly Lowered Prosecution’s Burden of Proof

The Colorado Court of Appeals issued its opinion in People v. Tardif on Thursday, November 2, 2017.

Jury InstructionsBurden of ProofHeat of Passion ProvocationAttempted Second Degree MurderFirst Degree AssaultMitigating FactorEvidenceDue ProcessSelf-DefenseDeadly Physical ForceSlow Motion VideoUnfair Prejudice—Prosecutorial Misconduct.

Tardif’s friend Soto was at a skate park and got into an argument with the victim. Tardif and Soto were members of the same gang, and the victim was wearing the colors of a rival gang. Soto called Tardif, and when Tardif arrived, Tardif and Soto walked up to the victim and Tardif shot him once in the abdomen. The victim fled and survived. Other people in the skate park recorded video of part of the initial argument between Soto and the victim as well as the shooting. A jury found Tardif guilty of attempted second degree murder, first degree assault, conspiracy to commit first degree assault, and three crime of violence counts.

On appeal, Tardif argued that the trial court erred by not instructing the jury that the prosecution had the burden to prove the absence of heat of passion provocation beyond a reasonable doubt. Heat of passion provocation is a mitigating factor for attempted second degree murder and first degree assault. Here, the heat of passion provocation instructions failed to inform the jury that the prosecution had to prove the absence of heat of passion provocation beyond a reasonable doubt. Therefore, the instructions, considered together, failed to properly instruct the jury on the prosecution’s burden of proof. Because Tardif presented sufficient evidence for a heat of passion provocation instruction, the error lowered the prosecution’s burden of proof and violated Tardif’s constitutional right to due process. Tardif also argued that the trial court’s self-defense instructions included several reversible errors. Self-defense is not an affirmative defense to conspiracy to commit first degree assault, and therefore, the court did not err in failing to instruct the jury that it was. But the trial court erred by instructing the jury on when deadly physical force may be used in self-defense because deadly physical force requires death, and here the victim did not die.

Tardif additionally argued that the trial court erred by admitting slow motion video recordings of the shooting. Although this evidence was relevant to explain the events around the shooting and to determine whether defendant acted with aggression or in self-defense, the probative value of the slow motion recordings was very low. This evidence was also cumulative of the real-time recording that was also admitted. Further, because Tardif’s state of mind at the time of the shooting was a disputed issue, the slow motion recordings’ low probative value was substantially outweighed by the danger of unfair prejudice. The slow motion recordings may have portrayed Tardif’s actions as more premeditated than they actually were. The trial court abused its discretion by failing to weigh the slow motion recordings’ probative value against their danger of unfair prejudice.

Tardif further argued that two statements by the prosecutor during closing argument constituted misconduct and required reversal. The court of appeals did not doubt the reliability of Tardif’s conspiracy conviction and concluded that the prosecutor’s allegedly improper statements did not constitute plain error.

The conspiracy to commit first degree assault conviction was affirmed. The remaining convictions were reversed and the case was remanded with directions.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Corporation with No Property or Payroll of Its Own Need Not Be Included on Tax Return

The Colorado Court of Appeals issued its opinion in Agilent Technologies, Inc. v. Colorado Department of Revenue on Thursday, November 2, 2017.

Holding CompanyPropertyCorporate Income Tax ReturnsCombined Returns.

Agilent Technologies, Inc. (Agilent) is incorporated in Delaware, but during the years at issue (tax years 2000 to 2007), it maintained research and development and manufacturing sites in Colorado. Agilent timely filed corporate income tax returns for these years. Agilent Technologies World Trade, Inc. (WT) is a subsidiary of Agilent and is incorporated in Delaware. It was formed as a holding company to own foreign entities operating solely outside the United States. As a holding company, WT does not own or rent property, has no payroll, and does not advertise or sell products or services of its own.

For federal tax purposes, WT and the foreign entities elected to be taxed as a single corporation. Agilent did not include WT in its corporate tax returns for the years at issue. The Department of Revenue (Department) issued notices of corporate income tax deficiency requiring that Agilent include WT in its Colorado combined returns for the years at issue and assessed tax, interest, and penalties. Agilent contested the Department’s adjustments, and the director upheld the notices. Agilent sought review in the district court. The district court concluded that the Department was prohibited from requiring Agilent to include WT in its Colorado combined corporate income tax returns and entered summary judgment for Agilent.

On appeal, the Department contended that the district court erred when it held that WT was not an includible C corporation under C.R.S. § 39-22- 303(12)(c). Conversely, Agilent argued that C.R.S. § 39-22-303(8) required exclusion of WT from its combined return. C.R.S. § 39-22-303(12)(c) requires inclusion of a corporation in a combined report if “more than twenty percent of the C corporation’s property and payroll” is assigned to locations inside the United States. Because WT had no property factors, although it wasn’t prohibited from including WT, Agilent was not required to include WT in its Colorado combined tax return.

The Department also contended that the district court erred when it ruled that, as a matter of law, C.R.S. § 39-22-303(6) could not be applied as an alternative basis for including WT in Agilent’s tax return. It also contended that the economic substance doctrine should be applied to permit taxation of WT even in the absence of specific statutory authorization. C.R.S. § 39-22-303(6) authorizes the Department to allocate income and deductions among corporations that are owned or controlled by the same interests on a fair and impartial basis to clearly reflect income and avoid abuse. However, C.R.S. § 39-22-303(6) cannot be applied to allocate income among affiliated corporations that were not otherwise includible under C.R.S. § 39-22-303(8) to (12). Accordingly, the district court did not err in concluding that C.R.S. § 39-22-303(6) did not provide a basis for including WT in Agilent’s tax return. Further, it was not alleged that WT lacks a business purpose apart from reducing tax liability. Therefore, the economic substance doctrine does not provide an independent basis in this case for including WT in Agilent’s combined return.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Tenth Circuit: Unpublished Opinions, 11/8/2017

On Wednesday, November 8, 2017, the Tenth Circuit Court of Appeals issued no published opinion and one unpublished opinion.

United States v. Lugo-Tovar

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.