This month federal regulators are expected to come out with new rules around Black Lung. The Department of Labor, which is writing the new requirements for how mining companies reduce the exposure of miners to respirable coal dust, particles of dust small enough to be breathed in by miners, won’t disclose what they say. But for the miners, tighter restrictions can’t come too soon.
In 2010 the Mine Safety and Health Administration, an office of the Department of Labor launched an initiative to end Black Lung. “Act Now!” says a project website in red type with all caps. But three years later the new rules that would help to prevent the disease still haven’t been issued, and five to eight hundred miners continue to die of Black Lung each year.
“Not only are we seeing more advanced cases, but we’re seeing the advanced cases in younger coal miners, ” said Timothy Bailey, a lawyer in Charleston, West Virginia, who represents sick miners against the industry. “These men are reporting the dust is so thick you can’t see in front of your face. The man operating the continuous miner can’t see the other end of the continuous machine.”
One explanation for the increase in cases, says Bailey, is a change in coal mining strategy. As we run out of pure seams of coal, he says mining companies are increasingly turning to sources that have more rock mixed in. As a result, miners are breathing in more rock dust, quartz, or silica, than they used to.
In 1968 a deadly explosion at a coal mine in Farmington, West Virginia killed 78 people. A year later, in new mine safety rules were created. But in the four decades since there haven’t been many changes to rules about dust in mines.
“It’s clear that the science that was used to set original standard wasn’t as accurate as it could have been,” says Dr. Edward Petsonk, a professor of pulmonary medicine at West Virginia University. Dr. Petsonk notes that the amount of dust, as well its toxicity, must be increasing. But Phil Smith, Direct of Communications for the miner’s union, United Mine Workers of America says some of the blame belongs elsewhere. “It’s a lack of will by the companies to follow the law that exist. And in some cases a lack of will by the government to enforce the laws that exist,” he says.
“If you’re going to cheat and not going to enforce the law,” says Timothy Bailey, “it doesn’t matter what the limit is.”
The National Mining Association, which represents mining companies, declined an interview on the expected new rules. But it did a issue a written statement saying it doesn’t deny there’s a problem. But it does disagree with the Mine Safety and Health Administration over the extent and proper response. The statement questions whether MSHA was "using a narrow problem in a tight geographic area as justification for imposing a new, reduced standard on the entirety of the industry -- where no documented problems exist.”
Whether it’s politics, science or companies running afoul of the law causing the problem, Dr. Petsonk just wants a solution, and quick. “I think the people who do this work deserve the best protection, the best science, our country can give them,” he says.
For the past two years, Apple has allowed independent inspectors to examine factory conditions for the Chinese workers who make iPads, iPhones, and the company's other iconic products. Today, the Fair Labor Association released its final report on three factories run by the Apple supplier Foxconn.
Apple agreed to allow the probe after a spate of suicides at its biggest supplier Foxconn engendered outrage over deplorable worker conditions at Foxconn factories. Two years ago, when this audit began, Foxconn was given 360 action items to meet. According to the report, Foxconn has met 99 percent of those items for the three factories that were inspected.
But, while that may sound like a success, the one action item Foxconn failed at happens to be one of the biggest complaints from labor activists about the company. Foxconn was not able to reduce overtime hours for its workers under an average of 9 hours a week, which means that technically the company continues to violate Chinese labor laws. (Though, the overtime law is almost never enforced, and nearly everyone violates it.) According to the report, Foxconn was able to keep overtime for its workers below 20 hours a week, which is what the Fair Labor Association deems acceptable, which is a big improvement for the company.
But workers still don't seem happy. One worker, Mu Xin Xian, assembles iPads for Foxconn. She says she was not pleased about the reduction in overtime hours.
"I traveled far away from my village to work as many hours as I can so that I can make money," Mu says. "So when I'm told I'm not allowed to work much overtime, I can't make enough to live on."
Foxconn has raised starting salaries and salaries for some engineers, but for workers like Mu who have worked there for three years or so, they haven't seen those pay raises. As it stands, Mu makes just $2 an hour to assemble an iPad. It's clear that Foxconn has done a very good job at meeting the demands of this inspection and improving working conditions at its factories, which also has a ripple effect throughout the manufacturing industry in China.
But many workers wish Apple could raise their salaries to meaningful levels so that they're not being punished for the demands on Apple from the public to reduce their hours.
Americans drink half a billion gallons a year of orange juice every year. That might sound like a lot, but it’s actually a record low. OJ consumption has dropped 20 percent in the last decade. That's prompted Florida's Department of Citrus to roll out a new ad campaign touting orange juice's health attributes.
Part of the reason demand is down is because there are simply fewer oranges being produced says Doug Ackerman, executive director of the FDOC. "Our challenge is the shortage of supply really creates higher prices at retail for us."
About 50 percent higher over the last 10 years. That's mainly due to a disease called greening.
Citrus farmer Bill Roe is examining a greening infected Valencia orange tree in his grove in Winter Haven, Florida. "This is a 5-year-old tree that's very symptomatic," he says, pulling off a couple of the yellowing leaves and a couple of small, misshapen pieces of fruit. Greening is a bacterial infection that slowly kills citrus trees. It showed up in the state about 8 years ago. Since then, Florida is producing half the oranges it used to. Roe says greening also causes oranges to drop off the tree prematurely.
"Half the fruit on that tree is on the ground," he says. "That means there’s no way to make money, essentially. And the whole point of farming is to make a little bit of money. It’s a good way of life, but it’s important to make money."
For farmers like Roe to make money with less fruit to sell and expensive greening treatments, they have to charge more for their oranges. "What happened in oranges is certainly rare and we’ve never seen it in any other market like that," says James Cordier, a commodities trader with Liberty Trading Group. Cordier says if Florida orange production keeps falling and economies in Asia, Europe, and the U.S. improve, orange juice prices could hit luxury territory. "It could be the liquid caviar."
Doug Ackerman, with the Florida Department of Citrus says he's confident scientists will find a cure for greening before things get that extreme. "The Florida citrus grower has a long history of fighting very tough diseases and coming out OK on the other end," he says. Ackerman says Florida’s citrus industry is worth about $9 billion a year and employs more than 76,000 people.
He says the Sunshine State is committed to its citrus farmers. "Well we’re still on the license plate here in Florida," he laughs.
Adobe releases its fourth-quarter earnings Thursday after the market close. The company's earnings slightly beat the consensus of analysts' estimates in the third quarter.
Adobe is a company most consumers are familiar with, because its software is loaded all over their computer desktops: Acrobat for accessing PDFs, Flash for playing YouTube videos, Photoshop for photoshopping pictures. It’s even become a verb.
The problem for Adobe is that it’s been better known in the past few months for having suffered a massive security breach by cyber criminals. The hack was identified by the company in September. It now appears tens of millions of emails and encrypted passwords were stolen from Adobe, as well as source code for some of its most popular products.
Technology analyst Carl Howe at the Yankee Group says the company is in part a victim of its own success. “They’re a fairly ubiquitous technology -- most computers have some Adobe software on them -- and that has made them a great target for malware and security exploitation.”
But Howe says unlike Microsoft, whose software is also on computers everywhere, and has strengthened its cyber-defenses over the past decade, Adobe hasn’t focused as keenly on the threat.
“I think they have been behind the eight-ball on security,” Howe says. “And the question is whether they’re going to catch up.”
Fatemeh Khatibloo, senior analyst at Forrester Research, believes that because of the company’s premier position in multiple product categories, it has an obligation to its customers to focus on security now. “Adobe should be held to a higher standard,” she says.
Khatibloo doesn’t think consumers who use popular programs like Photoshop and Acrobat will necessarily be deterred from further engagement with the company by the recent data breach. But professional clients, especially big corporations and agencies that use the products for advertising and marketing, might hesitate at some point. She points out that these clients are increasingly looking to Adobe as a partner in their marketing efforts.
“Do I think that consumers are necessarily going to stop using the Creative Suite?” she asks. “Probably not. But do I think some of their marketing clients, some of their brands and enterprise clients, might look at them twice and say, ‘Gosh, should I really be relying on Adobe as my strategic partner?' Possibly.”
Analysts say Adobe probably has some time to act -- on fortifying its internal defenses against hackers, and improving its image and communication around these issues -- before cyber-attacks actually impact the bottom line.
The government shutdown hurt workers in all sorts of industries, including those in steel manufacturing. Completed contracts were haulted and workers were concerned about their futures.
Fortunately for them, the industry is picking up since the end of the shutdown. Lisa Goldenberg, president of Delaware Steel Company in Pennsylvania and president of the Association of Steel Distributors, says inventory is at an all time low and there have been several price increases.
"The road block has been removed, and it's a little bit of the flood gates rolling," says Goldenberg. "It's good!"
Goldenberg says her company is moving inventory as fast as they can make it and she's hopeful for the future.
Anthony Murphy works at a hair salon where his phone has been stolen, not once, but three times.
“Yeah....” he says.
“Two of those times I was actually able to get the phone back,” by using tracking apps like Find my iPhone. “I rode around in the police car looking for it and tracking down my phone, it was kinda fun actually.”
But one of those times, Murphy couldn’t track his phone because the phone was turned off.
That’s why a group of Attorneys General want something called a “kill switch” -- where you can send a message to the phone rendering it permanently unusable, and thereby reducing the incentive to steal devices in general.
According to New York attorney general Eric Schneiderman, Samsung came up with such a kill switch, but cellphone carriers including Sprint, AT&T, US Cellular, and T-Mobile have all allegedly barred it.
In a letter, in which San Francisco District Attorney George Gascon is copied, the New York Attorney General asks for “further information relating to your decision to prohibit Samsung....from featuring a “kill-switch”...”
“We believe that one of the reasons they have done so is it really impacts the bottom line, the ability to sell insurance and other products they sell,” says San Francisco District Attorney George Gascon. In San Francisco, he says smartphone and tablet thefts account for 50 percent of all robberies.
Cell phone carriers say there has been some sort of misunderstanding.
“No we have not rejected the kill switch,” says Sprint spokeswoman Crystal Davis. “In fact we are working with a number of handset vendors to work on a kill switch type feature.”
A spokesperson for Verizon made the same claim. Both carriers say they want a kill switch that works for all phones, not just one brand. And Davis says having a different kill switch system for every type of phone is onerous.
There is also a security concern, says Iain Gillott, head of iGR.
“Nothing is ever as simple as it seems,” he says. “We read all day about accounts and passwords being hacked.”
He says a kill switch could be hacked too, and preventing abuse of that whether by hackers or by an ex, takes time. District Attorney Gascon isn’t buying it though, he and US Attorney General Eric Schneiderman want cell phone carriers to provide a written explanation by the end of the month.
Not many magazines can claim a 100th birthday, but Bowlers Journal International -- the world’s oldest monthly sports magazine -- just celebrated that milestone with a 300-page commemorative edition.
But times have been tough for the sport. Competitive bowlers in America have dropped from nearly nine million in the eighties to about two million today. Bowling journalism recently suffered a blow as 20-year-old Bowling This Month magazine published its final issue in October.
However, Keith Hamilton, president and co-manager of Luby Publishing, which publishes Bowlers Journal International, spins the situation in a different light.
“Bowling's not what it was in terms of being in the forefront, mainstream media, but bowling has evolved from a lot of organized play [and] league play. There's still millions who do it, but there's a lot more casual bowling going on,” Hamilton says.
Hamilton attributes the rise of casual bowling to the creation of more family and youth orientated bowling centers, which was not the norm back in the sport’s heyday.
“When I was growing up as a kid, I didn't bowl. But one reason why I didn't was because I couldn't. Every time I went to the bowling center, they were packed. They turned me away. So I didn't bother, but today's proprietors are trained differently. They are trained how to go after that youth market and how to cultivate them within a bowling center family,” Hamilton says.
This means arcades for the kids and “martini bars and lounges and deck areas” for the adults.
Hamilton also says the sport has adapted the changing times by entering school athletic systems.
“There's 3,000 high schools out there that offer bowling as a letter sport. There's more college programs embracing bowling. Title IX has really kind of paved the way for women bowling,” Hamilton says.
As for the continuing popularity of the magazine, Hamilton credits the company’s dedication to high journalistic standards and its loyal subscribers.
He also notes how advertising factors in the magazine’s content.
“Next time you go into a bowling center... look around. You got the lanes…you got masking units on the wall, you've got the pins, you've got electronics, you have the bar area -- there's so many different industries that go into building of a bowling center that there is an advertiser for each one of those products.”
Although bowling culture has drastically changed from the fifties and sixties -- no more celebrity status bowlers or Saturday afternoons watching tournaments on TV -- Hamilton sees America’s greatest indoor pastime successfully rolling into the present.
This final note today, courtesy of the professional networking site LinkedIn.
Their year-end list of the most overused buzzwords on user profiles (resumes, basically)...
'Responsible' is number one.
You're gonna have to do better than that if you wanna get a job, people.
'Strategy' is second...
'Creative' is third.
So hey, let's get creative out there, shall we?
It's been a little over two months since the Affordable Care Act's healthcare exchanges opened for business, or were supposed to open for business. Software problems crippled the Healthcare.gov system for weeks after its launch on Oct. 1.
Many small insurers expected to do a lot of business in the new health insurance landscape. In September, the non-profit HMO L.A. Care had only public insurance plans like Medi-Cal to offer. But on Oct.1, when the healthcare exchanges opened, L.A. Care was one of many small insurers getting into the private insurance business.
"We're anticipating hiring about 100 extra people just to handle the phones, the medical management, the kinds of questions that come up, etc." Howard Kahn, the head of L.A. Care, said then.
L.A. Care acquired an additional 50,000 square feet of office space for its new hires. Kahn expected the call center would be bustling when the exchange opened. "During the first month we could possibly see as many as 20,000 members or more signing up," he predicted. "It could be higher. It could be lower, depending on how the systems are working."
The systems, of course, did not work. Kahn used a single word to describe what it was like in the call center when the health exchange opened: Quiet.
The 20,000 new customers Kahn was hoping for in the first month did not materialize. L.A. Care has signed up just over 1,000 members. "I would say it has been bumpier then many of us expected," he said.
But business has improved steadily. On a recent afternoon, call center employees were busy answering phones in the new offices. In California, people can log onto the state's health exchange website, Covered California, and compare plans. But because the site is broken, they have to fill out a 23-page paper application.
"What we could do is take them through an application by phone and then mail it to them," said L.A. Care supervisor Regina Lightner. "It's a little convoluted, they would then sign it and they would then mail it into Covered California." This process can take anywhere from 30 to 45 days.
Despite all the missteps, Khan believes the state will solve these problems soon. "We've made adjustments to our expectations in the short term,"he said. "In the long term we haven't made long-term adjustments to our projections."
On the other side of the country, in Baltimore, Peter Beilenson is having similar problems. He was the health commissioner of Baltimore for 13 years, then health commissioner in Howard County for seven. A year ago, he started the Evergreen Coop, a small nonprofit insurer that came into existence because of the Affordable Care Act. Evergreen set up shop in an 1870's cotton mill overlooking a stream about three miles north of downtown Baltimore.
Maryland has had many of the same website failures that plague California. The previouis day, only four people had been able to enroll with Evergreen online. "That's just from the individual exchange, mind you," Beilenson said.
When it became clear the state's website wasn't working, Evergreen changed its strategy. Rather than focusing on individuals, it went after small businesses. "In the two weeks we've been approved for selling small group market here in Maryland, we have over 100 actively involved small businesses in the process of enrolling with us," Beilenson said. "It may be a silver lining of the exchange not working terribly well."
Even with the unexpected small business customers, Evergreen can't succeed without a drastic increase in the number of individuals it enrolls on a daily basis. To break even, Evergreen needs to enroll between 12,000 and 15,000 individuals.
"We are confident we will make that," Beilenson said.
Like Howard Kahn in California, Beilenson believes the problems with the new systems will be solved in the not too distant future and small insurers will be profitable alongside the larger companies that have dominated the market for decades.
South Korea is in the midst of a culture war over video game addiction. The South Korean Parliament is considering legislation that would put limits on video game advertising and also tax the industry's revenue to help fight addiction. The country's commitment to high speed internet infrastructure has helped to create a boom in gaming and young gamers. The BBC's Mark Gregory tells Marketplace Tech the latest on the story.
One of the details in yesterday’s budget deal concerns an agency that many Americans have probably never heard of. But about 44 million people’s retirements could depend on the Pension Benefit Guaranty Corporation -- PBGC for short -- and the agency has run deficits for years.
One of the world’s largest hotel chains expects investors will check in and stay awhile. Hilton Worldwide will price shares of the company after the market closes today, and will begin trading Thursday.
"There's this industry, essentially, around very real issues done in a way that has an element of a self-serving quality -- and it's certainly a self-perpetuating quality," says Peter Buffett, speaking of the world of charitable giving. About seven years ago, Peter, a composer and musician, and his wife Jennifer were thrust into the world of high profile philanthropy when Warren Buffett poured about a billion dollars into the NoVo Foundation. NoVo works to empower girls and women globally and to foster locally-focused economies. But along the way, Peter and Jennifer have learned a number of lessons about what works and what doesn't when it comes to trying to use your money to fix a major problem, and even become critics of the way many philanthropies work.
Just in time for the Christmas season comes this question, courtesy of our friends in Canada. Exactly who controls the North Pole? It turns out, no one. This week, however, the Canadian foreign affairs minister created a stir by announcing that his country plans to lay claim to the North Pole seabed, an expansion of Canada’s territorial claims in the region. Canada is asking scientists to draft a submission to the United Nations asserting that the outer limits of its continental shelf include the North Pole.
Interest in the Arctic is heating up as global warming shrinks the ice there, opening up new sea routes and commerce. Canada, Russia, the U.S., Norway and Denmark are all jockeying for position in the region. Their claims to various parts of it depend on geologic-mapping that will take years, but the region could be ice-free by 2030, according to some estimates. That opens up room for commerce. The U.S. Geological Survey estimates the region holds about 90 billion barrels of oil, around 1.7 trillion cubic feet of natural gas and 44 billion barrels of natural gas liquids. That amounts to almost a third of the world’s undiscovered natural gas and 15 percent of its oil, according to the USGS’s Alex Demas.
Robert Huebert, a political scientist at the University of Calgary, says none of it will be easy to access. “It’s very cold. It will remain cold even in the face of climate change,” says Huebert. “It will remain dark throughout most of the year. Logistically it’s very difficult to supply and it’s deeper water than we’re used to.”
Fourteen thousand feet deep, actually. Canadian legal scholar Michael Byers at the University of British Columbia says the idea that “anyone is going to be drilling for oil at the North Pole within the next century is a bit ambitious.”
“This is mostly about symbolism,” says Byers. “And it’s also about a Canadian prime minister who faces a re-election campaign in the next two years and not wanting to be the prime minister who formally gives up the idea of Canadian sovereignty at the North Pole.”
John Higginbotham, a former Canadian transport official, agrees Canada’s North Pole announcement this week is largely symbolic.
“This government has never failed to pick up an opportunity to push the Canadian identity, Canadian sovereignty button whenever it can,” he says.
The University of Calgary's Huebert says countries with Arctic interests are in this for the long term, so they’re interested in claiming as much territory as they can. After all, he says, technology advances can create commercial opportunities that nobody saw coming.
“I mean, think of North Dakota,” Huebert says, referring to the state’s fracking boom.
The bipartisan budget deal expected to go before House lawmakers this week would ease automatic spending cuts and boost fees. If passed, it would also do something else -- it would mean the U.S. government might finally stop hindering growth in the U.S. economy.
Economists and policy wonks are downright giddy at the prospect.
“We reached a deal,” says Jeff Stibel, the CEO of the Dun and Bradstreet Credibility Corporation. “How amazing is that? I mean, talk about a Christmas miracle!”
Stibel says the deal would be a boost to the overall economy in the new year, but if it’s passed soon enough, it could even pump up holiday shopping, as consumers feel more confident in the economy.
“We had lackluster sales with the early holiday shopping,” he says. “And I’m hoping this helps accelerate it.”
The uncertainty of Washington gridlock has kept companies from using stockpiled cash to hire more workers. But if Congress passes this deal, “then we’re really looking at an economy that can grow beyond 3.5 percent with the unemployment rate dropping to below 6.5 percent by the end of next year” says Bernard Baumohl, chief global economist at the Economic Outlook Group.
But Congress needs to do more, according to Linda Bilmes, who teaches public policy at Harvard. She cites bigger problems, like an outdated tax code.
“It is overly complicated,” she says. “It is badly in need of an overhaul.”
And while changes to the tax code or to Social Security funding won’t come immediately, Bilmes says there’s a better chance for them now that Congress may no longer be so preoccupied with short term fixes.
Today, the World Health Organization releases its annual report on malaria. The disease kills some 600,000 people every year -- most of them in Sub-Saharan Africa. Part of fighting any disease is understanding how populations move. And now, there's a tech device now being used to tackle this challenge. It's called... a cell phone.
An epidemiologist at Harvard named Caroline Buckee has been looking at massive amounts of cell phone data. Think the phone calls and texts of 15 million cell phone users in Kenya, for instance, with their locations triangulated by the phone company.
"So we combine that human mobility model with clinical information about the malaria parasite, and we use mathematical models to predict how people are going to spread it when they travel," Buckee says.
Think of plotting Malaria cases on a map and then overlaying data showing where people are moving, which helps make better predictions about where the disease might go next. Dr. Buckee points out that this data is thoroughly anonymous – they just see a bunch of dots. Still there are challenges.
"The challenges are the very poorest populations, and that the density of cell towers determines how high a resolution you can get your estimates," Buckee says. "So, in some of the most rural and underserved populations, we have the hardest time."
Buckee hopes those phones could someday warn people of an outbreak.
One of the world’s largest hotel chains expects investors will check in and stay awhile. Hilton Worldwide will price shares of the company after the market closes today, and will begin trading Thursday.
The initial public offering could raise more than $2 billion. It’s expected to be one of the largest pay-outs of the year. The company planned to introduce the stock on Friday, but was pushed forward because so many people are itching to invest.
Why investors so eager to buy shares of Hilton?
Hilton Worldwide oversees more than 4,000 hotels. But it owns less than half of the actual real estate. And that may not be such a bad thing.
“The business of managing franchising hotels is a fantastic business,” says Chad Mollman, an equity analyst for Morningstar. He says managing franchises doesn’t require much investment and expenses are low. “They typically get royalties of 4 to 5 percent of sales. It’s almost pure profit.”
And hotels like Hilton tend to lock-in long contracts with franchisees.
“You could have a management contract that lasts almost 50 years. In some cases, it’s almost a locked annuity for management companies,” says Nikhil Bhalla, a lodging analyst with F.B.R. & Company.
Growth outside of the U.S. has taken off.
“You’re seeing the Hilton brands grow in China, India, Latin America, Russia, at an alarming rate,” says Ryan Meliker, who tracks lodging companies for a boutique investment bank called M.L.V. & Company.
In this country, demand for hotel rooms is up. But the supply has remained almost flat, with little new hotel construction.
That’s good for companies like Hilton, but not so much for consumers. Over the next few years, analysts expect hotel room prices will continue to rise.
[UPDATED 12:45PM EST] One of the details in yesterday’s budget deal concerns an agency that many Americans have probably never heard of. But about 44 million people’s retirements could depend on the Pension Benefit Guaranty Corporation -- PBGC for short -- and the agency has run deficits for years.
Right now, it’s $36 billion in the red. The proposed deal would raise about $8 billion, but that’s not enough, says Olivia Mitchell, who runs the Pension Research Council and teaches at the University of Pennsylvania’s Wharton School of Business.
The PBGC is like a national insurance company for private pension plans: When companies go bankrupt, and they can’t make good on their pension obligations, the PBGC steps in.
Mitchell says the agency’s current deficit is only the beginning.
“The problem is, the PBGC faces additional shortfalls for companies that have not yet filed for bankruptcy,” she says. “The possible overhang could be on the order of $300 billion.”
So, if we think of PBGC like a health insurance company, it’s one where all the customers are old and sick. It only serves companies with old-school, “defined-benefit” plans—the kind that guarantee specific income levels for retirees. And young, healthy companies aren’t setting those up.
The proposed budget deal will effectively raise the premium for companies that are covered now, which Lynn Dudley calls “a terrible idea.” She’s an executive with the American Benefits Council, which lobbies the federal government on behalf of employer-sponsored benefit programs, including pensions.
Like a health-insurance plan that raises rates on its old, sick members, the PBGC would be “shrinking the base” of people who pay in, she says. In other words, she thinks raising rates could actually make the PBGC go broke.
Mitchell says the question isn’t if the PBGC will go broke: It’s when. She thinks 10 to 12 years is a reasonable estimate.
“But many of us retirees will probably still be around in 10 or 12 years,” she says. “So it’s a dire circumstance.”
President Obama is calling a surprise bipartisan budget agreement in Congress a good first step. The deal will roll back some of the across-the-board sequester cuts to the budget while at the same time raising fees on things like the security surcharge on airline tickets. If the deal is approved, federal pensions will change. Some retired military personnel will get lower cost-of-living adjustments, and new hires on the civilian side will pay more towards their own retirement. Overall, the changes are supposed to net the government $12 billion.
The cuts to worker pensions aren't dramatic like the cuts faced by city workers in Detroit or at private companies like GM that have been in the news lately. In fact, these are actually smaller changes than negotiators were looking at just a few days ago.
On the civilian side, the head of the Treasury Department Employees Union actually issued a statement saying, they found the cuts reasonable. New hires will kick in an additional 1.3 percent of their income, which brings their total up to 4.4 percent.
Basically, it beats the alternatives, like a government shutdown that sends all federal employees on furlough or the automatic sequestration cuts, which this deal replaces. Sequestration cuts would have resulted in layoffs of government employees.
On the military side, this only affects retirees who are under the age of 62 -- meaning that they could presumably be working other jobs while retired. It excludes folks who retired because of injuries or disability.
"There's this industry, essentially, around very real issues done in a way that has an element of a self-serving quality -- and it's certainly a self-perpetuating quality," says Peter Buffett, speaking of the world of charitable giving. That's not the sort of statement you might expect from someone who is both chairman of his own philanthropic organization, the NoVo Foundation, and son of one of the greatest philanthropists the world has even known.
Buffett, if you weren't clued off by his famous last name, is the son of Warren -- as in "the Oracle of Omaha;" one of the world's wealthiest men who has pledged to give nearly all of his $58 billion net worth away. About seven years ago, Peter, a composer and musician, and his wife Jennifer were thrust into the world of high profile philanthropy when Warren Buffett poured about a billion dollars into the NoVo Foundation. NoVo works to empower girls and women globally and to foster locally-focused economies.
But along the way, Peter and Jennifer have learned a number of lessons about what works and what doesn't when it comes to trying to use your money to fix a major problem, and even become critics of the way many philanthropies work. In a New York Times op-ed titled "The Charitable-Industrial Complex" published earlier this year, Peter wrote,
Early on in our philanthropic journey, my wife and I became aware of something I started to call Philanthropic Colonialism. I noticed that a donor had the urge to “save the day” in some fashion. People (including me) who had very little knowledge of a particular place would think that they could solve a local problem. Whether it involved farming methods, education practices, job training or business development, over and over I would hear people discuss transplanting what worked in one setting directly into another with little regard for culture, geography or societal norms.
With that critique in mind, Marketplace Morning Report host David Brancaccio sat down with Peter and Jennifer Buffett as part of our "A Lot to Give" series to talk about their thoughts on philanthropy and charity.
Peter Buffett that while giving can be a flawed process, there's a reason he continues to do it.:
There is bleeding that should be stopped. There are beds that should be in domestic shelters. There’s food that should be in food pantries. There are things in the here-and-now that should be happening for sure. But we have the opportunity -- ‘we’ meaning anyone in larger philanthropic circles – to go upstream and take big chances on how to solve these problems. There should be money going into, like I said, the here and now, but if we don’t believe they can be solved, we’re sort of in the wrong business. That some of us have to be idealists and say you know what -- and also pragmatic in terms of let’s keep walking up the stream and find the problem and stop it.
Jennifer says that Peter's op-ed was meant as a constructive critique of the philanthropy, and that what the couple is encouraging is more coordination between philanthropies in order to get the best possible results.:
I don’t think that sector thinks that it’s perfect. But I think it’s very difficult because we all like to tell the happy success stories and feel good about what we’re doing. It’s more difficult to have the conversations about the difficulty of problems, about you know, the gaps, about the incongruences of the whole sector and the fact that, you know, people get to decide their own sort of self-imposed metrics of excellence and success and what not, and it’s not well-coordinated at all. So it was a good call out and I think the response generally has been really positive and very constructive.
One key line from Peter's op-ed is his use of the phrase "conscience laundering" to describe some people's motivation when it comes to philanthropic giving. He elaborated on what he meant this way.:
Any intelligent person at some point is reflective enough as they go to sleep at night, to think about what effect their actions may be having on the world. And, even conscience laundering sounds harsher than I may even mean it [laughs] in some ways, because these are not necessarily bad people. They're caught up in a system that does some bad things, and as they probably get older, and they start to see the effects, they might start to stretch their minds, and say, 'You know, I think we need to do something about this.'
We spoke to Jennifer and Peter Buffett together and then aired the interview in two parts. Below is the transcript for both interviews:
Jennifer Buffett: First of all, I think going overseas to get labor for increasingly lower prices and resources and things like that, which then can devastate a community or a region. But then even when NGOs go into communities and they get, staff gets paid a certain wage or whatever and it completely then offsets the wages of the people living there and then they can’t afford to pay their rent in a certain area and then all these NGO workers displace the people that live there and set the whole thing out of balance. I mean those kind of unintended consequences I think happen all the time, all over the world.
David Brancaccio: I was reading your piece in the Times, Peter, and you concluded it seemed to me that no charitable project can solve the big problems of shelter for people, access to water, healthcare, stopping sex trafficking… But ‘solve’ is a big word. You know that saying, ‘The perfect is the enemy of the good’… You don’t think that philanthropy, if it can’t solve, can help a whole lot?
Peter Buffett: Well, therein lies the rub. There is bleeding that should be stopped. There are beds that should be in domestic shelters. There’s food that should be in food pantries. There are things in the here and now that should be happening for sure. But we have the opportunity – ‘we’ meaning anyone in larger philanthropic circles – to go upstream and take big chances on how to solve these problems. There should be money going into, like I said, the here and now, but if we don’t believe they can be solved, we’re sort of in the wrong business. That some of us have to be idealists and say you know what—and also pragmatic in terms of let’s keep walking up the stream and find the problem and stop it.
DB: I have to ask – Peter, did you ever hear from your dad about the New York Times piece? Did Warren Buffett call disinviting you from Christmas after reading this?
PB: [laughs] It’s funny how some people think that for sure but he did call and he was very proud of me and very proud of it. You know, my dad likes to, as I say, call a spade a shovel. And so he was I think very happy with it and impressed by the truth-telling that went on in the piece.
JB: I don’t think that sector thinks that it’s perfect. But I think it’s very difficult because we all like to tell the happy success stories and feel good about what we’re doing. It’s more difficult to have the conversations about the difficulty of problems, about you know, the gaps, about the incongruences of the whole sector and the fact that, you know, people get to decide their own sort of self-imposed metrics of excellence and success and what not, and it’s not well-coordinated at all. So it was a good call out and I think the response generally has been really positive and very constructive.
JB: We started traveling heavily in 2004-2006. I remember being in Rwanda, and I kept going to household after household and hut after hut, and the heads of the households were 15 year old girls. And the world was on these girls' shoulders. And I thought, 'Oh my goodness, no one is talking about this.'
PB: You know, only a girl will be the mother of every child. No one seems to argue with me on that point [laughs], which is good. You know, when again, at 12 years old she's making the choices between ... these are not choices. I should say she's not making the choices between being sold, being the utility for the household, getting the wood cooking the meals, taking care of the sick ... almost everything, again, falls on the girl. And if you want generational change yousupport her. You give her opportunities, give her choices, give her a choice to be a teenager.
DB: When you talk to philanthropists, about their motivations, this is a key thing, they say 'I give because I saw a need and I couldn't just sit here doing nothing, [I] needed to respond,' and they respond with their money. But there must be other reasons, to quote a Peter Buffet line, 'Conscience laundering ... laundering one's conscience?'
PB: Indeed, and any intelligent person at some point is reflective enough as they go to sleep at night, to think about what effect their actions may be having on the world. And, even conscience laundering sounds harsher than I may even mean it [laughs] in some ways, because these are not necessarily bad people. They're caught up in a system that does some bad things, and as they probably get older, and they start to see the effects, they might start to stretch their minds, and say, 'You know, I think we need to do something about this.'
DB: I've always wanted to ask you this, even before it gelled for us to sit down and talk about this, does the ability to give, to do philanthropy, give you power?
PB: Jen's over there nodding a big yes, and yes it does. I mean ... but that's the frustration to some extent, because there's so many passionate people doing amazing things, and here you are holding the purse-strings.
JB: I mean, I think if somebody has all the power and all the resources, and you want to stay in the good graces of that institution, you're going to take very few risks. You're gonna tell as many good stories as you can, but not necessarily the ones that would really help inform better philanthropy for more people or for an issue. So I think it's a difficult dynamic.
DB: By the way, before we go, this can't be true, did you find out about the billion dollars by a fax?
PB: That is true ...
DB: You had a fax show up?
PB: Yes, exactly which gives you the technical prowess of my dad, first and foremost. But it was also 2006, so we'll give him a little bit of a pass.
DB: And what'd you do, did you call Jennifer?
JB: You called me. I was coming out of the subway in Bryant Park and you said, 'You better come home, we got this fax, and i'll tell you what it is.' But I sort of I think screamed on Madison Ave. and said, 'Oh my goodness, our lives just changed.'
When asked for an example of philanthropy at its most effective, Tom Tierney, author of “Give Smart: Philanthropy that Gets Results,” likes to talk about a (largely-forgotten) metallurgist named John Dorr, who changed the way we drive.
In the early 1950s, highways only had one set of lines, that ran down the middle of the road. At night, or in bad weather, drivers clung to the center line, dangerously close to each other. Dorr’s wife suggested to him that painting lines on the outside of the road, effectively creating driving lanes, might reduce accidents.
Dorr pitched the idea to highway commissioners in New York and Connecticut, and initial tests showed that the lanes did indeed reduce accidents. However, the process of the painting lines was expensive, and state authorities needed to be convinced. Dorr, who was wealthy, used money from his own philanthropic foundation to conduct more tests, and to advocate for adoption of the lines, and, in time he made his case, leading to the near-universal presence of driving lanes.
“There’s a kind of philanthropy we’re all familiar with, and most Americans participate in, and that’s charity,” said Tierney, who is co-founder of the non-profit Bridgespan Group, which helps philanthropists get better results for their money. “There’s another kind of philanthropy, however, that’s not addressing the consequences of problems, but working to solve those problems.”
The notion of philanthropy as a force for solving problems dates back at least a century, as titans of industry John D. Rockefeller and Andrew Carnegie were struggling to define what modern philanthropy should be.
“We found many, many letters in our archives between the two of them,” said Judith Rodin, President of the Rockefeller Foundation, “wrestling with this question: is what we are trying to accomplish something different than charity? And Rockefeller wrote ‘We don’t want to put bandages on weeping wounds. Philanthropy is about trying to solve problems at their root causes.’”
One of the biggest challenges currently facing society, that of mass urbanization, would likely have been unimaginable in John D. Rockefeller’s time. The negative knock-on effects of human beings migrating to urban areas are almost too numerous to count. If a city is struck by an earthquake, a violent storm, flooding or a fire, millions of people, rather than thousands, are affected. Overcrowding has strained public health systems to the brink and worsened age-old sectarian rivalries. In response, the Rockefeller Foundation has begun an initiative called 100 Resilient Cities, aimed at helping city officials respond more quickly to shocks and stresses.
As part of the initiative, 100 cities spanning the globe were chosen from a pool of around 400 applicants. The first 33 cities were announced earlier this month. Each of the chosen cities will receive what 100 Resilient Cities Managing Director Michael Berkowitz refers to as a “platform of resources and services.” The initiative will work with each city to create a brand new job: Chief Resilience Officer.
“Chief Resilience Officer is a senior person in city government,” said Berkowitz. “You can think of him as mayor minus one, with the breadth and scope to coordinate across sectors and connect the dots of different efforts. What we’re going to do is help the cities hire them. And we’re going to pay their salaries for two years.”
Berkowitz can envision a world where a Chief Resilience Officer becomes an integral part of city government, rather than an idea which is currently chiefly experimental.
“In twenty years, we would hope that a city wouldn’t run its operations without a Chief Resilience Officer any more than they would without a chief of police,” Berkowitz said.
For any large urban area, working with a timeline of twenty years is a challenge. Many cities change their mayoral administrations every few years. Here, too, philanthropy has an advantage. Foundations, unlike mayors, cannot be voted out of office, theoretically freeing Berkowitz and his colleagues to check up on their progress even two decades from now.
“[Foundations] are set up purposely to exist in perpetuity,” said Rob Reich, co-director of Stanford’s Center on Philanthropy and Civil Society. “So they have an eternal time horizon. They have endowments which are meant to exist for a long time, so you can think over the ten year haul or the twenty year haul.”
Some of the first American philanthropic initiatives are still in existence, including the 1,700 public libraries built by Andrew Carnegie all across the country. Reich says a few years ago, when California was having trouble funding its public libraries, there was a suggestion that perhaps foundations or philanthropists should step in. He views that as a step backward.
"Successful operation of a foundation, in the model I have in mind, is where foundations stimulate the creation of some new social policy," said Reich. "So the idea that when California zeroed out the budget for public libraries, it should go back to private funding, is a step backward, not a step forward."
Yoga apparel giant LuluLemon Athletica appears to making some big life changes and getting in shape. The company announced it has appointed a new CEO, Laurent Potdevin, former CEO of TOMS Shoes. He will replace CEO Christine Day. What's more, Dennis “Chip” Wilson, the chairman and founder, is stepping down.
LuluLemon has taken heat recently for a high profile recall of transparent pants (not to mention Wilson’s remarks that some women’s bodies aren’t made for said pants). That would be an issue for any brand, but for LuluLemon, its brand and its culture are indistinguishable.
"The company is about a culture, a mindset. And I think their brilliance was being able to tap into that mindset and nurture it for so long," says Candace Corlett, President of WSL Strategic Retail.
That mindset of health, wellness….and other things.
"Brian Tracey CDs were huge. 'Good to Great was on the book club list," recalls writer and journalist Elizabeth Licorish, who worked at LuluLemon in 2011, while attending grad school. She says she was surprised at some of the material the company encouraged her to read.
"It culminated in Atlas Shrugged, which nobody had read," she says. "Nobody had read Ayn Rand, but you would mention her and their eyes would kind of glaze over, like Ayn Rand and objectivism and we believe!"
Licorish says employees were also encouraged to join Landmark, a well-known series of self-help seminars and that there was a lot of pressure put on eating right and taking the company’s free fitness classes. "That know that sounds great," says Licorish, "but that kind of translates into pressure to go to cross-fit at 5:30 in the morning before you work all day."
Licorish says customers felt the pressure, too. She says the store didn’t treat plus sized customers very well. I called LuluLemon to ask about this… they didn’t respond in time for broadcast.
"At times these corporate cultures can run amok and I think a little of that happened at LuluLemon," says John Horan, founder of Sporting Goods Intelligence. Horan says LuluLemon’s a strong corporate culture inspires employees, but when a culture starts to get exclusionary, it’s bad for business. Still he says, while the company's brand image clearly needs some remodeling, there's a lot of good there.
"They have terrific people in the stores, people who really are committed to the brand and to the products. That’s the upside to their culture," he says.
Horan says the new CEO needs to be careful not to throw the baby out with the transparent yoga pants.