Corporate boards are slashing the pay of some leading CEOs in a new trend that could just be getting started.

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The American economy is doing fine. So why are tech companies laying off tens of thousands of workers?

But first, here are three new stories from The Atlantic.

The trillion-dollar coin might be the least bad option. Are standardized tests racist, or are they anti-racist? A recession is not inevitable.

Copycats

Last Friday, Google’s parent company, Alphabet, laid off 12,000 of its employees—about 6 percent of its total workforce. Yesterday, Spotify announced layoffs for a similar percentage of its staff.

By now, you might be used to the steady drip of news about tech companies slashing jobs. About 130,000 people have been laid off from large tech and media companies in the past 12 months, according to one estimate. The reasons for this are not obvious. America’s overall unemployment rate is 3.5 percent, which ties for the lowest mark of the 21st century. And tech has long been one of the country’s most dynamic industries. So why is it struggling during an otherwise optimistic moment for America’s economy?

Our staff writers Annie Lowrey and Derek Thompson, who both recently published articles on the tech layoffs, offer several explanations for the trend. The first and most obvious is the Federal Reserve’s effort to ease inflation by raising interest rates sharply over the past year. As Annie writes:

Pretty much all American businesses across all business sectors are reliant on borrowed cash in one way or another … But many tech companies were especially conditioned to very low interest rates: Uber, an enormous and long-established business, for instance, loses money on many rides, and thousands and thousands of start-ups accrue huge losses and rely on their financiers to foot their bills while they grow.

But when inflation and then interest rates increased, these companies—which were making long-term promises at the expense of short-term profits—“got clobbered,” as Derek puts it.

The second reason: the pandemic. Annie reminds us what the economy looked like when Americans were in the thick of isolation:

People stopped going to theaters and started watching more movies and shows at home—hurting AMC and aiding Netflix and Hulu. Families stopped shopping as much in person and began buying more things online—depressing town centers and boosting Amazon and Uber Eats, and spurring many businesses to pour money into digital advertising. Companies quit hosting corporate retreats and started facilitating meetings online—depriving hotel chains of money and bolstering Zoom and Microsoft.

Here’s Derek on how that played out:

Many people predicted that the digitization of the pandemic economy in 2020, such as the rise in streaming entertainment and online food-delivery apps and at-home fitness, were “accelerations,” pushing us all into a future that was coming anyway. In this interpretation, the pandemic was a time machine, hastening the 2030s and raising tech valuations accordingly. Hiring boomed across tech, as companies added tens of thousands of workers to meet this expectation of acceleration.

But perhaps the pandemic wasn’t really an accelerant. Maybe it was a bubble.

Consumer spending has normalized, and Americans have returned to paying for restaurants and hotels and flights. As a result, tech companies are seeing declining revenues in parts of their businesses, and some corporate officers have admitted that they grew too quickly. (Apple is an exception that might prove the rule: The company expanded more slowly than some of its counterparts and has thus far avoided layoffs.)

But even though tech companies are facing a hard dose of reality, many of them are still very profitable. And, as Annie notes, the future is brightening: “The Fed is likely to stop hiking interest rates soon. Artificial intelligence has started making amazing breakthroughs … Maybe a tech summer is just around the corner.”

Reporting in November on the tech industry’s apparent collapse, Derek used an entertaining and useful metaphor: The industry is having a midlife crisis. And that means once the crisis is over, a new era will begin. “One mistake that a journalist can make in observing these trends is to assume that, because the software-based tech industry seems to be struggling now, things will stay like this forever,” he writes. “More likely, we are in an intermission between technological epochs.”

Some argue that, as they wait out this intermission, CEOs are copying one another—laying off workers not simply as an unavoidable consequence of the changing economy, but because everybody else is doing it. “Chief executives are normal people who navigate uncertainty by copying behavior,” Derek writes. He cites the business professor Jeffrey Pfeffer, who told Stanford News: “Was there a bubble in valuations? Absolutely … Did Meta overhire? Probably. But is that why they are laying people off? Of course not … These companies are all making money. They are doing it because other companies are doing it.”

Pfeffer believes that this “social contagion” could spread to other industries. “Layoffs are contagious across industries and within industries,” he said in the Stanford News article. If so, the story of tech layoffs could end up being a much broader story about work in America.

Related:

Why everything in tech seems to be collapsing all at once The economy is improving in three major ways.

Today’s News

A gunman killed seven people and injured one other in a mass shooting at two locations in Half Moon Bay, California, just two days after the mass shooting at a Monterey Park dance hall. A lawyer for former Vice President Mike Pence found classified documents during a search of Pence’s Indiana home. The Senate Judiciary Committee held a hearing about the ticketing market, in which Ticketmaster’s parent company testified about the issues with Taylor Swift’s concert-ticket sales.

Evening Read

The Atlantic

Twitter Has No Answers for #DiedSuddenly

By Kaitlyn Tiffany

Lisa Marie Presley died unexpectedly earlier this month, and within hours, lacking any evidence, Twitter users were suggesting that her death had been caused by the COVID-19 vaccine.

The Twitter account @DiedSuddenly_, which has about 250,000 followers, also started tweeting about it immediately, using the hashtag #DiedSuddenly. Over the past several months, news stories about any kind of sudden death or grave injury—including the death of the sports journalist Grant Wahl and the sudden collapse of the Buffalo Bills safety Damar Hamlin—have been met with a similar reaction from anti-vaccine activists. Though most of the incidents had obvious explanations and almost certainly no connection to the vaccine, which has an extremely remote risk of causing heart inflammation—much smaller than the risk from COVID-19 itself—the idea that the shots are causing mass death has been boosted by right-wing media figures and a handful of well-known professional athletes.

Read the full article.

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“Patience and I have traveled hand in hand / So many days that I have grown to trace / The lines of sad, sweet beauty in her face, / And all its veilèd depths to understand.”

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P.S.

Layoffs are not an abstraction for the people who have lost their jobs. With that in mind, I’ll leave you with a piece of advice I read in New York magazine’s Dinner Party newsletter: Phoebe Gavin, who was laid off last week from her job as the executive director of talent and development for Vox, wrote on Twitter that though you might be tempted to reach out to a laid-off loved one or acquaintance as soon as it happens, that person will really need to hear from you two weeks later, when they’ve had time to process and are starting to figure out what’s next. So mark your calendar to check back in.

— Isabel

Throughout my career studying and practicing American foreign policy, I’ve frequently been asked, What keeps you up at night? Is it China? Russia? Terrorism? Climate change? Another pandemic? While these issues all demand our attention, in recent years, I have found myself saying something else: The most urgent threat to American security and stability stems not from abroad but from within, from political divisions that jeopardize the future of American democracy and even the United States itself.

The obvious follow-up question is what to do about it. My answer draws inspiration from the holiday of Passover, when Jews celebrate their liberation from ancient Egypt. The annual retelling of the Exodus story is inspired by a command in the Bible: “And thou shalt tell thy son in that day, saying: It is because of that which the Lord did for me when I came forth out of Egypt.” Jews are instructed to make sure that every generation understands both what it means to be a Jew and what being a Jew requires. Only through recounting their history have they been able to preserve their identity, despite millennia of persecution and, until recently, not having a homeland.

This article is adapted from Haass’s forthcoming book.

Passover offers everyone, not just Jews, an important lesson: No group of people should assume that its identity will be automatically inherited by the next generation. For a people to understand and appreciate its collective identity is a matter of teaching, not biology. This is no less true for nations than for religious communities.

[From the October 2018 issue: Americans aren’t practicing democracy anymore]

One major reason that American identity is fracturing is we are failing to teach one another what it means to be American. We are not tied together by a single religion, race, or ethnicity. Instead, America is organized around a set of ideas that needs to be articulated again and again to survive. It is thus essential that every American gets a grounding in civics—the country’s political structures and traditions, along with what is owed to and expected of its citizens—starting in elementary school and continuing through college. It should be reinforced within families and communities. It should be emphasized by our political and religious leaders, by CEOs and journalists.

Alas, that is not the world we live in. There is a good deal of talk about the budget deficit, but our civics deficit may be of even greater consequence. Only eight states and the District of Columbia require a full year of high-school civics education. One state (Hawaii) requires a year and a half, 31 require half a year, and 10 require little or none.

At the college level, the situation is arguably worse. According to a 2015 study of more than 1,000 colleges and universities, less than a fifth require any civics coursework. As Ronald J. Daniels, the president of Johns Hopkins University, has written, “Our curricula have abdicated responsibility for teaching the habits of democracy.”

It should come as no surprise, then, that Americans know little about the history, ideals, and practices of their own political system.

The best remedy to this problem is to require that all high schools and colleges have their students complete a course on American citizenship and democracy.

This is easier said than done. At the high-school level, educators and students have limited time and resources. Each academic subject competes for attention with every other subject, not to mention extracurriculars. And relatively few teachers are trained to teach civics well. On top of all this, the scale and decentralization of American public schools—consisting of roughly 13,000 districts, 130,000 schools, 3 million teachers, and tens of millions of students—make any kind of national commitment enormously difficult to implement.

[Ronald J. Daniels: Universities are shunning their responsibility to democracy]

In some ways, the challenge is even greater at the country’s approximately 4,000 two- and four-year colleges and universities. Resistance to a civics requirement would come from many directions. Professors tend to dislike teaching basic courses, preferring more specialized offerings that reflect their research interests. Students typically want maximum freedom to choose what they study; the priority for many, not surprisingly, is to pursue fields that promise the best professional prospects. Many students are pressured to specialize early, leaving little time for other pursuits. Administrations and boards of trustees, for their part, have failed to make civics a priority and largely shy away from introducing core curricula that in any way constrain their students.

Because of these and other challenges, establishing a national mandate for high-school and college civics courses will demand a wide array of support: from state governments that oversee high-school funding and requirements, from parents who pay for their children’s education, and from administrative bodies that certify institutions of higher education. For private schools that are less subject to public influence, requiring civics can and should be used as a selling point.

Perhaps the hardest challenge is to decide what, exactly, counts as “civics.” The battles between the “1619 Project” and the “1776 Project”—two divergent narratives about the arc of American history—and over how to teach matters relating to race demonstrate how politically charged it can be to determine what children learn. This is especially true for public high schools and publicly funded institutions of higher education.

But civics need not be all that controversial. An effective civics course would describe the foundational structures of American government: the nature of the three federal branches, and how they relate to one another and to state and local government. It would distinguish between representative and direct democracies, explain the two-party system, and cover fundamental matters such as checks and balances, judicial review, federalism, impeachment, filibusters, and gerrymandering. Teachers should emphasize both the rights and obligations of citizenship, and expose students to the basic texts of American democracy, including the Constitution, The Federalist Papers, and pivotal Supreme Court decisions.

[George Packer: Can civics save America?]

More difficult is deciding what to include in the way of history. What events to highlight? How to present them? As a rule of thumb, any single framing of American history should be avoided. Where there is disagreement, various perspectives should be presented.

Civics courses should not try to settle the most contentious contemporary or historical matters, or advocate for any particular party or policy. Instead, they should present facts, describe significant events, and lay out the major debates of our past and present.

Designing a civics curriculum that is both useful and broadly acceptable won’t be easy. But there is perhaps no more urgent task if American democracy—and identity—is to survive another two decades, much less another two and a half centuries.

This article has been adapted from Richard Haass’s new book, The Bill of Obligations: The Ten Habits of Good Citizens.

The year after a midterm election is presidential purgatory. Congressional investigators from the opposing party devote themselves to flaying the incumbent. Stripped of any possibility of grand legislative accomplishments, presidents busy themselves with foreign policy and patiently wait for their domestic foes to overplay their hand.

For Joe Biden, this is all intimately familiar. He experienced this discomfort as Barack Obama’s vice president. And he walked away with a sense of how he might get through it differently himself, how he could profitably survive this awkward year—and leverage it as the basis for reelection.

Back in 2009, Obama anointed Biden “The Sheriff.” Obama charged him with overseeing the implementation of the Recovery Act, the $787 billion economic stimulus, passed in the first days of the new administration. This was a thankless task, because it made Biden responsible for any waste, fraud, and abuse in the program, but it was also a dream assignment. The career politician had a chance to race from ribbon cutting to ribbon cutting. He could bask in selling governmental achievements made of concrete and steel, stuff people could touch.

Biden’s frustration with Obama was that he didn’t sufficiently consider the marketing potential of the stimulus. Obama frankly admitted that he took “perverse pride” in how his technocratic administration constructed policy without regard for political considerations. The 2009 Recovery Act included tax cuts, but intentionally didn’t advertise them. The government quietly withheld less money from paychecks, a dividend that almost nobody noticed. This furtive tax cut was theoretically effective, because consumers were less likely to save money that they didn’t know they possessed. But it was also a political nonfact.

[From the April 2016 issue: The Obama doctrine]

This humility of sorts transgressed a core Biden maxim: Good policy is useless without good politics. The health of the government (not to mention the health of the Democratic Party) depends almost entirely on public appreciation of the government’s deeds.

Now that he’s president, Biden is his own self-anointed Sheriff. In its first two years, his administration passed ambitious, expensive legislation. The Infrastructure Investment and Jobs Act spends $1 trillion. The CHIPS and Science Act devotes more than $250 billion to jump-starting the American semiconductor industry and investing in technological research. The Inflation Reduction Act contains, at least, a $370 billion investment in clean energy. Biden could break his hand signing all the checks that his administration is about to write.

Overseeing these investments will allow Biden to fulfill the two grandest ambitions of his presidency. The first ambition is both lofty and self-interested. He has long argued that democracy will prevail in its struggle against authoritarianism only if it can demonstrate its competence to the world. That means passing legislation. But he believes that non-college-educated voters, the neglected constituents he wants to take back from the Republicans, hardly know about the big bills emanating from Washington with banal names. And they won’t believe in their efficacy in any case, unless they can see the fruits of the legislation with their own eyes.

Biden intends to deluge this group with relentless salesmanship—christening new airports and standing next to local officials as they break ground on new factories and tunnels. When he daydreams in the Oval Office, he imagines omnipresent road signs announcing new government projects in his name. In his mind, there will be Biden Rest Stops as far as the eye can see.

His second ambition is far trickier. He doesn’t just imagine scattered projects. He wants to comprehensively change the economy of entire regions of the country. By geographically concentrating investments—in broadband, airports, semiconductor plants, universities—he can transform depressed remnants of the Rust Belt into the next iteration of North Carolina’s Research Triangle. By seizing the commanding heights of the industries of the future, he can reindustrialize America.

But that vision requires mobilizing sclerotic bureaucracies—and aligning disparate agencies that don’t normally play nice with one another. The word implementation, perhaps the least sexy word in the English language, is his current fixation. He believes that the latent potential of these projects can be realized only if he pays close attention to them.

Large checks to semiconductor manufacturers will bring jobs and protect the supply chain from foreign threats. But that’s only half the mission. With his purse strings comes power. And Biden wants to use his leverage to create high-paying unionized jobs. He intends to pressure CEOs so that they don’t furtively funnel government money into stock buybacks. Even though the public doesn’t have this impression of Biden, he actually gravitates to the weeds. Obsessing over small details allows him to feel a sense of mastery of big processes.

Of course, Biden realizes that these projects will be mere sideshows in the press, as he spars with adversaries, foreign and domestic, bent on provoking apocalypse. But, in his mind, the role of Sheriff is connected to solving congressional crises, perhaps not in the near term but over time. All along, Biden has believed that he can exploit fissures within the Republican Party. That’s why he has always carefully drawn a distinction between the authoritarian MAGA faction and the traditional conservatives, whom he recognizes as his fellow politicians. There’s no dealing with the MAGA set. But the other Republicans have conventional interests, which he can exploit in his search for a deal.

[Read: What Joe Biden has (and hasn’t) accomplished]

He took this approach on January 4, in his appearance with Senate Minority Leader Mitch McConnell at the Brent Spence Bridge, crossing the Ohio River, to celebrate new government investment. That event transpired as Kevin McCarthy flailed in his campaign to become House speaker. Biden knows that McConnell has little regard for McCarthy—and would rather cut a deal on the debt ceiling than crash the U.S. economy. (After all, McConnell cut that deal before, back in 2011.) McConnell could serve as an ally while Biden slowly cultivates relationships with the 18 Republican House members from districts that he won in 2020. If these Republicans have any prayer of winning reelection, they will need to evince some measure of independence from the Trumpists. They, too, will need to show their constitutents that they can govern. Biden is not confident that he will prevail in this quest, but it’s his best play.

In the face of Republican extremism, Biden will continue to periodically sound the alarm about the threat to democracy. But he also knows that his opponents will do most of this work for him—and that the Sheriff can’t just pose as the protector; he also needs to deliver.

Swedish activist Greta Thunberg and other activists draw up cease and desist notice for fossil fuel CEOs on the sidelines of the World Economic Forum in Davos.

On one hand, such talk can be seen as a sign of corporate Japan casting aside the remains of a compensation system based on across-the-board ...

Many CEOs, investors and consumers are worried about a recession in 2023. But Moody's Analytics says the more likely scenario is a "slowcession," where growth grinds to a near halt but a full economic downturn is narrowly avoided.