Breakingviews - California and tech embrace one more knotty fling
NEW YORK, June 24 (Reuters Breakingviews) - The uneasy partnership between California's politicians and technology barons is based on mutual need. Taxes on capital gains help legislators balance the budget. Venture capitalists depend on the cluster of workers, firms and schools surrounding Silicon Valley. Both hope that the rise of artificial intelligence will shower them with wealth. Yet it could fatally weaken the relationship, too.
Half of the world's ten most valuable companies – from iPhone maker Apple to Google owner Alphabet – are headquartered in California. Many now benefit from an AI gold rush, as investor hype lifts valuations to dizzying levels. San Francisco-based OpenAI, which helped spark the mania, is now valued at $300 billion. Thinking Machines Lab, founded by ex-OpenAI employee Mira Murati, just snagged $2 billion in funds at a $10 billion valuation, the Financial Times reported. It's by far the largest seed round ever, according to Crunchbase.
The Golden State relies on these windfalls for the rich. About 60% of general revenue comes from personal income taxes, almost half of which are paid by the top 1% of earners. This cohort depends on capital gains that surge and tumble with the broader market. The AI boom is driving a new upswing: California expects to reap $6 billion, opens new tab more than originally projected this fiscal year.
Governor Gavin Newsom and legislators could use more. Lawmakers approved a preliminary $325 billion budget plan for the coming fiscal year. The two branches must now haggle over details, and how to best paper over a $12 billion budget gap. That hole is expected to grow in future years.
Raising tax rates seems a tough ask. California's top earners pay two-thirds more of their family income in state and local levies than the U.S. average, according to the Institute of Taxation and Economic Policy, opens new tab. A boost from rising valuations therefore would be especially handy.
Investors backing the industry, like Andreessen Horowitz or Founders Fund, probably would prefer to keep their lucre. They can't easily decamp, though. Yes, Tesla boss Elon Musk – after building a $1 trillion company – relocated to Texas. For venture capitalists seeking the next superstar founder, though, the density of engineers, programmers and specialized vendors is unparalleled outside of the Bay Area. They are further fed by top-flight institutions like Stanford University.
Yet the current AI boom is premised, at least partially, on automating much of this away. Programming is one of the jobs most at threat. Tech firms are laying off workers at a steady clip. If employment shrinks dramatically, so too will tax revenues – and, ultimately, the human and financial ties binding the industry and the state.
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Some wear balaclavas. Some wear neck gators, sunglasses and hats. Some wear masks and casual clothes. Across the country, armed federal immigration officers have increasingly hidden their identities while carrying out immigration raids, arresting protesters and roughing up prominent Democratic critics. It's a trend that has sparked alarm among civil rights and law enforcement experts alike. Mike German, a former FBI agent, said officers' widespread use of masks was unprecedented in US law enforcement and a sign of a rapidly eroding democracy. 'Masking symbolizes the drift of law enforcement away from democratic controls,' he said. The Department of Homeland Security (DHS) has insisted masks are necessary to protect officers' privacy, arguing, without providing evidence, that there has been an uptick in violence against agents. But, German argued, the longterm consequences could be severe. The practice could erode trust in the US law enforcement agencies: 'When it's hard to tell who a masked individual is working for, it's hard to accept that that is a legitimate use of authority,' he noted. And, he said, when real agents masks more frequently, it becomes easier for imposters to operate. German – who previously worked undercover in white supremacist and militia groups and is now a fellow at the Brennan Center for Justice, a non-profit – spoke to the Guardian about the dangers of officer masking, why he thinks officers are concealing themselves and how far the US has deviated from democratic norms. This conversation has been edited and condensed for clarity. Were you surprised by the frequent reports of federal officers covering their faces and refusing to identify themselves, especially during the recent immigration raids and protests in Los Angeles? It is absolutely shocking and frightening to see masked agents, who are also poorly identified in the way they are dressed, using force in public without clearly identifying themselves. Our country is known for having democratic control over law enforcement. When it's hard to tell who a masked individual is working for, it's hard to accept that that is a legitimate use of authority. It's particularly important for officers to identify themselves when they are making arrests. It's important for the person being arrested, and for community members who might be watching, that they understand this is a law enforcement activity. Is there any precedent in the US for this kind of widespread law enforcement masking? I'm not aware of any period where US law enforcement officials wore masks, other than the lone ranger, of course. Masking has always been associated with police states. I think the masking symbolizes the drift of law enforcement away from democratic controls. We see this during protests. We see this in Ice raids. And we see this in the excessive secrecy in which law enforcement has increasingly operated since the 9/11 terrorist attacks. How does masking fit into the post-9/11 trends in American policing? After 9/11, there were significant changes to the law – the Patriot Act, expansion of the Foreign Intelligence Surveillance Act, changes to FBI guidelines – that allowed mass warrantless surveillance. Those changes rolled back reforms that had been put in place to address law enforcement abuses, including the targeting of disfavored political activists. As the federal government greatly expanded its authority, state and local law enforcement adopted a similar approach they called 'intelligence-led policing'. That included the creation of 'fusion centers', in which state, local and federal law enforcement share information with each other and private sector entities. Roughly 80 fusion centers exist today, and there is very little oversight and regulation, and they operate under a thick cloak of secrecy, often targeting disfavored protest groups. Once police think of themselves as domestic intelligence agents rather than law enforcement sworn to protect the public, it creates this attitude that the public doesn't have a right to know what they're doing. And now that includes even hiding their identities in public. Why do you think some officers are masking? I have not had conversations with current officers, but I imagine some are masking because they don't normally work for Ice or do immigration enforcement, but are now being sent to do these jobs. [The Trump administration has diverted some federal officers from agencies like the FBI, Drug Enforcement Administration and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to support Ice, reportedly pushing agents who would be tackling violent crimes to instead handle civil immigration violations]. When these officers go home at night, they may not want people in their communities to know it was them. Maybe they have upstanding reputations because of the work they do for the FBI or ATF, and they don't necessarily want to be identified with this kind of indiscriminate targeting of immigrants. And that reluctance to be identified as engaging in those activities really highlights the illegitimacy of those actions. Are there concerns about having masked officers from other agencies working for Ice? Officers from other federal law enforcement agencies are used to operating within specific authorities, and they may not recognize that Ice enforcement actions don't necessarily allow for those same actions. When an FBI or ATF agent is seeking to arrest someone, they typically have a warrant signed by a judge and can go after that person even on private property. Ice's civil enforcement powers don't give them that authority. If Ice doesn't have a judicial warrant, they can't go into someone's home. So if the FBI is doing Ice enforcement, they have to understand their authority is limited in important ways in order to not violate the law. That's also why it's critical for agents to identify what agency they are with. Otherwise, it's hard to understand under what authority an action is being taken. Who is this person shoving a member of the public who is just asking questions? Historically, what are the basic standards and training for law enforcement showing their faces? I'm not aware of any general authority authorizing an agent not to identify themselves during public law enforcement activity. As a former FBI undercover agent, I tried to avoid getting my picture taken as much as possible. But it is a small number of individuals who engage in undercover operations who would require any kind of masking, and they have the option of not participating in arrests where they are going to be in public. A lot of training is about police safety. And part of that safety is having a clear indication that you are a law enforcement official when you're engaging in some type of activity that could involve use of force or arrest, including protest management. The badge was intended to protect the officer, to make it clear you're acting under the authority of the law and not just shoving somebody you don't like. As an FBI agent, if I was going to talk to a member of the public, I'd identify myself and display my credentials. It was routine. And anytime I would write up the interview for evidentiary purposes, the first thing I'd write was, I identified myself and let them know the purpose of the interview. Do you think lawmakers can address this issue with legislation? Some Democratic US senators have pushed Ice to require that agents identify themselves, and California lawmakers have introduced state legislation to ban law enforcement from masking on duty, arguing public servants have an obligation to show their faces – and not operate like Star Wars stormtroopers. Having clear laws, regulations and policies that require law enforcement to operate in an accountable fashion is critical. But a lot of this is about leadership. Law enforcement leaders are justifying masking as some dubious security measure instead of ensuring officers act in a professional manner at all times and holding them accountable when they don't. That has been a significant problem over time when police engage in illegal or unconstitutional activity. It's great when federal, state or local legislators pass laws requiring accountability, but those measures cannot be successful if police aren't expected by their own leaders to abide by those rules. What are the ongoing consequences of officers hiding their faces? The recent shootings of two Democratic lawmakers in Minnesota, by a suspect who allegedly impersonated an officer, highlights the danger of police not looking like police. Federal agents wearing masks and casual clothing significantly increases this risk of any citizen dressing up in a way that fools the public into believing they are law enforcement so they can engage in illegal activity. It is a public safety threat, and it's also a threat to the agents and officers themselves, because people will not immediately be able to distinguish between who is engaged in legitimate activity or illegitimate activity when violence is occurring in public. What are people supposed to do when they're not sure if an officer is legitimate? That question highlights the box that these tactics put Americans into. When they are not sure, the inclination is to resist, and that resistance is used to justify a greater use of force by the officers, and it creates this cycle that is harmful to people just trying to mind their business. And that can mean that these individuals are not just subject to use of force and very aggressive arrests on civil charges, but they could also face more serious criminal charges. The more illegitimate police act, the more resistance to their activities will result. And if the public doesn't trust officers, it becomes very difficult for them to do their jobs.
