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In a sharing economy, labor laws fall short

Thu, 2015-04-23 02:01

When it comes to the future of the growing “sharing economy,” things are far from clear. Two California juries are set to decide cases that could have wide-ranging implications on the industry that has grown up around Uber, Lyft, and other car-hire services.

Plaintiffs allege that the companies treat drivers as independent contractors even though they should be considered full employees, which would require Uber to provide sick days, health insurance and other benefits. Judge Vince Chhabria, who is presiding over the Lyft case, wrote that the jurors “will be handed a square peg and asked to choose between two round holes.”

Chhabria wrote that because he believes the labor laws, which employ legal tests to determine whether a worker is a contractor or an employee, are outdated.

For some workers, it’s clear.

Drew Bathe drives for Uber in Richmond, Virginia. He’s an EMT, and he’s usually in his car. “Uber was just a perfect opportunity to continue to use my car,” Bathe says. He says he can “sign on when I want and sign off when I want.”

He usually drives around during periods of high demand, in what's known as “surge pricing.” Bathe says he can make about $40 an hour. But other workers use Uber, Lyft, TaskRabbit and Mechanical Turk much more frequently, and they more closely resemble full time workers.

Wilma Liebman, former chair of the National Labor Relations Board, says that’s because “we now have work opportunities that no one would have thought of a few years ago.”

“Back when the labor laws were enacted,” Liebman says, “what we generally saw were large, vertically integrated corporations that did all aspects of the work.” Think Standard Oil and U.S. Steel.

Applying the employee/contractor test back then would yield clear results. The person who paints your house is an independent contractor. They have control over the tools, the means to do the job, how the complete the job. Employees are subject to employer-imposed restriction dress, appearance, tools and so on.

In recent years, some corporations have been accused of deliberately miscategorizing their workers as independent contractors in order to avoid the costs of hiring an employee, such as social security and payroll taxes, as well as health benefits. Fedex is appealing a Kansas supreme court ruling that said its drivers are actually employees.

Robert Reich, who was Labor Secretary during the Clinton Administration, says it’s a trend that's been going on for years.

“As I looked on a case-by-case basis, it was clear to me that some employers were doing it purely to save money and they were doing it as a way of circumventing all of these labor laws,” Reich says.

But what’s going on with sharing economy companies is a bit different, according to Elizabeth Kennedy, a professor of law at Loyola University Maryland.

She agrees with the statement by Judge Edward M. Chen, who is presiding over the Uber case, that it “strains credulity” for Uber to argue it is a tech company and not a car company. But, Kennedy says, it’s important to remember that apps like Uber started out small.

“How do we find this middle ground that recognizes the economic reality of the worker performing the service and also recognizes these businesses can scale up and reach a point where that relationship perhaps changes over time,” she says.

But there might be another way. Back in 2005, Kennedy wrote about how other countries had dealt with this pool of workers who fall between clear-cut employees and independent contractors: a third way, called “dependent contractor.”

 

In a sharing economy, labor laws fall short

Thu, 2015-04-23 02:01

When it comes to the future of the growing “sharing economy,” things are far from clear. Two California juries are set to decide cases that could have wide-ranging implications on the industry that has grown up around Uber, Lyft, and other car-hire services.

Plaintiffs allege that the companies treat drivers as independent contractors even though they should be considered full employees, which would require Uber to provide sick days, health insurance and other benefits. Judge Vince Chhabria, who is presiding over the Lyft case, wrote that the jurors “will be handed a square peg and asked to choose between two round holes.”

Chhabria wrote that because he believes the labor laws, which employ legal tests to determine whether a worker is a contractor or an employee, are outdated.

For some workers, it’s clear.

Drew Bathe drives for Uber in Richmond, Virginia. He’s an EMT, and he’s usually in his car. “Uber was just a perfect opportunity to continue to use my car,” Bathe says. He says he can “sign on when I want and sign off when I want.”

He usually drives around during periods of high demand, in what's known as “surge pricing.” Bathe says he can make about $40 an hour. But other workers use Uber, Lyft, TaskRabbit and Mechanical Turk much more frequently, and they more closely resemble full time workers.

Wilma Liebman, former chair of the National Labor Relations Board, says that’s because “we now have work opportunities that no one would have thought of a few years ago.”

“Back when the labor laws were enacted,” Liebman says, “what we generally saw were large, vertically integrated corporations that did all aspects of the work.” Think Standard Oil and U.S. Steel.

Applying the employee/contractor test back then would yield clear results. The person who paints your house is an independent contractor. They have control over the tools, the means to do the job, how the complete the job. Employees are subject to employer-imposed restriction dress, appearance, tools and so on.

In recent years, some corporations have been accused of deliberately miscategorizing their workers as independent contractors in order to avoid the costs of hiring an employee, such as social security and payroll taxes, as well as health benefits. Fedex is appealing a Kansas supreme court ruling that said its drivers are actually employees.

Robert Reich, who was Labor Secretary during the Clinton Administration, says it’s a trend that's been going on for years.

“As I looked on a case-by-case basis, it was clear to me that some employers were doing it purely to save money and they were doing it as a way of circumventing all of these labor laws,” Reich says.

But what’s going on with sharing economy companies is a bit different, according to Elizabeth Kennedy, a professor of law at Loyola University Maryland.

She agrees with the statement by Judge Edward M. Chen, who is presiding over the Uber case, that it “strains credulity” for Uber to argue it is a tech company and not a car company. But, Kennedy says, it’s important to remember that apps like Uber started out small.

“How do we find this middle ground that recognizes the economic reality of the worker performing the service and also recognizes these businesses can scale up and reach a point where that relationship perhaps changes over time,” she says.

But there might be another way. Back in 2005, Kennedy wrote about how other countries had dealt with this pool of workers who fall between clear-cut employees and independent contractors: a third way, called “dependent contractor.”

 

Coke and Pepsi face headwinds

Thu, 2015-04-23 02:00

Despite the fact that consumers are consuming sodas less frequently after lots of headlines about sugary drinks and the obesity epidemic, Coca-Cola managed to post better-than-expected earnings on Wednesday. 

But the celebration may be short-lived if Coke and its main rival Pepsi focus heavily on promoting their namesake soda brands. 

Consumer analyst Nik Modi of RBC Capital Markets says soda sales have been declining industry-wide, and among the reasons why is "the mom veto."

"Mothers are not buying these products for their kids, like the prior generation," says Modi, adding that consumers are not only paying more attention to the number of calories in the products they consume, but also to the number of ingredients and kinds of ingredients. 

He says one way Coca-Cola has combated this trend is by selling smaller cans of its sodas. "If you give a child an 8-ounce can of coke, that's much more tolerable than a 12-ounce can or a 20-ounce can," says Modi.

Coke has also raised prices and cut costs by doing things like laying off 1,800 employees. But industry consultant Tom Pirko is pessimistic about the future for both Coca-Cola and Pepsi, because the majority of sales for both companies come from foreign countries.

"Brazil, the rest of Latin America, Europe, Russia: the economies are in trouble and this is all directly affecting Coca-Cola," says Pirko, adding that both Coke and Pepsi should focus more on promoting and selling their non-soda brands.

Coca-Cola recently even got into the milk business.

Target takes aim at new 'core' customer: young Latinos

Thu, 2015-04-23 02:00

“There will always be a part of you that simply doesn’t translate.” That’s the slogan Target is using in a social media campaign with the hashtag #SinTraduccion, or “untranslateable.”

The campaign is aimed at Hispanic millennials, a demographic Target now counts as its core customer group. By one estimate, the buying power of U.S. Latinos overall is three times what it was in the year 2000: $1.5 trillion and counting.

Target spokesperson Luz Varela says the #SinTraduccion campaign hinges on words like 'arrullo,' which is often translated as ‘lullaby.’ That’s one meaning, Varela says, “But it’s also used to describe the entire setting and ambience of putting your baby to sleep.

Varela says Target’s goal here is to deepen the brand’s connection with people like Linda Hernandez, a 29-year-old mother of two at shopping at the Target in Yakima, Washington.

I’ve been here every day for the past two weeks,” Hernandez says. She even shows me a picture of her shopping cart posted on Instagram, featuring a pile of her favorite stationery, pens, and pencils.

According to marketing researcher Isabel Valdes, Hernandez is in retailers’ sweet spot.

“Latino millennial is the segment to target: if you’re not there, you’re losing,” she says. “That’s where the growth opportunity is—the new family formations, the new people buying cars.”

SinTraduccion is Target’s first campaign designed solely with Latino shoppers in mind. It uses Spanish songs that touch themes like childcare and family meals.

Roberto Siewczynski says that makes perfect sense. Even young Latinos who prefer English, “think of Spanish as the language of the heart,” he says.

Siewczynski manages Hispanic marketing for the firm Catapultvista.

“You have a very large company here that is not only telling Hispanics, ‘Hey, we’ve got great stuff for you to do,’ but it’s telling them, ‘It’s great to be Hispanic,’” he says.

Siewczynski says a second language is like a second path into a consumer’s mind. Will Target get there? Keep an eye out for the hashtag #SinTraduccion.

 

Rents are rising, and fast

Thu, 2015-04-23 02:00

The average rent in San Francisco is more than $3000 a month. In New York, you’re paying $2,355.  

According to the real estate tracking firm Zillow, rents are up 3.7 percent, nationwide.

“More and more Americans are renting now than they did before the great recession,” says Zillow senior economist Skylar Olsen.  

Olsen says there just isn’t enough rental housing to go around.  She says the renters are former home owners who were foreclosed upon, or newly employed millennials.

“They’re able to you know, imagine a world where they move out from their parents' basements," she says. "And when they do that they turn to the rental market.”

They can’t afford to buy a house because, even though they have a job, wages are still stagnant.

“Brad Pitt’s making millions of dollars but the average person in Keokuk, Iowa is not making a lot of money in terms of wage growth,” says Anthony Sanders, distinguished professor of finance at George Mason University.

And Sanders says, even if they do have a nest egg, they’re too nervous to buy in the wake of the housing crisis. 

Slimmer cable bundles rattle media companies

Wed, 2015-04-22 13:00

Verizon has launched a new pay TV service, with a stripped-down “basic” package and a choice of “channel packs” featuring genres like kids’ programming, news, or sports. The pitch to consumers is, essentially: "How'd you like to build your own TV bundle, with just the programming you want?"

Content companies like ESPN, Fox and NBC-Universal have made an offer of their own to Verizon, which amounts to: “How’d you like a fat lip?” They say Verizon’s plans violate their contracts.  

Content producers typically insist that their channels get included with basic bundles, says Derek Baine, research director at SNL Kagan, which watches the media industries. He says they have two very good reasons: one is ad revenue. "The bigger the number of subscribers you have, the more attractive you are to advertisers," Baine says. "They want access to the whole country."

The other is the licensing fees, which get passed onto consumers in the price of the bundle. Even customers who never watch ESPN —  and never see any ads — pay for the channel. Verizon says it’s offering consumers a way out of that.

The content companies say Verizon can’t do it without violating their contracts, and Laura Martin, managing director at Needham Equity Research, believes them. She thinks Verizon is bound to lose any legal fight.

However, the company may have other goals in mind. "One goal Verizon could have is to tell consumers that it’s not them that’s requiring these bundles, it’s these companies that are suing them," Martin says.

In other words, playing to the crowd. Or maybe, she says, Verizon is working the refs — signalling to regulators that the contracts, which require bundling, deserve scrutiny. 

Congress pushes for cybersecurity overhaul

Wed, 2015-04-22 13:00

After a series of spectacular cyber attacks on companies like Sony, Anthem and Target, Congress is pushing forward a bill to increase data sharing about security and hacks between private companies and the federal government.

The proposals address concerns from the business community that sharing data with the government could open them up to litigation from consumers; the companies that share data would be granted immunity.

The bills also address privacy concerns by requiring companies and government to try to scrub personally identifying information from the data. But that doesn't mean all the right information will be scrubbed.

"What we have seen in the surveillance context is the procedures don't actually protect privacy," says Mark Jaycox, legislative analyst with the Electronic Frontier Foundation

Matt Blaze, professor of computer science at the University of Pennsylvania, says the focus on data sharing was "baffling" and it would be better to encourage better security practices. "These systems are very weak to begin with," he says. 

And the version passed by the House Intelligence Committee would hand that shared data over to the NSA and parts of the Department of Defense, according to Gregory Nojeim, senior counsel at the Center for Democracy & Technology.  

That, Nojeim says, could discourage data sharing because some big tech companies have promised not to fork over users' data writ large to the government. 

That same House Intelligence Committee version also permits data obtained to be used in criminal prosecutions, according to Nojeim. If both the Intelligence Committee and a competing version from the Homeland Security Committee pass, it will be up to House leadership to decide which elements make it into the final version. 

How the humble glass bottle lost its appeal

Wed, 2015-04-22 13:00

It's Earth Day, but before we talk about recycling glass, Carl Zimring, author of the book, "Cash for Your Trash," suggests we start here: "The first question to ask is, 'how much glass is being produced to be disposed of as a product?'"

Way back when, glass wasn't so much recycled as it was reused, like with bottled milk.

"So that when you were done with the bottle, you would give it back to the dairy, which would wash it and then fill it with more milk," he says. Zimring says in the late 50s, beverage distributors started using bottles that were designed to be used once. Glass bottles were heavy, expensive, and expensive to transport. And they broke. So, Coke in plastic bottles and beer in cans took over.

"And that was absolutely deliberate to change the responsibility from the producer to the consumer," he says.

Zimring says manufacturers from that point on had no incentive to care about what happened to glass once it left their distributors. Some states enacted deposit laws, but he says the beverage industry lobbied hard against more. There hasn't been new bottle deposit legislation in more than 30 years.

Passing the buck — or in this case, the bottle — is just how manufacturers like it, according to Michael Munger, who teaches political science and economics at Duke.

"As soon as they make something, the packaging as well as the product belongs to someone else," Munger says.

Even with recycling, that someone else often turns out to be the landfill.

Soon Amazon will deliver to the trunk of your car

Wed, 2015-04-22 13:00

I know this makes it two Amazon finals in a row, but you gotta hear this.

The Financial Times is reporting that Amazon's going to pilot a program next month that will have packages delivered directly to the trunk of your car. The catch is that your car has to be an Audi and you have to live in Munich, Germany and you have to be an Amazon Prime member.

Amazon says a delivery person from DHL, a German delivery company, will get one-time keyless access to your trunk.

In the long term, they'll make the service available to Prime members everywhere.

Why NFL teams should think twice about coming to LA

Wed, 2015-04-22 12:20

The city of Carson, California approved plans Tuesday night for a $1.7 billion NFL stadium to be shared by the Raiders and Chargers, the second NFL facility green-lit in as many months in Southern California.  In February, Inglewood approved a $1.8 billion stadium for the St. Louis Rams to be built near Los Angeles International Airport.

Almost four million people live in Los Angeles, compared to 1.3 million in San Diego, or 318,416 in St. Louis — but in the NFL, bigger is not necessarily better.

Just ask the Green Bay Packers. Forbes ranks the Packers as the 13th most valuable NFL franchise out of 32 teams, even though they play in the tiniest market.

“It’s actually surprisingly profitable to host an NFL team in small cities,” says Victor Matheson, a sports economist at College of the Holy Cross. "Most of the revenue streams that an NFL team gets are shared equally among all teams in the league, which means a team operating in Los Angeles or New York City gets exactly the same share of the TV rights and merchandising as a team in Jacksonville or St. Louis.”

Tickets are split 60-40 between the home and away team, and all the revenues from jerseys and hats are pooled.

The NFL brings in enormous television rights fees of upwards of $6 billion a year, but all teams get the same cut: an estimated $187.7 million a year. By contrast, the Los Angeles Lakers and Los Angeles Dodgers are the first and second most valuable franchises in their respective leagues, according to Forbes. That's due, in part, to their lucrative local cable contracts: $122 million a year for the Lakers and $210 million for the Dodgers.

“In other sports, you go to a major market and you can get untold cable riches from having a local cable deal,” says Neil deMause, who edits the sports business site Field of Schemes. “That’s just not an issue in the NFL.”

What is a big issue is public financing, which smaller markets tend to be more generous with. Politicians in San Diego and Oakland are scrambling to come up with plans to keep the Chargers and Raiders in town, and Missouri Governor Jay Nixon has proposed extending state and local bonds to provide hundreds of millions in financing to keep the St. Louis Rams from returning to Los Angeles.

“If Missouri comes up and says 'Hey, we’ll kick in half the cost,' that’s going to be awfully tempting,” deMause says.

Los Angeles is not offering public financing, which helps explain why an NFL team hasn’t played here for two decades.

Moving west

In the case of Rams owner Stan Kroenke, moving West could get very expensive. The financing details are murky, but deMause says it’s hard to imagine a scenario where Kroenke would be spending much less than a billion out of pocket — and that’s not even including a relocation fee the NFL charges, which could tack on another billion.

"I’m not saying that Kroenke is absolutely bluffing, but I think it’s safe to assume that when any owner in the NFL says, 'I’m going to move to L.A., and I don’t care if I have to spend my own money,' it’s safer to assume bluff until proven otherwise,” deMause says.

So why would any NFL owner want to come to LA then? For one, there's nice weather, but more important is the ability to sell premium seats and luxury boxes. They're exempt from revenue sharing and have become an important tool to finance stadiums. There, L.A does have a big advantage, says Scott Spencer, President of the Suite Experience Group, a luxury box reseller.

“While the Rams and St. Louis have done a good job selling their suites, you’re going to see it go to a whole new level if they move to Los Angeles,” says Spencer. “Individuals – especially in Hollywood – they want to be in the 'in spots.' They want to be seen on the floor at Staples Center and so they’re going to be in suites in an NFL venue. In St. Louis, it’s frankly a different mindset, and businesses there just don’t have the funds to spend on luxury suites.”

Scott says that means the Rams could double the price of each luxury box if they were in LA, and have twice as many boxes. A nice stadium is important for keeping suites full, but the most important thing? Just win, baby.

IBM banks on Watson for progress and profit

Wed, 2015-04-22 11:27

IBM reported profits this week; they still made a pile of money, but it was the 12th straight quarter — that is, three straight years — of falling revenue.

Though known for hardware, IBM wants to be a major player in cloud computing, specifically in what the company calls cognitive computing. Their plan relies on the Jeopardy-winning super computer, Watson.

Marketplace's Ben Johnson visited the IBM Watson building in Manhattan this week. And while you can't see Watson — it's an amalgam of interconnected mega-servers and fans whirring away — its technology could hold great promise.

When Johnson went to visit Watson's human collaborators, he found them in a futuristic glass building in Manhattan, no buttons in the elevators. 

The goal of cognitive computing is simple on the surface: a computer that can hold a conversation. 

It's "the step before you get to artificial intelligence," Johnson says. "Google Now, Apple's Siri, Microsoft Cortana are all part of this idea."

What's not simple for a computer, is the vast amount of data that flows between two humans in even the simplest conversation. However, improving this process could speed up a lot of slow conversations that still take place person-to-person, or the data that we fill out in forms that later has to be entered into computers. 

Sound technical? Let's take this into a frustrating real-world location, the doctor's office. 

"Medical information doubles every three years. And in 2020, it will be doubling every 73 days. Your doctor's not going to be able to keep pace with that volume of information," said Steve Gold, Vice President of IBM's Watson group. "But Watson has a voracious appetite. It reads and understands all this information in context and become this assistant."

Instead of filling out reams of forms at every doctor visit, and waiting on that giant piece of paper in the back office, you could be talking to Watson until the doctor comes in. 

"Then, there's a three-way conversation [with] you, and the doctor, and the computer," Johnson said. "It actually could be really good for helping the doctor understand the full context of the patient, getting a good prognosis and a good way to a cure."

Emoticon creator says emoji are :-/

Wed, 2015-04-22 10:33

The year was 1982. The internet was in its infancy, and email had just opened up between universities. There was even a kind of social media, remembers Scott Fahlman, computer scientist at Carnegie Mellon University. You could send an email to a bulletin board to post it up. And just like today, sarcasm was rampant, and often misinterpreted. 

"We would have these flame wars," Fahlman said. "We felt maybe we needed a way to mark the posts that we put up that were just meant to be humorous."

They considered using an asterisk in the subject line, but that wasn't intuitive. Instead, Fahlman threw together three easy-to-find characters: a colon, a dash and a closing parenthesis. :-) 

"I thought, maybe people would turn their heads, and we could make a really nice face in that case," he says. 

Fast-forward a few decades and emoticons moved into work email, chats, and now text messages and tweets in the form of emoji. Fahlman doesn't much care for the cats-with-hearts-for-eyes variant. But he says it's a personal preference.

"People want to make this into a big crusade on my part and it's not. I'm not a fan of the graphical emojis, no," Fahlman says. "I think it took a little bit of creativity to figure out how to make a smiling face out of just text characters. And then for awhile people were inventing more and more complicated ones. Santa Claus and Abraham Lincoln and the Pope all being eaten by a python."

An example of ASCII art.

Courtesy: Chris.com

For emoji fans, Fahlman's perspective is less :-) and more . But one thing is clear: pictures help us express emotion and intent where words alone can leave too much ambiguity: softening the tone of a work email, turning a straightforward text into a flirtation, or adding fire to a heated back-and-forth exchange on a message board. And with the vast number of texts, tweets, emails and posts sent each minute, that's an important communicative tool.

Fahlman has worked as a computer scientist for decades, with an eye toward the development of artificial intelligence. Part of his legacy, though, is tied up in the expression of all these feelings, be they textual or graphical. 

"I've reconciled myself to the idea that the first line of my obituary is going to be 'Scott Fahlman who invented the email smiley face (and also made major contributions to artificial intelligence) passed away today.' And depending on how old I am, I guess there will either be a smiley face or a frowny face on the tombstone."

The bookstore primaries

Wed, 2015-04-22 10:02

Before presidential candidates head to Iowa, New Hampshire or Chipotle, they're in your book store.

Looking toward the GOP primaries, Marco Rubio just released his second memoir, "American Dreams"; Ted Cruz's "A Time for Truth" will hit shelves this summer; Rand Paul's second book in three years is out next month; and Jeb Bush is rolling out an e-book. Last year, policy wonks scoured Hillary Clinton's "Hard Choices" for clues to a presidential run and an expose about her finances is making headlines ahead of its release.

But writing, selling and releasing a book takes time, even with a ghostwriter. Why is just about every presidential hopeful doing it? What good does it do so early in the election season?

"Primaries are a crazy time, and they are so different from the general election," says D. Sunshine Hillygus, associate professor of political science at Duke University. "So when a candidate can do anything in a primary to get a bit more media attention, a bit more evidence that they might be electable and able to beat the other side, that's ... advantageous."

Sales don't hurt, but the political book is less a moneymaker than it is the foundation of a larger strategy, Hillygus says. As soundbites shrink, a book lets a candidate frame themselves and get out in front of any potential "dirt." In "Dreams of My Father," for example, a young Barack Obama discussed his drug use.

But here's the rub: it's not actually all that important that people read the book.

"Part of the value of the book is not the readership of the book, but the fact that you wrote it," says Craig Allen, an associate professor of journalism at Arizona State University who has written about presidential communication throughout history. Candidates can draw on the book during speeches and debates, he says, giving them an air of thoughtfulness and credibility. Best case scenario: the candidate recaptures the success of John F. Kennedy's "Profiles in Courage," which Allen says inspired many of the politicians who've written books since.

Even if they don't win any Pulitzers, savvy candidates can at least go on a book tour, giving interviews and essentially holding campaign events without ceding media coverage to their opponent under equal-time requirements.

That works if candidates get out their book early enough, says Peter Hildick-Smith, head of the publishing insights firm Codex Group. That's where the current crop of GOP candidates could run into trouble, he says, even if the message is well-crafted.

"If everybody's got their book coming out within a month of each other, it's very hard to get the audience's attention," he says. When candidates release the book early in the election cycle, "you don't have a campaign to run [and you get] to talk to people in a more normal way instead of being on the stump. It's that quiet conversation with Matt Lauer when people aren't really expecting it."

Hildick-Smith's company worked with a candidate on one of last year's political bestsellers. He wouldn't say who, but he did say the book had a larger-than-expected "crossover readership" of independent voters. Part of that comes from striking the right balance between policy and personal writing, along with getting the book out early.

Of course, a candidate's detractors can use similar tactics. The Clinton campaign is already running interference on "Clinton Cash," which comes out May 5 and alleges that foreign donations to the Clinton Foundation lined Hillary's pockets and influenced her policies as secretary of state.

"Clinton Cash" has potential to hurt Clinton because some major news organizations got an early look; the New York Times and Washington Post published deep investigations into the book's claims this week. While Clinton's campaign has a sizable headstart, her long history in politics means she's more vulnerable to this kind of scrutiny, says UC Davis political science assistant professor Amber Boydstun.

"If you took any potential opposing Republican candidate and you put them in public service as long for as she's been in public service, you'd probably have a book about them too," Boydstun says. "In Clinton's case, there's of course going to be dirt, and I'm not sure what the dirt looks like but that could potentially not play well, especially if the media gives credence to [it]."

There's a lot of ink spilled on all sides about candidates, but come Election Day, what impact does it really have? Duke's Hillygus says that's something political scientists are still puzzling out.

"A debate doesn't have much effect, frankly. A single television ad has almost no effect... it's all cumulative and incremental," she says. "What becomes important is: does this book by the candidate help to create a characterization of who they are that sticks? And it's never going to stick on its own."

Spoofing: An explanation using bananas

Wed, 2015-04-22 09:37

London-based trader Navinder Singh Sarao, and his company are accused of using software to manipulate the S&P’s futures contracts through a practice known as "spoofing.”

Spoofing means fooling the markets – making it look like you’re doing something, when you’re actually not. How about an analogy?

Imagine you have a booth at the farmers market, where you are selling bananas at two bucks a pound. Suddenly, this guy sets up an empty stall beside you and starts shouting about selling bananas for a dollar a pound. His truck is just coming up the street, he says – the bananas will be here in a minute. All your customers start lining up at his stall! It’s a nightmare!

So now you have to cut your price and sell your bananas for a buck a pound. You sell several boxes to a woman in a green hat. And suddenly, the guy beside you has disappeared! There’s no truckload of bananas coming!

You decide to raise the price back up to two dollars a pound again. When, suddenly, you get a phone call from your wife, who has spotted the truckload of bananas guy at the other end of the market. He’s selling bananas right out of the box, helped by a woman in a green hat. You have been spoofed! They fooled you into selling your bananas at half price, and now they’re selling them at two bucks a pound. 

At RSA, desperate for data to help understand threats

Wed, 2015-04-22 08:39

The annual RSA Conference is the largest security trade show in the world, and this year, there’s an extra level of desperation in the air. Security vendors and IT chiefs are looking to big data to help them understand how to protect companies from the ever-increasing tide of hackers looking to break in.

 The RSA Conference is, at its heart, a show where the makers of security products come to pitch their wares to big enterprise buyers. Those buyers, of course, are more interested than ever, since big companies and consumers are both reeling from a string of high-profile breaches at <a href="http://www.marketplace.org/topics/tech/sony-hack-dissected">Sony</a>, JP Morgan, Home Depot, <a href="https://soundcloud.com/marketplace/target-credit-hack-relied-on">Target</a> and others.

 Insiders say there’s a palpable shift in tone from how the security industry used to treat breached companies. They used to be pariahs: companies that had failed and obviously had inferior infrastructure.

 Now, though, the incoming president of RSA tells Fortune magazine flatly that <a href="https://fortune.com/2015/04/21/rsa-conference-amit-yoran-keynote/">"security has failed."</a>

Security products used to promise prevention and protection. At past conferences, a security company might terrify IT officers with tales of potential security flaws and then tout an ironclad fix.

More recently, as breaches got more common and ironclad fixes less believable, the focus shifted to "intrusion detection." Security experts started telling companies that they shouldn’t wonder if a breach might happen — only when.

 So, the next wave of products promised to detect those inevitable breaches sooner, before they got out of control and compromised mass amounts of data (remember, the Target and JP Morgan hackers were roaming around inside the company’s networks for months before anyone noticed). 

So this year, the product focus is something more like troubleshooting.

 "Half the vendors here are talking about some app that can provide intelligence or 'threat intelligence,'" says Chris McClean, a risk and security analyst at Forrester Research. "That’s the buzzword of the year here."

From what I can tell, "threat intelligence" is really just a dramatic way of saying "figure out what’s happening and hopefully what might work to stop the bad guys."

For example, I interviewed Vikram Phatak, CEO of a company called NSS Labs, which is a security research and advisory company that just launched a new product to help companies gather data about where they’re vulnerable to attack and how well their security products are working.

NSS Labs <a href="http://www.reuters.com/article/2015/04/14/idUSnMKWr1G6wa+1c8+MKW20150414">just raised $7 million in funding</a> to grow its spectacularly named Cyber Advanced Warning System. It’s basically a subscription service with a web dashboard that offers analytics about a company’s security.

There are lots of points of possible failures. Most companies layer on multiple products, like an intrusion detection service, a firewall and a so-called "endpoint solution" (basically an antivirus or antimalware product like McAfee). And then there’s all the potentially vulnerable software the company runs, like Windows, Java, Flash, Internet Explorer and so on.

The Cyber Advanced Warning System dashboard might show, for example, that lots of attacks are getting through the firewall but being stopped by the antivirus software, but that the company is running an outdated version of Java and needs to update it before someone exploits it and takes over company systems.

 The goal, says Phatak, is to help security pros understand how to better use the software they have, deploy the right settings on their company networks and get "situational awareness" about their overall security systems.  

 McClean says that approach — looking to the data — is a big theme at RSA this year.

 "The message is right," he says. "If you are telling an enterprise, we can take all of the disparate sources of information, we can tell you where you risks are and help you make better business decisions, how to allocate and where to prioritize and whether to use certain vendors in certain regions, then as a vendor, you’re in great shape." 

Still, he says there could be a whole new approach to security by next year, because cybersecurity threats are going to keep increasing for the foreseeable future — that is, there's always something to be afraid of. 

"Every year we say that in the last year we’ve seen breaches that are unprecedented and this totally changes the game," he says. "Next year we’ll say there are new breaches that have changed the game; in three years there will be more breaches that change the game. The game will always have changed."

PODCAST: The spark behind the "Flash Crash"

Wed, 2015-04-22 03:00

First up, we talk about the challenge of proving that a trader is out to manipulate a financial market. We talk to Joel Hasbrouck, a financial industry consultant and Professor of Business Administration and Professor of Finance at the NYU Stern School of Business, for more. Plus, search giant Google could launch its new wireless service as early as today. The Wall Street Journal reports a key feature is customers paying only for the data they use instead of buying data in bulk, whether they use it or not. And a California appeals court has ruled that one city's special system of charging for water—the more you use, the higher the price—is invalid. Pricing water is tough, even in places not beset by drought.

A look at how you're doing based on where you vote

Wed, 2015-04-22 02:30

One useful way to answer the question of how America is doing is to consult a new statistical analysis out Wednesday called "Geographies of Opportunity."

It looks at statistics on health, education, and what we earn and produce what's called a Human Development Index. As the campaign gears up, the report offers a breakdown by congressional district in the U.S., compiled by an outfit called Measure of America.

The report also allows for comparison between congressional districts on everything from median earnings, to level of education, to life expectancy.

Measure of America

Especially interesting among the findings: The higher the proportion of foreign-born residents in a congressional district, the longer people live. For example, data shows foreign-born Latinos live much longer than native-born Latinos.

Measure of America co-director Kristen Lewis says one possible theory points to social cohesion and family support buffering the effects of poverty to create better outcomes.

Click the media player above to hear Kristen Lewis in conversation with Marketplace Morning Report host David Brancaccio.

Police departments grapple with body camera costs

Wed, 2015-04-22 02:01

In light of recent high profile police use-of-force headlines, form Ferguson to New York, to North Charleston, there's been a lot of talk of arming police officers with body cameras.

President Barack Obama this past December proposed spending hundreds of millions to equip police departments.

But the costs don't just end at the initial expense of buying cameras. Police departments that are already using the devices, from trials to full implementation, report that maintaining and managing volumes of video data is the bigger cost.

There seems to be little doubt among police executives on the merits of the cameras, according to a report by the Police Executive Research Forum, an organization that provides research and support to police chiefs. PERF reports that many police chiefs think the cameras make a measurable difference in reducing complaints against officers.

Mary D. Powers, 92, of Chicago can attest to the benefits of introducing cameras in policing. Powers first became a watchdog thorn on the Chicago police department's side more than 45 years ago.

"In the early days, people thought you were a kook if you were talking about police brutality," Powers says.

Still, Powers and those in her now-disbanded watchdog group Citizens Alert, successfully fought to get cameras installed in Chicago's police interrogation rooms. Powers says many commanders reported reductions in abusive interrogation tactics — tactics such as the ones that this month led the city of Chicago to pay reparations to victims of former commander Jon Burge. Burge oversaw a program of police torture of suspects using tactics such as electric shock and mock executions to elicit confessions. 

Powers says public attitudes have changed, and quickly, with the mass availability of cheap smartphone cameras that have captured the kinds of abuse she used to report one flier and public meeting at a time.

"The public is certainly a lot more aware," Powers says, and more "acknowledging that some of these things do happen, which was unpatriotic to admit that in the old days. You were questioning your government."

Powers is in favor of police body cameras, saying the devices represent the next step in the evolution of police transparency and accountability.

A recent survey by the Police Executive Research Forum, a group that conducts research for law enforcement chiefs, found that many chiefs agree with Powers. In many departments that already use them, police executives report body cameras correlate to a noticeable drop in complaints against officers.

"Certainly there are chiefs who see the potential here," says Brian Jackson, a researcher with the Rand Corporation's Center on Quality Policing. But Jackson says implementing cameras worn on uniforms comes with a whole host of questions, and policy and budget considerations, which all still have to be worked out.

For example, "deciding when they have to be turned on," says Jackson, "And when you're a department who's ... taking video a good chunk of every day, the amount of that data just adds up very fast."

Storing all of that data, according to the PERF survey, costs departments more than the cameras themselves. The survey found that 39 percent of police executives cite cost as the primary reason for not implementing body cameras at their departments.

In Baltimore, the city's mayor initially vetoed a body camera bill because of the costs. A city-wide program to furnish cameras to officers would cost between $5.5 million and $7.9 million annually. The city is now consider a limited trial program.  

But other departments see clear benefits that outweigh the costs.

"If the purpose is to use those cameras to get at the truth: what happened between an officer and a citizen ... how can you not afford ... to outfit your officers?" asks Michael Wagers, the chief operating officer of the Seattle Police Department.

His department plans to spend $2 million on 1,000 cameras. He is now testing a system to automatically redact the videos those cameras will produce, and upload them all on YouTube. The idea is to reduce manpower costs and allow access to the videos, which will be blurred and without sound. The YouTube videos will be used as an index, from which people can then request specific segments of video.

The idea is to have people request minutes, not hours, of tape, which workers would then sift through, redact any sensitive information (such as children's identities) that they are legally required to, and release the clear versions of the videos to the public.

Right now, the Seattle Police Department already has its own channel on YouTube, with some experimental videos uploaded. Wagers says the hope is to eventually blur the videos less. He's employing volunteer coders to figure out how to do that, perhaps only automatically blurring faces, in the near future. As they are now, the videos are fuzzy and unclear.

Wagers was recently invited to a White House meeting held with a number of law enforcement experts, to discuss body cameras and the various issues involved with their implementation. 

Longtime police watchdog Mary Powers applauds Seattle's attempts, but she's underwhelmed by their project.

"It doesn't seem to be all that practical, but I think it's wonderful that they have the intent of sharing all this information, making it available. Why not?" Powers says.

Raising water rates isn't just a California problem

Wed, 2015-04-22 02:00

A California appeals court found that one city’s tiered rate system violates a constitutional limit on fees. The ruling has potentially serious implications for California, which is deep in drought.

But California isn’t the only state struggling to set an appropriate cost for water, and scarcity isn’t the only factor putting pressure on prices.

Newsha Ajami is director of urban water policy at Stanford’s Woods Institute for the Environment. “You might now have a water scarcity problem, but you might also have a water quality problem,” she says.

Furthermore, the cost of building and maintaining infrastructure is rarely fully accounted for in water rates. “There are a lot of other municipalities that might not have the capacity or manpower or expertise to set up the rates properly ... or they just don't do it," Ajami says.

Peter Gleick is president of the Pacific Institute. "The proper pricing of water is, frankly, a global issue,” Gleick says. “We argue about it in the West, and in California in the context of drought, but it’s a national issue as well. We ought to pay the full price of the water services we get."

Gleick says raising rates to reflect the true cost of water is the best way to develop better infrastructure and encourage people to use less.

You're mortal, so write your will

Wed, 2015-04-22 02:00

Just 56 percent of American parents have gone through the fairly uncomfortable process of writing up a last will and testament to divide up their assets among beneficiaries upon their death, according to a new survey from Caring.com.

Not having an estate well ordered before your death can result in turmoil after your passing. Some famous examples are the estates of Jimi Hendrix, Martin Luther King Jr., and Robin Williams. 

"If the person has gotten their lives and their paperwork in order then it should be a fairly simple process," says Sally Hurme, author of ABA/AARP Checklist for My Family: A Guide to My History, Financial Plans and Final Wishes.

But it's not always so easy. Andy Cohen, CEO of Caring.com, says using an additional step—placing assets into a living trust—can help keep your estate out of probate court, in which a judge determines who gets what.

If you don't do that, "the estate goes to probate. It can drag on in the courts for years, it can cost a lot of money and most importantly it’s a lot of heartache for the families."

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