Marketplace - American Public Media

Could $1 store + $1 store = monopoly?

Thu, 2014-08-21 13:33

Citing antitrust concerns, Family Dollar stores has rebuffed an offer of $9 billion from its competitor Dollar General.

But let’s review the issue at hand here: monopolies. Monopolies are bad (unless you're the owner) because they mean no competition, and the potential for just one company to control prices. But Rob Campagnino, head of consumer research for SSR, says the proposed merger doesn't represent any substantial antitrust concerns.

“They’re dollar stores – inherently they aren’t looking to raise prices," he says. "As a matter of fact, the pricing tends to be a race to the bottom."

Campagnino says the antitrust concerns that get raised generally revolve around large businesses that increase prices. "That's just not how these companies do business," he says. 

But for some consumers, the fear of a monopoly can depend on where they live.

"In very dense environments, where there’s a store every couple of blocks, you don’t worry as much because there are so many competitive choices,” says Scott Hemphill, a professor of antitrust law and intellectual property at Columbia Law School. But things can change as geography does.

"If you are a customer in a part of the country that’s close to Dollar General and close to Family Dollar, but not close to a Wal-Mart, then there’s a real concern that the firms that they merged would be able to raise their prices," he says. 

George Hay, a professor of law and economics at Cornell who held the position of chief of economic policy for the antitrust division of the Justice Department, says he thinks it’s highly unlikely there will be an antitrust issue with a dollar store. But, he says, that doesn’t mean companies shouldn’t be careful. You only have to take the case of the merger of United and Continental airlines. 

“The government passed on the merger and a group of lawyers brought a case on behalf of consumers who would be adversely affected," he says. "At the end of the day that challenge did not succeed, but it did cause problems.” Problems in the form of delays and legal expenses.

But Hay says Family Dollar Stores' antitrust concerns are probably just an excuse to let it go with a different offer. SSR's Rob Campagnino agrees. It's likely, he says, that the president of Family Dollar has planned to stay on in some capacity, but he wouldn't be guaranteed a spot based on Dollar General's offer.

"People," he says, "tend to like to keep their jobs."

School transportation cuts still affect families

Thu, 2014-08-21 13:33

The School District of Philadelphia is facing a budget shortfall of more than $80 million. Among the cost-saving measures being voted on: the District wants to stop giving free bus passes to high-school students who live within two miles of school.

Previously, students who lived more than 1.5 miles from school got free bus or train passes. That difference of half a mile could impact thousands of students, according to the District.

Paying for your kid’s trip to school can definitely add up. Before Thursday’s vote in Philly, public school mom Helen Gym, an advocate, worried about more parents paying bus fare for their kids.

“It’s $2.25 each way,” says the co-founder of Parents United for Public Education. Multiply that by two trips a day over a school year and she says a family, “would have to pay $810 dollars a year, per child.”

That’s the full cash price Gym is quoting, but even reduced token fares add up to hundreds of dollars out of parents’ pockets.

Still, the idea of state and district cuts to transportation support is hardly new. In fact, Michael Griffith with the Education Commission of the States says most transportation cuts came from the recession, and have waned.

“But they’re not going back to the levels before the recession,” he says. Griffith says states and districts want to put money back into other areas first, like teachers.

“So they’re looking to replenish those areas that were cut that directly impact student learning,” he says, “and there really isn’t the money available in most districts to go back and to put it into programs and areas like transportation.”

Marguerite Roza with Georgetown University says it’s all about trade-offs. She studies public education resource spending and says higher transportation spending in and of itself isn’t necessarily the goal.

“If you’re not spending the money on transportation, then you get to spend it on something else,” she says. “So is the higher transportation spending bringing greater student outcomes or is it bringing lower student outcomes ‘cause that means there’s less spending on math.”

Though, when subsidized school transportation goes away, families may have to do more math to get through it.

California's wells are going dry now, too

Thu, 2014-08-21 12:27

Water supplies are dwindling in California as the state’s historic drought drags on this summer. So, farmers in the state’s multi-billion dollar agricultural industry are looking for water below ground instead. Groundwater is being pumped at record rates, and some of it is being sold for record prices.

In a good year, California’s farmers get most of their water from the state’s vast network of rivers and reservoirs. But in a drought, groundwater makes up 60 percent of the state’s supply. It’s a lot like an underground reservoir – and it’s drying up in many places. 

“When the water is gone, all the farming is gone,” says Billy Grissom, a Central Valley farmer and rancher who lined up to speak about groundwater at a recent Merced County public meeting. 

Many farmers in the region are relying on groundwater from wells on their land this year. When that happens, the groundwater levels drop, much like having too many straws in the same glass. So Grissom has had to deepen his wells.

“I had to add 40 feet,” he says. “I have the bill right here from Shannon Pump.”

Grissom is one of the lucky ones. It’s tough to get an appointment with companies that drill water wells because they’re booked up for months.

“A lot of people’s wells are going dry,” says Merced County supervisor Deidre Kelsey. “We are over-drafting the groundwater, and it is agriculture.”

Groundwater pumping doesn’t have to be publicly reported in California. There’s virtually no regulation of it, unlike in other western states. So, often, farmers don’t know how much their neighbors are taking until the water starts drying up.

At this public meeting, county supervisors are hearing about a case that’s on the record because the groundwater is being sold.

“This is common practice,” says Steve Sloan, one of two ranchers looking to sell up to 4 billion gallons of groundwater. Under California law, he owns the groundwater under his property. On today’s water market, it could make him millions.

“Water exchanges, water transfers have been done for over 30 years,” he says. “This is how we survive collectively as an ag industry in California.”

The water will be sent 50 miles away to a water district on the other side of the Central Valley. Farmers there are in even worse shape – they are looking at ripping out almond orchards, says local water manager Anthea Hansen.

“We’re in crisis mode,” says Hansen. “I have trees I need to keep alive. We don’t need large quantities of water to do that. “

Hansen is trying hard to make her case at this public meeting, but many farmers in the region don’t want to see water flowing elsewhere.

“What’s going to happen when you take this much water out of an aquifer?” asks Mike Gallo, a neighbor of Sloan’s. “We’re on the same aquifer. I don’t know what it’s going to do. Nobody knows what it’s going to do.”

The federal referee in the sale is the Bureau of Reclamation and the agency has approved it. Under current law, there’s little that local county officials can do.

In the big picture, water sales can help even out the economic impacts of the drought, according to experts.

“One of the ways to deal with shortages is to let water start moving, let the markets start moving water and that actually increases your economic efficiency,” says Jeff Mount, a geologist and senior fellow at the Public Policy Institute of California.

But there are caveats. Groundwater is being dramatically over pumped in many parts of the Central Valley.

“You also have to do it in ways that don’t harm other parties,” says Mount. “And if you start drying up your neighbors' wells to sell water to somebody else, then you are causing harm.”

Some counties have taken matters into their own hands and effectively banned the sale of groundwater outside county lines.

California lawmakers are looking at regulating groundwater for the first time. Two bills are being considered in this legislative session and would have to pass by the end of August.

What is a superfood?

Thu, 2014-08-21 12:00

We think we know what superfoods are. Nutrient-rich, high in vitamins, they're fruits and vegetables with extra oomph that seem to have benefits beyond plain healthy eating.

In a recent Nielsen survey commissioned by Bloomberg Businessweek, 75 percent of consumers said they can manage their health through nutrition. One third say that they can use food to replace some medicines.

Farmers are seeing this trend and turning over crops to accomodate demand for once-unappealing wintry vegetables.

"I know we are not supposed to speak of kale on this show," said Venessa Wong, who reported on the findings for Businessweek. But she did anyway (listen in the audio player above), because its growth has been explosive.

"In 2012, about 2,500 farms harvested 'the k-word,' which is up from fewer than 1,000 in 2007," Wong said, adding, "Farmers are indeed very in touch with what people want to eat right now."

And far and away, 'the k-word' is the thing that people want to eat. But Brussel sprouts, spinach, chard and arugula are also showing a 10-20 percent boost since 2009.

With marketing buzz galore and significant public interest, the CDC journal Preventing Chronic Disease tried to define superfoods.

The produce selected may surprise you: tomatoes, carrots, strawberries, oranges, even iceberg lettuce. Wong notes that there are good reasons for their inclusion, but on a scale of defining a superfood, less trendy veggies stand out.

"The most nutrition dense food are watercress, Chinese cabbage, beet greens, spinach, so things that don't get as much buzz as the pomegranates, the quinoas," Wong said.

And the fact that the most super of foods aren't among the supermarket bestsellers is hardly a surprise.

"As much as people believe in the power of food," Wong said, "half of people surveyed by Nielsen said that they weren't willing to give up taste for health."

Kai's K-Word Chips

(1) Preheat oven to 450 degrees F.

(2) Trim kale and toss with olive oil.

(3) Bake until crispy.

(4) Season with salt to taste.

(5) Eat 'em while they're hot.

As waters rise, Mekong rice farmers switch to shrimp

Thu, 2014-08-21 12:00

It’s the rainy season here in Tran De. About a dozen field workers have squished out into a green paddy that goes on for more than two and a half football fields.

They chatter in Khmer as they bend low and pull young rice plants from their monsoon-soaked beds, and toss them into piles for replanting.

“I was born in this area, I’m from this area,” says a 64-year-old farmer named Minh. “I learned from my father and my grandfather, from the time I was a kid, how to grow rice.”

Minh is renting the land to grow his crop. “Rice is good,” he says, “you can always eat it. It’s reliable.”

At least right now it is.

Things will change when the dry season starts in January. That’s when farmers here usually start raising a rice crop, typically relying on fresh water they pump or channel in from some branch of the Mekong River.

But the dry season has been getting dryer. And the South China Sea - less than a mile away - is rising and pushing up into empty river and stream beds.

What little fresh water there is goes salty. So does the soil.

Once that happens, rice farmers like Minh know their crops are history.

“This village is affected by saline intrusion,” he explains. “During the dry season, people here can’t do anything with the land. They just leave it, go somewhere else and work, or try to find some work locally.”

If Minh risked planting a dry season crop, he could earn more than $2,000.

But he won’t take that chance. Instead of fighting saline intrusion, he’s found a way to hedge his bets and make some money off climate change.

He’s gone and bought himself a shrimp farm.

So has another farmer, named Sung. Standing beside two shrimp ponds out behind his house, Sung fires up what looks like a system of small spinning steamboat paddles.

They’re adding oxygen to an opaque brown pool.

This salty water is killing off the region’s rice, while the shrimp, somewhere down at the bottom, are loving it.

They can earn Sung in a year more than four times what an average rice farmer brings home.

“In a good year,” Sung says, “I do two crops. If it hits, I get $4,720 from these two ponds. This is the only thing I can do. Growing rice is not very profitable.”

With very few choices, explains Tim Gorman, a Cornell grad student researching how peoples’ lives in the Mekong Delta are being changed by global warming, some farmers are turning away from rice.

“The biggest option to people here in these areas affected by saline intrusion,” Gorman explains, “is to abandon rice altogether and switch to saltwater shrimp.”

This has been a “winning strategy” for many people in the area, Gorman observes. “Just driving around here you can see that there are big new houses, you see some nice new cars. And so you have some people who really have made a lot of money from growing shrimp, which is primarily exported to markets in Europe, Asia, and the US.”

Shrimp farmer Sung isn’t doing quite that well. He’s helping his daughter pay for college, but there’s no fat new Mercedes in the driveway.

That kind of money goes mostly to big-time farmers. Some people earn tens of thousands of dollars a year in the shrimp trade. With the lure of five and six-figure profits, plus faltering rice crops killed off by rising seas, Gorman says some folks are even taking hammers to the very gates and dykes set up to protect the area from the ocean.

“People are actively manipulating the infrastructure,” he says, “sabotaging the infrastructure, to allow salt water to come in. Not just during the dry season, but all year, so they can switch from freshwater rice farming to saltwater shrimp farming.”

Shrimp is no sure bet, either. Seeds, antibiotics, aeration systems, start-up costs - kilo for kilo, it’s way more expensive to raise than rice. A few sick ones can take out a whole pond.

Sung says he’s gone bust before. “In a bad year, all I have left are the whites of my hands!”

That’s the risk for most farmers here - rice, shrimp, or anything else.

But more and more, those who can afford it are moving away from rice and putting their money down on a changing climate.

===============

Christopher Johnson is a reporter for BURN: An Energy Journal from SoundVision Productions with support from the Alfred P. Sloan Foundation.

The flop that is 'Expendables 3'

Thu, 2014-08-21 11:59

To be blunt, "Expendables 3" was a major box office flop on its opening weekend. Part three of the action-packed franchise was the only one to have a PG-13 rating, rather than the usual R.  Although their intentions were to target a younger demographic and broaden their potential audience, the film only grossed approximately $15 million.

"The problem with this movie, and it’s been the problem with this whole series, is that it has this idea that the thing we really want is the great action stars all together, giving us movies they don’t make anymore," says Wesley Morris, critic at Grantland. "But there’s kind of a reason we don’t make those movies anymore. And this movie is just plowing forward. It’s so bad."

Case in point, says Morris, the proposed spin-off of the Expendable's series, in which the leads will all be women, is called "ExpendaBelles."  Actress Sigourney Weaver was offered a part.

"She, perhaps smartly, said no," adds Morris.

PODCAST: Bank of America settles for $16.65 billion

Thu, 2014-08-21 07:47

News broke Thursday morning that Bank of America will pay $16.65 billion for misleading consumers by dressing up faulty mortgages ahead of the economic crisis. David chats with New York University Professor Lawrence White about what that means for B of A. Then, Mesirow Financial's Susan Schmidt joins us ahead of the big convention in Wyoming to help predict when the Federal Reserve could start raising interest rates.

After that, we turn our attention to Africa, where an Ebola outbreak is causing devastating loss of life. Kate Davidson looks at the economic impact on Sierra Leone, Guinea and Liberia.

Finally, Globalist Editor-in-Chief Stephan Richter stops by the Marketplace studios to deliver another quiz, this time on poverty.

If you give a kid an iPad...

Thu, 2014-08-21 02:45

As iPads and other technologies make their way into more classrooms, unforeseen consequences are also on the rise. There's the need for more IT workers. There's the need for  bigger security budgets. And now, there's this: The American Civil Liberties Union has filed a complaint with the Massachusetts Department of Elementary and Secondary Education over a policy that lets some kids take their school-issued tablets home, while others cannot.

Students who qualify for the free and reduced lunch program can bring the iPads home. The district website indicates other students may do so if they pay a fee.

“Students whose parents choose not to or can't buy this expensive device — they don't get to take it home,” says Laura Rotolo, staff counsel with the ACLU of Massachusetts. “They are at a distinct disadvantage in relation to the other students.”

Rotolo says the iPads must be provided to all kids for free if they're a core part of the curriculum. 

The school district’s superintendent, Joseph P. Maruszczak, could not be reached for comment.

“I do think it is something that school districts, state legislatures and school boards need to consider in the future because there is an equity issue,” says Scott Himelstein, director of the Mobile Technology Learning Center at the University of San Diego. 

Himelstein believes technology can ultimately give more equal access to education. But he says there will be growing pains — and more legal questions — along the way. Even when schools give all kids devices, he says, issues may arise if students lack equal access to broadband at home to complete homework assignments. 

“Case law is slowly evolving in this, these things are being tested nationwide,” Himelstein says.

The Massachusetts Department of Elementary and Secondary Education has asked the Mendon-Upton school district for a report on its iPad policies. It's due by the end of the month.

Ebola's cost to African economies

Thu, 2014-08-21 02:35

The Ebola outbreak claiming lives in West Africa is also hurting the economies of Sierra Leone, Guinea and Liberia and the harm is micro and macro in scope. 

It starts small. But it quickly adds up: the World Bank Group has pledged as much as $200 million in aid.

Shop vendors, stalls that are the basis of the economy for ordinary people in these countries, are affected by curfews, night-time closings,” says J. Peter Pham, who directs the Africa Center at the Atlantic Council.

Add in border closings and flight cancellations. Tourism halts. Contractors with the mining company ArcelorMittal declared force majeure — an act of God — and left Liberia, though other operations continued.

Manufacturing has slowed, says Charles Laurie, head of the Africa practice for the global risk consultancy Maplecroft. He says workers are reluctant to “participate in jobs where large numbers of people are collecting at any one given time.”

An initial World Bank-IMF projection said Guinea could lose a full percentage point of GDP growth. Laurie says the region’s poverty means it’s heavily reliant on international aid organizations to shore up health infrastructure.

Governments are also selling bonds. Sierra Leone recently auctioned about $20 million in T-bills to help fund its Ebola fight.

These countries are extremely poor,” Laurie says, “so borrowing money is not much of a long term solution.”

Short-term solution as it is, he expects more borrowing to follow.

Building a better news feed

Thu, 2014-08-21 02:00

Twitter recently announced that it was changing its policy related to violent images and videos within its platform. 

The move comes as the loved ones of kidnapped American photojournalist James Foley have been asking people not to share images or video of his beheading at the hands of extremists. Last week, Zelda Williams quit Twitter after people harassed her with offensive images of her father Robin Williams following his death.

YouTube, Facebook and Twitter and many more of the places we live online have dealt with similar challenges. But there's an interesting layer to this.

Even if we don't share images of violence, we sometimes still promote them in the view of the algorithms that measure our engagement.

Karen North, professor of social media and psychology at USC Annenberg, thinks a lot about how content spreads on the web.

Click the media player above to hear Karen North in conversation with Marketplace Tech host Ben Johnson.

The web has a violent news problem

Thu, 2014-08-21 01:30

To look at media coverage this summer is to witness a season of violence in the real world. A plane shot down in Ukraine, the suicide of Robin Williams, the Ebola outbreak that is now an International Public Health Emergency, everything that's happening in Ferguson, Missouri and the rise of ISIS are just a few of the stories on the list. Even for those of us who see news events blend together in a seemingly endless daily grind, it's tough to watch. A friend and news junkie told me this week he had "no stomach" for the story of beheaded photojournalist James Foley. Yesterday I was reading statements from Foley's family saying how proud they were of him and the work he did, and I started to cry. That is not something I do very often. 

It is cliche at this point to say that "the 24-hour news cycle" and "the age of the Internet" contribute to our perception about the volume and intensity of this violence, but it is also true. Just this week I interviewed David Carr on how tweets about Ferguson influenced coverage of the events there in a big way. Twitter is an especially compelling tool for the news media, in part because of its chronological design--something Zach Seward at Quartz just used to compare it to regular television. But culling social media for news is tricky, because news is filtered and social media is not. After family members had to beg users to stop sharing James Foley's beheading video, and following Zelda Williams quitting Twitter because of people assaulting her with violent imagery following her dad's death, the social network has announced this week that it will respect takedown requests on a case-by-case basis

Twitter and other companies might need to do more than that. For Thursday's show we spoke with USC Professor Karen North about an interesting problem: how algorithms can reward the content we don't want to like, upvote, or even share. U.S.-born tech companies like Twitter, Youtube, and Facebook have unique challenges when it comes to takedown requests, because they don't want to censor content that should be allowed to exist. But an algorithm used to measure and organize the stuff that comes in can give points for all kinds of engagement. If you're giving a YouTube video a thumbs down, you're still engaging with the content, which might improve that content's standing. Watching it all the way through might help, too.

It's important to note that this depends a lot on the company you're talking about and the algorithm you're talking about. Algorithms, like Google's mysterious search algorithm, are being changed all the time, too. But as Jon Lee Anderson writes in The New Yorker, "there is no longer any doubt that the Internet, with its power of contagion and usefulness for recruiting, has become a preferred, particular tool of terrorists." When you put that next to the possibility that our online behavior, even when we don't want it to, might be rewarding the content of terrorists, you don't feel so good about the Internet's impact on world events. As users, we should be thinking about how our online behavior, however passive, can have an impact. Tech companies should also keep thinking about the impact of not just their takedown policies, but the tools they use to comb through and curate the content they're hosting. 

How the Fed became a Central Superbank

Wed, 2014-08-20 13:55

On Thursday, central bankers from around the world will converge on Jackson Hole, Wyoming for the annual Economic Policy Symposium. At issue this year is whether the central banks in this country and elsewhere should continue with aggressive action, or take their feet off of the gas.

It'll be something of an existential discussion about the role of central banks, which changed a lot during the recession. The Federal Reserve is the most radical example; going from, you might say, a mild-mannered Clark Kent to an ultra-proactive SuperFed.

"Its job was fairly narrowly defined to focus on inflation," says Edwin Truman, Senior Fellow at the Peterson Institute for International Economics. "But in the crisis, they ended up using tools that had not been used since the 1930s - and inventing a whole bunch of new tools."

Tools like quantitative easing, wherein the Fed started pumping $85 billion into the economy every month.

"I do think that the bank is fundamentally changed," says economist Jared Bernstein, former member of President Barack Obama's economic team and Senior Fellow at the Center on Budget and Policy Priorities. Bernstein says the central bank went from reactive to proactive.

He says it’s now looking like it will get even more proactive under Federal Reserve Chief Janet Yellen, even stepping into an oversight role. "When chair Janet Yellen says, 'I don’t think the Fed has the luxury of ignoring bubbles in financial markets,' that’s different than either of her last two predecessors," says Bernstein.

Even if Yellen wanted to retire the red cape, she’d find it hard, says Truman.

"You’re not going to put the genie back in the bottle... It creates what the economists call a moral hazard. If things get in trouble, the Federal Reserve will ride to the rescue."  

Truman says now that the central bank has flexed its monetary muscles to save the U.S. economy and maybe even the world, no one will ever look at the mild-mannered Fed the same way again.

Obama campaign operative's surprising move to Uber

Wed, 2014-08-20 13:55

Uber, the ride-sharing app and tech company that has up-ended the taxi industry, has a new vice-president and strategist. He is not from the world of tech, but rather the world of politics: former Obama campaign operative David Plouffe.

At first glance, this seems like a surprising alliance. After all, Uber has been unabashed in its fight against various transportation regulations and taxi driver unions -- things you wouldn't think a longtime Democratic strategist would be embracing.

In fact, in recent weeks, Republicans have been doing the most vocal cheerleading for Uber. The RNC recently sent out an email petition with the headline, "Why We Need Uber." It touts the company as a perfect example of GOP free-market ideals, and casts the challenges Uber has faced in some cities as a case of “unions and liberal government bureaucrats…setting up roadblocks, issuing strangling regulations and implementing unnecessary red tape to block Uber from doing business.” RNC Chairman Reince Priebus wrote an op-ed in the Chicago Tribune making a similar point.

So on Tuesday, when Uber announced it was hiring a top Democratic strategist, there was a lot of head scratching at GOP headquarters.

“I think we were a little shocked,” says RNC Press Secretary Kirsten Kukowski.

Jeff Berry, a professor of political science at Tufts University, was not shocked. He points out that Plouffe will join a company venture capitalists recently valued at more than $18 billion dollars.

“Ka-ching! There's a lot of money that David Plouffe is going to make as a strategist,” Berry says.

Aside from the money, there are strategic reasons the Democratic Party might want to be associated with a tech start-up like Uber, he says.

“This actually gives the Democrats an opportunity to identify with a deregulatory environment, one in which entrepreneurs are free to develop new ideas and new businesses.”

The alliance could alienate some local taxi driver unions, taxi company owners, and people like Ramzi Reguii, an Uber driver in San Francisco who leads a network of Uber drivers pushing for tighter regulation of the company and better worker protections.

“That's what the Democrats ought to do and that’s what the Republicans ought to do. You can support Uber, but you can also make it right at the same time,” Reguii says.

 Meanwhile, in this era of partisan bickering, it finally seems that some Democrats and Republicans have found something they can agree on: they love Uber.

The NFL wants artists to pay to perform at the Super Bowl

Wed, 2014-08-20 13:55

There are three finalists for next year’s Super Bowl show at halftime: Katy Perry, Coldplay and Rihanna. According to the Wall Street Journal, the NFL has asked the artists if they'll pay to play.

“I think it probably is worth it to be honest with you," says Bill Werde,  an entrepreneur at Guggenheim Digital Media, and former editor of Billboard Magazine

"The only thing that comes close is arguably the Grammys,  and that’s only if you have a Norah Jones kind of night – you perform, you do an amazing job, you win a bunch of Grammys and it’s just, kind of, your night. Then you’ll see the kind of sales spikes and lifts that are associated with a Super Bowl performance,"  he says. "Even when you’re an established artist, the lift that you get from playing this halftime show is undeniable.”

After playing halftime, notes Werde, you can raise ticket prices, and get bigger and better brand sponsorships worth millions.  

Victor Matheson, a professor of economics at the College of the Holy Cross, says even if this year’s finalists won’t pay up, the NFL could still ask other musicians to – after all, it has a monopoly on halftime.

“You can come up with a list pretty quickly, of other folks who might be willing to pay a little bit of money to have their act featured on a show that over 100 million people are watching," he says.

But, points out Russell Scibetti, founding editor of industry blog The Business of Sports, maybe fans shouldn’t get to watch the NFL’s negotiations.

"The way that they went about it maybe wasn’t the best. They could have had those conversations privately with the artists," says Scibetti about the NFL's requests.

A different approach, says Scibetti, like the NFL asking artists to help promote it through charity work, would have been better received.

Notes Werde, musicians want their music in the spotlight – not their negotiations.

“I promise you that there are people in the head office of the NFL on a witch hunt right now, trying to figure out how this news got out there,” he says.

Had the negotiations taken place in complete secrecy, says Werde, "These artists would all be considering what it’s worth to them and what part of that value they should be willing to share with the NFL – out in the public it takes on a very different patina."

Graphic by Shea Huffman/Marketplace

Your money's worth more in Mississippi

Wed, 2014-08-20 13:55

The Tax Foundation, a Washington think tank specializing in tax policy, has created a map that shows just how much stuff you can buy for a $100 in each state, as compared to how much stuff you can buy for $100 as a national average. 

When adjusted to reflect how prices differ state by state, you could get $100 worth of goods in Washington, D.C. at a price of $84.60, and in Hawaii at $85.32.

On the other hand, it's worth most in states like Mississippi at $115.74, and Arkansas at $114.16.

 

 

Tax Foundation

How can you be sure a medical app actually works?

Wed, 2014-08-20 10:53

Your smartphone will see you now: the wild west of medical apps

If you take a virtual stroll through the iTunes store or Google Play, you will find nearly a hundred thousand health apps – everything from fitness trackers to blood glucose monitors. Out of all these apps, only about 100 have been cleared by the Food and Drug Administration. Some lawyers are calling for more regulation.

Nathan Cortez went to law school in Silicon Valley. He wears a black Fitbit bracelet and his iPhone is stocked with apps like WebMD. But some apps scare him.

“I’ve got an app that you can use to record your heartbeat or bowel sounds,” he says. “And it spits out a diagnosis. Just the thought you can hold your cell phone up to your chest and receive a serious diagnosis of a heart problem is a little mind blowing.”

Scary diagnoses

Cortez is a law professor at SMU in Dallas. He outlined the potential dangers of medical apps in an editorial in the New England Journal of Medicine. And while Cortez talks about hypothetical dangers, he has real life examples of malfunctioning apps.

For example, a rheumatoid arthritis app created by Pfizer in 2011: “It was basically a calculator,” he says, “trying to calculate a score for how severe your rheumatoid arthritis is.”

And it wasn’t working.

“In that case, you may have seen treatment decisions made based on erroneous calculations.”

The blood glucose app from drug company Sanofi was recalled because it miscalculated insulin doses.

Right now the FDA categorizes apps on three levels of risk. It only has jurisdiction over the riskiest products, and does not even review all of those.

Why? Cortez says it’s mainly politics, and a fear of stifling innovation.

The FDA is sensitive to accusations of over-regulation. This month the agency announced even more exemptions for mobile health products that allow users to track, log, trend, and share data with doctors. New rules clear Apple’s product HealthKit, an app to track everything from blood pressure to lung capacity, from regulation.

The regulatory hurdle 

In the past decade, the FDA has confirmed the medical claims of roughly 100 apps, or .1 percent of what’s out there. One app that has been cleared is called My Vision Track.

MyVision Track App 

MyVision Track

“We believe that a regulatory approved medical app costs you about 10 times as much and takes about 10 times as long as doing one that’s not regulated,” says creator Mike Bartlett, with Richardson-based company Vital Art and Science Inc.

Bartlett had to organize multiple months-long clinical studies to prove that My Vision Track can monitor the progress of retinal diseases such as macular degeneration. But he’s not upset about the expensive, arduous process.

“I would be very cautious about using something that’s unproven,” Bartlett says. “And we know that there are vision tests that absolutely don’t work.”

Regulators walking a fine line

Regulators are walking a fine line between letting snake oil salesmen roam free and discouraging legitimate developers.

Chuck McCoy, head of North Texas Angels Network, says so far he hasn’t heard complaints from investors about too much red tape.

“The FDA over regulates in many areas,” he says, “but if you are going to make clinical claims about a device, there has to be some scientific basis for those claims.”

So far, the FDA has taken a fairly lenient view of the medical app ecosystem, says Dr. Chandra Duggirala, a physician with the San Mateo Medical Center. Last year, he made an experimental device for Type 2 diabetes with promising early results. But he wasn’t able to secure funding that would have brought it to market. Duggirala says the lenient stance could change once people start using medical apps that don’t just track, but also diagnose health conditions.

“So far, not many medical apps are hugely popular in a way that would attract FDA attention," he says. "Once that happens, I’m sure there will be some regulatory hurdles for everybody to cross."

Most entrepreneurs agree the FDA over-regulated medical devices. Now, the question is whether they’re under-regulating mobile medical apps.

The business of pop music

Wed, 2014-08-20 10:52

It's hard to think of a side of the music industry Linda Perry hasn't seen; from playing out of a coffee bar in San Francisco to producing music to having her own VH1 reality show. It's a career path some might call unstable, even with all of her successes.

"I've lived out in a park sleeping on the grass with no place to go, I've not eaten, I've been there," says Perry. "There's nothing you could do to me, nothing you could take away from me that would make me feel like I wasn't going to be all right. I would just start all over again."

But even when she's had success, Perry doesn't feel she's actually tasted it.

"Honestly, I don't feel ever very successful because I haven't had a hit in a while, because I don't search for them," Perry says. "To be where I am now, I love it -- I love writing songs, but I don't want to write the songs everyone else is asking me to write. I'm waiting for when people want the real thing again, and that's when you'll start hearing my hits again."

Part of the reason music has become so big, she says, is because of the business that drives a sort of endless cycle.

"Things get greedy, music gets s***ty, movies start losing the plot, we complain, independents show up, there's going to be a girl who's going to sell a million records out of the trunk of her car, you know what I mean?" she says. "And then the next time it'll be even bigger."

The business of pop music

Wed, 2014-08-20 10:52

It's hard to think of a side of the music industry Linda Perry hasn't seen; from playing out of a coffee bar in San Francisco to producing music to having her own VH1 reality show. It's a career path some might call unstable, even with all of her successes.

"I've lived out in a park sleeping on the grass with no place to go, I've not eaten, I've been there," says Perry. "There's nothing you could do to me, nothing you could take away from me that would make me feel like I wasn't going to be all right. I would just start all over again."

But even when she's had success, Perry doesn't feel she's actually tasted it.

"Honestly, I don't feel ever very successful because I haven't had a hit in a while, because I don't search for them," Perry says. "To be where I am now, I love it -- I love writing songs, but I don't want to write the songs everyone else is asking me to write. I'm waiting for when people want the real thing again, and that's when you'll start hearing my hits again."

Part of the reason music has become so big, she says, is because of the business that drives a sort of endless cycle.

"Things get greedy, music gets s***ty, movies start losing the plot, we complain, independents show up, there's going to be a girl who's going to sell a million records out of the trunk of her car, you know what I mean?" she says. "And then the next time it'll be even bigger."

Got a tax credit you can't use? You can sell it

Wed, 2014-08-20 10:04

States spend billions on tax incentives for all kinds of business activity. Here’s one example of the growth in state tax credits: In the year 2000, only four states gave film tax credits. Now, almost 40 do.

Still, lots of businesses never rack up enough of a tax liability to actually use the tax credits states give them. Perhaps they’re an out-of-state film company with a low tax bill, or a nonprofit or start-up with none at all. One way for states to entice those groups is with transferable, or sellable, tax credits. So the secondary market for those credits is growing too.

To show you how sophisticated the market for buying and selling state tax credits is getting, let’s follow the path of an incentive named Betsy.

Okay, it’s actually "BETC", which stands for Business Energy Tax Credit – but it’s pronounced Betsy.

BETC is from Oregon. The state said to businesses there: "Invest in renewable energy or energy conservation, and you can get this tax credit."

Our BETC’s story starts at the Port of Portland, an economic hub that relies on a dredge, called  the Dredge Oregon, to clear navigation channels along the Columbia River.

The dredge was getting old.

“It wasn’t particularly environmentally friendly,” says Tatiana Starostina, the Port’s senior finance manager.

So the Port undertook a $20 million project to overhaul the Dredge Oregon’s engine, pump and generators. The Port says the overhaul will reduce the dredge’s greenhouse gas emissions by 40 percent.

To help pay for all this, the Port got a BETC from the state. But there was a wrinkle: “Well, because the Port is a government entity,” says Starostina, “obviously we cannot use the tax credit to its original purpose.”

The Port doesn’t pay taxes, so a tax credit doesn’t do much good unless it can monetize it.

“Monetize means we literally sell it,” says Starostina – at a discount, of course. Then the company that buys BETC gets to apply the full credit to its state tax bill.

“It would be like a Groupon,” says Rob O’Neill, the man the Port asked to sell BETC.

O’Neill is a partner with Moss Adams, an accounting firm that’s helped facilitate the transfer of over $500 million in state tax credits since 2007. He says the firms that buy larger tax credits, those worth more than $1 million, are typically Fortune 500 companies.

He also says the secondary market for tax credits is growing.

By some estimates, there are up to 200 state tax credits that are transferable or directly cashable (called refundable). Companies are selling their unused film credits, credits for historic preservation, job creation, renewable energy, even farmworker housing.

But O’Neill says, until now, the market’s been a bit of a black box.

“A lot of people were calling tax directors, and CFOs, and people they meet on the golf course, and try and sell them a tax credit,” he says. “And no one really had transparency with respect to the market.”

Now, O’Neill was preparing to list BETC on a new digital exchange, kind of like a Craigslist of tax credits. Buyers and sellers would be able to log in, click on Oregon, and then see BETC’s listing: a $647,190 credit available for 73.6 cents on the dollar.

Then, at the last minute, BETC sold the old fashioned way, off-exchange. O’Neill got a call from “a large, public, transportation equipment manufacturer.”

He described the buyer on the condition it not be named.

Still, O’Neill wants to nudge more tax credit business online. Moss Adams is one of at least half a dozen companies starting private exchanges through a platform called The Online Incentives Exchange, which also hosts a new public exchange.

“What’s critical is to bring the tax credit market into the modern era,” says OIX’s co-founder Danny Bigel.

Rob O’Neill agrees. “Everything’s moving to the web, and so I think it’s just a matter of time before the business community starts to accept that this is the way credits will transfer in the future,” he says.

Meanwhile a company with almost $2 billion in revenue gets a deal on a state tax credit. The Port of Portland gets to use BETC’s proceeds for its dredge project. Oregon achieves its energy efficiency goal, although it does lose more than half a million dollars in tax revenue from a business that might not need public help.

That’s all from the path of one little tax credit in a market of incentives worth billions.

Got an Oregon tax liability? This $2.6 million credit is available for 25 percent off.

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