Category: Business

Corporate news from all over

John Norquist and Our Congestion Obsession

Seth Anderson0 comment

East To Dan Ryan Expy
East To Dan Ryan Expy

Years ago, I read a book (or series?) set in the near future where all the freeways had been turned into public parks.

Everybody’s been sort of trained to believe that if you’ve got a traffic problem, all you have to do is make the pipe bigger, you know, make the road wider and that’ll solve the problem. The Detroit metropolitan area is covered with freeways. Ever freeway you could possible imagine has been built—although there are a couple left on the drawing board—but more than any other place in the country, the Michigan DOT pretty much go its way.

And they have solved the problem that they identified, which was congestion. The city of Detroit doesn’t really have a problem with congestion anymore. That’s the least of their problems. So by creating a transportation system that encouraged people to leave town—the population of the city is about a third of what it was since 1950. They had 300 miles of streetcars at the end of the war. That’s all gone. Now they have these big roads. The street grid has been cut up, so it’s hard to move around on the surface streets. And normally that’s a big problem, but with Detroit the rush hour has become so uneventful that you really don’t have a problem with congestion. You have to go out to the suburbs to find congestion that you’re used to in America…

The stated goal was to battle congestion, and in Detroit, they did it. And there are side effects. You could take care of congestion in New York in a similar way: If you eliminate the 700 miles of subway, eliminate the commuter trains, build the Cross-Manhattan Expressway, put the West Side Highway back in—build all the freeways that Robert Moses didn’t get around to building—you could probably solve the congestion problem in New York. Manhattan’s population would drop from 2 million down to half a million, and the city would become a really poor place instead of a rich place.

The point I’m making is that, since the postwar period, federal transportation policy has been focused on eliminating congestion, and that’s too narrow a goal. The goal ought to be, What adds value to society? What adds value to the economy? If you look at the richest places in America, they’re the most congested.

(click here to continue reading Next American City » Buzz » INTERVIEW: John Norquist and Our Congestion Obsession.)

Also too bad the current crop of Republicans is so anti-train: city congestion is one thing, but what about travel from city to city?

Clear Channel in Trouble

Seth Anderson0 comment

Cleaning Up
Cleaning Up

I wonder when Bain Capital is going to hollow out Clear Channel, home to the Vulgar Pigboy, Rush Limbaugh.

A hedge fund is accusing a subsidiary of Clear Channel Communications Inc. of improperly moving $656 million to its debt-laden parent, which is owned by private-equity giants Bain Capital Partners and Thomas H. Lee Capital Partners.

The cash transfers, which were fully disclosed, were made from billboard company Clear Channel Outdoor Holdings Inc. The company is 89% owned by Clear Channel Communications, with the rest owned by public shareholders.

JHL Capital Group, a $1.5 billion Chicago hedge fund, argues in a letter to the billboard company that its board members may be liable for “breach of duty” due to cash transfers to the larger media company, according to the Nov. 29 letter. The hedge fund owns less than 1% of Clear Channel Outdoor, according to securities filings.

The private-equity firms, which are named in the letter, are at the center of the dispute. Bain and Thomas H. Lee teamed up to purchase Clear Channel Communications in 2008 in what has thus far been one of the more disappointing buyouts of recent years. In addition, four members of the billboard company’s board are employed by the two firms.

…Bain and Thomas H. Lee paid $17.9 billion to buy media-and-entertainment company Clear Channel Communications just before the economy headed south and radio advertising deteriorated. Today, Clear Channel’s actively traded debt is rated at the lower end of the “junk”-bond universe, even though revenue and operating income rose last year. The company has more than $12 billion in debt due in 2016 and default is a “real possibility,” said Melissa Link, an analyst at Fitch Ratings, in an interview. Clear Channel declined to comment on Ms. Link’s analysis.
The $656 million moved to Clear Channel Communications has risen from $123 million two years ago and could exceed $1 billion “in the next several years,” the company recently told investors in bond-offering papers. The company wouldn’t comment on the offering.

(click here to continue reading Transfers At Clear Channel in Dispute – WSJ.com.)

We Three Pigs
We Three Pigs

And a possible reason why Mitt Romney refuses to say much about Limbaugh – Romney still gets most of his money from Bain, remember?

Clear Channel is going to host Rush until the bitter end…

Rush Limbaugh is probably not sweating this one, folks. The critics keep piling on. But the immensely popular talk radio host has the biggest “sponsor” of all on his side: Clear Channel radio network.

Arizona Sen. John McCain, Republican presidential candidate Newt Gingrich, and New York’s Cardinal Timothy Dolan are among the latest to criticize Limbaugh for calling a Georgetown University student a “slut” and a “prostitute” after she testified in favor of birth control insurance coverage.

But Clear Channel’s Premiere Radio Networks Inc., which hosts Limbaugh’s conservative talk show, has voiced its unwavering support for Limbaugh, whose contract runs through 2016.

“The contraception debate is one that sparks strong emotion and opinions on both sides of the issue,” Premiere Networks told the Associated Press. “We respect the right of Mr. Limbaugh, as well as the rights of those who disagree with him, to express those opinions.”

A representative for Premiere declined to tell the news service how much revenue the company is losing over the recent loss of advertisers seeking to distance themselves from Limbaugh and his comments.

(click here to continue reading Rush Limbaugh has the biggest support of all from Clear Channel. – latimes.com.)

Fresh allegations increase likelihood of News Corp being prosecuted under Foreign Corrupt Practices Act

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Join The Accusations
Join The Accusations

As always, waiting with bated breath for Rupert Murdoch and News Corporation to be prosecuted. Murdoch needs to go to jail, his company needs to lose its license to broadcast over the public airwaves, and his empire should be broken apart.

This week, Metropolitan police deputy assistant commissioner Sue Akers told the Leveson inquiry, which is investigating the state of the British press following the phone-hacking scandal, that there was a “culture of illegal payments” at the Sun to a “network of corrupted officials”.

The Sun and its former sister paper, the News of the World, are owned by News International, a wholly owned subsidiary of News Corp, the US media gaint that owns Fox, the Wall Street Journal and a controlling stake in Sky, among other assets.

“This is obviously a very significant development with regards to the likelihood of a US prosecution,” said Mark MacDougall, partner in the Washington office of the law firm Akin Gump Strauss Hauer & Feld and a former federal prosecutor. “If the British authorities are articulating a pattern, a defined scheme, to bribe officials, that is a very big deal.”

The latest allegations significantly increase the likelihood of an FCPA action, said Mike Koehler, professor of business law at Butler University and author of the FCPA Professor blog.

“Last July, when we first started talking about this, there was one newspaper, the News of the World, and one category of foreign official, the police. Now we have another newspaper and a much broader category of foreign officials,” said Koehler.

“The evidence seems to suggest that there was a recognition that these payments may have been illegal and the notion that there were attempts to disguise the nature of these payments,” said Koehler. These elements would fall under the remit of the FCPA.

The original investigation centered on payment to police officers, and there had been some argument that the police did not fit the FCPA’s definition of “foreign government officials”.

Tom Fox, a Houston-based lawyer who specialises in FCPA cases and anti-corruption law, said Akers’s allegations that payments had been made to “police, military, government, prison and health and others” had destroyed that argument.

“Speaking of a culture of corruption is really bad,” said Fox. “There are two main types of FCPA case. In the first, a company has policies in place but fails to detect corruption. The second is far worse. And that’s when there is a programme in place and you ignore it.”

(click here to continue reading News Corp: threat of US legal action raised in light of ‘illegal payment’ claim | Media | guardian.co.uk.)

 

Heartland’s Corporate Sponsors

Seth Anderson1 Comment

Drive Towards the Sun
Drive Towards the Sun

Any corporation that donates money to the anti-planet, anti-humanity hateful organization the Heartland Institute, is on my shite list. There is no excuse to support them.

Along with tobacco giants Altria and Reynolds America, and drug firms GlaxoSmithKline, Pfizer and Eli Lilley, major corporations have given over $1.1m in the past two years to the institute, and are planning to give another $705,000 this year.

Some of the companies included on Heartland’s list of donors were surprising. Bill Gates, the founder of Microsoft Corporation, has vigorously promoted clean energy in a number of speeches, and his charitable foundation works on helping farmers in the developing world, who will be badly affected by climate change.

But Heartland claims in a fundraising document to have received $59,908 from Microsoft in 2011.

…

A spokeswoman for GSK said the $50,000 the company donated in the last two years was for a healthcare initiative. She could not comment on whether GSK would be working with Heartland in the future.

…

General Motors Foundation, which is committed to social responsibility, has also made modest donations to Heartland, contributing $15,000 in 2010 and 2011.

…

Diageo, the drinks company which owns Smirnoff, Johnnie Walker and Baileys, said its funding of Heartland was now under review. It gave $10,000 over the last two years, according to the leaked papers, and was projected to give another $10,000 this year.

(click here to continue reading Climate science attack machine took donations from major corporations | Environment | The Guardian.)

I don’t buy the excuse that some of what the Heartland Institute does is ok, and is worthy of corporate sponsorship. I wouldn’t excuse a crack dealer who happened to purchase neighborhood kids a pair of shoes either – the main business is still selling crack, just like the Heartland Institute’s main business is denying climate change.

Some other corporate sponsors I recognize, and now despise:

  • Amgen
  • Anheuser-Busch Companies
  • AT&T
  • Bayer Corporation
  • Comcast
  • Eli Lilly
  • Farmers’ Insurance (Zurich)
  • Marathon Petroleum
  • Nationwide Insurance
  • Nucor Corp.
  • PepsiCo, Inc.
  • Pfizer
  • State Farm
  • Time Warner Cable
  • Verizon
  • and of course, the U.S. Chamber of Commerce

Google Tracked iPhones, Bypassing Apple Browser Privacy Settings

Seth Anderson1 Comment

Ride Smarter
Ride Smarter

Don’t Be Evil is a thing of the past, the new Google is brash in its insistence that consumers are the product. You are their product, to be sold to advertisers. What you want is not important, only your demographic information is, since that is the commodity that makes Google wealthy.

Google Inc. and other advertising companies have been bypassing the privacy settings of millions of people using Apple Inc.’s Web browser on their iPhones and computers—tracking the Web-browsing habits of people who intended for that kind of monitoring to be blocked.

The companies used special computer code that tricks Apple’s Safari Web-browsing software into letting them monitor many users. Safari, the most widely used browser on mobile devices, is designed to block such tracking by default.

Google disabled its code after being contacted by The Wall Street Journal.

WSJ’s Jennifer Valentino-DeVries has details of Google and other advertising companies that were bypassing privacy levels set by users of Apple’s Safari browser on their iPhones. Photos: Getty Images

The Google code was spotted by Stanford researcher Jonathan Mayer and independently confirmed by a technical adviser to the Journal, Ashkan Soltani.

…

In Google’s case, the findings appeared to contradict some of Google’s own instructions to Safari users on how to avoid tracking. Until recently, one Google site told Safari users they could rely on Safari’s privacy settings to prevent tracking by Google. Google removed that language from the site Tuesday night.

…Google’s privacy practices are under intense scrutiny. Last year, as part of a far-reaching legal settlement with the U.S. Federal Trade Commission the company pledged not to “misrepresent” its privacy practices to consumers. The fine for violating the agreement is $16,000 per violation, per day. The FTC declined to comment on the findings.

(click here to continue reading Google Tracked iPhones, Bypassing Apple Browser Privacy Settings – WSJ.com.)

Utterly embarrassing for Google, and right when the Congress is poised to look at Google’s privacy practices.

For the record, I use Google constantly, have had a Gmail account since it was first offered, use Google Analytics on this site, even have Google ads (if you haven’t blocked them like I have)

The EFF Foundation blogs:

Earlier today, the Wall Street Journal published evidence that Google has been circumventing the privacy settings of Safari and iPhone users, tracking them on non-Google sites despite Apple’s default settings, which were intended to prevent such tracking.

This tracking, discovered by Stanford researcher Jonathan Mayer, was a technical side-effect—probably an unintended side-effect—of a system that Google built to pass social personalization information (like, “your friend Suzy +1’ed this ad about candy”) from the google.com domain to the doubleclick.net domain. Further technical explanation can be found below.

Coming on the heels of Google’s controversial decision to tear down the privacy-protective walls between some of its other services, this is bad news for the company. It’s time for Google to acknowledge that it can do a better job of respecting the privacy of Web users. One way that Google can prove itself as a good actor in the online privacy debate is by providing meaningful ways for users to limit what data Google collects about them. Specifically, it’s time that Google’s third-party web servers start respecting Do Not Track requests, and time for Google to offer a built-in Do Not Track option.

Meanwhile, users who want to be safe against web tracking can’t rely on Safari’s well-intentioned but circumventable protections. Until Do Not Track is more widely respected, users who wish to defend themselves against online tracking should use AdBlock Plus for Firefox or Chrome, or Tracking Protection Lists for Internet Explorer.1 AdBlock needs to be used with EasyPrivacy and EasyList in order to offer maximal protection.

(click here to continue reading Google Circumvents Safari Privacy Protections – This is Why We Need Do Not Track | Electronic Frontier Foundation.)

Long Awaited Closing of State Line Power Station

Seth Anderson0 comment

Midwest Generation Fisk Station
Midwest Generation Fisk Station

Hmm, 100 jobs versus the air quality for over 9,000,000 other people (and maybe more – I’m just counting the Chicagoland area). How is that even a debate? And land-use? Again, not really a debate except by debating societies…

While many environmentalists are cheering the closing, it raises new environmental and land-use challenges. It will also be an economic blow to Hammond, and to about 100 employees…Similar situations are playing out nationwide as aging coal plants close, including a Dominion plant in Salem, Mass.; six Midwestern and Eastern coal plants owned by FirstEnergy Corp.; and, potentially, the Fisk and Crawford plants in Chicago in coming years.

Lower natural gas prices from the increase in hydraulic fracturing, or fracking, of shale gas deposits have made it much less profitable to produce electricity from coal. This is especially true for facilities like State Line and the Chicago coal plants, which sell electricity on a highly competitive short-term wholesale market rather than through long-term contracts.

“These companies bought coal plants based on certain assumptions about the price of natural gas,” said William Boyd, a professor of energy law at the University of Colorado. “Shale gas turned their world upside down, and retrofitting old coal plants to meet new environmental regulations doesn’t make sense anymore.”

Some coal plants elsewhere in the country have been retrofitted to burn natural gas. But Dominion and Midwest Generation, which owns the Chicago plants, said converting would be too expensive.

Doug McFarlan, a spokesman for Midwest Generation, said, “We will continue to evaluate numerous factors — including the capital expenditures required to comply with environmental regulations and market conditions that impact our ability to recover costs — in making decisions about future investments in any of our power generating units.”

Dominion had planned to close State Line in 2014, but last summer the company said the plant would be shut down by March.

Environmental advocates have long said the sooner the better, since medical studies link emissions from coal plants to higher rates of asthma attacks, cardiac disease and premature death among surrounding residents.

(click here to continue reading Closing of State Line Power Station, on Illinois-Indiana Border, Is Expected to Leave Problems Behind – NYTimes.com.)

 

Disclose Act of 2012

Seth Anderson0 comment

Victim of Fuzzy Thinking
Victim of Fuzzy Thinking

I strongly support this legislation! If Citizens United gave corporations the right to speech, at the very least, citizens should know who is contributing the cash to fund political campaigns. Public companies eventually have to report such expenditures, but every corporate entity should have the strength of their convictions, and sign their name to policy they support.

Imagine if each of the vicious attack ads staining the presidential campaign had to name the five biggest donors paying for the propaganda, and end with an “I approved this ad” statement from the attack group’s chief operative.

This thin ray of sunlight is at the heart of a new House proposal to repair some of the damage done to American democracy by the Supreme Court decision allowing campaigns to be flooded with unlimited, and largely cloaked, corporate, union and other special-interest contributions.

The Disclose 2012 Act, introduced by Representative Chris Van Hollen, Democrat of Maryland, is a tighter version of the 2010 bill that was blocked in the Senate by a Republican filibuster. The new measure would require disclosure of donor names within 24 hours for contributions of $10,000 or more — making it hard for “super PACs” and other money vehicles to take advantage of loose reporting deadlines. Union and corporate leaders and others would have to own up to sponsorship in their ads, while informing shareholders and union members how their money is spent politically. Lobbying groups like the National Rifle Association and the Sierra Club would also have to disclose their campaign spending more clearly.

(click here to continue reading Sunlight on Secret Donations – NYTimes.com.)

Via Congressman Chris Van Hollen’s website, this summary:

The “DISCLOSE 2012 Act”

SUMMARY

THIS BILL HAS 4 MAJOR REQUIREMENTS TO IMPROVE THE DISCLOSURE OF CAMPAIGN-RELATED SPENDING BY CORPORATIONS AND OUTSIDE GROUPS. IT WILL:

1. ENHANCE PUBLIC REPORTING, BY CORPORATIONS AND OTHER OUTSIDE GROUPS, OF CAMPAIGN-RELATED ACTIVITY: All corporations, unions, other outside groups, and Super PACs will have to report, to the FEC, within 24 hours of making a $10,000 campaign expenditure or financial transfer to other groups which can then be used for campaign-related activity.

2. REQUIRE CORPORATIONS AND OTHER OUTSIDE GROUPS TO STAND BY THEIR ADS: All leaders of corporations, unions, other outside groups, and Super PACs that make campaign-related Ads, will have to stand by their ads and say that he/she “approves this message,”. In addition, this bill will require the top financial contributors to be disclosed in the Television and Radio advertisements.

3. REQUIRE CORPORATIONS AND OTHER OUTSIDE GROUPS TO DISCLOSE CAMPAIGN-RELATED SPENDING TO SHAREHOLDERS AND ORGANIZATION MEMBERS: Corporations, unions, and other outside groups will have to disclose their campaign-related expenditures to their shareholders and members in their periodic and annual financial reports. This would also require these groups to make their political spending available to the public, through a hyper-link to the FEC, on their websites.

4. REQUIRE LOBBYISTS TO DISCLOSE CAMPAIGN-RELATED EXPENDITURES IN CONJUNCTION WITH THEIR LOBBYING ACTIVITIES: All Federally registered lobbyists will have to disclose their political expenditures in their Lobbying Disclosure reports in conjunction with the report of their lobbying activities.

To read the full text, click here (PDF, 29 pages).

Making The Same Mistakes
Making The Same Mistakes

The Sunlight Foundation blogs its support:

The bill will create robust reporting requirements for Super PACs, corporations, unions and nonprofit organizations that decide to make campaign expenditures. It will also require reporting of transfers by those groups to others making such expenditures, to prevent the money laundering that makes it easy to hide huge campaign contributions.

DISCLOSE 2012 will also require ads to contain disclaimers by the top officials of such groups, similar to the stand by your ad mandates required of candidates. In addition, shareholders and members of outside groups will be informed of campaign spending, and lobbyists will be required to report their spending on independent expenditures and electioneering communications.

When the Supreme Court decided the Citizens United case, it hung its hat on the theory that systems were in place to ensure unlimited corporate and union spending would be disclosed on the Internet. The Court was, at best, naïve. Because the Court created a whole new kind of spending, there was no disclosure system in place. (And the moribund Federal Election Commission would never be able to create such a system through a rulemaking process.) DISCLOSE 2012 creates that system of transparency and as such should receive wide support from members on both sides of the aisle.

Early primary spending has demonstrated that previously unheard of expenditures will become commonplace and overwhelm the 2012 elections. At a minimum, voters have a right to know whether the Super PAC that paid for an ad they just watched is tied to a candidate, or was funded by corporation or union with very special interests. Candidates will know who is footing the bill for ads that support their candidacy, even if such ads are technically not “coordinated” with their campaigns. With DISLOSE 2012, the voters will know too.

(click here to continue reading House Democrats Introduce DISCLOSE 2012 – Sunlight Foundation.)

A Terrible Transportation Bill

Seth Anderson0 comment

Imaginary Anthropology
Imaginary Anthropology

The anti-American Republicans in the House are trying to gut public transit.

Add this to the list of Things I’m Pissed Off About…

The list of outrages coming out of the House is long, but the way the Republicans are trying to hijack the $260 billion transportation bill defies belief. This bill is so uniquely terrible that it might not command a majority when it comes to a floor vote, possibly next week, despite Speaker John Boehner’s imprimatur. But betting on rationality with this crew is always a long shot.

Here is a brief and by no means exhaustive list of the bill’s many defects:

¶It would make financing for mass transit much less certain, and more vulnerable, by ending a 30-year agreement that guaranteed mass transit a one-fifth share of the fuel taxes and other user fees in the highway trust fund. Instead it would compete annually with other programs.

¶It would open nearly all of America’s coastal waters to oil and gas drilling, including environmentally fragile areas that have long been off limits. The ostensible purpose is to raise revenue to help make up what has become an annual shortfall for transportation financing. But it is really just one more attempt to promote the Republicans’ drill-now-drill-everywhere agenda and the interests of their industry patrons.

¶It would demolish significant environmental protections by imposing arbitrary deadlines on legally mandated environmental reviews of proposed road and highway projects, and by ceding to state highway agencies the authority to decide whether such reviews should occur.

…

Where that $40 billion will come from is also unclear. The idea that oil revenues from increased drilling will provide it is delusional. Even if new leases are rushed through, oil will not begin to flow for years, and neither will the royalties.

In any case, none of this is good news for urban transit systems, including New York City’s Metropolitan Transportation Authority, which, in 2010 alone, received about $1 billion from the trust fund.

Ray LaHood, the transportation secretary, rightly calls this the “worst transportation bill” he has seen in 35 years of public service. Mr. Boehner is even beginning to hear from budget-conscious conservatives who believe that relying on user fees is the most fiscally responsible way to pay for all transportation programs.

(click here to continue reading A Terrible Transportation Bill – NYTimes.com.)

 

People Are Spouting Nonsense about Chinese Manufacturing

Seth Anderson0 comment

Apple Store in Soho
Apple Store in Soho

But facts are so boring…

Wages paid to manufacturing workers in China are not determined by the productivity of those specific workers. They are not determined by US wages, by the profits that Apple makes nor even by the good intentions of the creative types that purchase Apple products. They are determined by the wages paid by other jobs in China and that is itself determined by the average level of productivity across the Chinese economy.

But now to the specific complaints that are being made. There are three that are being repeated around the intertubes as being particularly outrageous.

The first is the spate of suicides at the Foxconn plants. Suicides did indeed take place and each and every one an individual tragedy. Both for those who died and for those they left behind to mourn them. However, we are talking about some 18 suicides in 2010. What we actually want to know is whether that is a high or a low number. Suicide does happen in every society and country, so before we start blaming working conditions we’d like to know whether that rate is higher or lower than that in the surrounding society.

The general suicide rate in China is 22 per 100,000 people. That is a high rate by international standards but that is the one that we should be looking at to try and judge the suicide rate at Foxconn.

Foxconn employs some 1 million people in total so, if the Foxconn workforce were to have the same suicide rate as the general Chinese population (which, to be accurate, it won’t for suicide is not equally divided over age groups and the workforce is predominantly young) we would expect to see 220 suicides among such a number each year.

We actually have an outcry therefore about a suicide rate which is under one tenth of the general suicide rate in the country under discussion. If people were being rational about this instead of spouting nonsense then this would be something that was praised, not vilified.

(click here to continue reading The Apple Boycott: People Are Spouting Nonsense about Chinese Manufacturing – Forbes.)

About that first point, Paul Krugman writes:

First of all, even if we could assure the workers in Third World export industries of higher wages and better working conditions, this would do nothing for the peasants, day laborers, scavengers, and so on who make up the bulk of these countries’ populations. At best, forcing developing countries to adhere to our labor standards would create a privileged labor aristocracy, leaving the poor majority no better off.And it might not even do that. The advantages of established First World industries are still formidable. The only reason developing countries have been able to compete with those industries is their ability to offer employers cheap labor. Deny them that ability, and you might well deny them the prospect of continuing industrial growth, even reverse the growth that has been achieved. And since export-oriented growth, for all its injustice, has been a huge boon for the workers in those nations, anything that curtails that growth is very much against their interests. A policy of good jobs in principle, but no jobs in practice, might assuage our consciences, but it is no favor to its alleged beneficiaries.

and also wrote:

Wages are determined in a national labor market: The basic Ricardian model envisages a single factor, labor, which can move freely between industries. When one tries to talk about trade with laymen, however, one at least sometimes realizes that they do not think about things that way at all. They think about steelworkers, textile workers, and so on; there is no such thing as a national labor market. It does not occur to them that the wages earned in one industry are largely determined by the wages similar workers are earning in other industries. This has several consequences. First, unless it is carefully explained, the standard demonstration of the gains from trade in a Ricardian model — workers can earn more by moving into the industries in which you have a comparative advantage — simply fails to register with lay intellectuals. Their picture is of aircraft workers gaining and textile workers losing, and the idea that it is useful even for the sake of argument to imagine that workers can move from one industry to the other is foreign to them. Second, the link between productivity and wages is thoroughly misunderstood. Non-economists typically think that wages should reflect productivity at the level of the individual company. So if Xerox manages to increase its productivity 20 percent, it should raise the wages it pays by the same amount; if overall manufacturing productivity has risen 30 percent, the real wages of manufacturing workers should have risen 30 percent, even if service productivity has been stagnant; if this doesn’t happen, it is a sign that something has gone wrong. In other words, my criticism of Michael Lind would baffle many non-economists.

Associated with this problem is the misunderstanding of what international trade should do to wage rates. It is a fact that some Bangladeshi apparel factories manage to achieve labor productivity close to half those of comparable installations in the United States, although overall Bangladeshi manufacturing productivity is probably only about 5 percent of the US level. Non-economists find it extremely disturbing and puzzling that wages in those productive factories are only 10 percent of US standards.

Finally, and most importantly, it is not obvious to non-economists that wages are endogenous. Someone like Goldsmith looks at Vietnam and asks, “what would happen if people who work for such low wages manage to achieve Western productivity?” The economist’s answer is, “if they achieve Western productivity, they will be paid Western wages” — as has in fact happened in Japan. But to the non-economist this conclusion is neither natural nor plausible. (And he is likely to offer those Bangladeshi factories as a counterexample, missing the distinction between factory-level and national-level productivity).

Netflix Hates Its Own DVD business

Seth Anderson2 Comments

Netflix Has Lost Its Way

I don’t understand this corporate logic:

Netflix has given up all hope that there’s a future in DVDs.

…On an earnings conference call with analysts Wednesday, Hastings said Netflix now has no plans to spend any marketing dollars on its DVD-by-mail service, which lost 2.76 million subscribers during the last three months of 2011.

“We expect DVD subscribers to decline each quarter forever,” he said.

(click here to continue reading Netflix sees DVD business withering, gives up on video games – latimes.com.)

especially when the DVD rental is the bulk of Netflix’s business, and generates most of its profits:

While the streaming business is growing (adding 220 subscribers domestically in the quarter), and the DVD business sis shrinking (it lost 2.76 million subscribers domestically), it’s margins are much worse than the legacy DVD business. The streaming business has an 11 percent profit margin, compared to a very healthy 52 percent margin for the DVD business.

Out of Netflix’s total $847 million in revenues last quarter, $476 million came from streaming and $370 million came from DVD rentals (the remainder came from international). The streaming business also twice as many subscribers: 21.7 million versus 11.2 million. But the DVD business contributed the vast majority of Netflix’s profit: $194 million versus $52 million.

If you break that down, each streaming subscriber is worth only $2.40 in profit each quarter to Netflix, compared to $17.32 for each DVD subscriber. The old business was very lucrative. The new business kind of sucks. The economics are very different. The DVD business had fixed costs, while Netflix is forced to negotiate streaming licenses on a case by case basis with each media company.

(click here to continue reading Netflix Streaming Margins Are 11 Percent, DVD Margins Are 52 Percent | TechCrunch.)

Maybe Netflix can sell its DVD business to someone who cares about it still. From my perspective as a long time Netflix subscriber (since September, 2001, actually), the streaming option is occasionally useful, but most films I want to watch are not available as a streaming option, nor are their “extras” included. Often my streamed film is fuzzy, pixelated, the sound doesn’t sync, subtitles are unreliable, or unavailable, and so on. Unfortunately, there is no other solution, or I would have dumped Netflix over the summer.

Netflix Throttling

There is also the issue with the DVD throttling practice. I returned two films at the same time; one was received by Netflix the next day, the second took an extra three days, presumedly because it was supposed to go to Bloomington, IL first. If Netflix despises its DVD rental business so much, perhaps they ought not to care enough to throttle anymore. There is no limit to the amount of streamed video one can view, why the rental restriction?

Taking Back Wasted Tax Breaks

Seth Anderson0 comment

Illinois Department of Revenue
Illinois Department of Revenue

Speaking of corporate welfare, who will be the first state to start demanding corporate welfare recipients pass drug tests? Or at least do what the taxpayer funded subsidy was supposed to accomplish?

For example: Many states compete for new jobs by offering taxpayer-funded subsidies to companies to entice them to open in their state. In many ways, these states are just like consumers: those willing to pay the most (in this case, offer the most generous subsidy) ultimately get the product they demand (the jobs a company promises to provide in exchange).

So if these companies ultimately fail to produce the jobs they promised, shouldn’t the taxpayers get their money back? Seems right, but according to a new report from Good Jobs First, this is hardly ever the case. Their analysis of  “clawback” efforts for 238 different state-based business subsidies reveals just how tough it is to demand fairness and accountability when it comes to public handouts to private companies.

At first glance, many of these subsidies do appear to have return policies in place: fully 90 percent of these programs actually require companies to deliver regular reports to state agencies estimating how many jobs they have successfully created thanks to public subsidies; furthermore, 75 percent of the programs they studied contain some type of penalty measure in the event that job creation fails to meet the agreed upon standards.

But here’s the bad news: 31 percent of the programs that require proof of job creation do not require any independent third-party reviewer to ensure that the data these companies submit is actually accurate. And those penalty provisions? Forty-seven percent of them are only enforced voluntarily, meaning that they are basically never enforced at all — in fact, only 21 of the 178 programs with penalty provisions actually publish any documentation of enforcement efforts.

 

(click here to continue reading No Subsidies For You: Taking Back Wasted Tax Breaks – The Demos Blog – PolicyShop.)

Flag Waving
Flag Waving

What about your state? What is its ranking on this list of Clawbacks and Other Enforcement Safeguards in State Economic Development Subsidy Programs? Illinois scored 52/100 on the Monitoring, Enforcement & Penalty Score, covering 5 projects totaling nearly $150,000,000 of state budget.

Illinois’ worst score was for IDOT Economic Development Program ‐ a funding stream for road infrastructure built primarily to benefit specific companies, primarily big‐box retailers, for these reasons:

  • Agency awarding subsidy does not verify performance outcomes reported by recipient
  • No penalty
  • No recalibration of award
  • No online publication of statistics regarding award
  • No online publication of names of companies penalized and dollar amounts
And yet our state is in dire financial straits, and our leaders cannot seem to figure out why…

Jobs, Jobs and Cars

Seth Anderson0 comment

Chrysler Royal
Chrysler Royal

Paul Krugman writes, in response to the lame Mitch Daniels response to the 2012 State of the Union speech:

Why does Apple manufacture abroad, and especially in China? As the article explained, it’s not just about low wages. China also derives big advantages from the fact that so much of the supply chain is already there. A former Apple executive explained: “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away.”

This is familiar territory to students of economic geography (corrected link, PDF): the advantages of industrial clusters — in which producers, specialized suppliers, and workers huddle together to their mutual benefit — have been a running theme since the 19th century.

And Chinese manufacturing isn’t the only conspicuous example of these advantages in the modern world. Germany remains a highly successful exporter even with workers who cost, on average, $44 an hour — much more than the average cost of American workers. And this success has a lot to do with the support its small and medium-sized companies — the famed Mittelstand — provide to each other via shared suppliers and the maintenance of a skilled work force.

The point is that successful companies — or, at any rate, companies that make a large contribution to a nation’s economy — don’t exist in isolation. Prosperity depends on the synergy between companies, on the cluster, not the individual entrepreneur.

But the current Republican worldview has no room for such considerations. From the G.O.P.’s perspective, it’s all about the heroic entrepreneur, the John Galt, I mean Steve Jobs-type “job creator” who showers benefits on the rest of us and who must, of course, be rewarded with tax rates lower than those paid by many middle-class workers.

And this vision helps explain why Republicans were so furiously opposed to the single most successful policy initiative of recent years: the auto industry bailout.

The case for this bailout — which Mr. Daniels has denounced as “crony capitalism” — rested crucially on the notion that the survival of any one firm in the industry depended on the survival of the broader industry “ecology” created by the cluster of producers and suppliers in America’s industrial heartland. If G.M. and Chrysler had been allowed to go under, they would probably have taken much of the supply chain with them — and Ford would have gone the same way.

Fortunately, the Obama administration didn’t let that happen, and the unemployment rate in Michigan, which hit 14.1 percent as the bailout was going into effect, is now down to a still-terrible-but-much-better 9.3 percent. And the details aside, much of Mr. Obama’s State of the Union address can be read as an attempt to apply the lessons of that success more broadly.

(click here to continue reading Jobs, Jobs and Cars – NYTimes.com.)

 

Media Matters Goes Light Bulb Shopping

Seth Anderson0 comment

Vintage Light Bulb
Vintage Light Bulb

I still do not understand how or why the GOP mouth-breathers have decided that incremental improvements in light bulb efficiency is a threat to civilized society. Such an odd thing to freak out about.

Few things exemplify the ongoing right-wing, media-fueled campaign against reality as well as the hysteria surrounding implementation of light bulb efficiency standards, which gather the low-hanging fruit of energy conservation by inciting manufacturers to improve their technology. Following in a long line of federal efficiency standards created by Republican presidents, the light bulb requirements were signed into law in 2007 by President George W. Bush with bipartisan support.

Reporting on what it called “a case study of the way government mandates can spur innovation,” the New York Times noted back in 2009 that Philips Lighting had already developed a more efficient incandescent light bulb using halogen gas to comply with the new requirements. Philips executive Randall Moorhead has said that “the new incandescent lights were not being made because there was not an economic incentive to make them.” The other major lighting companies have followed suit, and today halogen incandescent bulbs are widely available for purchase at hardware stores, department stores and online. The U.S. Energy Information Administration projects that “more efficient incandescent lights” will continue to make up a large portion of general service light bulb purchases for decades to come.

And yet the efficiency standards — the first phase of which took effect on January 1 despite legislation blocking funding for enforcement — have been met with outrage from conservative media who spent the last year claiming that they infringe on consumer “freedom of choice.” Led by Fox News, right-wing media outlets have repeatedly told consumers that the standards would “ban” incandescent bulbs and force us all to purchase “mercury-laden, ugly and smelly compact fluorescent light bulbs,” to the chagrin of electrical manufacturers. Fox has even gone so far as to encourage consumers to “hoard” the old, inefficient bulbs.

(click here to continue reading Media Matters Goes Light Bulb Shopping | Media Matters for America.)

Banality
Banality

The lighbulb manufacturers must regret being Republican sponsors…

The NYT reported last May:

Late in his second term, George W. Bush signed into law the Energy Independence and Security Act of 2007, which requires light bulb makers to improve the efficiency of incandescent bulbs by 25 percent. The details of the law dictated a phase-out of the manufacture of certain bulbs in their current incarnation, starting with 100-watt bulbs next January.

The law does not ban the use or manufacture of all incandescent bulbs, nor does it mandate the use of compact fluorescent ones. It simply requires that companies make some of their incandescent bulbs work a bit better, meeting a series of rolling deadlines between 2012 and 2014.

Furthermore, all sorts of exemptions are written into the law, which means that all sorts of bulbs are getting a free pass and can keep their energy-guzzling ways indefinitely, including “specialty bulbs” like the Edison bulbs favored by Mr. Henault, as well as three-way bulbs, silver-bottomed bulbs, chandelier bulbs, refrigerator bulbs, plant lights and many, many others.

Nonetheless, as the deadline for the first phase of the legislation looms, light bulb confusion — even profound light bulb anxiety — is roiling the minds of many. The other day, Ken Henderlong, a sales associate at Oriental Lamp Shade Company on Lexington Avenue, said that his customers “say they want to stockpile incandescent bulbs, but they are not sure when to start. No one knows when the rules go into effect or what the rules are.”

Probably this is because articles about light bulb legislation are incredibly boring, and articles about the end of the light bulb as we know it are less so. Certainly they stick in the mind longer.

For years, Glenn Beck, among other conservative pundits and personalities, has proclaimed the death of the incandescent light bulb as a casualty of the “nanny state” (never mind that the light bulb legislation is a Bush-era act), and he has been exhorting his listeners to hoard 100-watt light bulbs (along with gold and canned food). This year, conservative politicians took a leaf from his playbook, introducing bills like the Light Bulb Freedom of Choice Act, courtesy of Michele Bachmann, the Minnesota congresswoman, that would repeal the 2007 legislation.

The hubbub has been deeply irritating to light bulb manufacturers and retailers, which have been explaining the law, over and over again, to whomever will listen. At a Congressional hearing in March, Kyle Pitsor, a representative from the National Electrical Manufacturers Association, a trade group that represents makers of light bulbs, among others, patiently but clearly disputed claims that the law banned incandescent bulbs. He restated the law’s points and averred light bulb makers’ support for the law. As usual, it seemed as if no one was paying attention.

(click here to continue reading Fearing the Phase-Out of Incandescent Bulbs – NYTimes.com.)

Who Buys All Those Google Ads

Seth Anderson0 comment

Google Chrome Mac Screen shot 2009-12-08 at 3.29.24 PM
Google Chrome Mac

Damn, that’s a lot of web advertising. Especially given the ubiquity of adblockers, and so forth…

Google cleared $37.9 billion in 2011 revenue, which equates to more than $3 billion a month, mostly from those little text ads next to your search results that neither you or anybody you know will admit to ever clicking on.

Insurance and finance buys for Google Adsense words accounted for $4.2 billion of that total — more than 10 percent — according to Larry Kim, the founder of Wordstream, a company that sells software to analyze text ad campaigns and commissioned the infographic above. The most expensive search term in that niche was “Self employed health insurance” — not surprising in the aftermath of the recession and the Affordable Care Act, which will eventually require nearly everyone to have health care insurance (unless the Supreme Court nullifies the law later this year).

That phrase cost $43.39 per click, nearly $10 more than the next most expensive term, “cheap car insurance”. (That’s not too surprising given that the long-term worth of a new insurance client might be worth losing money on them the first year.)

Retailers were a somewhat distant second, but still accounted for a hefty $2.8 billion in ad buys, and were led by e-commerce behemoth Amazon. Inexplicably, the top-priced search term in this niche was for “zumba dance DVD.” Or, perhaps the explanation is all those self-employed people looking to lower the cost of those health insurance policies they’ll need by finally getting started on a high-impact cardio routine.

(click here to continue reading Who Buys All Those Google Ads? An Infographic Breakdown | Epicenter | Wired.com, and see the infographic Wired created)

and compiled thus:

“I compiled these revenue estimates by using our own trillion-keyword database and the Google Keyword Tool to determine the top 10 million most popular search queries in 2011, as well as their average cost-per-click prices as paid by advertisers,” Kim told Wired. “I used WordStream PPC technologies to categorize the huge keyword list by industry, such as “Finance & Insurance,” then applied a model that weighed the relative percentages of each industry’s revenue (keyword volume * average cost per click) to Google’s 2011 revenues, excluding non-advertising revenues.
“The top five advertisers in each industry and their estimated spend was obtained by using data from SpyFu.com, then applying the same categorization analysis.”

Bill Clinton: Infrastructure Bank and BUILD Act

Seth Anderson0 comment

Halfway To Discontent
Halfway To Discontent

Charles Pierce and Mark Warren interview Bill Clinton, well worth a read. I had many disagreements with President Clinton, but I admire his political savvy and intelligence.

I like this idea:

ESQUIRE: Where’s the demand from outside, though? Where are the people insisting, “Hey, my bridge is falling down, and ‘We can’t afford to fix it’ is not a good enough answer for me. And if you can’t come up with a better one, then you’re back in the private sector”?

CLINTON: One of the things that I think should be done is the infrastructure bill that Kay Bailey Hutchison and John Kerry proposed, which sets up an infrastructure bank which would be seeded with U. S. taxpayers’ money, but it would be open to investors. Like, you and I could buy a $1,000 infrastructure bond, or the Chinese sovereign wealth fund, Saudi sovereign wealth fund, anybody could invest in it, and the returns on infrastructure are significant enough that in an uncertain stock market, I think you could get a lot of private capital.

And then it would be really interesting, it’d be a great opportunity — all this dispute about the one tenth of 1 percent of America that Paul Krugman’s always talking about. I believe that people of my income group should pay more, and I explained why, but that won’t necessarily lift overall wage levels. To do that, you’ve gotta have more jobs, a tighter labor market, different job mix. This is one way that wealthy Americans could really contribute. They could put hundreds of millions of dollars into the infrastructure bank, be a good investment for them, for their children, for their grandchildren, and they would directly contribute to revitalizing a big sector of middle-class wages in America and making our country more productive, so that we could create more opportunity. But I think that we could get a lot of grassroots support from, like, local chambers of commerce and other things if they understood exactly how this infrastructure bank would work. I hope that the president will make more of this, and I wouldn’t be as sure as everyone is now that nothing will be done next year. If we get this done, then I think he ought to challenge them to make a deal on corporate taxes and establishing the infrastructure bank that can take private capital, and you can make some slice of that deal repatriating a bunch of that money that’s overseas now at a lower tax rate, and put that money directly in the infrastructure bank. That’s the federal government’s contribution, and then open it up for other investment. And I think, you know, you might have $100 billion by the time you get done — that could put people to work right away.

(click here to continue reading Print – Bill Clinton: Someone We Can All Agree On – Esquire.)

Is this privatization? or just investment. If it is the latter, I’m for it. Our national infrastructure is crumbling, and the Republicans, for the most part, seem to be pleased about this. Repairing bridges, water mains and the like is also an employment boon – you can’t outsource that kind of work so easily.

Decline and Fall of Empire
Decline and Fall of Empire

I had never heard of this concept, turns out Senators John Kerry and Kay Bailey Hutchison proposed it back in March 2011, but I guess it went nowhere.

Tuesday, March 15, 2011 WASHINGTON, D.C. – At a press conference today, Senators John Kerry (D-Mass.), Chairman of the Foreign Relations Committee, Kay Bailey Hutchison (R-Texas), Ranking Member of the Commerce, Science, and Transportation Committee, and Mark R. Warner (D-Va.), Member of the Banking, Housing and Urban Affairs Committee, announced legislation to create an infrastructure bank that would help close America’s widening infrastructure funding gap, create millions of American jobs in the next decade, and make the United States more competitive in the 21st century.

U.S. Chamber of Commerce President and CEO Thomas J. Donohue and AFL-CIO President Richard Trumka, who also attended the event, underscored the unique coalition of business and labor uniting around this initiative.

“This is a bi-partisan moment to make a once bi-partisan issue bi-partisan once again,” said Sen. Kerry.  “Democrats and Republicans, business and labor, are now united to create an American infrastructure bank to leverage private investment, make America the world’s builders once again, and close the deficit in our infrastructure investments.  The BUILD Act will create good jobs, strengthen our competitiveness, and do more with less.  Most of all, this bill breaks a partisan stalemate to get America back in the game.  When you’ve got a Massachusetts Democrat, a Texas Republican, the Chamber of Commerce and the AFL-CIO preaching from the same hymnal, you’ll find a sweet spot that can translate into a major legislative step forward.”

“I have been working to overhaul our nation’s aging infrastructure for nearly 20 years. This national infrastructure bank is an innovative way to leverage private-public partnerships and maximize private funding to address our water, transportation, and energy infrastructure needs. It is essential to think outside the box as we work to solve national challenges, particularly in this fiscal crisis. We must be creative to meet the needs of our country and to spur economic development and job growth while protecting taxpayers from new federal spending as much as possible,” said Sen. Hutchison, who served on the Commission to Promote Investment in America’s Infrastructure in 1993 as State Treasurer of Texas and is the Ranking Member on the Senate Commerce, Science, and Transportation Committee.

“The United States is spending less than two-percent of its GDP on infrastructure, while India spends five-percent and China spends nine-percent,” said Sen. Warner. “As a matter of global competitiveness, we need to find additional ways to upgrade our nation’s infrastructure, and this bank will help us strike the right balance between near-term discipline and investment in future growth.”

“A national infrastructure bank is a great place to start securing the funding we need to increase our mobility, create jobs, and enhance our global competitiveness,” said Donohue. “With a modest initial investment of $10 billion, a national infrastructure bank could leverage up to $600 billion in private investments to repair, modernize, and expand our ailing infrastructure system. While private capital is badly needed, we must also recognize our public financing mechanism is broken. Receipts to the Highway Trust Fund have fallen dramatically, funds are being diverted to non-infrastructure projects, and the gas tax has not been increased in 17 years. We need a multiyear highway bill to meet immediate needs, but we have to figure out a way to ensure we have adequate public investments for years to come.”

The Building and Upgrading Infrastructure for Long-Term Development (BUILD) Act would establish an American Infrastructure Financing Authority (AIFA) – a kind of infrastructure bank – to complement our existing infrastructure funding.  This institution, which would provide loans and loan guarantees, would be both fiscally responsible and robust enough to address America’s needs.

 

AIFA is independent of the political process.  It would fund the most important and most economically viable projects across the country, our states, and our communities.

AIFA is also fiscally responsible.  While AIFA will receive initial funding from the government, after that it must become self-sustaining.

Finally, AIFA relies on the private sector.  It can never provide more than 50 percent of a project’s costs, and in many cases would provide much less, just enough to bring in private investment.

(click here to continue reading John Kerry – United States Senator for Massachusetts: Press Room.)

Division Street Bridge
Division Street Bridge

More:

Earlier this year, Sen. John Kerry introduced the BUILD Act as new legislation to tackle the problems of jobs, economic growth and our declining infrastructure simultaneously. The centerpiece of the legislation calls for the creation of an American Infrastructure Financing Authority, or what is coming to be known as an “infrastructure bank.” This essay will touch on the fundamentals of the bill and the problem it attempts to solve, explain ways it could be improved, argue that it is a good idea, and advocate political support for it. The BUILD Act creates a financial institution modeled after the Export-Import Bank, which was created by FDR during the Great Depression. The bill would require a small amount of start-up capital financed by the federal government, but it would conduct its business as an independent agency. A CEO and a seven-member board of directors would be appointed by the president and confirmed by the Senate. Although the initial start-up capital ($10B) would be provided by the federal government, the bank would be required to become self-sufficient in five years.

(click here to continue reading Daily Kos: Building on the BUILD Act.)

So, we’ll see. Apparently John Boehner’s House minions don’t like the idea of country first over party victory, so have refused to move the bill forward.