Marketplace - American Public Media

Summer fun for future Fed chiefs? Maybe.

Mon, 2014-07-21 10:52

If sprinklers, Slip'N Slides and the other joys of summer aren’t wonky enough for your kids, there’s always Fed camp. The Federal Reserve Bank of Richmond runs a summer program for kids in grades K-8. It’s a field-trip destination, with half-day workshops meant to boost children’s basic financial literacy.

Outreach specialist Angela Collier gathers a group of rising kindergarteners around her at the Richmond Fed. They’re four- and five-year-olds in bright orange T-shirts, visiting from Camp Primrose.

In her best ‘this-is-awesome’ voice she tells them, “We’re gonna be talking about goods. And services. And consumers and producers and spending and saving.”

Oh yeah, it’s Fed boot camp.

“Uh, I wouldn’t call it Fed boot camp,” Melanie Rose quickly corrects. She oversees the Richmond Fed’s economic education programs, including its Summer Camp Challenge.

Is she at least scouting for the next Janet Yellen? Or Ben Bernanke?

Well, if we happen to find one I’m sure we would take him,” she says. “But no.”

Really, this is more like Fed-lite. It’s a chance for almost a thousand kids to stop by, play games about personal finance, and build their economic knowledge. But let’s just say you were secretly grooming future Fed chairs. You’d start young, right?

Step One: Establish everyone’s weight in gold.

“Probably all of you weigh about … one and a half, maybe two gold bars,” Collier tells the 40-pound kindergarteners. They’re standing in front of a gold brick that weighs 401.75 troy ounces.

Now that they’ve got the gold standard down, it’s time for Step Two: Master the difference between a good and a service.

A good, Collier says, is “something you can touch and feel and take home. Can you think of anything that would be an example of a good?” she asks.

“Play dough?” suggests camper A.J. Salvatto.

“Play dough is a great example of a good!” Collier cries.

Well done, A.J. Save that kid a space on the Federal Open Market Committee.

Step Three: Practice. The kids turn over cards, with pictures of cars and clocks and waiters. They try to identify goods and services. There are a lot of question marks in their little voices.

“Uh, a service?” asks one.

“A good?” asks a bunch of them.

Camper Tony Cavero nails it. He holds up pictures of firefighters.

“Are they providing a good or a service?” Angela Callier asks.

“A service,” he replies.

Tony Cavero: destined for the Board of Governors.

Now, older kids come through the Fed summer camp challenge too. But these little guys showed so much promise, we asked them about the biggest lesson learned from their day at the Richmond Fed.

Like Skanda Athreya, whose dad is an economist there, they all mention the same thing: the bus ride.

“I learned on the bus, when the driver’s driving, don’t distract your driver, ‘cause it can make him get in a car crash,” Skanda says.

Which in the coded language of Fed-speak says a whole lot about how to manage the economy.

Your Wallet: Kids are moving in with their parents

Mon, 2014-07-21 07:23

Have you ever had an extra bedroom or couch occupied by a loved one longer than you anticipated?

According to the Los Angeles Times, more homes than ever before have multiple generations under one roof:

A record 57 million Americans, or 18.1% of the population, lived in multigenerational arrangements in 2012, according to the Pew Research Center. That's more than double the 28 million people who lived in such households in 1980, the center said.

In the past, the elderly were the primary group moving in with family. But now, it's millennials:

About 23.6% of people age 25 to 34 live with their parents, grandparents or both, according to Pew. That’s up from 18.7% in 2007, just prior to the global financial crisis, and from 11% in 1980.

For the first time, a larger share of young people live in multigenerational arrangements than of Americans 85 and older.

If you've dealt with this situation, we want to hear how you made that sometimes difficult break. How did you help get that person out of the house and onto their feet? Email us, or let us know on Twitter.

Mapping the city, statistic by statistic

Mon, 2014-07-21 07:05

The map, one of the central elements of navigation, has expanded in capability since the form has been translated to digital. Case in point, the MIT Media Lab’s “You Are Here” project is a collection of maps that visualize a variety of datasets over space. Things from bike accidents to coffee shops, graffiti reports, and transit connectivity are all laid out, using a variety of open data and other online resources, such as Google’s map directions services API.

Sep Kamvar, one of the leaders of the MIT project, says he was prompted to start this project by noticing the subtle ways in which cities differed — often due to deliberate decisions.

“I realized that the cities are quite different, and they’re quite different because of lots of tiny little design decisions that were made, from the width of sidewalks, to the number of trees on the streets, to the proximity of independent coffee shops,” he says.

Kamvar goes on to argue that a typical map does not show these other factors that shape the city — all important, but often underestimated.

The goal of the maps, according to Kamvar, is to illuminate where things are happening in the city, not just how to get around.

“My hope is that each of these maps gives information on how to make the city a better place,” he says, citing as a partiuclar example a map that allows users to map where trees throughout the city are located. 

The MIT project is not the only initative using open data to illuminate cty-level statistics. Last week, another project visualized the distances travelled by by New York City taxicabs in a single day, using data obtained from the city's taxi regulator. Below is one of the project's "Fastest Mode of Transit" maps.

Check out this map of the fastest modes of transportation in Manhattan

Republicans have a birthday card for Dodd-Frank

Mon, 2014-07-21 06:00

Passed in the aftermath of the financial crisis, the Dodd-Frank Act sought both to prevent future economic disasters and create a better framework to deal with them, should they still arise. Monday marks its fourth birthday. How’s the toddler doing?

New criticisms

Many are still unhappy with these reforms, including Republicans in the House Financial Services Committee, who are marking the anniversary with a 100-page report criticizing the law for failing to prevent banks from becoming “too big to fail.” The report also expresses concern that some non-banks are labeled systemically important (which makes them subject to special regulations) and that label could act as a guarantee of sorts, signaling to investors that the government won’t let those companies fail if they get into trouble.

Implementation

There were about 400 different individual elements that made up Dodd-Frank. An analysis by the law firm Davis Polk found roughly half those rules have been finalized; another quarter are in the proposal phase and the last quarter still need government agencies to even come up with them.

However, even finalized rules might require tweaking.

“There’s still a tremendous amount of work to do and even the work that has been done will have to be redone over time,” says Jeffrey Manns, a law professor at George Washington University. “It’s a process of trial and error in that rules will be implemented or are being finalized, but those rules will need to be changed.”

Like a large construction project, work can begin on day one,  Manns says, but you’re going to working and tinkering for many years to come. 

Design: where dollars are scarce and need is great

Mon, 2014-07-21 04:00

In a Stanford classroom crowded with Post-it notes and duct tape, Dr. Shankar Rai, a plastic surgeon from Nepal, is wearing a hand splint made out of Popsicle sticks and pipe cleaners. He’s giving feedback on a prototype made by graduate students in a class called "Design for Extreme Affordability". Currently, the only splints available in Nepal cost upwards of $50. The students are aiming to do better.

Here in the U.S., we’ve got asthma inhalers at every doctor’s office, baby incubators at every hospital, and irrigation systems at most every farm that needs one. But in some places in the developing world, many of these technologies are just too expensive to use. American design schools are trying to change that by teaming up with NGOs around the world to get truly affordable products to market.

Rai works with the non-profit Resurge International to improve care for burn victims in Nepal. One of his main problems is the cost of supplies for the operating room: If a patient shows up at a government hospital, the surgery may be free, but “dressing materials, sutures, all those things will be bought by the family.”

When families can’t afford those supplies, Rai says burns turn into lifelong disabilities. So Resurge submitted a “wish list” to Stanford’s design school. Included on that list is a splint that could be made for less than $10.

“Small non-profits don’t have the luxury of having their own designers and their own R+D  teams,” says Jim Patell, who teaches the design class.

According to Patell, both NGOs and students are trying out ideas others might see as too risky. When publicly-traded companies come up with new products, they have to decide who their next customers will be: affluent consumers in the West, or people living on a few dollars a day in places like rural Nepal.

They can think about it very deeply,” says Patell, “and find out that, yeah, developing the next product for the Western world is the responsible thing to do for their investors.”

Universities don’t have to answer to investors, and initiatives like Patell’s class have sprouted at schools all over the country.

Amy Smith, who founded the D-Lab at MIT, says student designers sometimes benefit from their lack of expertise:They may come in with a very new way of doing things, because they’re not concerned that it can’t be done that way, and therefore they find a way to do it.”

Failure is part of the process too. And even though his students “get it right” less than half the time, Patell says, Design for Extreme Affordability counts 32 student projects that have found new life as NGOs or even for-profit companies.

PODCAST: Happy birthday Dodd-Frank

Mon, 2014-07-21 03:00

The Dodd-Frank Act turns four, just in time for strong critiques of its implementation. Plus, more on a new study showing that millennials tend to fear investment, instead opting to save money in cash. Also, in an incongruous pairing, Goldman Sachs will fund an educational program on Rikers Island. It's part of a social impact bond, where investors put money into social programs with the promise of profit if the program meets its goals.

SIB spells a way for financiers to do social good

Mon, 2014-07-21 02:00

Governments and non-profits struggle with shrinking tax revenues and donations, and the lack of funding puts social programs in jeopardy. A new movement tries to fill that gap with money from banks.

The twist? The people providing this money aren't donors; they're investors, and they stand to make a profit on social services. That’s why the first attempt at what’s called a social impact bond in America is being closely watched by scholars, bankers, and politicians alike.

The bond involves the incongruous pairing of one of the world’s best-known banks with one of New York's most notorious prisons. Goldman Sachs is lending $9.6 million to fund an educational program on Rikers Island for 16-18 year old offenders.

The program aims to change the young inmates' way of thinking, with the goal of enabling them to make the choices that will ensure they don’t get locked up again. But they face grim statistics -- About half are likely to be back in prison within a year after getting out.

This high recidivism rate carries high costs for the young offenders, their families, and their communities. It’s also alarmingly expensive for New York City to keep them in prison. That’s where the social impact bond comes in, becoming profitable only if the city saves substantial money through a reduction in re-incarceration attributable to the education program.

If the program leads to a 10 percent reduction in recidivism, Goldman recoups its investment. If the reduction in recidivism is greater than 10 percent, Goldman profits.

“Goldman doesn’t earn any return unless the city reaps significant savings on the decrease in recidivism,” explains Andrea Phillips, a vice president at the bank’s Urban Investment Group. (Not all of Goldman’s money is technically at risk. Bloomberg Philanthropies is kicking in $7.2 million to guarantee part of the loan. That has drawn critics, who say it prevents this social impact bond from being a pure test of using private capital for social good.)

The basic case for social impact bonds is they risk bank money instead of taxpayer dollars. A key worry is that it’s a bad and untested idea to mingle services for the poor with bank profits. 

“I understand the discomfort with that,” says Susan Gottesfeld, associate executive director at the Osborne Association, a non-profit operating the program at Rikers. “But I feel that it’s not only government’s job, not only non-profit’s job to make sure that our society’s working. And if banks who make lots of money are interested in using that money to make something possible that otherwise would not be, we’re very open to that.”

Gottesfeld says she often hears from other non-profits asking for advice on how they can strike bank deals of their own.

This program will ultimately be judged by what it can do for young people like Louis Rivera. He now works near Coney Island, far better waters than those around Rikers Island, where he did time for attempted burglary. He says the program helped him turn himself around, and what he learned showed him how to give his two year old son Landon a better future.

“I wanna teach him that life doesn’t have to be that for him,” Rivera says. “Regardless of where you come from, because life’s not about the things you go through it’s about the choices you make when you go through them.”

Independent analysts are evaluating the program’s impact, with a report expected next year. If it’s a success for the city and Goldman, expect to see many more banks, governments, and charities buying in to social impact bonds.

Young adults choose to save cash instead of investing

Mon, 2014-07-21 02:00

Amanda Moffitt is 30, so she was just getting settled when the economy tanked.  

“It was 2008, so there was a lot of concern about the stock market and what could possibly happen to your money when you invest it,” Moffitt says. 

And, it turns out, that attitude has stuck among young adults.  

“They are the most risk-averse group,” says Greg McBride, vice president and chief financial analyst at Bankrate. Its new survey shows that once those under 30 actually have some money to save, they’re very cautious.  

“They prefer cash by a 3-to-1 margin over the stock market, for money they’re not going to need for at least 10 years,” he says. 

That could be too conservative of a strategy, since savings accounts don’t keep up with inflation. 

“Kind of gets us back to that Depression mindset of hiding cash under the mattress,” says David Weliver, editor of moneyunder30.com. Part of the whole problem is choice overload. 

“The thousands of investment choices, and all the conflicting advice out there. A lot of it is they sit tight and do nothing,” Weliver says. 

As for Amanda Moffitt, she’s wised up. She’s working to become a financial planner.

So where should millennials be investing?

We've heard the mattress is not the way to go, and saving accounts aren't much better. Young people may also simply be intimidated by the vast array of choices, or worried they don't have enough money on hand to make investing worth it. Nonsense.

We've dug back into the Marketplace archives to find some of the best advice we can offer for young (or otherwise new) investors. To start, here's a quick personal finance cheat sheet.

    • More on mutual funds: Many mutual funds offer "quick and easy" plans aimed at first-time investors, but easy doesn't always equal better. Marketplace Money explains.
    • What if I have a bunch of retirement funds? If you have a few different retirement plans, we have some tips to juggle them all.

Finally, if you're sick of reading, your mate Paddy Hirsch has a number of "Whiteboard" videos explaining index funds, ETFs, compounding and more.

Gamers, want to win $10 million dollars?

Mon, 2014-07-21 02:00

People like to watch other people play video games. They like it so much that tournaments for competitive gaming — or e-sports as it's known — are packing stadiums and offering multi-million dollar prizes.

They're also getting the attention of the likes of ESPN, which televised the "International Dota 2" Championships in Seattle over the weekend, with winners soon to be announced.

Tickets to "Dota 2" sold out in an hour at the 17,000 seat Key Arena, and millions of people were expected to watch the games on ESPN2, ESPN3 and online.

Erik Johnson is with Valve, the company behind "Dota 2."

"This is a huge amount of fun for us, we're all fans and we get to kind of show off a little bit, put on a big show for everybody," says Johnson.

"Everybody" includes hordes of young men ages 18 to 34, a group advertisers love.

Nicholas Taylor, who teaches digital media at North Carolina State says cable tried airing gaming championships in 2008, but the timing was wrong. That's not the case anymore.

"As it may have been, a shot in the dark, let's put it that way, for ESPN six years ago, is now probably a pretty sure bet in 2014 and going forward," says Taylor.

ESPN says it hasn't committed to any other e-sports coverage. But, Taylor says, the sport is so big, it's going to happen.

McDonald's, KFC hit by food scandal in China

Mon, 2014-07-21 02:00

McDonald’s and KFC's parent company Yum! Brands apologized to Chinese consumers over concerns that a supplier of theirs was selling expired chicken and beef to fast food chains.

Chinese regulators have shut down the supplier, Shanghai Husi Food Company, which is owned by OSI Group, an American food supplier based in Aurora, Illinois that has an annual revenue in the billions of dollars. The Shanghai supplier also provided food to Pizza Hut, Papa Johns, and Starbucks. 

Sunday evening, a local television news program in Shanghai aired a report that showed workers at the supplier’s plant repackaging chicken and beef products that had gone past their expiration dates. The report stated workers also hid crates of expired beef from inspectors sent by McDonald’s.

Foreign fast-food chains typically earn more trust among Chinese consumers who believe the chains will have better hygiene than local eateries, so the question Chinese consumers are asking now is: what about the rest of these brands’ suppliers?

"I think we will come to a point where the large brands – KFC, McDonald’s, Starbucks, and others – will have to start just like Nike and Apple did, showing who their suppliers are and releasing reports about the quality of each one," says Richard Brubaker, founder of Collective Responsibility, which helps multinational companies in China with corporate social responsibility.

Brubaker says all of the companies involved in this particular scandal will need to begin doing unannounced inspections at their suppliers in China, and they’ll have to be more transparent about their supply chains to regain the trust of not only Chinese consumers, but the trust of investors, too.  

 

Jobs, like water, always seem to run downhill

Mon, 2014-07-21 01:00

Did you hear the one about the American furniture factory that was able keep jobs in America despite intense competition from low-wage China?

I was just talking to newspaper reporter Beth Macy about her new book “Factory Man,” the story of a fierce American furniture tycoon named John Bassett III who went on a mission to China to see where all his furniture jobs were going.

His detective work paid off: In China, he learned a piece of information that turned out to be a powerful tool that kept his factory in Virginia open, his people employed, and an Appalachian town thriving. Macy reveals Bassett’s weapon of choice in this battle against offshoring and I’d hate to spoil it here.

That said, moving jobs to spots where labor is cheaper and unions are weaker is a process that has endured in the US labor market throughout the last quarter century. Talking to Macy, I was struck by the sense that outsourcing never seems to come to rest. Jobs move, then move away again.

Staying with the furniture business for a moment, let’s consider New England (something I like to do as a New Englander). As Macy points out, New England used to be a major hub for furniture manufacturing. A lot those jobs went to the Midwest, but only for a while.

John Bassett’s grandfather and grandmother came along early last century, looked carefully at those Michigan furniture factories and figured out a way to move the work south, to North Carolina and Virginia. They brought manufacturing efficiencies that helped ensure the success of the new factories. What also helped was the tendency of people in Appalachia to work cheaper. 

Then, when China got most-favored nation trade status and joined the World Trade Organization in 2001, the jobs moved to China, Mr. Bassett’s heroic efforts became an exception to a rule.  

Yet the jobs are not staying in China, Macy points out. Many companies have moved on to the current center of the furniture universe: Indonesia, where wood is available and labor is cheaper still.

Late in the book, Macy writes about flying to Indonesia and talking with a local furniture sample engineer. Macy asks him if he ever spared a thought for the Appalachian furniture makers his Indonesian operation replaced (no, he doesn’t). But then the engineer volunteers something he does worry about: the future of his own factory. 

“I worry about someone somewhere else, somewhere cheaper will start to make furniture, and that will be that for us,” Macy quotes him as saying.

Where could furniture companies find labor cheaper than in Indonesia? Maybe sub-Saharan Africa some day, then offshore further still to the island of Madagascar, for instance. Regardless, at some point the whole world will be globalized and companies will not find a cheaper place to find workers to build furniture, or where a worker could feel secure.

Yet I wonder if that is not the final fate of offshoring at all. Once the world economy runs out of cheaper and cheaper labor, you know who will get the work? Not humans, but machines. There will be robots to do the work of building furniture. Technology, not geography, is probably what lies at the very end of the offshoring food chain. 

How businesses in Murrieta are coping with immigration protests

Fri, 2014-07-18 14:17

Earlier this year, the town of Murrieta California started positioning itself as a culturally diverse and economically strong oasis in the California desert. About an hour north of San Diego, the bedroom community is trying to lure companies in the tech and medical fields. But then, a wave of undocumented immigrants began crossing the border in Texas, some 800 miles away.

Soon, US Immigration and Custom Enforcement officers brought hundreds of those undocumented immigrants to the federal detention in Murrieta. And with that, anti-illegal immigration protests broke out, giving the city a huge public relations black eye.

To see how the business community is responding to all the bad press, we spoke with Kim Davidson, Murrieta’s Business Development Manager. 

Click play above to hear how immigration and immigration protests affect Murrieta.

What we know about Buk missiles

Fri, 2014-07-18 13:45

It's likely that the missile that downed the Malaysia Airlines plane yesterday was a relic of the Cold War era known as a "Buk."

Here’s what we know about the Soviet-era missile system:

What is a Buk missile?

The Buk is a surface-to-air missile that can shoot down airplanes flying up to 13 miles off the ground. 

It looks like the lower half of a tank or truck, with a few anti-aircraft missiles on the top and was developed by the Soviet Union in the early 1970s.

What does "Buk" mean, anyway?

Buk means “Beech Tree” in Russian. During the Cold War, NATO’s code name for the Buk was "the Grizzly.”

How many of them exist?

There are several hundred Buk missile systems out in the world today, in the hands of about a dozen countries, says arms control expert Igor Sutyagin with the Royal United Services Institute in London. Russia, Ukraine and other former Soviet republics are known to have them. Syria, which has bought weapons from Russia for years, has also been known to own the systems.

Who has them now?

There is no official registry of where each Buk system is, but the United Nations and the Stockholm International Peace Research Institute keep lists that attempt to keep track of these and other weapons.  Individual countries also try to track the weapons through their own intelligence agencies.

How could one have ended up in Ukraine?

There are a few theories on the origins of the Buk missile system that allegedly shot down the Malaysian passenger jet. The Ukrainian military inherited some Buks after the Soviet Union collapsed. It's possible that pro-Russian rebels captured one from the Ukrainian army. Or, it could have come from a Russian military commander, either through official channels or on the black market. 

Why do weapons from that era end up in different places? 

It’s not uncommon for old weapons from Russia and the U.S. to have second and third lives beyond their original owners. Military officials sell old equipment to other countries, often at bargain prices.

“The United States is anxious in many cases to provide allies with military capabilities that don’t bust their budget,” says Bruce Bennett, Senior Defense Analyst with the Rand Corporation. The sales are legal, and governments aren’t required to report the movements of those weapons around the globe, though the UN and SIPRI both try to keep track.

It’s even more difficult to know how many smaller, less conspicuous Soviet-era weapons are circulating around the world's conflict zones illegally. 

Weekly Wrap: Duck hunting and the Fed

Fri, 2014-07-18 13:33

Marketplace host Kai Ryssdal discussed the week that was in business and the economy with the Wall Street Journal's John Carney and chief economist at Redfin Nela Richardson

Listen to their conversation in the audio player above.

How many apps do you use in a month?

Fri, 2014-07-18 13:31

The good people at Nielsen did some measuring of how many apps we use on a regular basis.

You'll probably need a second to think about it; there are lots of categories to consider, right? News, travel, entertainment, finance...

Okay, ready?

We all, on average, we use 26.8 apps per month on a regular basis.

There seems to be a natural cap of 30; no age group uses that many.

Twitter may change metrics to reflect a wider audience

Fri, 2014-07-18 13:28

Some 255 million people log on to Twitter every month. That’s lot of people, but the number’s not growing fast enough to satisfy some investors. Now, the Wall Street Journal reports Twitter may unveil new metrics to convince investors that the world of people who engage with Twitter is bigger than the world that logs on.

“When you’re analyzing a social network, there are only two things that you care about,” says Shyam Patil, senior internet research analyst at Wedbush Securities. “The number of users and the level of engagement.”

Twitter describes those now with two metrics: monthly active users and timeline views. But there’s a problem, says analyst Brian Wieser of Pivotal Research Group.

“The problem is: Twitter - surprise, surprise - isn’t for everyone,” he says.

Growth in users and engagement has slowed year-over-year.

But these days, plenty of non-tweeters still interact with tweets. Say you’re a sports fan reading a piece online about LeBron James going back to Cleveland. Tweets from LeBron might be embedded in the article.

“So that would be me engaging with Twitter, but not really signed on,” says Shyam Patil.

Your mom might not send tweets, but she’d see and hear them if you watched "Celebrities Read Mean Tweets" on "Jimmy Kimmel Live" together.

Twitter’s new metrics would – reportedly – capture some of that wider audience. The company declined to comment, citing the quiet period that precedes earnings reports.

Analyst Brian Wieser says he thinks all this focus on Twitter user metrics is “distracting from the fact that they’ve got a great business. Metrics that would tell a much better story are things like: How many advertisers do they have? What is the average spend per advertiser?”

Things, he says, that speak more directly to Twitter’s source of business than the number of people who see tweets.

Why planes fly through dangerous airspace

Fri, 2014-07-18 13:17

The downed Malaysia Airlines jet has passengers and airlines alike asking new questions about safety, wondering why the company stuck to a flight path directly over a volatile conflict zone. President Obama says it appears the plane was shot down by a missile from Ukrainian land controlled by pro-Russian forces.

Ukrainian authorities had closed the flight path up to 32,000 feet. But Flight MH17 was above that altitude. Even before the incident, some airlines avoided the area altogether. Malaysia Airlines, however, stayed the course, as did several other carriers. A less efficient flight path means more money spent on fuel, crews and maintenance. So it’s not a decision carriers take lightly.

“This industry has gotten so dog-eat-dog and so competitive that they’re looking at the bottom line far more than they ever have in the history of this industry,” says University of Portland finance professor Richard Gritta, who has long studied commercial aviation.

The strict cost cutting of modern airlines is striking to those who remember aviation’s glamorous golden age. Retired American Airlines pilot Jim Tilmon remembers taking a plane hundreds of miles off its planned path to avoid nasty weather and provide a more comfortable ride for passengers.

“I did burn a little bit more fuel, but it wasn’t a big deal. It wasn’t so much that the airline got upset,” Tilmon remembers.

With airlines facing high fuel prices and relentless shareholder pressure, pilots today don’t expect their employers to be so lenient.

Mark Garrison: Airlines use computer modeling and human judgment to choose flight plans. Basically, they look at two things, says aviation consultant George Hamlin.

George Hamlin: The first thing is safety. The considerations after that are basically you would like to do that at the lowest possible cost.

A less efficient flight path means more money spent on fuel, crews and maintenance. So it’s not a decision carriers take lightly. Ukrainian authorities had closed the flight path up to 32,000 feet. But Flight MH17 was above that. Some airlines still avoided the area altogether, paying more for extra safety. Malaysia Airlines stayed the course, as did several other carriers.

Richard Gritta: This industry has gotten so dog eat dog and so competitive that they’re looking at the bottom line far more than they ever have in the history of this industry.

University of Portland finance professor Richard Gritta says a longer flight path may only cost a few dollars more per seat. But multiply that over all the flights and it takes a real bite out of profits.

Gritta: It becomes a fairly big deal, especially if you’re flying that route several times a day.

Strict cost cutting is why you don’t often hear captains of today’s commercial jets talk like Jim Tilmon.

Jim Tilmon: I’ve flown hundreds of miles around weather to keep my passengers secure and safe and comfortable.

Tilmon was a longtime American Airlines pilot, whose career included air travel’s golden age.

Tilmon: I did burn a little bit more fuel, but it wasn’t a big deal. It wasn’t so much that the airline got upset because I did that.

With companies facing high fuel prices and shareholder pressure, pilots today don’t expect their employers to be so lenient. I'm Mark Garrison, for Marketplace.

A look at the Export-Import bank

Fri, 2014-07-18 12:23

In Congress, there’s been a big, heated debate about a bank most people probably haven’t heard of: The Export-Import Bank of the United States, commonly called the Ex-Im.

The bank’s charter expires in September, and many conservative Republicans would like to kill it, while others are calling for reforms.

Conservatives say the Ex-Im bank is bloated, inefficient, comes at a high cost to the taxpayer and is really just a form of corporate welfare for big companies, including Boeing.

But Democrats and some Republicans say Ex-Im helps small businesses enter foreign markets, helping boost exports.

To help explain what the Ex-Im bank does and put it in context, we took a little field trip to a fabric whole seller in New York City who once did business with the bank. We also spoke with entrepreneur and investor Jan Boyer* in Washington, D.C.

*CORRECTION: An earlier version of this story provided the misspelled the name of Jan Boyer. The text has been corrected.

 

Tech IRL: Selling your smartphone safely

Fri, 2014-07-18 12:13

Smartphones hold so much of our lives. From our photos to our emails to our texts, there is a lot of personal info housed on our smartphones. Hayley Tsukayama, tech reporter for the Washington Post, joins Marketplace Weekend host Lizzie O’Leary to tell listeners what they should be doing with their smartphone before selling it.

Selling your smartphone is a quick way to make some cash. But a study published earlier this week by the security firm Avast, in which the firm bought some used Android phones and recovered thousands of "erased" personal files, stands as a good reminder that you have to think carefully before you sell.

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