We’re pressing on with the fourth part of our Congressional Contenders series. We sit down for a no-time-limit discussion with each of the Democratic primary looking to represent South Brooklyn and Staten Island in Washington D.C. We asked each candidate to talk with us about the issues that most motivate them. Join us as we dive deep into their proposals and get to know more about them.

Our guest today is Zach Emig, an MIT engineering graduate and bond trader. Zach announced his candidacy all the way back in May of last year. We’ll discuss Zach’s long haul on the NY11 campaign trail and dig into his “Narrows Agenda” for improving the district. We’ll discuss corporate and income taxes, the opioid epidemic, technology, and immigration. We also touch on the partisan rancor that is affecting national and local politics, and how to solve it.

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Get Involved

Get in touch with Zach:
Twitter: @ZachEmig2018
Website: www.ZachEmig2018.com
Facebook: www.Facebook.com/ZachEmig2018

Show Notes

Introduction

Zach mentions that 75% of the country has not seen a significant pay raise in over twenty years. Depending on your definition of “significant”, there is data to support this. The overall average wage has increased at a slightly higher rate than inflation… however, there is a problem: that growth is slowing down. If a significant change occurs, then it is usually a cut. Even worse, there are usually no significant wage increases during good times to provide a balance.

source: tradingeconomics.com

Zach’s Background

To open up the show, Zach Emig briefly mentions his business background… but here’s a fuller picture. After getting his Engineering degree at MIT in 1998, Zach worked briefly for Canon’s Media Technology Lab in Kawasaki, Japan. Afterward, he worked at Credit Suisse First Boston on IT systems until 2003. At Credit Suisse, he observed fixed-income trading in action and subsequently went for his MBA. He graduated in 2005 from the University of Michigan’s Ross School of Business. Finally, he worked at Deutsche Bank until 2015, where he was a Director of Securitized Product Trading.

Early on, Zach studied Software Engineering and Programming at MIT. He also has a fondness for Manga and cartooning. He authored a long-running series called Rhino-Man, an absurdist Japanese-inspired spy-thriller. It ran in MIT’s oldest and largest student-run newspaper, The Tech. You can see his love of comics in his campaign tweets to this day.

Zach mentions with fondness his time canvassing and doing Get Out the Vote work for Hilary Clinton in 2016. He was down in West Philadelphia, riding their bike-share system while canvassing and working the phone banks. You can check out some of his Tweets documenting his journey:

https://twitter.com/zachemig2018/status/807623401422655488

The Narrows Agenda

Zach started off his campaign with a full-fledged, five-point campaign proposal titled “The Narrows Agenda”. We touch on all of these main points in the podcast, but it’s also an interesting read. Each point is backed up with specific proposals across thirty pages, such as his ‘Money Out of Politics’ proposal. This isn’t just a phrase, it includes proposals for Congressional term limits, firing of judges who consider corporations are people, and federal campaign matching funds. Zach keeps the document updated, and since our recording, he has added several new items to the document.

We briefly spoke with Zach about why he had a policy platform so early in his campaign, which is a rarity. Political advisers often don’t consider it a major factor in voters decisions, and thus many candidates decide to skip it. Many campaign websites lack issues pages since consultants often assume voters will judge a candidate based on likability or other factors. Because of this, sadly, platform issues are left vague… even at a party level.

There is also research that party platforms themselves, at a national level, barely exist anymore. However, Zach may be onto something many campaigns ignore. A detailed policy platform can be essential in organizing an effective coalition of volunteers because engaged voters are often crucial allies in the early stages of a campaign.

Legislation vs Partisanship

We spent some time discussing the importance of being engaged with both sides of the news media, both left and right. If you want to dip your toes into the bipartisan waters, consider Anna Bubenko at the NY Times. She rounds up the best political writing from both sides of the spectrum and is a great way to widen your news diet.

Further, Zach is no stranger to crossing the aisle. Zach’s early political views were shaped as a Libertarian-leaning conservative in the early 2000s under George W. Bush. However, he grew disillusioned and changed parties in 2008, which culminated in his decision to run for office as a Democrat.

https://twitter.com/zachemig2018/status/811755855184101376

In his defense of Democratic legislation, Zach mentions both Washington Senator Patty Murray’s “Raise the Wage Act” and Vermont Senator Bernie Sander’s “Social Security Expansion Act.” He cites both as examples of Democratic legislation that voters often overlook. Both pieces of legislation are from 2015 and aimed at directly benefiting the Middle and Working Class. Emig said he’d focus on writing laws, not theatrics or hysterics: “It’s crazy enough to work” said Emig.

New York’s 11th District as a Microcosm

We briefly mention the Sri Lankan community on the North Shore of Staten Island, which has a population of over 5,000. It has grown since the late 60’s in Tompkinsville to include communities in Port Richmond and Mariners Harbor. To learn more, we highly recommend the student-driven Demographics project undertaken by Macaulay CSI students documenting the ethnic makeup of Staten Island. “It’s a fascinating district,” says Emig.

Zach also mentions Staten Island’s strong Union background. 28% of the borough is unionized, most of whom are in public employees unions and working for the government. The presence of private trades further boosts Union power on the Island and in Southern Brooklyn, especially Healthcare and Transit unions. Sadly, private sector rates are far lower than they have ever been.

Money In Your Pocket

Zach talks about the necessity of paycheck increases. He says, “The laws that we have create incentives for the pay to go to the top of the scale rather than the bottom.” Despite the passage of the Dodd-Frank Act after the financial crisis, a good first step to changing these incentives, legislators have dragged their feet on those changes. As Emig points out, this disproportionately benefits CEOs.

Emig supports Senator Bernie Sanders $15/hour minimum wage bill. While the most obvious beneficiaries are those working for less than fifteen dollars and hour, Emig correctly points out that a rising tide lifts all boats. Emig points out workers making over $15/hr today would have significant leverage to have their own wages raised as well. If you are concerned about effect this proposal might have on the economy, we highly encourage you to read the Economic Policy Institute’s excellent breakdown of proposal.

In addition to wages, Emig mentions overtime pay. This is especially important since the Trump administration is deferring action on defending a 2016 Department of Labor rule which automatically made workers making under $47,000 a year eligible for overtime pay. The rule was put on hold by a Federal Texas Court before it could take effect. While the rule could still come into effect for procedural reasons, the Trump administration and Department of Labor have signaled they intend to make major changes.

Corporate Equity with Workers

Emig makes numerous statements about the massive difference between CEO pay and the average worker within the same company. The Economic Policy Institute has an excellent report that details the average ratio from 1965 to 2016. Emig slightly exaggerates average CEO pay as being 500 times larger than their workers. While this indeed occurs (with some CEOs making in excess of 900 times their average workers salary), the average pay for a CEO is around 200 times larger than their workers. This, however, should be put into context: in 1965 the average pay difference between a CEO and their workers was only 20 times larger. This difference remained relatively stable until the 1990s.

Emig also takes time to make a dig at the productivity of Hedge Fund managers, suggesting that a majority of their time is spent on social media. While the Hedge Fund industry is usually depicted as having an intense workload, some analyses say that doesn’t affect their perceptions of having an excellent work-life balance. This high workload / low productivity argument is further evidenced by Warren Buffett’s famous bet that Hedge Funds, which rely on “skilled” trading, perform no better (or worse) than just picking a single, static Index fund that doesn’t need a trader to manage.

Corporate Tax Rates

Emig also takes a dig at the recently-passed Republican tax plan, which cuts the Corporate Tax Rate to 21%. This move, widely criticized as being far too expensive to make permanent, was indeed made permanent. The trade-off was to make the widely-advertised individual tax cuts non-permanent in order to pay for it. In essence, the Republican Tax Plan was a permanent cut for corporations with just enough short-term benefits to convince voters to accept it. Even worse, to keep paying for it in the long term (after a decade) individual tax rates will need to be raised further.

Emig’s solution to this was to only allow a corporation to have a 21% Corporate Tax Rate if it fulfilled specific criteria. In his proposal, to qualify, a company would need to reduce the difference between the pay of it’s CEO and those of it’s workers to match the original 1965 average of a CEO making no more than 20 times the average pay of the bottom 10% of their workers. Emig also ties this back to the Opioid crisis. John Hammergren, CEO of McKesson Corporation (one of the two largest opioid drug manufacturers in the country) made nearly $100 million dollars in 2017.

Why do CEOs demand such high salaries? Emig mentions that there is a feedback loop in place, where achieving arbitrary “goals” are directly tied to CEO pay and bonuses. This means executive pay often ignores more in-depth performance reviews which take into account how much a company benefits it’s workers, customers, and society. A great primer for this was published last year in Fortune magazine. Even more insidious are companies using the amount they pay out to CEO’s as part of the justification that their company is doing well financially, which in turn triggers more CEO pay.

Corporate Ownership Models and Co-Determination

Rachel also briefly mentions the lengths Henry Ford went to provide for the well-being of his workers. A great example of this was Fordlandia, which happened to be covered in detail by the excellent podcast 99% Invisible. Even closer to home, some New York neighborhoods have their origins as “company towns” where factory owners created entire residential districts, complete with social services and shopping areas, to cater to their employees. Notable examples are Astoria (Steinway Pianos) and College Point (Conrad Poppenhusen’s Rubber Factory). Staten Island, too, had a company town of it’s own: Kreischerville.

Zach also mentions his preference for the German model of corporate ownership. This is known as ‘Mitbestimmung’ or ‘co-determination’, in which workers get to elect half of their companies Board of Directors. In place since 1976, co-determination may seem radical but has been one of the foundations for strong German economic performance, especially since the Great Recession.

Changing from a shareholder model to a co-determination model would be a major undertaking. It is increasingly being discussed as a possible reform for American companies and tactical change to empower unions. Among the benefits of giving workers more representation in a companies decision-making process would be a focus on a companies efficiency, labor standards, and most importantly: tangible production. Where a shareholder model often incentivizes surpluses, sales numbers, expansion, and financial trickery, co-determination could even the scales. Workers on a Board of Directors has been proven in European countries to push companies to focus on what is good for it’s customers and employees, rather than it’s shareholders.

Personal Income Taxes

Zach mentions he plans to propose restoring the Income Tax to its previous levels, before the Republican tax plan, for rates between $600,000 to $1,000,000. For rates above $1 million, he would restore the rate that President Ronald Reagan instituted for the top tax bracket in 1981, which was 49% (down from 70%). These rates, Emig contends, would pay for tax cuts for those making under $77,400. The other rates instituted by the most recent 2017 Republican Tax Plan would remain in effect.

It is important to note, though, that Pres. Reagan did reduce the tax rate further from that 49% level, down to 28% (even lower than the recent GOP tax bill). It was President Bill Clinton who raised taxes up to 39.6%. You can check out the results that tax cuts and increases on the super-wealthy with these awesome infographics from Politico.

Congressman Dan Donovan, our current NY11 representative, did not have concerns about the Corporate or Income Tax rates. Instead, he cited the elimination of the SALT (State and Local Tax) deduction as the reason he opposed the tax plan, as well as specific tax breaks for jet owners and champagne producers.

Opioid Crisis

Zach briefly mention that Congressman Dan Donovan claimed that he helped open a drug treatment center on Staten Island. We could not verify that Donovan ever claimed this. However, Zach may be referring to occasional misreporting that Donovan was responsible for instituting drug courts during his time as the Staten Island District Attorney, which sentence addicts to rehab rather than jail. While this was a focus during Donovan’s tenure as District Attorney, the first Drug Court in NYC opened in Brooklyn in 1996. Staten Islands first drug court opened in 2002.

Arresting Drug Company CEOs

One of the most forceful of Zach Emig’s policy proposals relates to arresting the executives who run pharmaceutical and drug companies that sell (and over-distribute) opioids. In the podcast, he mentions that white-collar arrests can have a major effect on how companies operate.

The Wayne Law Review published an article analyzing the deterrence effect of jail time for white-collar crimes. The study concluded that white-collar criminals are difficult to deter because they do not believe what they are doing is illegal. However, it also concluded that harsh sentencing and imprisonment sends a powerful message that these acts are considered illegal. Furthermore, this article from The Nation also backs up Emig’s point that arrests would serve a symbolic purpose. The article concludes that harsh imprisonment (in a maximum security prison), even for a short period of time, may be a far more effective deterrent than minimum-security imprisonment and fines. In short, what white-collar criminals fear most is the severe reductions in their freedom to enjoy their accustomed lifestyle. Fines and lengthy sentences in minimum-security facilities simply don’t work to change corporate culture.

Fentanyl

Zach briefly dismisses Congressman Dan Donovan’s focus on controlling Fentanyl as being too enforcement-based, specifically citing his push to control pill-making machines or ‘pill presses’. These presses, while legal and used by small businesses to manufacture pills for organic health stores, can also be used to lace together synthetic Fentanyl (over 100 times stronger than Heroin) with other drugs and form very convincing counterfeit pills designed to look like OxyContin.

Controlling pill-presses does indeed focus on enhancing enforcement rather than prevention. The idea would be that by restricting access to the machines, counterfeit pills would be easier to identify by law enforcement. However, an argument can also be made that by making counterfeit pills easier to identify, it is less likely that people will accidentally ingest Fentanyl-laced opioids thinking they are something else (such as pure heroin, which is less potent), and thus is also a preventative measure. However, this argument may understate the number of users who are willingly using Fentanylbecause of its potency.

Cannabis Legalization

Emig said during the podcast that he supports cannabis legalization, and stated that it is less addictive and much less lethal than other drugs, notably tobacco and alcohol. Emig said he considers tobacco the most medically dangerous, and alcohol the most societally dangerous.

Stats do indeed back this belief up. Tobacco-related deaths cause over 480,000 deaths annually according to the Centers for Disease Control and Prevention, far higher than alcohol at 88,000 deaths per year. Cannabis barely registers at all, at 3 deaths related to marijuana toxicity over a five year period from 2010 to 2015, all of which were due to synthetic cannabis.

Further, the contention that alcohol is the most societally dangerous is backed up by the Oxford Encyclopedia of Social Work, which states in an article on Alcohol and Drug Problems:

While the magnitude of alcohol problems has been overshadowed by the political and media preoccupation with illicit drugs, it is important to note that the consequences of alcohol-related problems are more devastating and widespread for both individuals and society.

Oxford Encyclopedia of Social Work

Emig also mentions that his brother lives in Colorado, which legalized cannabis in 2014. You can learn a bit about what it’s like in Colorado right now, and how the state is dealing with the effects (or lack thereof) of legalization, check out this documentary short from NBC News.

Emig also mentions that Portugal fully decriminalized all drug use in 2001. While to many Americans, this seems not only extreme but crazy, it has had a major effect on reducing the harm drugs have on its society. The switch in funding from enforcement to treatment has had a major public health benefit while freeing up resources for police to focus on drug traffickers rather than arresting addicts.

Addiction Theories

Rachel and Zach had a discussion about possible factors that affect peoples likelihood to become addicted to drugs. Zach had some thoughts on recent research that suggests that addiction has roots in peoples genetic makeup. Rachel focused on social pressure and environment as a major factor. She cited an interesting study using drugged lab rats to make her point.

The study was known as the “Rat Park” experiment, conducted in the 1970s. It was a response to an experiment that showed that, in an isolated cage, rats will choose drugged over non-drugged water, eventually dying. However, when the same experiment was conducted in what was termed a “rat park”, a large space providing ample socialization and amenities, even rats addicted to the morphine-laced water ended up voluntarily reducing their drug intake. Rats raised in this environment consistently refused the drugged water after realizing it affected their social lives.

Zach’s addiction theories point toward genetics and epigenetics. Recent advances in computing power and data processing are allowing much more detailed studies in genetics and epigenetics (gene changes that occur over your own lifetime). New studies may reveal more links between addiction predisposition, and also whether becoming addicted to certain drugs can change how your genes are inherited.

Infrastructure

Emig briefly touches on his belief that higher education and college isn’t the best default career path. He sees it as addressing “the symptom rather than the cause”, which involves using higher education to fill in the gaps of an inadequate elementary school system.

High Speed Internet

Emig sees high-speed internet as part of the “muscle and bone” of America, specifically fiber optic systems. He takes a more national perspective and sees access to data as a problem especially in more rural parts of the country, and that laying new fiber-optic lines in these areas should be a part of any new infrastructure bill. For example, Verizon FiOS, the primary provider of residential high-speed internet in New York, stopped expanding it’s national fiber optic network in 2010 to focus on its wireless system.

In fact, fiber-optic networks are much easier to install in rural areas than it is in urban areas. New York’s 11th District is a perfect example. Staten Island was the first borough to receive extensive residential fiber-optic coverage, and today consistently maintains above 99% coverage as it meets the demands of new residential construction and development. It is also extensively served by “dark” fiber, depicted by the blue lines in the map above. Dark fiber is not actively shared by multiple users and focuses on high-demand commercial clients requiring private “lanes” of internet traffic.

In contrast, tight city blocks such as those in Bay Ridge, which are served by phone and electrical lines located in tightly-packed private backyards surrounded on all sides by buildings, are very difficult to run fiber optic cable through. As a result, there are more people lacking high-speed internet in Bay Ridge alone than the rest of the district combined, representing over half of those without access. Worse, nearly 100% of those without access live on the Brooklyn side of the district. The small portion of Bensonhurst which overlaps the district, for example, has only 36% coverage. On the business side of things, the closest nexus of dark fiber stops directly to the north of Bay Ridge, centered on the Brooklyn Army Terminal.

All of this is despite the fact that major fiber optic lines run across the Narrows. Multiple lines, some of which are not publically mappable, handle data between Staten Island and Long Island. Some of these lines run directly down 77th street and 3rd and 4th Avenues in Bay Ridge, and 14th Avenue in Dyker Heights.