Crony Capitalism Not Working Out Too Well For Upstate New York

On Saturday the New York Times, deep in its interior (page A21), had a report on the economy of upstate New York titled "Governor Struggles to Preserve Jobs and Economic Momentum Upstate."  I like the term "economic momentum" in relation to upstate New York.  As far as I know, all the economic momentum there is negative, and preserving that kind of momentum is the last thing anyone would want to do -- I think.  Another theory is that upstate New York leans Republican in its politics, and Governor Cuomo and his Democratic allies are intentionally shrinking it because they would like nothing more than to have it disappear.  You be the judge!

Upstate New York is a world center of crony capitalism, by which I mean every sort of government grant, tax break, incentive, and handout to big employers to induce them to come and bring "jobs."  The Times article goes through a litany of various of these giveaways.  Examples:

Mr. Cuomo has been aggressive about promoting business in the state, cutting or capping a variety of taxes and doling out state money, including $1.5 billion in stimulus through a regional development competition promised this year. He says such plans are necessary to reverse what he calls the “negative synergy” of job and population losses.  To that end, the state has awarded nearly $3 billion through its Regional Economic Development Councils over the past four years, nearly $2.4 billion of it upstate, to create or retain some 150,000 jobs, according to the Empire State Development Corporation, the state’s economic development agency. New York has also offered billions in other incentives dating back to previous governors’ terms.        

They hand out billions and billions, and all they have to show for it are ongoing "job and population losses."  Somehow, nobody ever realizes that in the world of handouts and tax giveaways, the politically disfavored who don't get the handouts and breaks end up bearing disproportionately high taxes, and over time they give up and close down.  Overall, the results of the game are negative.  Lots of that is reported in the Times article:

On Monday morning, the Entergy Corporation said that it would close a nuclear plant on Lake Ontario, eliminating more than 600 jobs north of Syracuse. Hours later, Alcoa said it would soon idle or close two smelting plants in Massena, on the St. Lawrence River, leaving nearly 500 people out of work. The same day, the state posted a formal notice that Sentry Safe, a safe-building company in Rochester, would close a factory with some 300 jobs next summer.      

And there are plenty of more examples.  Then there are the brilliant efforts of our political saviors to swoop in at the last minute with big government handouts to "save" some jobs:

[O]n Wednesday, . . . Mr. Cuomo and Senator Chuck Schumer, a Democrat, announced a deal with Kraft Heinz, committing up to $25 million in state funds for upgrading several of the company’s upstate plants, which make products such as mozzarella and Cool Whip, in exchange for the company’s maintaining nearly 1,000 jobs for five years.     

Without a doubt, Kraft Heinz will shortly be back for another handout, and then another, to "save" the jobs again and then yet again.

There is nothing new about this.  In upstate New York they've been trying to lift themselves up by the magic of crony capitalism for as long as I've been alive.  Check out this article from Forbes in 2000 titled "Willis Carrier's Ghost."  Willis Carrier is the Carrier of Carrier Air Conditioning, a large employer originally attracted to the Syracuse area by government handouts.  According to Wikipedia here, at its peak Carrier employed over 7000 in the Syracuse area, but now the total is more like 1000.  "Over the course of 2011 the majority of [Carrier's] manufacturing buildings of the Syracuse campus were demolished at a cost of nearly 14 million dollars."

But Carrier is only the tip of the iceberg in Syracuse's dabblings in crony capitalism.  From Forbes:

By the estimate [in 2000] of Vito Sciscioli, the city’s longtime development director, some $2 billion has been shelled out in Syracuse over the past five years in government grants, tax abatements, benefits from tax-exempt financing, infrastructure improvements and utility breaks. This is a staggering sum for a city that now has only 152,000 people in it.      

The population of 152,000 was in 2000.  By 2014 it was more like 144,000.  I guess the $2 billion didn't work out too well.  Too bad for the suckers who stuck around but didn't get the handouts!

But Cuomo and his allies have no ideas for upstate other than more of the same crony capitalism that has driven the place into the ground for decades.  Another billion dollars for Buffalo!  Four new casinos!  And of course, the one business that was ready to come in and start work right away without government handouts or help of any kind -- "fracking" for natural gas -- has been banned.  With gas prices now way down, it's probably too late for that, now, at least for several years. 

New York -- The Endless Source Of Bad Policy Ideas

Far more bad public policy ideas come out of New York than anyone can even keep track of.  But I thought I'd just take note over a period of a few days and see what turned up.  So here are some of the latest in the endless list of bad ideas.

Restricting hotels in industrial zones.  The New York Observer reports on November 3 that our Mayor and City Council have reached an "agreement" to make changes to the zoning law to limit new hotels in industrial zones.  Up to now, under New York's zoning laws, hotels have been permitted "as of right" as a lawful use in areas zoned for industry.  The new proposal is that you can't build a hotel "as of right" in such a zone any more, and you will need to go through a long and expensive process to get a special permit, after which you may well not get approval at all.

Before a few years ago this was never really an issue, because there were almost no hotels in the industrial zones; and who would want to build a hotel next door to a noisy, dirty factory anyway?  But in the last few years suddenly there have been lots of hotels getting built in the industrial zones.  Did something change?  Most importantly, most of the factories have closed or moved away.  According to the latest data from the New York Department of Labor, New York City is down to only 73,900 manufacturing jobs, well less than 2% of all jobs (the total is 4.192 million), and yet another decline from 76,500 last year, even as other types of jobs were up substantially.  And, with most of the factories gone, the gritty former industrial zones became kind of cool.  Because you can't build much else there, particularly residences, the land is cheap.  So hotels became an obvious choice.

Now, why would the City possibly want to restrict an influx of new productive economic activity into these otherwise mostly dormant industrial zones?  Read the Observer article, and you'll find quotes from Deputy Mayor Alicia Glen and Councilman Stephen Levin (who represents an area of Brooklyn with some industrial zones) talking about preserving existing jobs, and preserving space for new factories just waiting to move in.  Do you buy it?  I sure don't.  Manufacturing in New York City has been in rapid decline toward oblivion for my whole lifetime, and it ain't coming back any time soon.  The answer is elsewhere.  It is that the hotel workers union has been putting on a big push for the zoning restrictions, because the new hotels in the industrial areas provide low cost non-union competition for the established hotels in the fancy areas.  You have to do some looking to find articles discussing this (the unions prefer to do their corrupt deals behind the scenes), but there are plenty if you look.  Here's one from the same Observer back in 2010.  Excerpt:

The main force behind the push-back against the limited-service hotels [in industrial areas] is Peter Ward, the president of the New York Hotel & Motel Trades Council. His union is threatened by the explosion of such hotels-since 2005, the union estimates that more than 13,000 rooms in limited-service or boutique hotels have been developed or are in development. Given that the vast majority of the limited-service and boutique hotels have small staffs and are non-union, this draws business away from some venues that employ Mr. Ward’s membership. 

Yes, our City Council is completely willing to prevent entry of new businesses and jobs into underutilized areas in order to protect a union from competition and keep its political contributions flowing.

Opposition to expensive new condominiums.  In my neighborhood of the West Village, two big new condominium developments are nearing completion, with a total of perhaps 300 units.  The apartments are big, and the average price over the two projects is something like $7 million per apartment.  That means a total sales price for the two of well over $2 billion.  In any rational world you would think that the government and the neighbors would be salivating over all the real estate and income taxes that are going to be paid by these well-heeled new neighbors.  The two projects replaced a former warehouse, that paid very little in taxes, and a hospital, that paid nothing.

Well, you don't understand Greenwich Village or New York City.  You won't find anyone (except me) in Greenwich Village to say a good word about these new condos, and our Mayor de Blasio when he was running specifically opposed the one that replaced the hospital.  Many raised a huge ruckus over "losing" our hospital, although since it closed the nearest one is barely a mile away, and there are 20+ other hospitals on our little island of 23 square miles.  Taxes?  We get plenty of those from the tooth fairy.

So what is the thinking?  An article in the new November issue of our local paper West View News ("The Voice of the West Village") may help you to understand.  The article considers the effect of yet another new large development now proposed for the southwest corner of the neighborhood, on top of the two mentioned above.  Here is their take:

[W]e are being surrounded by a new generation of Villagers who can afford some of the most expensive apartments in the world.  And soon they will be the majority voters at the Community Board meetings asking to end rent stabilizations so their kids graduating from Ivy League colleges can move into those nice quaint brown stone apartments currently occupied by little old Villagers on Social Security. 

It's the envy of percents 2 and 3 against percent 1.  Or, in the case of our neighborhood, maybe the envy of the bottom half of the top one percent against the top half of the top one percent.  The evil rich must be stopped before they drive us out of our homes!  (It's not clear to me how that would work, given that the apartments at issue are new ones that nobody lived in previously.)  Make those "kids graduating from Ivy League colleges" suffer two hour commutes in from Staten Island!  It's all very unbecoming.

Support of EPA's Clean Power Plan.   According to the New York Law Journal this morning, New York's Attorney Journal Eric Schneiderman has joined a coalition of 24 "states, cities and counties" seeking to intervene in litigation in the D.C. Circuit to support EPA's "Clean Power Plan."  The CPP is otherwise known as the Obama administration's gambit, without Congressional support, to shut down the U.S. coal industry.  The article does list seventeen states that have lined up with New York to support EPA, although it concedes that some 25 states have taken the other side.  Here are the Law Journal's quotes from Schneiderman and City Corporation Counsel Zachary Carter:

Attorney General Eric Schneiderman said the plan is needed to respond to the threat of climate change and incorporates strategies New York and several other states have used to cut pollution. . . .  Corporation Counsel Zachary Carter said in a statement, "These important rules are firmly based in law and in science, and give government the critical tools it needs to protect our environment well into the future."    

Over at Power Line, Steven Hayward points out that the U.S. has approximately 500 coal power plants today.  Meanwhile, in Asia they are planning to build around 500 coal power plants next year alone -- and then another 500 plants the following year, and another the year after that, and so on until about 2030, at which point everybody in Asia should finally have electricity.  The large majority of it from coal.  And this is not just China -- it's India, and Indonesia, and Japan (got to replace Fukushima!), and South Korea, and Thailand, and on and on and on.  So what exactly is the point of the U.S. closing its 500 plants?  Hey, it's what all right-thinking New Yorkers agree we should do!  Don't ask us for any actual rational thinking.  

No Subject Generates More Ignorance Than Poverty

Back in the 90s when welfare reform got enacted, a chorus of cries went up from the Left, loudly proclaiming that the heartless cutbacks would throw millions of innocent children into poverty and starvation.  Even New York Senator Daniel Patrick Moynihan, justly famous prior to that time for educating people on the destructive effects of welfare dependency, joined the chorus.  In early 1996 Moynihan took to the floor of Congress to deliver a famous speech opposing the welfare reform then about to be passed.  Here are some excerpts (from a March 1996 article in First Things):

Welfare reform proposals in Congress, especially provisions to put time limits on the reception of benefits, “will produce a surge in the number of homeless children such that the current problem of ‘the homeless’ will seem inconsequential,” declares Moynihan. Then comes the most stark and chilling statement of his counsel of despair: “I believe our present social welfare system is all but overwhelmed. . . . Hundreds of thousands of these children live in households that are held together primarily by the fact of welfare assistance. Take that away and the children are blown to the winds. [An] Administration analysis concludes that the welfare conference agreement [between House and Senate] will force 1.5 million children into poverty."       

Then the welfare reform became law, and to literally everyone's surprise, child poverty went down.  And not by a little.  A study by Heritage in 2003 found that the poverty rate for black children went down from 41.5% in 1995 to about 30% in 2000.  Here is their chart:

View fullsize

I will admit that I too was surprised at the time, but that's because this was before I started getting into the numbers and understanding how this works.  Then I studied up a little and learned how it works, and I had the aha! moment.  You can have it too.  Here's how it works:

The government "antipoverty" programs are specifically and intentionally designed to make absolutely sure that nobody who takes the handouts ever escapes from poverty.  Far and away most of the government handouts are either post-tax or in-kind rather than cash (examples: food stamps, public housing, Medicaid, EITC, clothing and energy assistance).  The official definition of "poverty" excludes all post-tax and in-kind benefits.  Then there are benefits distributed in cash, notably TANF and SSI.  These things count in the definition of "poverty," but the level of the handouts is very specifically and precisely set to be sure that it is always just below any applicable poverty thresholds.

Now why would the government intentionally design "anti-poverty" programs to keep the level of measured "poverty" up?  Do you think that it doesn't make any sense?  If so, then you understand nothing about how bureaucracies work.  In fact it makes perfect sense.  If the number of people in "poverty" actually shrank, then the public's willingness to support huge anti-poverty spending would shrink, and the bureaucracies would be threatened.  From the bureaucracy's perspective, it is absolutely essential that the number of people counted as being in poverty be kept high.

Meanwhile, simply working full time for the year, even at a minimum wage job, is sufficient to raise most people out of poverty (depending somewhat on family size and number of workers in the family).  When people get cut off from welfare, many go to work, and by doing so they exit the ranks of those counted as poor.  So actually, as soon as you understand how things are counted, it would be completely obvious that the 1996 welfare reform was going to lower poverty.  Similarly today, reductions in the number of participants in "anti-poverty" handout programs would absolutely lower measured poverty, and dramatically.  On the flip side, expanding handout programs will dramatically increase measured poverty.  Anybody who understands the first thing about this subject knows that.

And then we come to this editorial yesterday from Bloomberg News, titled "How to Cut Poverty Rates Right Now."  And, you guessed it, the proposed way to cut poverty rates "right now" is to increase participation in the handout programs.  What???

Why aren't America's public-assistance programs helping more people out of poverty? One important answer is that too many people who could benefit don't sign up. Just 32 percent of those eligible for welfare enroll, along with 64 percent for Supplemental Security Income. And nonusers are often the people who need help the most.              

It's almost beyond belief.  They think that the idea of public assistance programs is to "help people out of poverty"?  Nobody but nobody gets out of measured poverty by taking America's public assistance programs.  And they don't know that TANF and SSI levels are almost always insufficient to raise the recipients out of poverty -- while at the same time trapping those unfortunates on the easy elixir of handouts?  Could they be any more uninformed?  Yes!  Try this on the EITC:

[In a recent study]  three small changes -- repetition, simplification and disclosure of potential benefits -- persuaded 31 percent more eligible tax filers to claim the earned income tax credit. If the same changes were made nationwide, they could provide tax credits for millions more needy families.      

Wow -- they don't know that the EITC is deemed "post-tax" and does not count at all in the measure of poverty!  In fact, as things are counted, you could multiply the amount disbursed by the EITC by one million and not raise a single person out of poverty.  It doesn't count!  And these are people claiming to know what they are talking about and to make public policy prescriptions to the government!

In the many comments to the Bloomberg editorial, there is much back and forth on whether it is a good idea for a society to push citizens into taking handouts that they had previously done without even though entitled to take them.  That is a very reasonable issue to raise.  But there is literally no recognition or awareness that the government handout programs are intentionally designed to keep their participants in measured poverty.  Somehow, that most critical of facts just slips beneath everyone's notice.

So I'll close with this important quote from the 2013 book The Problem Of Political Authority, by Michael Huemer (page 220):

The general lesson is that if some part of government fails in its function, it will most likely be given greater funding and power.  Of course, the purpose of this is not to reward failure; the thinking would be that more money and power will enable the agency to solve the problem.  But the effect is that government grows when social problems grow, and thus it is not in the government’s interests to solve society’s problems.            

Hat tip, Don Boudreaux, Café Hayek. 

The CFPB Requires Banks To Return To Predatory Lending

On Friday the New York Times ran a big article on the program currently underway at the Consumer Financial Protection Bureau (CFPB) to require banks to return to the pre-financial crisis practices of predatory lending.  The headline is "Biased Lending Evolves, and Blacks Face Trouble Getting Mortgages."  The article reports on a recent settlement between the CFPB and New Jersey's largest savings bank, Hudson City Savings Bank, in which Hudson City agreed to pay $33 million (without admitting wrongdoing) for allegedly avoiding the granting of mortgages to black borrowers.

Why, you ask, would the CFPB not only encourage, but require, banks to engage in the awful practice of predatory lending?  Of course the answer to that question is that the official terminology has changed.  The term "predatory lending" has gone out of fashion; it's so last decade!  "Predatory lending" is what happened back before the financial crisis hit, when many financial institutions sought to increase the number of minority group borrowers and so made mortgage loans despite low borrower credit scores and high loan-to-value ratios (sometimes over 100%).  Surely the banks knew that many or most of these borrowers would be unable to repay and would get thrown out of their homes in a traumatic and heart-wrenching foreclosure process.  What could be more predatory?   Use of the charged term "predatory lending" facilitated many lawsuits against financial institutions that made these pre-financial crisis loans.

But that was then.  Following the financial crisis, underwriting standards came back.  Basically, that means borrower credit score, loan-to-value ratio, and loan-to-income ratio.  All of those three on their face are race-neutral.  But the percentage of mortgages held by blacks and Hispanics dropped noticeably.  According to the Times:

In 2014, black people held 5.2 percent of the nation’s home loans, compared with 8.7 percent in 2006, according to the Federal Reserve Bank. Hispanics have struggled to regain lost ground as well, accounting for 7.9 percent of home loans in 2014, compared with 11.7 percent in 2006.

It's "redlining"!  Or to put it another way, the official terminology shifted 180 degrees while you weren't looking.  Obviously, if blacks or Hispanics are "losing ground" it must be the fault of the banks.  Now, which are they doing:  making not enough loans ("redlining") or too many loans ("predatory lending")?  It has to be one or the other at all times, because of course banks bear ultimate responsibility for achieving perfect fairness and justice in the world, particularly between and among racial and ethnic groups.  As the Times today tells us, failure to make enough loans to members of minority groups can undermine their economic mobility and destabilize their communities:

The effect [of redlining] on minority communities can be profound. Homeownership is a cornerstone of economic mobility, and without a stable group of homeowners, neighborhoods can be left vulnerable to blight and disrepair.             

But wait a minute, you ask -- wasn't it just a couple of years ago that "predatory lending" was the thing that was undermining minority economic mobility and destabilizing neighborhoods?  Really, you are so behind the times!

I like particularly that the CFPB has chosen for its latest target to pick on Hudson City Savings Bank.  This institution is known for multiple branches in New Jersey cities with large minority populations, like Newark, Orange and Jersey City.  Even the Times concedes that "predominantly black and Hispanic communities accounted for more than a third of [Hudson City's] market in the region that included North Jersey and parts of New York. . . ."   But, they continue:

[T]he bank stationed only 12 of its 162 mortgage brokers in those communities. Last year, blacks accounted for just over 1 percent of Hudson’s mortgage approvals in the market that includes New Jersey and sections of New York and Connecticut; Hispanics accounted for 4 percent.  

Could that possibly be because few potential minority-group borrowers met more stringent underwriting standards?  I'm sorry, but you are not going to be finding out the answer to that question from the New York Times, nor from the CFPB.  Oh, and by the way, the Times article also reports on numerous other CFPB enforcement actions against banks around the country for allegedly discriminatory lending practices -- again in the face of underwriting criteria that are facially race-neutral.  But don't worry: when the market once again turns, as it inevitably will, and the eased lending once again leads to large numbers of foreclosures, as it inevitably will, and the lending gets labeled "predatory," as it inevitably will, the CFPB will not be accepting any responsibility.  More likely, they will be leading the charge of prosecution. 

The Greatest Scientific Fraud Of All Time -- Part VIII

In a prior piece in this series (Part V), I reported back on June 7 on an article that had just come out in Science titled "Possible Artifacts Of Data Biases In The Recent Global Surface Warming Hiatus."  The article was written by a team of government scientists from the National Oceanic and Atmospheric Administration (NOAA) and the National Centers for Environmental Information (NCEI), led by one Thomas R. Karl.  Readers here will recognize the name of Mr. Karl as one of the foremost global warming zealots living on the taxpayer dime.

Although the Karl article itself is behind a paywall at Science, its issuance was accompanied by a lengthy press release from NOAA summarizing it and touting its conclusions.  The idea behind the article was explicitly to refute the growing chorus pointing to a near-twenty-year "pause" or "hiatus" in the rise global temperatures as undermining the narrative of a coming catastrophic global warming.  Mr. Karl stated that purpose in this quote in the press release:

"Adding in the last two years of global surface temperature data and other improvements in the quality of the observed record provide evidence that contradict the notion of a hiatus in recent global warming trends," said Thomas R. Karl, L.H.D., Director, NOAA's National Centers for Environmental Information.       

But despite Mr. Karl arguing that the data in this article supported such a broad conclusion, many things about the article were literally bizarre.  Most notably, neither the article nor the press release so much as mentioned the main source of the data that establish the "pause," namely the NASA satellite data as processed by UAH and RSS.  (Do they think we don't know about that data?  The UAH data are here.)  Then there was the fact that the article dealt only with a tiny portion of the surface temperature record, namely sea surface temperatures in the Arctic.  And then, within just a few days after the article came out on June 4, numerous critics had pointed out other gigantic flaws, like the facts that the "new" data included "homogenization" based on extraneous data that would clearly bias the results toward increasing any warming trend, such as using nearby land temperatures to fill in gaps in temperatures over the water at times when the water has ice on the surface.  Read more about these flaws here.  From a critique by Michaels, Lindzen and Knappenberger reproduced at that link:

The treatment of the buoy sea-surface temperature (SST) data was guaranteed to put a warming trend in recent data. They were adjusted upwards 0.12°C to make them “homogeneous” with the longer-running temperature records taken from engine intake channels in marine vessels. As has been acknowledged by numerous scientists, the engine intake data are clearly contaminated by heat conduction from the structure, and they were never intended for scientific use. On the other hand, environmental monitoring is the specific purpose for the buoys. Adjusting good data upwards to match bad data seems questionable, and the fact that the buoy network becomes increasingly dense in the last two decades means that this adjustment must put a warming trend in the data.  The extension of high-latitude arctic land data over the Arctic Ocean is also questionable.   Much of the Arctic Ocean is ice-covered even in high summer, so that the surface temperature must remain near freezing. Extending land data out into the ocean will obviously induce substantially exaggerated temperatures.  

Read that and lots more at the link, and you come away with the conclusion that this study was completely preposterous.  On the other hand, it can well be explained by its timing:  it came out just as EPA was getting ready to issue its so-called Clean Power Plan, otherwise known as the complete takeover of the energy sector of the economy and the forced closure of all power plants that burn coal; as well as a few months before the big planned climate meetings in Paris in December where our government would like to commit us to forced reductions in fossil fuel usage and a "skyrocketing" of the cost of our energy.

Anyway, now for the latest.  It seems that the House Science Committee, chaired by Lamar Smith of Texas, subpoenaed NOAA for data and communications relating to the Karl article.  Yesterday, the Hill reported that NOAA is refusing to comply with the subpoena, claiming some kind of "confidentiality" of scientific communications.

The federal government's chief climate research agency is refusing to give House Republicans the detailed information they want on a controversial study on climate change.  Citing confidentiality concerns and the integrity of the scientific process, the National Oceanic and Atmospheric Administration (NOAA) said it won't give Rep. Lamar Smith (R-Texas) the research documents he subpoenaed.               

This is not any kind of "confidentiality" that I've ever heard of.  Confidentiality as against Congress as to things funded by the taxpayers?  Huh?  At the Global Warming Policy Foundation they ask "Why is NOAA withholding climate documents from Congress?" and whether this is "the next Climategate?"  The editorial at Investors Business Daily is headed "Did Federal Agency Commit Climate Fraud?  Sure Looks Like It."  Excerpt:

The American people have every right to be suspicious when NOAA alters data to get the politically correct results they want and then refuses to reveal how those decisions were made," [Congressman] Smith said this week.  We agree. For too long, global warming proponents, both inside and outside government, have tried to halt debate over their extreme conclusions and data manipulation, all in the name of "science." Looks political to us.  Taxpayers pay for this research, which is being used to justify massive new federal spending and regulation. They deserve to know what NOAA and other federal agencies are doing -- and whether they're being honest or serving an unspoken extreme political agenda.   

As usual, the mainstream media are paying no attention whatsoever.  How long are they going to be willing to cover for this fraud? 

Catching Up With The Manhattan Contrarian -- Nail Salon Scare Edition

Back on May 7 and 8, the New York Times came out with one of those big two-article exposes, running around 7000 words.  The author was Sarah Maslin Nir.  This series claimed that the nail salon industry in New York was grossly and systematically underpaying its workers and, moreover, poisoning them with dangerous chemicals.  The two Times articles are here and here.

The Manhattan Contrarian was on the story just a few days later, on May 13.  I called the Times series a "scam" and "journalistic drivel."  I was highly critical of numerous commenters (including NBC, Jezebel, and even Rich Lowry of National Review) who had inexplicably swallowed the Times's obviously false reporting without critical analysis.  Admittedly, I did not go out and re-report the Times's story.  The bases for my conclusions were three things: (1) my own knowledge of what you have to pay to hire people in Manhattan, (2) the indisputable fact that people are not stupid, and (3) the systematic omission from the Times series of any mention of the tips earned by the workers, which were obviously a major part of their compensation.

Of course, meanwhile nobody paid attention to me and everybody paid attention to the New York Times.  Our governor Andrew Cuomo promptly bought into the Times's story, sicced the labor regulators on the salon industry, and imposed new "bonding" requirements on salon owners to secure their obligation to pay wages.  Numerous salons went out of business.

Well, now an enterprising guy named Jim Epstein at Reason Hit & Run has actually gone out and re-reported the story.  It looks like he is planning a three part series, with the first part available here.  They are a little late getting to this, but on the other hand I credit them with having done a lot of work.  And yes, it's as bad as I predicted.  Nir systematically misquoted people, took evidence out of context, and mistranslated things from the Chinese or Korean.  Pretty much everything about her story was false.  By all means you should read the whole thing, but I'll give you a few examples:

• To support a statement that the "vast majority" of manicure workers earn less than the minimum wage, Nir interviewed Sangho Lee, President of the Korean-American Nail Salon Association, and paraphrases him as follows:  "[Lee] declined a request to address issues of underpayment. So many owners do not pay minimum wage, he said, that he believed answering any questions would hurt the industry."  Lee, who speaks limited English, tells Epstein that what he told Nir was:  "I told her that even though 80 to 90 percent of the industry pays much more than the minimum wage, it would inappropriate for me to say anything negative about the industry as the president of the leading industry association."  
• Nir specifically discussed wages at a salon on the East Side of Manhattan called Iris Nails, where Nir claimed that wages for starting workers were "$30 and $40 a day."  Epstein interviews the owner of the salon, Alex Park, a Korean immigrant, who provided the following very different information:  "He estimates that his lowest-level employees earn about $180 a day, including tips, and his most experienced employees can earn as much as $400 per day including tips and commission."  
• Epstein goes deeply into Nir's ridiculous omission of the whole subject of tips.  Sample: "Nir’s report doesn’t discuss gratuities. In fact, nowhere does the Times coverage attempt to gauge average daily tips in the industry or what workers actually take home in total compensation.  This is like writing a 7,000-word piece on what waiters make for a living but focusing only on base compensation."  Epstein quotes Aiming Feng, an accountant specializing in the nail salon industry, as saying that, at least during certain seasons, tips in the nail salon industry can exceed base compensation.  Of course, that was already obvious to everyone who thought about it.

You get the picture.  Do you actually trust anything that comes out of the New York Times?  Meanwhile, yesterday there was a big protest at the Times building here in midtown by salon owners and workers demanding that the Times retract and correct the series.  Signs read "Apology Now.  Fire Nir!" and "Shame On You New York Times, Your Lies Kill Our Shops."  At the Times, they seem to think that their false "exposes" have no real world consequences.