Pete Peterson, the Republican candidate for Secretary of State, plans to use the entrepreneurial qualities of Californians to reignite the greatness of the Golden State.

Now, rarely enough, we’re seeing a second unified front among some dissimilar editorial boards at large state newspapers. The issue: lightly disguised attempts to manipulate the regulatory process to kill or severely damage Uber, Lyft and other innovative companies that use smart phones and individual drivers to create transportation networks that often are cheaper and easier to use than taxis, limos or other alternatives.

Here are excerpts from three editorials in the last week.

L.A. Times: Driving away innovation

Just as Silicon Valley is a hotbed for innovation, Sacramento is a hotbed for regulation. Those two impulses are clashing now over a new generation of tech companies that uses smartphone apps to connect ride-seekers with drivers. If lawmakers aren’t careful, the regulations they’re poised to impose could snuff innovation across the sharing economy.

At issue is whether the Legislature will impose a second layer of rules on companies such as Uber, Lyft and Sidecar in addition to the ones the state Public Utilities Commission has been setting over the past year. To its credit, the commission recognized that these “transportation network companies” are fundamentally different from taxi companies, despite similarities in the services offered. The commission’s rules for driver and vehicle safety recognized the risks to passengers, but also that the drivers were freelancers using their own vehicles on a part-time basis, not full-time employees using cars dedicated to carrying passengers.

Nevertheless, some lawmakers allied with the taxi industry are now arguing that what’s sauce for the goose should be sauce for the gander. With little or no evidence to show that the ride-sharing services are as risky as traditional taxis, they nevertheless are pushing to make the former comply with several of the regulations that apply to the latter — or even more stringent ones.

The current version of one bill, AB 2293, proposes that ride-sharing companies carry more coverage when their drivers have no passengers than cab companies in L.A. are required to carry when their taxis are full.

Read the online version here.

The O.C. Register: Saddling rideshare services with uber-insurance

Cheering the bill is a coalition of special interests. Taxi drivers and companies, who are rapidly losing business to ridesharing companies, welcome the chance to impose higher costs on their competitors. The industry complains about regulatory disparities, yet it seeks to raise protectionist regulations on others, rather than lower its own regulations, which would open taxis up to more competition. …

There was a time when Microsoft and other tech companies were loath to stoop to lobbying the government. They were naïve enough to think that they should invest their hard-earned revenue in developing new technologies and finding better ways to serve their customers and stay ahead of their competition, rather than courting politicians. Then reality hit when the government cracked down with costly regulations and bogus antitrust charges. Now the ridesharing companies are learning this lesson.

Read the online version here.

U-T San Diego: Ridesharing bill: The stench in Sacramento

Under the bill, ridesharing companies wouldn’t just have to meet the state edict that they have $1 million commercial insurance coverage while a passenger is in their cars; they would have to have such coverage “from the moment a driver logs on to the application” linking them with a ridesharing network.

This mandate has no nexus with passenger or driver safety. Hitting a button on a smartphone and glancing at a screen while driving is an extremely common thing for drivers to do. If it were truly dangerous, our morgues would be overflowing.

That’s why it’s not the American Automobile Association or public-health lobbyists pushing AB 2293. It’s taxi and limousine companies that don’t want competition — with a huge assist from insurance companies, which love the idea of costlier coverage mandates, and trial lawyers, who expect to win bigger settlements from those required to have more expansive coverage.

I wrote the U-T editorial. Read the full thing, with the show-offy “Jungle” reference, here.

These didn’t pull any punches, echoing what they were hearing from their constituents: Asian parents didn’t want racial quotas keeping their deserving kids out of the UC and CSU campuses of their choice. Their framing: What you define as “social justice” is punishing Asians in the name of atoning for historical white racism.

But will this sharp single-issue split lead to an Asian political realignment? Or just to a shakier Democratic coalition in which Asian-Americans are still largely reliable members?

The latter is far more likely because of how damaged the GOP brand is with Asian-Americans. A new Politico analysis written by three academics opens with the painful account of Kansas Republican Sen. Pat Roberts’ awkward, patronizing and goofy comments to an Indian-American doctor nominated by President Obama to be surgeon general, then says the following:

“… this is exactly the sort of exchange that makes Asian Americans — the fastest growing ethnic group in the country — more likely to identify themselves as Democrats than Republicans, and by stunning margins. In the 2012 presidential election, Barack Obama won 73 percent of the Asian American vote, exceeding his support among Hispanics (71 percent) and women (55 percent).”

If GOP can’t understand problem, that’s telling

Politico points out something that I find amazing: Republicans …

“… seem generally mystified as to what they might be doing wrong. …  Asian Americans as a group have certain characteristics that would ordinarily predict a Republican political affiliation, most strikingly their level of income, which on average, is higher than any other ethnic group in the United States. …

“Other conservatives have pointed to less tangible characteristics of Asian Americans, such as an emphasis on discipline in child rearing and a penchant for entrepreneurship, that ought to make them Republicans. ‘If you are looking for a natural Republican constituency, Asians should define “natural”,’” notes the American Enterprise Institute’s Charles Murray. “And yet something has happened to define conservatism in the minds of Asians as deeply unattractive.”

Yes, “something has happened,” but it’s hardly a mystery. Republicans are perceived as looking down on nonwhites. GOPers may say it’s unfair, but nothing else explains their huge underperformance with Asian voters. The academics agree, and offer some hard evidence, not just anecdotes.

“First, there’s race. The feeling of social exclusion stemming from their ethnic background might push Asian Americans away from the Republican Party. Many studies, like Henri Tajfel and John Turner’s work on the psychology of intergroup relations, have shown that one’s identification with a broad category of people—be it on the basis of language, ethnic or racial solidarity or some other trait—is important politically. Republican rhetoric implying that the (non-white) ‘takers’ are plundering the (white) ‘makers’ has cultivated a perception that the Republican Party is less welcoming of minorities. …

“And many Asian-Americans do feel like they don’t get equal treatment. According to the 2008 National Asian American Survey, nearly 40 percent of Asian Americans suffered one of the following forms of racial discrimination in their lifetime: being unfairly denied a job or fired; unfairly denied a promotion at work; unfairly treated by the police; unfairly prevented from renting or buying a home; treated unfairly at a restaurant or other place of service; or been a victim of a hate crime. We found that self-reported racial discrimination was positively correlated with identification with the Democratic Party over the Republican Party.”

Making the case for Kashkari: 2 plus 2 is 4

Now if this doesn’t make it obvious to California Republicans that letting Neel Kashkari be their gubernatorial candidate for the inevitable November GOP loss to Jerry Brown, nothing will. I wish he didn’t vote for Obama in 2008 and I wish he didn’t see his role as “bailout czar” in the big-government TARP (Troubled Asset Relief Program) as such a badge of honor.

But if you want Asian-Americans in California to take a fresh look at the GOP — and if you’re a Republican, you do, you do, you do — then the political math is about as difficult as two plus two equals four.

Strategery: Sometimes you just have to go there.

Jan. 18, 2013

By Chris Reed

That California is extraordinarily hostile to business is accepted as a given by just about everyone who is an executive, manager or small-business owner in the state.  But Democrats and some in the media routinely challenge this assumption, and some genuinely seem to believe it’s nothing but a talking point used by business interests to gain undeserved favor.

I once saw a labor official even suggest there was something sinister or rigged about the CEO survey that comes out every year and always ranks the Golden State last in business-friendliness, as if there was a national conspiracy to put California down.

To a degree, Gov. Jerry Brown seems to believe that the business community’s gripes have some merit. So he’s taken to criticizing excessive regulation and to urging bureaucrats to help, not hinder, job creation.

Brown now faces an acid test for his alleged interest in helping the private sector: an insanely capricious and destructive decision by the state’s Franchise Tax Board to impose four years of retroactive taxes on hundreds of businesses because it lost a court fight with one business. It was a fight that started in 2008 over whether the company qualified for a tax break that encourages entrepreneurs — a partial state income tax exclusion on sales of stock of a “Qualified Small Business.”

Tax decree

At xconomy.com, victimized businessman Brian Overstreet shares his horrific story of facing a huge ex post facto tax decree, and explains its genesis:

“The company at issue in that lawsuit did not meet one of the QSB requirements—that it maintain 80 percent of its employees and assets in California. In August of 2012, the California Court of Appeals sided with the plaintiff, ruling that denying him the QSB exclusion based on the ’80 percent requirement’ was an unconstitutional violation of the interstate commerce clause.

“Since the FTB lost the case, you might think that they would strike the unconstitutional requirement and keep the rest of QSB statute intact. Not a chance.

“What the FTB did instead was to take their ball and go home. They decided that since they could not impose the 80 percent requirement, no one would be entitled to the QSB exclusion. They put out an announcement terminating the Qualified Small Business exclusion and retroactively disqualifying all exclusions and deferrals going all the way back to 2008.”

This is bonkers. You don’t get much more anti-business than punishing business owners out of pique over losing a lawsuit that those business owners had nothing to do with.

Overstreet’s takeaway from this assault on sanity:

“1. If you are a business founder or early investor who sold stock since 2008 and took the QSB exclusion: Surprise! You are going to get a bill from the FTB for the 50 percent of the taxes you excluded plus interest plus possible penalties.

“2. If you are a business founder or early investor and have not yet sold stock: Rethink your business and tax planning strategies. Consider whether it’s fiscally prudent to stay in California.

“3. If you a contemplating starting or investing in a California business: Think long and hard. Consider out-of-state alternatives.”

The governor should clean house, right? Well …

If Jerry Brown really means what he says about wanting to help grow jobs in California, here’s what he should do: Clean house at the Franchise Tax Board.

FTB Executive Director Selvi Stanislaus? He should be gone, for starters. And so should everyone at FTB who thought this made sense.

But there’s a little problem with the let’s-clean-house theory. According to the FTB’s website, who are the three members of the agency’s governing board?

1) Ana Matosantos. As in Jerry Brown’s director of finance.

Evidently word of the governor’s desire to help the private sector hasn’t reached his Cabinet.

2) Jerome Horton. As in the former Democratic lawmaker from Inglewood appointed by Brown to the FTB oversight post.

Evidently word of the governor’s desire to help the private sector hasn’t been shared with his board appointees.

3) John Chiang. As in the state controller, elected by the voters.

Evidently breaking trust with job-creating entrepreneurs in such grotesque and extreme fashion isn’t a big deal to the veteran Democrat who fancies himself as governor material.

I look forward to watching this story play out. Most mainstream media in California have little sympathy for business complaints. But everyone can relate to the story of people hit with four years of dubious back taxes because of childishness and stupidity from tax bureaucrats. And their bosses.

Your move, Gov. Brown. Yo, Jerry: Do you think this is fair? Tolerable? Honorable?

We shall see.