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Manhattan gets its first Dairy Queen

Tue, 2014-05-20 13:01

There are more than 4,000 Dairy Queens in the U.S. China has nearly 600. But out of all those stores, none is on the New York island of Manhattan. That changes next week when the Minnesota-based chain opens its first Manhattan location.  

“I like to say a Blizzard is going to hit Manhattan, and really New York City as a whole,” says John Gainor, International Dairy Queen’s president and CEO. 

The Blizzard is the chain’s signature milkshake. Gainor was in town taking a look at the soon-to-open, two-story Dairy Queen on 14th Street in Manhattan. 

But this is a city with endless options for treats, from frozen yogurt to artisanal ice cream. Dairy Queen has stiff competition. Just blocks away I found a Mister Softee truck, a New York icon.  

Ric Perez working inside didn’t feel the threat. 

“People prefer Mister Softee. Yes, it is a New York thing,” he says. 

Actually, Dairy Queen CEO Gainor says his competition is any fast food restaurant. McDonald's has a McFlurry, and this Dairy Queen serves burgers. 

And, for all the talk of chains like 7-Eleven and IHOP and now Dairy Queen invading Manhattan, this one seems different. 

“New Yorkers have been very welcoming to our brand,” Gainor says. 

That’s not just CEO-talk. Many New Yorkers aren’t from here. They have a soft spot for Dairy Queen’s soft-serve, growing up in Dairy Queen towns.

“When we were younger, we’d ride our bikes there and stuff like that,” says Adam Sansone, walking near Union Square.  

More Dairy Queens are on the way for Manhattan and the other four boroughs.

They won’t necessarily replace mom and pop shops. Retail all over New York has been expanding since 1993, thanks to drastically reduced crime and a bigger population. 

“A lot of companies probably feel that they can’t afford not to be here in New York City,” says MIchael Moynihan, chief economist at the New York City Economic Development Corporation. 

A motorcycle design for the history books

Tue, 2014-05-20 12:49

This is part two of a two-part series. Read part one here.

Jim Jacoby wants to create an American Renaissance of design. He has a plan to give blank checks to master craftsmen, and give them the freedom and the budget to build their dream project. His first commission, a groundbreaking motorcycle by renowned designer JT Nesbitt, is nearly complete. It’s sort of a patronage system loosely modeled after the Medici, the wealthy banking family that gave birth to the Italian Renaissance. This new system is designed to remove the drive for profit from the act of designing. The hope is that through this process, breakthroughs in design and engineering emerge. And those breakthroughs will lead to business opportunities.

This system is called the ADMCi, American Design and Master Craft Initiative, and its first commission is called The Bienville Legacy.

When David Lenk, an industrial design expert, first saw the Bienville Legacy, he was so moved, he cried. He says the design rivaled the great industrial designers of history, “the genes of engineering greats like Barnes Wallis along with the ascetics, the fine touch of Ettore Bugatti. I know that your eyebrows may arch linking JT with these engineering and design icons, but I will stand behind it.”

What he saw, he says, “Was a motorcycle that basically challenges many, many engineering precepts that go back 120 years. This is a guy who not only stepped back to square one, but then he stepped out of the square.”

Let’s go back to square one. The origin of the motorcycle is essentially the bicycle. “Think about the first motorcycle,” says Lenk, “it was a bicycle that they hung an engine onto.” But for The Bienville Legacy, Nesbitt started from an entirely new origin point: The bow.

“The very first man-made spring is a bow and arrow. So this technology is Paleolithic. It predates civilization,” says Newsbitt.

Imagine a bow and arrow pointed at the sky. Where your hand grips the bow is where the engine of the motorcycle is attached. At each end of the bow is a wheel. So instead of having shocks like a regular motorcycle, the entire bike is one big leaf spring. It looks like it's part beast, part machine.

“These are the sort of things you read about in history books,” says Lenk.

Lenk has spent his entire life surrounded by industrial design. His grandfather was at one point the largest producer of soldering irons in the world. Lenk went on to study at the Rhode Island School of Design. “I guess you could say I’ve been born with this bug and have nurtured it my whole life,” he said.

Today Lenk designs museum exhibits for a living. After finishing a recent job at a museum in New Orleans his employer took him to a French Quarter bar called Molly’s to celebrate. By chance, he happened to sit next to JT Nesbitt and Jim Jacoby. “It was a real Motorhead moment,” Lenk remembered. “Within two sentences we were talking about French Coachwork of the 1930s and design, and the conversation ended with an invitation to visit his C shop that Saturday. But nothing could have prepared me for what I saw.”

Nesbitt’s shop is called Bienville studios. It’s about a block from the Mississippi River on the edge of the French Quarter. When you step inside, it’s surprising just how spare it is: a small workbench, a few racks with parts, some tool boxes.

JT Nesbitt working in his studio.

Justin Jackola

But the most striking thing in JT’s shop is in the center of the room, a strange looking motorcycle, balancing on a hydraulic lift like a statue on a pedestal. It’s a prototype that Nesbitt built. He’s named it The Bienville Legacy.

“There’s no example, as far as I know, of anyone else in the world doing that. It’s completely original thought,” said motorcycle journalist Alan Cathcart. He’s written about motorcycles for over 30 years. He’s been called the kingmaker because he’s often the first person to ride and review new bikes. 

He described Nesbitt’s design as breathtaking, though to most people it simply looks strange.

“It doesn’t matter whether it’s a strange-looking thing because we don’t have to sell them,” said Nesbitt.

If this were a typical corporate motorcycle, the plan would be to put the bike into production and sell them for a profit. But this is not a profit-driven endeavor. “To look at this for short-term recoupment would be to undermine the overall purpose of what we're up to,” said Jim Jacoby.

He’s put up his life savings to pay for the building of three prototypes. Jacoby gave Nesbitt a blank check and told him build his dream bike without any constraints. The expectation is that by giving JT the freedom to experiment with new ideas and materials, breakthroughs in engineering and design will emerge.

When I visited Nesbitt at his shop, one of the first things Nesbitt showed me was a small box full of bolts

“This is titanium hardware,” said Nesbitt, holding up a wooden box. Nesbitt designed the bolts himself. The bolts and other hardware alone cost $30,000. Boeing's prototype shop in Seattle is manufacturing them.

Nesbitt says this motorcycle is the first to use this much titanium and carbon composite structurally. “I think that all motorcycle designers want to use those materials but they are limited by their budgets. The materials that I'm talking about are radically expensive.”

Motorcyle journalist Alan Cathcart mounts the nearly competed Bienville Legacy Prototpye.  

Scott Tudury

Nesbitt calls titanium a miracle material, “and now it’s available. Ten years ago, I couldn’t have done what I’m doing now because the military industrial complex had sucked up all the titanium. It’s just now becoming available in quantity.”

One of the byproducts of Nesbitt’s motorcycle is eight original engineering patents related to his first-of-its kind suspension system. “The outcomes for the patents might be new ways of doing suspension in automobiles,” said Jacoby.

This is one potential long term source of revenue from the bike. If the automotive industry adopts these engineering ideas, it would have to pay to license the patents. But that’s a big "if." This is one reason this project is a tough sell to investors: It’s unclear if any of Nesbitt’s radical designs will ever be adopted by the wider automotive world.

When Nesbitt was commissioned to build his motorcycle prototype, he signed over the patents and intellectual property to the American Design and Master Craft initiative, the ADMCi. In exchange, he gets his rent paid, but zero salary. If the patents do make money, he will get a percentage. But again, that’s the big if.

“I think on balance, I’m coming out way ahead,” said Nesbitt. “I’m giving everything I can to live my dream. I get to reinvent American motorcycling.”

Motorcycle journalist Alan Cathcart has been called \"The Kingmaker.\" Here he is with Nesbitt and the nearly completed Bienville Legacy.

Scott Tudury

The next step for Nesbitt and Jacoby is to prove that the motorcycle is more than just a beautifully crafted, groundbreaking design; they have to prove that it can perform. So they’re taking the bike to the Bonneville Salt Flats in Utah, to attempt to break a world land speed record. 

“The weight advantage, for a variety of design decisions, is tremendous,” said Jacoby, “It’s probably going to net out as a 350 pound bike with a 300-350 horsepower engine which is, by any definition, a rocket.”

Jacoby has decided he wants to be the one to ride the bike across the salt. He’ll have to top 200 miles per hour to break the record in the category this bike competes in. He’s never gone anywhere near that fast on a motorcycle. He admits that this plan is completely absurd, but, he says, it’s necessary. “This is a design that needs to be proven on the field of battle. And the field of battle in this case is the Salt Flats.”

After Nesbitt finishes building the motorcycles, he will remain a part of the ADMCi. “I become one of the people who’s involved with selecting the next project.”

If the ADMCi can recoup the money spent on the three prototypes and attract patrons to fund more commissions, Nesbitt will help seek out another master craftsman to get a blank.

This time he will be the one asking the question, “What would you do if you could do anything?”

“I’m the perfect person to be a judge of character, said Nesbitt, “and when somebody asks you what you would do if you could do anything, you had better be ready with a good answer.”

CORRECTION: Barnes' Wallis' last name was misspelled in an earlier version of this story. The text has been corrected.

How much would an all-American iPhone cost?

Tue, 2014-05-20 11:02

How much would an iPhone cost if it were entirely made in the U.S.?

At the moment, the iPhone 5 costs between $650 - $850 retail.

iPhones are mostly manufactured and assembled in China, famously by the company Foxconn. And Apple pays around $5 per iPhone for labor.

"It largely costs more for people to manufacture products in the U.S. because of higher labor costs," says Carl Howe, Vice President of data sciences at the Yankee Group. "Labor costs here are somewhere in the vicinity of two to three times what they’re going to be in China."

Now our iPhone (the cheapest model) will cost $660, but labor’s not the most significant financial advantage to manufacturing the iPhone in China, where Apple has been able to create enormous iPhone-assembling villages.

"They have these special regions, like Shenzhen, which is an industrial region," explains Rene Ritchie, editor-in-chief of iMore, a publication about Apple products. "Anything you need is just a couple of buildings away, and the ability to keep everything so close together has incredible logistic advantages for Apple."

Ritchie says it would be almost impossible to re-create that in the U.S., which would mean longer assembly times, less efficient assembly and lots of micro-shipments.

"It’s an incredibly complicated process to build one of these devices and you’d have to move that entire culture of production to the U.S. in order for it to work," says Ritchie.

And then there are the parts themselves…

"For almost every component that goes into the device, there may be as many as two or three sources," says Andrew Rassweilier, Senior Director of Materials and Cost Benchmarking at IHS technology. "Then if you were to dig down another layer into some of the components, such as the display, the touch screen, the batteries. Those are also assemblies that are comprised of multiple components coming from, potentially, multiple counties."

IHS broke down the cost of the iPhone’s components and found they add up to around $190 per phone. 

The most expensive part of the phone is the display, which costs about $40. Making the display in the U.S. would roughly triple its cost, according to Rassweilier. That alone would add around $80 to the price of the iPhone

That brings our iPhone to $740.

Rassweiler says making all of the iPhone’s parts in the U.S. would push the price of the iPhone’s components from $190 to around $600.

"If the materials alone are costing $600," says Rassweilier, "it stands to reason, that same iPhone could cost, perhaps, $2,000 at retail."

That's right. $2,000 for an iPhone.

And it wouldn’t even earn political goodwill from most of its customers.

 

Screenshot: "Inequality For All"/Radius/TWC

The U.S. only brings in 6 percent of profits from iPhone sales, according to "Inequality for All". 

"Two out of three Apple customers aren’t in the USA anymore," says the Yankee Group’s Carl Howe. "That’s quite a change from many years ago when most of Apple’s customers were in the US."

 It’s just as well, says Howe. Even with overseas cost efficiencies, the iPhone is one of the costliest phones on the market.

 

Two years ago, Marketplace's Shanghai Bureau Chief Rob Schmitz was only the second reporter ever to gain access to visit the factory floor at Foxconn. He took a tour of the assembly line and the Foxconn campus to see what living and working conditions were like for the hundreds of thousands of workers there:

Divide, Google's latest buy, hardens Android security

Tue, 2014-05-20 11:02

A deal leading from Silicon Valley to Silicon Alley: Google is buying New York-based enterprise software company Divide for an undisclosed sum. Divide provides mobile device management technology—tools to keep business data separate and secure on smartphones and tablets. The company also provides productivity tools for people to work and collaborate on mobile devices.

The move is designed to drive more business for Google’s Android devices among companies concerned about security. 

Increasingly, people use their mobile devices for work and personal life interchangeably. Many employees are expected to access work data when they're at home or on the road, and people want to be able to use the mobile device of their choice, one which also holds personal email, photos, games and the like.

“If you download a tic-tac-toe game off the Google playstore,” says Tyler Shields, a mobile-security expert at Forrester Research, and it’s loaded with malware, “once you run it on your phone, it could grab all your contacts or all your calendars.” Shields says that might include some of your employer’s contacts and calendars, or confidential information like blueprints or business plans that you’ve been working on.

Technology analyst Crawford Del Prete at research firm IDC says of the acquisition of Divide: “This move by Google is to say: ‘We are hardening the Android experience. We are going to give you more control as an enterprise, to have a secure container and a secure place for your corporate data.’”

Del Prete says Google is wise to make this move, because there’s a perception in the marketplace—among IT professionals, business managers, and consumers—that competing devices and apps from Apple are more secure and less easily hacked.

How many devices (phone, tablet, laptop, desktop computer) did you have for work and play in 2004? 2009? Today? Tell us in the comments below, or get in touch via Twitter and Facebook.

Eating out? Leave a big tip

Tue, 2014-05-20 10:05

From the Marketplace Datebook, here’s a look at what’s coming up Wednesday, May 21:

In Washington, the United States Senate Committee on Finance Subcommittee on Social Security, Pensions, and Family Policy will hold a hearing about Strengthening Social Security to Meet the Needs of Tomorrow’s Retirees.

President Obama will welcome the Super Bowl Champion Seattle Seahawks to the White House to honor the team and their Super Bowl XLVIII victory.

Brought to you by the letters U - S and O. Sesame Street’s Elmo and Friends will roll onto Capitol Hill in their Sesame Street/USO tour bus to attend the bi-annual USO Service Project event.

Thinking about a dinner date? Keep in mind that it’s National Wait Staff Day! Win over your server and your date with a large tip!

Meet Happy! The unsettling new Happy Meal mascot

Tue, 2014-05-20 09:14

One thing that has fascinated me for a long time is how huge, multi-billion dollar companies can make really obvious mistakes, mistakes that even a child could see.

Do people lose touch with the hoi polloi when they've been enjoying the perks of the executive cafeteria for too long?

Is it a product of the 'yes man' corporate culture, where some out-of-touch CEO has a shower epiphany which rips unchecked through vice presidents, middle managers, and teams of consultants to be broadcast nationwide?

Take what happened today: I'm looking at a photo of one of the biggest, most expensive branding decisions McDonald's has made in a long time. Happy, the new mascot of the Happy Meal.

This is an updated version of the old mascot, which was a Happy Meal box with a yellow smile drawn on it. Simple. Classic. Totally solid mascot. It seems logical, obvious, even, to give that old tried-and-true mascot an update. Bring it to life: add arms, legs and a face. What could possibly go wrong?

Crazy Eyes. That's what.

Happy looks crazy. Not evil, serial killer-crazy (which would actually, I think, be better) or even evil genius crazy... it's a desperate, deeply-needy, sad kind of crazy.

Happy's eyes say: "Hi! I'm Happy! Will you be my friend? Please? I have a lot of trouble reading social cues! Oh my God, I'm so lonely!"

Happy has the kind of expression on his face that you sometimes see on an internet date or a person you are sitting next to on a transatlantic flight. The kind of expression the person in the aisle wears that makes you think, "How much time can I spend in the bathroom before it becomes rude to the point of cruelty?" Shortly before ordering the strongest possible drink as fast as you possibly can.

In its press release, McDonald's says Happy will serve as "an ambassador for balanced and wholesome eating... and will encourage kids to enjoy fruits, vegetables, low-fat dairy and wholesome beverages such as water or juice."

Happy accompanies a new yogurt option (alternative to french fries) in the Happy Meal. So, Happy is telling kids to eat their fruits and vegetables.

Kids.

Kids, who will take one look at Happy and know that if they sat next to Happy in the lunch room, their social life would be over until they went to college. If you thought kids hated eating their fruits and vegetables before, now those fruits and vegetables are associated with being a social outcast... which makes me think that maybe, just maybe, Happy isn't the marketing snafu it first appears to be.

Maybe Happy is ACTUALLY a piece of marketing genius.

Consider this: McDonald's serves burgers, sodas, fries, Filets-o-Fish, McRibs, Egg McMuffins and basically everything that is bad for you and can fit inside of a sesame seed bun. McDonald's might SAY it's embracing healthy eating, but it's not.

If everyone in the world started eating what their doctor told them to, McDonald's would go out of business inside of two weeks. So what does McDonald's do? It rolls out a mascot for healthy eating, to tell kids how great "fruits, vegetables and wholesome beverages" are; a mascot that is so deeply unsettling to look at, any child who sees it will probably never want to go within 100 miles of fruit, vegetables or wholesome drinks ever again.

You know what doesn't have any fruits or too many vegetables? Burgers. Fries. Filets-o-Fish. McRibs. Egg McMuffins and basically everything else McDonald's serves.

McDonald's has not rolled out a messed-up mascot, it's invented the anti-mascot. Happy is reverse-psychology marketing in action.

Children, highly impressionable children, will now forever associate "balanced and wholesome eating" with the kid who sits alone in the corner of the cafeteria and brings his cousin to the Homecoming dance.

Sure, Happy might have crazy eyes... but I would submit that they might just be crazy, like a fox. Crazy like a fox that will spend the rest of its life thinking trans-fats are what the cool kids are eating.

Well played, McDonald's.

How much help do rural schools in your state need?

Tue, 2014-05-20 08:30

The Rural School and Community Trust has released its "Why Rural Matters" report for 2013-2014, tracking the conditions of rural education in each of the 50 states. Using a combination of measurements, including student diversity, socioeconomic conditions and educational outcomes, the nonprofit organization categorizes in its report the overall need for support of rural education in each state.

In particular, the report highlighted the fact that rural schools, which serve 20 percent of U.S. schoolchildren, are experiencing higher growths in enrollment rates compared to non-rural schools. Rural schools also serve an increasingly diverse demographic and a growing percentage of students live in poverty, according to the report.

This is your brain on a phone

Tue, 2014-05-20 08:00

There is word that Britain's National Health Service has just commissioned a big study to see what mobile phones are doing — if anything — to our kids.

This is one of the biggest stories I'v seen so far while broadcasting this week from London, and yet it has received very little coverage outside of these isles.

Here is the part that stopped me in my tracks: Researchers say this is not something that has been studied much. It should be said that perhaps there are no significant health, cognitive or developmental effects of young people using cell phones the way they do. But until this new research starts bearing fruit in a few years these will remain open questions.

The study will recruit parents and children at about 160 middle and high schools around London. They have to agree to let a special app monitor the phones of children as young as 11. The app will track how the phone is used, as a speaker phone, via headphones or how often it's held up against the ear.

Researchers, coordinated by the Imperial College London, are interested in any effects of radio waves emitted by the phones but also how the regular use of mobiles might change the way kids think or remember information. It's not just the effects of phones they are interested in, but other digital devices such as tablets as well. Alarmist nonsense? It is being noted here that the World Health Organization has said there is an urgent need for this kind of research with youngsters.

It is interesting that for a while now the National Health Service over here has had guidelines urging that phones should only be used by kids for "essential purposes." If you have ever seen a kid stuck in that praying mantis pose with a phone in hand, you know that is not always the case. That is to say kids have been known to use smart phones for more than just calling home for a ride or checking if the teacher had sent an email.

The lead investigator in the new British study is quoted by the BBC saying, "As mobile phones are a new and widespread technology central to our lives, carrying out the study is important in order to provide the evidence base with which to inform policy and through which parents and their children can make informed life choices."

What I am wondering is where they are going to find kids for the study's control group: the kids who never use phones are becoming a very rare breed.

Fashion soared as the economy faltered in the 1930s

Tue, 2014-05-20 07:15

Despite dismal economic circumstances, fashion made great technological and aesthetic advances in the 1930s, says Patricia Mears, co-editor of the book "Elegance in an Age of Crisis: Fashions of the 1930s". Mears is the deputy director of the Museum at the Fashion Institute of Technology.

Madeleine Vionnet orange cotton cutwork dress, circa 1932, Paris, gift of Genia Graves.

© Eileen Costa

Even amongst the poorest people, she says, there was a strong effort to dress well.

"America was probably the best-dressed country in the world because we were so innovative in ready-to-wear," says Mears. "That sense of occasion that really drove the need to wear a suit...and the fact that you didn't have a lot of resources, so you really wanted to put your best self out there, I think was very important."

It wasn't just the economic downturn in the '30s that sparked a wave of fashion innovation, however.

"It sat very closely after World War I, which was a very revolutionary period that really upended culture and society," Mears explains. "Also, there was a lot of technical innovation going on in things related to clothing, namely with textiles -- the innovation of very lightweight, much more flexible, and larger and longer lengths of woven fabric were available to dressmakers and couturiers." 

Madeleine Vionnet black chiffon dress with pintucks, circa 1930, Paris, lent by Beverley Birks.

© Eileen Costa

Hollywood, naturally, influenced the style of the era in its own way--particularly thanks to one Fred Astaire, who would dance up and down the hallways to make sure his clothes fit properly.

"The fact that he was a dancer and that movement was so important--and that he was on the big screen, he understood the importance of properly-proportioned garments--I think was one of the reasons his style has such resonance today," Mears says. "He was one of those men who could wear a white tie and tails the way that other men wore pajamas. There was that sense of ease about the way he dressed."

PODCAST: London's stock ambitions

Tue, 2014-05-20 07:05

There's news that the London Stock Exchange may be the leading contender to buy Russell Investments of Seattle with a purchase price something near $3 billion, according to the Financial Times. We check in with Julie Niemann, the analyst at Smith Moore and Company, to discuss.

And we check in with Brixton Market, in South London. It's a fragrant place, specializing in African and Caribbean produce.

Meanwhile, that leading light of management theory, Peter Drucker, figured companies would be wise to pay their CEOs about 20 times the typical salaries at the company. In recent years in the U.S., that ratio has run 350 to 1. This has been noted in the US, but here in Britain, complaints about executive compensation have risen to a clamor. As part of our coverage of London as a global financial center this week, we bring in Deborah Hargreaves, founding director of what's called the High Pay Center here in Britain.

Are London's CEOs earning too much?

Tue, 2014-05-20 05:23

How much more should a CEO earn than his or her employee? The rates vary around the world, showing little consensus. 

In recent years, U.S. CEO's have seen their pay rise to 350 times that of the average worker. In the U.K., levels of pay aren't far behind, but the conversation concerning executive compensation is far ahead. 

Deborah Hargreaves, founding director of the High Pay Centre in London and a leading voice in that conversation, joins Marketplace Morning Report host David Brancaccio to discuss executive pay and what levels are best for business and the economy. Click on the audio player to hear more.

 

How the AT&T-DirecTV deal plays in Latin America

Tue, 2014-05-20 02:51

In the U.S., satellite TV has been at something of a disadvantage, compared to cable.  

“Part of the reason for that is they lacked the clout to effectively negotiate reasonable rates for content, so they’ve always lagged in the content wars,” according to David Balto, a former policy director for the Federal Trade Commission who now runs a private anti-trust practice.

The merger will, says Balto, place both AT&T and DirectTV in a much better position to bargain for content in the U.S., making it “a much stronger rival to Comcast.”   There are places, however, where satellite already has the upper hand and where DirectTV has a significant stake that could accrue to its and AT&T’s mutual benefit, if the merger makes it past regulators. 

In many emerging markets, where public infrastructure is limited, satellite access is cheaper and more feasible for consumers.   

Stephen Snyder, an analyst with global intelligence and advisory firm Ergo, explains that “satellite TV requires much less infrastructure than cable does. All you need is a dish to receive the signal, whereas with cable TV you need to have antennae, cables, amplifiers and so forth, so that makes it a lot more costly to install.”

It’s the same reason why mobile banking and mobile phone use are so high in the developing world.  “Brazil has six times as many mobile phone users as it does landlines, compared to the U.S. where that ratio is 2 to 1,” says Snyder.  

In the U.S., the cable industry had a two-decade head start in terms of infrastructure and relationships that allowed it to prevent the ascendance of a new system – satellite – that otherwise could have well won out.  The rise of the internet and its associated convenience and alternate infrastructure has finally begun to pry off cable’s dominance. In emerging markets, however, that competition is getting off to a more even start, and the old race may turn out differently.

DirectTV has aggressively targeted Latin America, where it now has around 18 million subscribers, and which constitutes its fastest growing segment.    

“There’s a great opportunity for expansion in Latin America,” says Erik Brannon with IHS Global Insight.  “As people become more affluent, uptake of more high-end cell services like what we enjoy domestically would become the norm, so it’s a significant opportunity for AT&T to expand and do what they do best – provide wireless services.” 

Is London too expensive for poor Londoners?

Tue, 2014-05-20 02:45

London may have opened its doors to the rich from around the world– at the latest count the city had 72 billionaires - but some of the British capital’s poorest, indigenous residents are not feeling quite so welcome. They are being priced out of their hometown. 

Twenty-nine single mothers on welfare in the east London borough of Newham claim that they were threatened with exile from their own city. The mothers were living in the Focus E15 hostel for the homeless and when the hostel faced closure, the local authority reportedly advised the women to relocate to cheaper parts of the country.

One of the mothers -- 20-year-old Samantha Joanne Middleton -- was angered by the advice: “They’re trying to move me away from my family. I mean, I’m born and bred. My mum and my dad are from Newham. Their family’s from Newham. It’s not right. It really ain’t right.” she says.

Middleton became homeless after a domestic dispute. 19-year-old Jasmin Stone was in the same predicament when she went to live in the hostel, and she claims she too was told by the local authority that although she was born and brought up in Newham, she’s now too poor to live in the borough: “East London was a place for the poor. But it’s not anymore. You see so many luxury apartments everywhere. The rents are so expensive. London’s being made a place for just rich people.”

Some of those rich people are foreign investors buying new luxury apartments in the city off-plan. That makes Middleton feel even more alienated. 

“We’re the minority of London now,” she says. “Londoners don't live in London anymore.” 

The 29 “Focus E15” mothers will be living in London for a while longer. Thanks to a protest campaign organized by local activist Hannah Caller, the mothers have been given a reprieve; they will stay in the neighbourhood in private rented accommodation for the immediate future. But Hannah sees this as only a temporary fix.

“The fundamental problems remain for poor people across the capital,” says Caller. “Both Labour and Conservative governments have failed to build enough public housing for low-income families. And now the present coalition government is also squeezing the incomes of the poorest and most vulnerable members of the community by cutting and capping welfare benefits.”

Caller accuses Britain’s main political parties of not caring about the poor and focusing only on the money that big business and rich individuals can bring into London. 

No one at the Newham Borough Council was available for comment.

Local activist Hannah Caller pictured next to a campaign poster says “ British governments don’t care about the poor.” 

Stephen Beard/Marketplace 

President Obama makes a sales pitch for the U.S.

Tue, 2014-05-20 02:44

President Obama will meet with business executives Tuesday morning with the goal of getting more companies to invest in the United States. 

The Obama administration is the first White House to actively campaign for foreign investments. And its intervention is none too soon.

Last year, foreign investment in the U.S. was roughly $193 billion -- down from its peak of $310 billion in 2008.

Dartmouth’s Matthew Slaughter says the U.S. attracts investments from foreign companies by telling executives that the U.S. is "the most innovative, open, largest economy on the planet.”

But Slaughter says many foreign company leaders respond by saying growth in the U.S. has slowed compared to developing countries like China, not to mention an aging infrastructure, complicated immigration system and high corporate taxes.

In 2011, the White House set up an office to attract foreign investments; work that until then had been left up to cities and states.

Nancy McLernon is president and CEO of the Organization for International Investment, which represents U.S. subsidiaries of foreign companies.

She says it’s still too soon to know whether the White House strategy is working, but it can’t hurt.

“Competition around the world has gotten more intense and fierce," McLernon says, "It was getting harder for Ohio to go compete against Singapore.”

Video gaming as a spectator sport

Tue, 2014-05-20 01:10

According to Variety, Google is in talks to buy Twitch, a live video game streaming service, for close to $1 billion.

According to the tech news site Re/code, "When Twitch started up in June 2011, it claimed five million users a month. In 2012, it was up to 20 million. By the end of last year, that number had jumped to 45 million. Broadband service provider Sandvine says Twitch now accounts for 1.35 percent of Internet traffic during peak hours in North America. That’s more than HBO Go’s 1.24 percent."

But how much can streaming video game play actually be worth?

"Streaming is essentially broadcasting yourself and your gameplay online in the gaming world," says former professional gamer Mike Rufail. "We have what is a growing sport, and there's a lot of interaction between the person who is streaming and the viewer."

Here's a live stream here:

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"Google would be interested in this from a pure investment standpoint," says Rufail. "It's grown to a point now where the advertising revenue generated from these online broadcasts rival major television networks and surpass many of them as well. So I think, a lot of people, are cutting off their televisions and taking in the things on the web."

In London, food banks feel the strain

Mon, 2014-05-19 23:56

At the Tower Hamlets Food Bank in East London, staff make up bags of groceries for the dozens of people who attend the center daily because they can’t afford to feed themselves. The food bank is just a few minutes away from the wealth of London’s Canary Wharf financial hub, yet Tower Hamlets is one of the poorest boroughs in Britain.

Those who use the food bank are referred by their doctor or local social services department. One man – unwilling to give his name - said he’d recently lost his job, and that he didn’t want to be at the food bank.

“I just never thought I would end up here,” he said.

 In the last year alone, there’s been a 160 percent increase in people using food banks, according to the Trussell Trust, a Christian charity that runs almost 40 percent of the UK’s food banks.

Amy Kimbangi, project coordinator at the Tower Hamlets food bank, says it now feeds about 200 people a month. She rejects accusations in some newspapers here that some who go there are just freeloaders abusing the system.

“The majority of people who come here do not want to be at the food bank," she says. "People who come here feel ashamed, feel embarrassed.”

She says a system is in place to ensure that the people helped are those who really need it.

Some say the surge in poverty and the resultant increase in the numbers of people using food banks is the result of sweeping government cuts in welfare benefits. They say people shouldn’t have to rely on food banks in a relatively rich country.

Others disagree. John O’Connell of the Taxpayers Alliance, a campaign group that backs the government cuts, say the greater use of food banks is a good thing.

“The answer isn’t always government hand-outs. It’s endemic of the growth of the benefits system which engenders a culture of dependency in the UK.”  

“The government,” O’Connell says, “can’t take care of everyone.”

Faarea Masud/BBC

 

Opportunity cost and the home

Mon, 2014-05-19 23:40

I met someone recently who bragged that she and her husband had saved hundreds of thousands of dollars over the years because they did all the work around their house themselves. That means yardwork, maintenance, the whole nine.

But did they really save money? What if they ran the numbers on that opportunity cost equation and found they actually lost money?

I'm thinking a lot about this right now, because I bought a new house recently, and there's plenty of maintenance to be done. In fact, right now, there's a guy out back fixing a busted pipe in my sprinkler system. And I’m feeling a bit guilty: Should I be out there fixing that thing? It doesn't look that difficult – all it really amounts to is replacing a piece of broken plastic piping.

The case for outsourcing

  1. I know nothing about sprinkler systems. Nada. Zip.
  2. I have no specialized equipment, or materials, so I’ll have to find out what I need to buy and then go buy it. And then get distracted in the grilling section of the hardware store. And end up spending way more than I really should.
  3. I’ll probably make a mess of it the first time and have to do it over. Plus there’s that vital part that I didn’t get at the store, so I have to make another trip.
  4. It’s what time? Where did the day go?
  5. I didn’t even start writing this blog, and now I might get fired.
  6. My sprinkler guy will take 30 minutes and charge me $50. Boom.

The case for DIY

  1. I’m gaining valuable experience. Once you’ve done something once, whether its stucco, or concreting or sanding a painting a deck, you know what to do, what equipment to buy or lease and how much time it takes. And that investment could mean that every time my sprinklers go kablooey, I have the confidence, know-how and gear to fix them myself in short order, and for next to nothing.
  2. I’m not making any money during the time that the sprinkler guy is fixing my stuff: I’m an exempt employee and I don’t’ get paid overtime.
  3. I get huge satisfaction out of fixing stuff myself. I feel like a provider, a fixer, someone who can be relied on to get things done when things break down. I feel like Magyver. I feel … like a man!
  4. Fixing stuff is fun. Plus you have bragging rights. 

If opportunity cost is "the road not traveled," then the cost of outsourcing is the improvement in my expertise and sense of satisfaction. The cost of DIY, on the other hand is all the time (and maybe money) that I could otherwise spend either making money or relaxing (hey, it's the weekend).

Which means that the opportunity cost calculation of whether or not to outsource household chores becomes a very personal one. People calculate it when they decide whether or not to get groceries delivered, to have a gardener come to work on their yard, or to have their house cleaned by someone else. And a big factor in the decision is how much you enjoy doing those chores yourself. If you really, really hate it, and it takes forever, and you'd enjoy that time so much more doing something else productive or fulfilling or rewarding, then go ahead and outsource.

For a lot of people, of course, there is no question of doing an opportunity cost calculation: they simply don't make enough money to even consider paying someone else to do something for them, so they have to do it themselves. Which means that if you're in a position where you find yourself wondering about opportunity cost, it means you're lucky. Even if it does mean doing some math.

GM doesn't want employees using these words in memos

Mon, 2014-05-19 14:16

A quick follow-up to last week's story about the $35 million fine General Motors is going to pay for not telling the truth about its ignition switch problems.

As part of the document dump related to that case, there's a PowerPoint presentation about how to describe the recall process. Words employees were never to use? "Grenadelike," "Kevorkianesque," "widow-maker," and "rolling sarcophagus," and more:

A coffee plant disease threatens more than prices

Mon, 2014-05-19 13:37

Farmers and harvesters in Central and South America have been hit hard by Roya, or "coffee rust," a fast-spreading fungus that infects the leaves of coffee plants. Roya has caused an estimated $1 billion in damage, and threatened the livelihoods of more than half a million families from Mexico to Peru.

"Entire fields have just been devastated by the rust," said Jonathan Rosenthal, executive director of Cooperative Coffees, who saw the impact of the rust in Honduras. "The trees have turned to skeletons. It's like a ghost town." 

The U.S. is stepping up its efforts to help eradicate the disease, partnering with Texas A&M's World Coffee Research Center. Coffee farming has lifted many families in Central and South America out of poverty. USAID Administrator Rajiv Shah says the organization's Feed the Future program has connected thousands of coffee growers to companies including Starbucks and Peet's. In some cases, Shah said, those farmers have seen their yearly incomes double or triple. He warns that as families fall into poverty, they become increasingly susceptible to the influence of drug traffickers and gangs.

"They prey upon communities that are poor, where lots of children are hungry, and they offer them an illicit income opportunity by producing drugs and selling drugs," Shah said. 

Fungicides are able to treat the blight, but many small farmers can't afford them. 

"The fungicide requires investment; the tools that are used to apply the fungicide require investment," said Lindsey Bolger, vice president of coffee sourcing and excellence for Keurig Green Mountain. "In some cases, these farmers just don't have the resources that they need." 

Unpacking the AT&T-DirecTV deal

Mon, 2014-05-19 13:29

Over the weekend, AT&T announced it plans to buy DirecTV for $48.5 billion. That is, of course, pending approval from federal regulators that are already busy sorting out a different telecommunications merger: Comcast’s bid to buy Time Warner Cable.

“Big fish are swallowing small fish,” says Reed Hundt, former chairman of the Federal Communications Commission, of the changing media landscape. “And if you want to avoid being swallowed, you need to be a bigger and bigger fish.”  AT&T, which is primarily a wireless provider, wants to diversify – to be able to sell customers phone service, internet access, and television.

And its advantage in selling regulators on the deal? Its size. "In terms of the pay TV business," says Todd Rethemeier of Hudson Square, "AT&T is a relatively small player."

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