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A federal bankruptcy judge has ruled that General Motors is shielded from potential liability related to defective ignition switches that occurred before the company's 2009 bankruptcy.
The ruling, from Judge Robert Gerber, is a huge victory for GM as it walks a fine line between accepting responsibility for a safety crisis that has been linked to the deaths of 84 people, and trying to position the post-bankruptcy organization for success going forward.
John Pottow is a law professor at the University of Michigan. He says the ruling is great for GM.
“It’s a big deal because what they were trying to do is bulletproof their bankruptcy reorganization plan,” Pottow says.
The ruling establishes a clear legal separation between the “Old GM”, and the new post-bankruptcy GM.
Still, the legal cases in this matter are far from resolved. Pottow said the fact that the “New GM” knew about the defective switches, but did not bring up the issue during bankruptcy, could end up helping the plaintiffs.
"The law takes notice incredibly seriously and if someone figures out they did something wrong they have to send out notice right away, particularly if they've discharged something in bankruptcy,” Pottow said.
“So, that could be another hook they're trying to grab on to, to say we still have a second bite at the apple."
Steve Berman, a partner with Seattle-based Hagens-Berman, is co-counsel in the suit against General Motors. He said they will appeal Judge Gerber’s ruling.
Even factoring out the cars that are shielded from liability, GM could still be on the hook for economic losses for people who bought cars after the bankruptcy.
“Let’s just say conservatively there's still 10 million cars left and the average value of diminution was $700—that's $7 Billion,” Berman said.
In addition to ongoing lawsuits for economic loses, the company also faces legal action from people who were insured in crashes.
In a statement, GM praised the decision and stated that any future claims not barred by the ruling must still be proven in court.
[Ed note: In honor of Etsy's IPO, our December 2013 interview with Etsy CEO Chad Dickerson]
When you think about the really big names in online retailing just a couple of companies probably come to mind: Amazon, eBay, maybe Apple. But there's another name that can arguably be added to that list. Just 8 years after it started, Etsy does almost a billion dollars a year in annual transactions. Chad Dickerson is the guy who's been running Etsy for the past five years, and we popped into the company's corporate headquarters in Brooklyn to pay him a visit. Etsy's business has doubled under Dickerson's lead, and he says as Etsy grows, so goes its sellers.
"One of our sellers who was doing Etsy as an escape from nursing school, she started to achieve success and some exposure. Fast-forwarding she was noticed buy Nordstrom and did a deal with Nordstrom and now not only has she quit her job but her husband quit his finance job to help her. In this particular case this is literally a mom and pop. Etsy is really about making a life not just a living so we're just giving them the ability to grow and really change their lives."
Dickerson says the growth is just the start of the mark Etsy strives to make. He says the company hopes it won't just give other online retailers a run for the money, they'll change the whole marketplace.
"What I see Etsy doing is changing the way things are made. I think the ethos of Etsy, this idea that buying and selling should be all about people will start extending into areas like manufacturing and distribution and all of these things. When I think about what Etsy can do over the next 10 or 20 years it's really humanizing the whole supply chain."
Whether it's going from the proverbial rags to the proverbial riches, or just doing a little better than your parents, stories of upward mobility have long been a part of how we define the American dream. But how possible is that dream today? A group of economists at Harvard and UC Berkeley have been looking in to that question recently. It turns out the answer varies widely depending on geography.
Part of the researchers’ theory is that by looking at places with especially bad rates of upward mobility, to see what those places have in common and what they’re missing, we can learn something about how to optimize chances for upward mobility everywhere.
Which is what brought me to Dayton, Ohio, recently. The Dayton metro area has one of the worst rates of economic mobility in the country. Other areas with poor rates include Atlanta and Charlotte, North Carolina.
In Dayton, 40 percent of children born poor, stay poor. Just five percent make it to the top fifth of earners by the time they're adults. Before we get to some of the things that may drive those statistics, it's worth pointing out that Dayton used to have a very different reputation.
For much of the early 20th century, Dayton was known for innovation, opportunity and upward mobility. The area was full of people from humble backgrounds who “made it.” The story of the Wright Brothers and their airplane is one of the best known. But there is also the story of their high school classmate, the poet Paul Laurence Dunbar.
Dunbar was born in Dayton, in 1872, to parents who'd been born in to slavery. After graduating high school, he was too poor to afford college. He worked as an elevator operator. To support his writing, he sold copies of his poems for a dollar to people who rode on his elevator.
A decade later, Dunbar had catapulted himself in to a different life. He was the first African American poet to become internationally famous. He met the Queen of England and Teddy Roosevelt. He was a major inspiration for poets in the Harlem Renaissance and throughout the twentieth century, including Maya Angelou. Her poem "Caged Bird" is a direct reference to Dunbar’s poem "Sympathy.”
I know why the caged bird sings, ah me,
When his wing is bruised and his bosom sore,—
When he beats his bars and he would be free;
It is not a carol of joy or glee,
But a prayer that he sends from his heart’s deep core,
But a plea, that upward to Heaven he flings—
I know why the caged bird sings!
In early twentieth century Dayton, Dunbar could turn his literary success in to economic success. That fact is still evident today on what is now called Paul Laurence Dunbar Street, where a stately Italianate-style two-story home stands. Dunbar bought the building in 1904 at the height of his fame.
“He really wanted to purchase the finest home that he could afford,” says Alex Heckman, who gives tours of the home for the group Dayton History. “It was a lovely middle class neighborhood when he was living here.”
But the neighborhood has changed since Dunbar's time. Dilapidated and boarded up homes now surround the Dunbar House. Heckman says he worries about bringing visitors here. In just the last few years, three violent felonies have taken place on the property, or right next to it.
“There was a homicide victim whose body was dumped and set on fire literally feet from the visitor's center entrance. There was a prostitute shot in the alley behind this historic barn. And a few doors down, a young man was shot,” Heckman says. “The last half century of disinvestment in neighborhoods like this one... it’s tragic.”
The Paul Laurence Dunbar Home is now a stately historic landmark, in the middle of an impoverished neighborhood.Krissy Clark/Marketplace
How does a place that celebrates a man who so famously achieved the proverbial American dream become a place full of such nightmares?
That is of course not something the handful of paragraphs that make up this article can fully answer. But the fact that Dunbar’s former neighborhood and many others like it in cities across the country, have become so disinvested and so economically isolated — that fact in itself has become a key focal point of economic research on upward mobility.
“Areas where there's more concentrated poverty — more economic segregation — tend to have lower rates of upward mobility,” says Harvard economist Nathan Hendren.
Hendren is part of a team of researchers at Harvard and UC Berkeley who have combed through decades of Internal Revenue Service data to track the earnings of children born into poor families as they reach adulthood. The team wanted to figure out which places have the best rates of upward mobility, which have the worst, and why.
They have looked at all kinds of possible factors that might be at play: the health of a region’s overall labor market, its median income, tax policies, percentage of immigrants, even the number of bowling alleys per capita (the theory is bowling alleys might be a sign of broader community engagement).
Among all the factors the team analyzed, a few patterns rose to the top. Areas with the worst rates of economic mobility tend to have worse schools and less stable families, which isn’t all that surprising. Perhaps less obvious was the fact that areas with poor economic mobility also tended to have more income inequality and economic segregation.
A map of Dayton, Ohio census data from 2010 color-coded by race. Blue dots represent white residents, green dots represent black residents. Click for a zoom-able, interactive version.
A map of Dayton, Ohio census data from 2010 color-coded by race. Blue dots represent white residents, green dots represent black residents. Click for a zoom-able, interactive version.Courtesy: Weldon Cooper Center for Public Service
“It’s really about the extent to which the poor at the bottom of the income distribution are geographically segregated from the middle class and the upper class,” Hendren says. “Are people from disadvantaged backgrounds economically integrated in to the local area?”
In other words, a crucial part of economic mobility seems to be whether rich and poor and middle class people are bumping in to each other, and interacting on a daily basis.
For Kathleen Somerset-Fields, who grew up in Dayton in the 1990s and 2000s, the answer to that question was a distinct “No.”
As a child, Somerset-Fields lived in a public housing project not far from Paul Laurence Dunbar's home, but long after he died, once the area was known for concentrated poverty and extreme racial segregation. It’s a part of Dayton known the "West Side.” Somerset-Fields says stereotypes about West Dayton are so ingrained that she tries to avoid saying that's where she grew up during job interviews.
“When you put that down in your resume, it's like ‘Oh, the West Side of Dayton, here we go,’” she says. “I don't want to be looked at like that. I'm not the West.”
Growing up, Somerset-Fields faced an overwhelming tangle of struggles. Her mom and step-father battled with drug addiction. Somerset-Fields and her siblings were moved in to foster care for a time. At 13, she had her first child and was basically the mother to her six younger siblings—paying bills, and managing the food stamps and government assistance they survived on.
“It was hard — but I'm grateful for it,” she says, her voice getting lower. “I would say it empowered me. It really did. To strive for better. To want better. To do better.”
And somehow, Somerset-Fields seems to be beating the odds working against those born in to poor families in Dayton and places like it. Today, she is the assistant manager of a youth program at a community center in Dayton. She says she is definitely not rich, but she is not poor either.
“I consider myself surviving. Is that a category?” she laughs. “Surviving on the good end.”
Of course, it's impossible to say exactly why Somerset-Fields found a way to climb out of poverty when forty percent of her peers in Dayton have not. But when I ask her what she thinks, she immediately points to one relationship in her life, with a teacher she met in a GED class when she was 16 named Diane Brogan-Adams.
On Friday, we look at the two women's relationship and the support it provided, which researchers think may be a key ingredient for economic mobility.
First Lady, Senator from New York, presidential candidate, Secretary of State. Hillary Clinton has a long history in politics, which Marco Rubio was quick to use against her as he launched a bid for the Republican nomination earlier this week.
“Now just yesterday, a leader from yesterday began a campaign for president by promising to take us back to yesterday,” he said.
How does Clinton avoid this “yesterday” role with voters? How does she get people to listen again and listen anew, perhaps even change their minds? Getting voters or consumers to take a second look at a candidate, a company, a product — something they already think they know — is tough work, says Scott Davis, the chief growth officer at Prophet, a brand strategy firm.
“One of the most important things in this campaign process is that there’s a lot that people think they know, and a lot they don’t know, about Hillary Clinton," says Karen Finney, a Clinton campaign spokesperson. That’s why Clinton is starting small and slow, touring in a van she calls "Scooby," having one-on-one conversations with potential voters.
It’s important Clinton be authentic and very clear about her purpose, Davis says. It helps if she can give other people the tools to advocate on her behalf. She may also need to plan something big, bold or innovative to shake people from their preconceived ideas.
Howard Belk, co-CEO and chief creative officer at Siegel+Gale, says Clinton might reference something about her history in a way that won’t alienate her supporters, but with fresh ideas and programs. After her supporters, Belk says the second group Clinton should be targeting is the "switchers." In brand terms, they're the people who may open the product, even if they don’t use it. But he advises against trying to pander to a third category, detractors. They’re a lost cause.
The New York Times recently reported that the Clinton campaign has hired Kristina Schake, former communications chief to Michelle Obama, who was in charge of the current First Lady's image and appearances on"Late Night with Jimmy Fallon" and the Oscars.
But Clinton is only one of many prominent politicians who have undergone a rebranding. We called up a couple of political scientists to ask them about other notable political reinventions, and how successful they were.
Like Clinton, Nixon was very much a known commodity when he ran for president in 1968. He was a congressman and a vice president before famously losing to John F. Kennedy in the 1960 presidential election, and he went on to lose the California gubernatorial race in 1962.
Generally, in today's political environment, "if you lose a presidential general election you're done, you don't get a chance to reinvent yourself," says Vincent Hutchings, a professor of political science at the University of Michigan.
Nixon worked on several other campaigns, taking some cues from Barry Goldwater and George Wallace and earning favors, Hutchings says. By the late 1960s Nixon reemerged as a "law and order" candidate. He also made a bid for likability by hiring a joke writer and appearing on "Laugh-In," notes UCLA political science assistant professor Chris Tausanovitch. He finally won the presidency in 1968.
"He wasn't ever going to pull off the same kind of persona as a Kennedy, be that Robert or John F. Kennedy," Hutchings says. "But he seized upon this growing unease in some sectors of the American electorate regarding the progress of the civil rights movement, urban unrest, [and so on]."
Specter changed parties at the beginning and end of his political career — two reinventions in two very different political climates with two very different results.
"Voters don't like it when people appear to be switching their views," UCLA's Tausanovitch says. "In fact, voters like it so little that they would prefer a candidate who sticks to their guns, rather than a candidate who switches their views in a way that [the voter] might even favor."
Specter pulled of a party switch in 1965 and went on to enjoy a 30-year career in the Senate as a moderate Republican. When he ran as a Democrat in 2009, Specter lost in the primary, in part because partisan lines were far more rigid, Tausanovitch says.
"These days the legislative parties are incredibly sorted out. Liberal Republicans are still a lot more conservative than conservative Democrats, which in the '60s was not true," Tausanovitch says. "There were Rockefeller Republicans and Blue Dog Democrats and boll weevils and all of these moderates ... that could fit in either party."
Gore's problem was similar to Hillary Clinton's, Tausanovitch says: he came off as arrogant, stilted, and his plain blue suits were bland.
"[The blue suit] conveys dullness, convention, safety and, ultimately, boredom," the Washington Post wrote in May 1999. "In other words, the Blue Suit-ness of the suit underlines the Al Gore-ness of Al Gore."
Gore was told to loosen up by none other than embattled departing President Bill Clinton. Gore tried brown suits and polo shirts, but just got made fun of.
Instead Gore came into his own after losing to George W. Bush in 2000. Gore became an environmental advocate and appears far more at ease in public, Tausanovitch says, though it doesn't appear his politics have changed much. Instead, it seems getting out of politics gave Gore the re-brand he needed during his campaign.
"It looks like he has come into his own as an authentic and better public speaker, but his problem to begin with was not that he was hiding something," Tausanovitch says. "That's not an experiment that we don't get to run with Hillary Clinton, but it's certainly something that people will speculate about."
Airing on Thursday, April 16, 2015: There's word today that Japan has overtaken China as the number one foreign holder of US treasuries. I'm speaking of Japanese pension funds, the Japanese government and other Japanese investors. We consult Adolfo Laurenti, chief international economist at Mesirow Financial in Chicago on the shift to US debt. Plus, the world's largest car maker by volume, Toyota, is saying it plans to invest $1.4 billion to build two new factories in Mexico and China. The announcement marks an end to three-year freeze on expansions that Toyota imposed on itself. More on that. Electronic payments-through companies like PayPal-are supposed to make it easier and safer to buy things online. But we found that it doesn't always translate when you're trying to make a purchase across borders.
Yale University’s School of Medicine is deciding whether to create an online version of its physician’s assistant master’s program. Its first attempt failed because it couldn't get accreditation. Yale says it’s “reviewing the matter” and may try again.
Yale’s partner in all this is the education technology company 2U, which has plenty of other customers, many of them Ivy League schools.
“There’s a lot of demand for us right now,” says Chip Paucek, CEO of 2U. He says universities want to enroll students online to address shortages of workers in some fields. But online degrees also bring in more tuition dollars.
“A university needs to figure out how to pay its bills and be sustainable," he says. "Just like any enterprise.”
But some degrees lend themselves more to online learning than others.
“So learning statistics or data science online, certainly learning some of the computer sense, skills and knowledge,” says Andrew Kelly, education scholar at the American Enterprise Institute.
Kelly says degrees that require hands-on training, like physician’s assistant’s programs, are more difficult, because universities have to find hospitals where online students can train.
Ahead of its IPO, Etsy priced its shares at $16, with an estimated value of $1.78 billion. But Thursday saw those numbers explode, with shares opening at $31, which placed the company value at $3.4 billion.
The 10-year-old marketplace for vintage and handmade goods, is a ‘B Corp,’ or ‘benefit corporation’ - i.e it’s certified as a company that benefits the community. It's notable because very few (Etsy is only the second) for-profit companies with B Corp certification go public.
“If it can do good for the community, for the consumer, for the vendors, it satisfies the B Corp requirement and gives them a good rating,” said Santosh Rao, head of research at Manhattan Venture Partners.
The other reason, Rao added, is strategic: “They need to keep the vendors happy. 80 percent of their business is repeat customers and loyalty is important for the company.”
Etsy’s vendors, however, are mostly small businesses that, on average, don’t make much more than the U.S. median income. That means they aren’t nearly as wealthy as those who typically invest in the stock market.
It’s always risky to buy stock in any company, Rao said, but “nothing wrong in having them come in and especially this one where they are committed to the community.”
Although Etsy hasn’t been profitable recently, the IPO is likely to help, according to Rao. It would help them raise the money to grow bigger and expand beyond the U.S.
But the bigger Etsy gets, the higher the chances of its business becoming more commercial. That could be a problem since many, including Rao, believe its loyal customer base is the result of its stated mission to promote the opposite: artisanal goods and small, community-based businesses.
“It was designed originally for that,” said Rao. “It wasn’t meant to be a big, high-scale commercial operation and that’s where they made the market.”
Etsy could keep the commercialism at bay, said Rao, because it was a ‘B Corp.’
“They don’t have to necessarily look at the bottom line every quarter,” he said. “In the end they have to show a path to profitability to show they they are a good business but there’s no near-term, absolute imperative to show a profit.”
But even Rao believes there’s a strong likelihood of it being bought over by a bigger company. “I’ll give 60 percent odds that they will be acquired,” he said.
Coal-mining companies Peabody Energy and Murray Energy have sued to block the Environmental Protection Agency from finalizing its Clean Power Plan, the Obama administration’s broadest plan to reduce carbon-dioxide emissions from power plants. Today lawyers present oral arguments in the federal Court of Appeals for the District of Columbia.
In general, the law favors the EPA, according to Harvard law professor Jody Freeman, a former attorney for the Obama White House who wrote the book on climate change and U.S. law, published by the American Bar Association.
If the court allows the case to move forward, "I would be very surprised," she says. "Now, of course, look: Courts sometimes do unusual things."
A decision against the EPA— even if reversed later— would mean delay, which could be costly to President Obama, who has a tight timeline.
"He wants to get this done by the time he leaves office," Freeman says. Otherwise, a Republican president might easily undo it in 2017.
"So, this is for all the marbles," Freeman says. "This is a very high-stakes case that is playing out in the courts and will keep playing out in the courts."
The plaintiffs have trouble, win or lose. According to a new analysis from Bloomberg New Energy Finance, this will be a record year for the closing of coal-fired power plants.
"That is driven by multiple factors," Bloomberg analyst Ethan Zindler says. "In the short-run, it’s really not being driven by the Clean Power Plan."
There have been other regulations, plus competition from cheap natural gas, and the inefficiency of many plants, some of them 50 years old.
One of the plaintiffs, Peabody Energy, was removed from the S&P 500 stock index in September 2014.
The world’s largest carmaker by volume, Toyota, says it plans to invest $1.4 billion to build two new factories in Mexico and China.
The announcement marks an end to a three-year, self-imposed expansion freeze. The new plant in Guanajuato, Mexico, will turn out 200,000 compact Corollas per year by 2019. The plant in Guangzhou, China plans to start production in 2017 with a capacity to make around 100,000 cars a year.
The free-trade agreements between Mexico, the U.S., and Europe, coupled with Toyota’s new super-efficient global architecture has the potential to set a new competitive threshold for the car industry.
Mohammad Wasiq works at one of the hotels on Savannah’s downtown riverfront. His job is just shy of a mile and a half from his apartment - an easy bike ride. He says it usually takes him less than 10 minutes.
Before Wasiq got the bike, he had to take the bus, and that was a different story. “First ten days, I was late sometimes, sometimes early,” he says, “because I couldn’t wait for the bus so I was just walking from here.”
Wasiq’s bike came from the Savannah Bicycle Campaign’s recycling program. The group takes donations of used bikes and parts. Then volunteers refurbish them and outfit them with accessories the users might need, like racks for groceries. A refugee placement organization called Lutheran Services of Georgia connects the Bike Campaign with people who need the help. Each user gets a helmet, a lock, and a light.
Lauren Cruickshank works with the refugees. “The fact that they can get a bicycle for free means that they’re not spending money on the bicycle,” she says, “and it also means that maybe they don’t have to spend money on a bus ticket each time they’re going to their ESL class or each time they’re going to the grocery store.”
The program also offers a mobile repair trailer and helps people learn about bike maintenance. Manager Jen Colestock says that’s also key when every penny counts.
“Especially if you’re somebody who bikes by necessity, and wouldn’t necessarily be able to afford that repair at a bike shop but might have access to tools to fix it, that’s another ten, twenty, thirty dollars that you’ve saved then,” Colestock says.
A spokesperson for the League of American Bicyclists says recycling programs like this one have been around for a while, and they’ve seen a rise around the country as biking has gotten more popular. They have a lot of different goals - from increasing economic freedom to helping the environment.
On the country's Pacific coast, in a remote beach town, there is a Spanish school called Pie de Gigante. It draws an international crowd to its website. But its founder, Juan Delgado, says it has sometimes failed to convert them into real-world visitors, thanks to its website's inability to let them pay online to reserve a space.
"Right now, we're using a system that's a little bit complicated," he says, speaking in Spanish. "We use a system of paying via Western Union or in cash."
PayPal isn't an option.
"In most of Latin America today, the only way you can take money out of your PayPal account is having a U.S. bank account," says Arnoldo Reyes, head of financial services and business development for PayPal in Latin America and the Caribbean.
The exceptions have required the company to navigate local regluations and to partner directly with individual banks. It's this kind of extra work that pushes companies like PayPal to focus first on bigger, wealthier markets. (Nicaragua is the second poorest country in all of Latin America, after Haiti.)
"I mean, you can't take an Uber in Nicaragua," says Reyes.
"We're basically closed off," says Marcella Chamorro, an entrepreneur who first ran into the payment problem when trying to create a kind of Nicaraguan Ticketmaster.
"I know a bunch of small business owners who need to find like a cousin in California who can open a bank account for them and then sell through PayPal to this bank account and then their aunt comes three months later to bring the cash," she says. "It's really complicated."
It makes it harder for locals than for people like Chris James--a British ex-pat who runs the Hostal El Momento in Granada, Nicaragua. He has a local, Nicaraguan bank account for cash and credit cards. But he also has a U.S. bank account, which he uses for receiving PayPal payments.
"It's easier to have both really: accounts here and out of the country as well," he says. "That's what I find anyway."
The situation has been changing. In the last few years, PayPal has partnered with local banks to make receiving payments possible in Peru, Chile, Costa Rica and--on Monday--the Dominican Republic. But as for Nicaragua, Reyes says while the country is on PayPal's radar, the company couldn't give any specific timeline.
That's how many hours of content Netflix users streamed in the first quarter of this year, according to the company's most recent earnings report released Wednesday. Quartz points out that's about 55 hours per month, per person.3 years
That's how long Toyota's self-imposed expansion freeze. The world's largest carmaker by volume has just ended the freeze by announcing plans to invest $1.4 billion to build new factories in Mexico and China.$16
This is how much Etsy, the online retailer platform, has been priced in its IPO. The deal raised about $267 million by selling 16.7 million shares and gives Etsy a valuation of $1.8 billion.$6.6 billion
That's 10 percent of Google's annual sales, and the fine the tech giant could pay in an antitrust suit brought by the European Union Wednesday. The EU is accusing Google of privileging its own services in search results. New tech correspondent for Marketplace Molly Wood tells us how Google's mission makes this case somewhat inevitable, and how the company can adjust its model to get out of this.$1.224 trillion
This is Japan’s total holding of US government debt. Now the third largest economy in the world has surpassed the second in U.S. bond holdings. According to the Financial Times, China pegs its currency to the dollar, which has recovered strongly this year. Meanwhile, growth in the Asian giant is slowing, leading it to reinvest more of its foreign earnings domestically. However, U.S. investors still remain the number one buyer of U.S. bond.$15 per hour
The starting wage for employees at the East Village restaurant Dirt Candy, three times New York's minimum wage for tipped employees. Dirt Candy has gotten rid of tipping entirely, instead adding a 20 percent "administrative fee" to every meal. It's something of a reaction to the way tipping habits have changed, the Washington Post reported, though it's not always easy to ditch the tradition without raising prices or sacrificing service.
The world's fastest-growing major economy is slowing its roll, just slightly. China's announced a 7 percent growth rate in the most recent quarter, on an annualized basis.
And if you're saying to yourself right now, "I'd love to hear numbers like in the U.S., or in Europe," yes, you're right. Seven percent is huge. But compared to the past few decades, when China's growth seemed unstoppable.
Lately, China-watchers have wanted it both ways: a more balanced and stable economy that continues to push global growth with its breakneck pace.
"It's probably an irrational expectation," says Matthews Asia investment strategist Andy Rothman.
Even at 7 percent, though, China is driving a third of global growth. That's more than the U.S. and Europe combined. Constant economic growth has fostered a culture of entrepreneurship in the Communist state.
"When I started there in '84, there were no private companies at all. Today, 80 percent of employment is private, all the new job creation is private," Rothman says. "People starting up businesses in garages, just like the U.S."
More than GDP figures, today Rothman focuses on the job market and income growth. China is doing well by those measures, he says. In his talks with small, private companies, he finds that businesses are having to give raises to both skilled workers and those on the factory floor alike, to hang on to the workforce they need.
While that's a good sign for China, the average person still can't buy a car or home. Despite massive urbanization, half of the population is in the countryside, where incomes are much lower.
As this all settles out, Rothman says, we should be prepared for the day when China's growth range matches other industrial nations: plus or minus 3 percent a year.
And as deceleration of Chinese growth continues, Rothman says we'll have to brace ourselves for the hyperbole.
"Every quarter, people are going to be telling us, 'Hey, that was the slowest quarter since the Tang dynasty,'" Rothman says.
Jason and Kristen Sarata won a diamond at a charity raffle, but when the couple couldn’t agree on whether to sell the diamond or not, Jason hid it in the laundry room.
“The diamond became part of this vast repository of what I’ve learned is known as the overhang,” says “Freakonomics” author Stephen Dubner.
According to diamond expert Edward Jay Epstein, “The overhang is every diamond ever sold in history that is on someone’s finger or in a bank vault, or in some drawer somewhere.”
Dubner says when people stash away their prized diamonds, it makes them more valuable. “All those unsold diamonds that people keep because they think of them as investments makes them valuable because they are constricted,” he says.
And the common belief that diamonds are inherently valuable? It’s just not true.
“[The diamond industry has] kept prices high over the years by constricting demand, kind of matching demand to the number of engagements, for instance, for engagement rings,” Dubner says.
In fact, reselling a diamond for top dollar isn’t all that easy. “The markup from a jeweler is huge, so you can’t expect to get all that much if you sell it back to a jeweler and you don’t have that many choices. It’s what economists call a thin market.”
Which is why the Saratas have decided to skip over the middleman and sell their diamond on eBay (they’ll also donate fifty percent of the sale back to the charity they won the jewel from).
“If you know anybody that wants to buy a diamond, not just any diamond, a diamond that was won at a raffle and fought over and hid in a laundry room and fought over some more, head over to eBay and search for 'Freakonomics Charity Diamond,'” Dubner says.
The Federal Reserve was out with its eight-times-a-year regional look at the American economy on Wednesday. Sure, fine, call me a dork if you will — but I do love me some Beige Book.
The Wall Street Journal's Real Time Economics blog read it so we don't have to. The choicest nuggets...
- First of all, the weather in the Northeast: restaurant revenues in the Boston area were down 30 to 40 percent with all that snow on the ground.
- Apparently, it's been raining a lot in Mississippi and Alabama: really wet ground there means farmers are behind on their corn planting. They might switch 'em over to soybeans, in fact.
- And, from the "yes, it is a tech bubble" category: backlogs for architectural companies in San Francisco are the biggest they've been since the recession.
On Wednesday, the European Union's antitrust division officially hit Google with an antitrust case, which could cost the search giant as much as $6.6 billion, according to Margrethe Vestager, the European Union competition commissioner. The accusation is that the search giant abused its power in the European market, by privileging its Google Shopping service in its Google Search results.
But are monopolies always bad? Danny Sullivan, editor of Search Engine Land, says Google has been dominant in the European market for more than a decade.
"Having a big market share by itself is OK," says Nicholas Economides, Professor of Economics at NYU Stern School of Business. He says the problem is when companies abuse that market share by taking anticompetitive actions that hurt its competitors and its customers.
Determining when competitors and customers are harmed is hardly straightforward, according to Peter Passell editor of The Milken Institute Review.
But some say when you look at Google's business model, that debate is inevitable. Says Marketplace's Molly Wood, "Google's goal—and it's a mission-driven company—is to organize the world's information ... And if that means occasionally buying a company so that they can deliver results from a company they already own, so be it."
When asked if she thinks there is a possible happy ending in this situation, Wood points to the need for Google to return to filtering results, not owning them: "Let Yelp surface for restaurant reviews instead of having your own restaurant reviews."
And as far as the possibility of an outcome affecting policy in the states, Wood says, "The EU has had a different standard, but I will say, if they have solid findings, it could cross the pond."
Mat Honan is the San Francisco bureau chief for BuzzFeed News, and writes about the technology industry and its impact on society. Honan recently wrote about the guilt one may feel when taking part in the on-demand economy. The full article, "LOL Everything Matters When Everyone Is Connected,"can be found on BuzzFeed:
Our washing machine is broken. Or, at least, the pipe it drains into is. Despite all my attempts to fix it, crawling around on my belly with a pipe wrench and a plumber’s snake, all I have to show is a broken PVC pipe, a minor chemical burn, and a mountain of laundry that our family of four has piled up. So last night, I put in an order with Washio, an on-demand laundry service. And this morning, an extremely nice and highly professional woman showed up at our door, promptly at 7 a.m., took away our laundry, and left us with a chocolate pastry from a bakery in Oakland.
It was amazing, and I feel conflicted about it.
It’s the same kind of feeling I have whenever I take an Uber, or Lyft, or use Instacart to pick up groceries, rather than going myself. I found myself apologizing to the woman who picked up our laundry. “Our washing machine is broken,” I explained. “Well that’s good business for us,” she countered. And it’s true, I guess. Why wouldn’t she be happy to have work? A job is a job when you need one.
And yet my guilt stems not from whatever her own personal experience is as much as it does the remaking of the great American economy into a vast labor market of contract workers — the 1099 economy — whose days are dictated by the whims of mobile software and whose job security is often determined by the numerical star rankings of a capricious and harried market.
Continue reading, "LOL Everything Matters When Everyone Is Connected"
Authorities in the European Union have filed a complaint against Google claiming the company violated anti-trust laws.
More specifically, there's accusations that Google has abused its search-engine dominance to steer people to other Google products and services. Authorities have also announced an investigation into Google's Android operating system.
Click the media player above to hear Marketplace Tech guest host Adriene Hill in conversation with Marketplace's Molly Wood.
Airing Wednesday, April 15, 2015: One week into the spring season for companies to reveal profits, losses and reveal plans for the future, we check in with our regular Brian Reynolds for the morning open. Plus, there is news today that the Chinese economy grew at its slowest rate in six year. The numbers are for January to March, and annualized it's down to a 7 percent growth rate. Magnificent by US standards but lackluster by China's standards which has to keep creating jobs for people pulled into the economy from the hinterlands. Finally, we can't go without talking about tax day. And while people across the country rush to meet the midnight deadline to file or to file for an extension, the Treasury department is warning about a phone scam - where the caller impersonates an IRS agent and demands money.
It's the income tax deadline day, unless you filed for an extension. Turns out that is a popular course of action. If you're getting an extension, I'm on your side, in a world of just-in-time worker scheduling, juggling little league games, the babysitter and bosses sending you urgent action email at 10:47 at night. But Marketplace's explainer in chief, Paddy Hirsch is more hard core than I, and apparently sees a nation of procrastinator here.
Click on the above multimedia player to hear more on just why people put it off until the big day.