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Inversion – ain’t nothing but a tax dodge, baby

Tue, 2014-07-08 01:00

When a big American company tries to buy a small company overseas, it’s always worth asking the question: "Why?" Sometimes, it’s because the acquisition gives the big company access to a new and growing market. Sometimes, it’s because the small company has some cool technology the big company wants. And sometimes … it’s a big fat tax dodge.

Take AbbVie, a U.S. pharmaceutical company that wants to buy an Irish drugmaker called Shire. Shire won’t give AbbVie access to an exciting new market, or bring it any sexy new technology. What it will provide – if the merger happens – is headquarters in a country with much lower tax rates than the U.S.

This is called a corporate inversion. Companies that do this behave a bit like the homeowner who sells her beautiful, perfect house in one city and uses the cash to buy a hovel in a town with a great school. The house may be outrageously expensive, and it may be falling down, but the buyer doesn’t care about any of that – she only cares about being able to send her kid to the local school. She can work out the other stuff later.

The same goes for Abbvie: it doesn’t care much about Shire, it cares about paying less in taxes. The same goes for another U.S. pharma company, Pfizer, that tried to buy British drugmaker AstraZeneca earlier this year, as well as a company called Destination Maternity, which tried to buy British maternity retailer Mothercare recently.

The list of companies that have inverted is a long one. It includes Applied Materials, which acquired a Japanese company and reincorporated in the Netherlands; Chiquita Brands, which bought Irish company Fyffes and shifted to Dublin; Power Management company Eaton Corp. did likewise after it bought Cooper Industries; pharma company Perrigo bought Irish company Elan and moved; and publisher Omnicom shifted to the Netherlands after it bought French rival Publicis Group.

Moving overseas to save tax money isn’t a new phenomenon, and companies are careful to obey the law. But, the law has made things more difficult. Companies used to be able to just open an office in Bermuda and move, but they’re not allowed to do that anymore. Hence the inversion activity that we’ve seen recently – at least 20 in the last two years, according to sources cited by the New York Times.

Now, you may think that it’s fair enough for companies to do this: It’s entirely legal, and the 35 percent tax rate that corporations pay is a lot higher than in other countries. So why shouldn’t these companies move and save? They do it within the U.S., after all, moving from state to state to get tax benefits. Some Congressional representatives might agree with you. Others, like Republican Senator Charles Grassley, says inversion may not be illegal, but it’s “immoral.” I guess he doesn’t like seeing all those dollars leaking away overseas.  

It looks as though the Obama Administration feels the same way. The New York Times reported recently that “the House Ways and Means Committee and the Senate Finance Committee are working on draft legislation for comprehensive tax reform that is expected to include new rules intended to curtail inversions while also trying to make the United States a more competitive place for multinationals to call home.”

Tyler Perry just trademarked "WWJD?"

Mon, 2014-07-07 14:17

From the pages of The Hollywood Reporter: Tyler Perry has moved one step closer to owning the trademark on the phrase "What Would Jesus Do?" 

For whatever it's worth, he can only use it for entertainment purposes - a movie, live show or TV show - not wrist bands or tattoos or the like.

And, no, your T-shirt won't have to say "Tyler Perry presents," because there's a separate "WWJD?" trademark for clothing. 

ADM wants a taste of the flavor business

Mon, 2014-07-07 13:10

Food processor Archer Daniels Midland (ADM) is getting its first taste of the flavor market. ADM says it will buy a company called Wild Flavors for almost $3 billion. Wild Flavors specializes in natural flavors for beverages and food, and natural means big business these days.

To start, we should say that flavor people are a very tight lipped crowd.

“You got that right,” laughs John Leffingwell, president of Leffingwell & Associates, which consults for the flavor and fragrance industry.

He says the flavor industry is competitive. Flavorists keep their discoveries secret as long as they can. But one trend is clear.

“When I started in the industry about 30 years ago,” he says, “about 70 percent of the flavors were artificial flavors. Today it’s close to 80 percent or maybe even more that are all natural flavors.”

That’s an estimate. But foods labeled ‘natural’ did rack up more than $40 billion in U.S. retail sales last year, according to Nielsen.

The problem is healthier foods aren’t always appealing to consumers.

“People would love to have lower sodium or lower sugar in the diet, but when companies reformulate with these changes, a lot of time consumers don’t buy them,” says Devin Peterson, a University of Minnesota professor who works with the Flavor Research and Education Center.

He’s researched solutions like getting salt to release more efficiently in the mouth, so a lower sodium chip tastes just as salty.

Flavor companies are also tackling the low sodium taste conundrum.

“What flavor companies do, they help food companies to reduce the salt content but save the flavor of the crisp,” says Evgenia Molotova, a chemicals analyst at Berenberg.

She says that’s one reason why the flavor business is appealing right now.

“Sales of flavors are growing much faster than the sales of food products,” she says.

Wild Flavors specializes in natural flavors for beverages. That helps ADM diversify its commodities business.

Why Americans spend less of their budgets on food

Mon, 2014-07-07 13:10

Food prices are rising, and the reasons run the gamut. 

A disease known as porcine epidemic diarrhea virus has killed millions of piglets and young hogs, driving up the price of pork and bacon. A drought in Texas and Oklahoma cattle country has caused a spike in the price of beef. Coffee rust in Central America could raise the price of a cup of high-end joe, and a disease called citrus greening is wiping out orange and grapefruit trees in Florida. And yet, consumers in the U.S. spend a smaller percentage of their disposable income on food than citizens of any other country in the world. 

It's not simply that food in the U.S. is cheaper. "Americans on average have a higher income level and when you're talking total income and the amount spent on food, it's just a lower percentage," said Anne Marie Kuhns, an economist with the Department of Agriculture's Economic Research Service. People who live in developing nations have incomes that are far lower than those of a typical American. Food is bound to eat up a larger percentage of a typical family's budget.

Graphic by Shea Huffman/Marketplace

Americans, though, also spend less on food than people in higher-income European countries like France, Sweden and Germany.

A number of factors are in play,  including the amount of farmland in the U.S., estimated, says Dan Basse, president of the consulting firm, AgResource Company, at "around 350 million acres," and different quality standards. Genetically modified plants are restricted in Europe, but, are considered technological advances that help increase the productivity of farmland in the U.S.

Graphic by Shea Huffman/Marketplace

And while food is susceptible to price hikes, Americans eat a very varied diet, and if one product becomes expensive, there are others that can be swapped in to take its place. Think substituting chicken for beef when meat prices are high. 

Finally, some researchers say European consumers simply have different standards of quality. 

"Consumers take their food a lot more seriously in Europe than we do here," said Timothy Richards, the Morrison Chair of Agribusiness at Arizona State's W.P. Carey School of Business. "They're more likely to buy higher-end things. Here, Walmart is the dominant food supplier because it's cheap." 

Failing deals: a trend, or temporary?

Mon, 2014-07-07 13:09

You or I might borrow money from a bank, put up our house as collateral, and pay interest on the cash. Financial institutions do this too amongst themselves; they borrow cash and put up bonds as collateral. Or they’ll lend cash in order to get collateral. This is called the repo market. Banks use this to cover pulls and pushes on the financial system. Traders use it to make short sales.

But some odd things have been happening in this market over the past few weeks and even years.

For starters, negative interest rates. “It’s like if the bank lends you money, they would paying you interest to be able to lend you cash,” says Peter Anderson repo trader with Potomac River Capital.

For example, just this morning, lenders were willing to loan cash for -0.1 to -0.15 percent interest -- meaning they would pay -0.1 to -0.15 percent interest in order to lend that money if it meant they would get their hands on the newest five year treasury notes as collateral.

Why? Because they really, really need collateral. Collateral to make other deals, collateral to cover short sales.

There isn’t enough to go around, and this means that deals are failing. Fails happen all the time, but their volume has been increasing.

In 2012, the average volume of failed deals per week was around $30 billion. In 2014, it’s about $67 billion.

Some fails can be particularly bad. For example, when one entity fails to find the collateral it needs to complete a deal with another party, who needs that collateral to complete a deal with another party, and so on. “It creates a daisy chain of fails, a chain reaction of fails,” says Anderson.

This is what happened at the start of the financial crisis. Fails now are nowhere near that level, but they still present a source of unease.

“The fact that we are seeing repeated episodes where security doesn’t clear up for days at a time is a sign of a market that’s not functioning very well,” says Louis Crandal, chief economist at Wrightson ICAP.

Among the reasons for the tighter repo market is a new set of rules on bank capitalization that make banks less willing to tighten their grip on bonds being sought for use as collateral.

“Banks have been required to hold more capital against trades that prior to the crisis were seen as being relatively low risk, and which are low risk in good times.” However in a crisis, trades can create systemic problems like the daisy chain effect that took out Bear Sterns and Lehman Brothers. Regulators have insisted more capital be held against such trades, and so fewer trades are made.

“Thats not an unintended consequence,” says Crandal. “One of the points of Dodd-Frank and all the other changes in regulatory structures globally was to increase the cost of financial intermediation,” the fear being that razor thin margins amplified financial risk.

But regulators didn’t intend to increase the number of failed deals per se. In 2009, they developed a new rule to incentivize institutions looking for collateral to keep looking. Simply put: it’s a fee for failure. A financial institution looking for collateral to finalize a deal somewhere else now has to pay a 3 percent fee if it fails to find it.

This penalty should keep a lid on fails, says Joseph Abate, short rate strategist for Barclays. “I think this is transitory and will resolve itself within a week or so,” he says, speaking of the recent spike in fails. Periodically as economy improves and people begin to foresee interest rate rises, “the demand to borrow securities is picking up,” as people seek to short securities. In the process, they are applying demand side pressure on those securities in the repo market.

As treasury bonds are auctioned in tranches over a quarter, there are choke points at the beginning of an auction period where there are fewer bonds, and towards the end of the quarter, financial institutions will have used up

Crandal, at Wrightson ICAP, says the increasing fails rate is unlikely to blow up, but “it’s a case of existing market structures not really making sense in a new capital framework, and we haven’t developed new avenues for sourcing those bonds.”

If the issues persist, either the financial system on its own or regulators down the road will have to figure out a new way of doing business -- such as a central clearing house for all repo trades, or a new type of financial entity tasked with handling that process.

Meet the man who invented the pool noodle

Mon, 2014-07-07 12:58

Steve Hartman is the CEO and president of Industrial Thermal Polymers, but he's got another claim to fam: He's the guy who first decided that colorful foam tubes make a pretty fun pool toy.

Hartman invented the pool noodle three decades ago when he first went into business with his dad in Toronto, Canada.  

"We're going to make backer rod," his dad said. Steve's follow-up question: What's a backer rod?

Steve's dad told him backer rods are used in anything with expansion joints - high-rises, roads, ramps, runways - you peel away the caulk or tar and there's a foam rod in there to seal it. The Hartmans would make those foam rods.

"We always had these foam rods (lying around)," Hartman says. "They were gray and 9-footers and it seemed like every time we jumped in the pool, we were playing with these things."

So Hartman mixed up a batch with color and tried to sell them to a few of the local pool supply stores. There was just one problem: What do you do with these things?

"We said, 'Well, you float around with them, you hit your brother with them.' It was a tough sell," Hartman says. 

For over a year Hartman peddled his noodles, but no one was biting. Since he made no sales, he figured why patent the thing?

But then a funny thing happened. Canadian Tire, a company that sells all kinds of stuff, bought a batch of the noodles and priced them low enough to draw folks in. 

"People would walk by them and see these bright colored foam rods and they weren't sure what to do with them.But the price was right, so they would grab a couple and try them out," Hartman says.

The noodle took off slowly for awhile. But these days it's a staple of pools, docks and beaches everywhere. Hartman says his company sells between 6 and 8 million of them a year. Even though he can't ward off imitators, Hartman estimates that Industrial Thermal Polymers produces around half of North America's noodle supply.

And best of all? He no longer needs to tell people what to do with them. There are plenty of other places to find that information.

Meet the man who invented the pool noodle

Mon, 2014-07-07 12:58

Steve Hartman is the CEO and president of Industrial Thermal Polymers, but he's got another claim to fam: He's the guy who first decided that colorful foam tubes make a pretty fun pool toy.

Hartman invented the pool noodle three decades ago when he first went into business with his dad in Toronto, Canada.  

"We're going to make backer rod," his dad said. Steve's follow-up question: What's a backer rod?

Steve's dad told him backer rods are used in anything with expansion joints - high-rises, roads, ramps, runways - you peel away the caulk or tar and there's a foam rod in there to seal it. The Hartmans would make those foam rods.

"We always had these foam rods (lying around)," Hartman says. "They were gray and 9-footers and it seemed like every time we jumped in the pool, we were playing with these things."

So Hartman mixed up a batch with color and tried to sell them to a few of the local pool supply stores. There was just one problem: What do you do with these things?

"We said, 'Well, you float around with them, you hit your brother with them.' It was a tough sell," Hartman says. 

For over a year Hartman peddled his noodles, but no one was biting. Since he made no sales, he figured why patent the thing?

But then a funny thing happened. Canadian Tire, a company that sells all kinds of stuff, bought a batch of the noodles and priced them low enough to draw folks in. 

"People would walk by them and see these bright colored foam rods and they weren't sure what to do with them.But the price was right, so they would grab a couple and try them out," Hartman says.

The noodle took off slowly for awhile. But these days it's a staple of pools, docks and beaches everywhere. Hartman says his company sells between 6 and 8 million of them a year. Even though he can't ward off imitators, Hartman estimates that Industrial Thermal Polymers produces around half of North America's noodle supply.

And best of all? He no longer needs to tell people what to do with them. There are plenty of other places to find that information.

MayDay PAC: The end of the Super PAC era?

Mon, 2014-07-07 12:17

Money plays a crucial role during the political campaign season. The amount of money backing your campaign could mean a win or loss in a seat in Congress. And when Super PACs were deemed legal by the Supreme Court in 2010, the game changed.

Before Super PACs were "super", a PAC was limited to spending no more than $2,500, with corporations and unions strictly forbidden from making donations. Now corporations and unions are allowed to make donations and the limit to spending? Well there is none.

Fair or not, this is one issue that is set in stone... or at least was. Lawrence Lessig, a Harvard Law professor, wants to take down these Super PACs... by creating one of his own. This past weekend, the MayDay PAC reached its fund raising goal of $5 million. Lessig plans to start the anti-Super PAC campaign for this year's House of Representative election.

"We want to win five seats so we can convince the people of Washington that this issue really matters to voters so that we can build the campaign we have to have for 2016 that will win a Congress that is committed to changing the way that elections are funded."

This goal isn't an easy feat. The elections take place in a few months and the majority of people who donated are from areas that have a Democratic seat in the House, according to a map from the MayDay website. But Lessig says this issue is as important to people on the right as well as the left.

"You know, when Dave Brat beat Eric Cantor, the number two issue he talked about was that Eric Cantor had become a Crony Capitalist. So our view is this is cross partisan and we can talk about this in a way that gets people on the right and people on the left to recognize that though they don't have a common end, they have a common enemy. And the common enemy is the way we fund campaigns today."

Now that Lessig has done his part to raise money for the MayDay PAC, he'll hand it over to the campaign shops "that are experts at winning campaigns" and wait until November to see if it was all worth it. 

Your Wallet: What would you tell your 18-year-old self about money?

Mon, 2014-07-07 12:06

We're asking listeners about what they could tell their 18-year-old selves about money if they had the opportunity to:

 

New question for next week's @MarketplaceWknd: what would you tell your 18-year-old self about money?

— Lizzie O'Leary (@lizzieohreally) July 3, 2014

 

Here's a few of your responses:

@lizzieohreally @MarketplaceWknd Don't sell that Apple stock you bought for $36.

— Andy Lancaster (@andylancaster) July 3, 2014

 

@lizzieohreally @MarketplaceWknd loans are not evil. That 2nd job will burn u out. Drink at home. Stop wearing nautical-themed polos.

— Trevtor (@Trevtor) July 3, 2014

 

@lizzieohreally @MarketplaceWknd consider a life of crime

— Ryan Grim (@ryangrim) July 4, 2014

So what would you tell yourself if you had the chance? Let us know in the comments!

Your job in 5 words

Mon, 2014-07-07 11:07

We asked President Barack Obama to describe his job in five words or less. He couldn't do it. But our listeners could. Here's what you do, in (give or take) five words: [<a href="//storify.com/Marketplace/your-job-in-five-words" target="_blank">View the story "Your job in five words" on Storify</a>]   And hey? .sxsw-box { position:relative; text-align: left; height:auto; min-height: 250px; border-style: solid; border-width: 1px; border-color:#777777; background-color: #ffffff; color: #000000; padding: 25px; font-size: 1em; font-style: heavy; font-family: arial; } .sxsw-button { width: 31%; margin:0 1% .5em; display:inline-block; height: 50px; border:none; color: #ffffff; background-color: #00c7e1; font-size: 1.5em; font-family: arial; font-weight: 500; cursor: pointer; } .sxsw-button:hover { background-color: #19bcd1; } #sxsw-panel { font-size: 2em; font-weight: 900; line-height:1.2; color: #333; margin: auto; font-family:Georgia, serif; padding:1em 1em 0; display:block; text-align:center; } #sxsw-social { display: none; text-decoration: none; margin-top: 25px; line-height: 25px; } #sxsw-twitter-anchor { text-decoration: none; color: #666666; font-size: .85em; font-weight: 200; } #sxsw-twitter-anchor:hover { color: #222222 } #sxsw-twitter-icon { padding-right: 6px; vertical-align: middle; } .sxsw-logo { position:absolute; width:140px; right:4%; bottom:10px; } #happy {background-color:#5FCBF3;margin-left:0;width:100%} #happy:hover {background-color:#4089A4;} #part-one, a#first-handle {color:#34B24F;} #part-two, a#second-handle {color:#BED440;} #quote-link-1, #quote-link-2 {text-decoration:none;} #reveal {display:none;} @media screen and (max-width:586px) { #sxsw-panel { font-size:1.5em; } .sxsw-box {padding:25px 10px;} .sxsw-button {width:30%;} } var NUMBER_OF_SENTENCES; var SECOND_NUMBER_OF_SENTENCES; var my_job_1 = ["I build", "I'm amazed", "To help", "Create fun", "Training dancers", "Make it", "Build infrastructure", "Create music", "I educate", "I draw", "Megaphone", "Make the best", "I make", "Get wasted", "I do", "Dubious medicine", "Sit", "Organizing and supporting", "I teach people", "I count", "Whine, assign blame", "Delivering pizzas", "Draw pipes", "Teach tweens", "I save", "I nurture", "I teach", "Cut, retract", "Keep airplanes", "I have", "Helps people", "Write emails", "Play on", "Struggle to", "Ensure safe", "Help pastors", "Ensure opportunities", "Keep kids", "Help hotel"]; var handle_1 = ["@adviserdavid", "@adviserdavid", "@gringocameraman", "@winkiewinx", "@matthewdonnell", "@BandHouser", "@the_tlover", "@ZachMarshMusic", "@Cavalier1313", "@annaraffNYC", "@goodpointco", "@bigspooners", "@seemomster", "@GroovyyDhruvy", "@bbaumgartner", "@RotatingBacon", "@KBIAThinking", "@meg_kaye", "@circusharmony", "@Clarkiclarki", "@schwingcat", "@CrbnBsdBpd", "@Hailtheyounger", "Cynthia Almy Savage", "Alice Rupp Bennett", "Karen Locke", "Kerstin Thompson", "Don Daubman", "John Strickler", "Ariel Abuel", "Eric Warner", "Lorene Lynn", "Sean Guilly", "Russ Fortson", "Ann Catherine Keirns", "Gregory R. 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#JobIn5Words

Putting online testing to the test

Mon, 2014-07-07 08:38

Forget paper and pencils, and filling in all those little dots.  

Kids are increasingly being asked to take standardized tests on computers .

And those who aren’t, soon will be.

There’s a big push to  get kids online at school, so they will be ready when testing begins on the Common Core standards, which will be implemented in many states over the coming months.

Not all schools are prepared. In some districts, there is a computer for every child - and the bandwidth needed for the tests. 

Other places aren’t close.

A recent survey of K-12 educators, found that 60 percent don’t feel well prepared to administer online tests.

When things are in order, however, kids will probably be fine.

There’s a general sense among educators that kids are way more comfortable online than most of us grownups will ever be… so they have that going for them.

There is one small thing to be concerned about: making sure kids can use a keyboard.  Keyboarding classes are becoming routine in elementary schools.

Schools that don’t get up to speed in time to offer tests online, will still be able to use papers and pencils for the next few years.  

For more about online testing, listen to my conversation with Ben  Johnson, host of Marketplace Tech, by clicking on the audio above. 

Charge your phone, or you can't fly with it

Mon, 2014-07-07 07:50

If you’re traveling abroad soon, make sure to have your electronic devices charged up on the way back to America. If you don’t, your smartphone, tablet, or laptop may not be able to come back with you.

The Transportation Security Administration is announcing new security measures at certain overseas airports with flights to the U.S.

Security screeners will ask flyers to turn their devices on. Those that don’t power up will not be allowed on the plane.

The move is meant to foil plots to use smartphones and tablets to disguise bombs, amid concerns Al Qaeda terrorists are planning to attack airlines. But the new screening procedures are bound to frustrate innocent travelers. They’ll be forced to abandon their cherished electronic devices if they’re unfortunate enough to have dead batteries.

Just like taking off our shoes and limiting the liquids we carry on, we’ve got yet another new security habit to form. The best way to make sure you don’t lose your devices abroad is to have all your chargers packed in carry-on luggage, including any adapters needed for foreign power outlets.

Still, one person’s security hassle is another’s business opportunity. The limiting of carry-on liquids created an expanded market for beverage sellers inside the security checkpoints. This new move may provide similar opportunity for clever entrepreneurs. Soon, before flyers can pass through airport security to buy overpriced bottles of water, they’ll likely see merchants with an array of overpriced chargers and adapters just outside the security gates.

PODCAST: Walmart and women

Mon, 2014-07-07 03:00

With Congress back from recess, one piece of legislation that needs to be hammered out soon involves funding for transportation. With a dwindling Highway Trust Fund, delays to construction projects could be seen as soon as August. Plus, Walmart will be using a new logo to denote products from women-owned companies. But will special labels combat or perpetuate stereotypes? Also, New York's Museum of Modern Art just released Bjork's Biophilia app for $13. It's part of a larger initiative by the museum, treating technology as art.

Congress could hit dead end with highway funding

Mon, 2014-07-07 03:00

Congress is back after the July 4th recess with at least one major piece of legislation that really needs to get worked out: funding for transportation.

The Highway Trust Fund is financed by an 18.4 cent-per-gallon gas tax, which hasn’t increased in 20 years. And that’s just part of the reason there may not enough money.

“Sometime in August, perhaps late July, you’ll see the trust fund running low on fumes to the point where the Federal Highway Administration will have to slow down payments to states,” says Joshua Schank, president and CEO of the Eno Center for Transportation, a nonprofit based in Washington DC. “The immediate effect would be a slowing down or termination of construction projects around the country.”

That means a possible dip in jobs -- According to the Obama administration, as many as 700,000 jobs in all.

But there’s also a long term reason to be concerned.

“The road network suffers dramatically, the transit systems can’t expand, and all of this really has an economic downside to it," says Jack Basso, a former Assistant Secretary for Budget and Programs and CFO at the US Department of Transportation.

Basso says poor infrastructure slows the movement of people and goods. Plus, he says those bridges and roads become even more expensive to fix later on.

 

Walmart to highlight women-owned businesses

Mon, 2014-07-07 03:00

Shoppers at Walmart this Fall might notice something new on some of the products on store shelves: a little logo that says it was made by a women-owned company. It will first appear on Maggie’s Salsa, Anise Cosmetics, the Smart & Sexy brand of underwear, and the household cleaner called CLR. 

“Women in general, if there’s a product that they can tell is a women-owned product, they’ll actually buy that product over the next product,” says Pamela Prince-Eason, president and CEO of the Women’s Business Enterprise National Council, one of the organizations working with Walmart on the logo.

Those organizations will be watching closely to see if the logo affects sales in either direction. Women buy more cosmetics, but CLR skews male. It’s an open question whether the logo will help combat gender stereotypes, or perpetuate them. 

In general, though, consumers think highly of women-owned businesses. 

“There might be a sense of trust, and confidence in the fair dealings in the organization,” says Laura Kray, Professor of leadership at UC Berkeley’s Haas School of Business. 

And, even if consumers have no opinion, just seeing the logo could get consumers to want to learn more about gender issues in business. 

“It brings that issue to the forefront and actually makes people look into it and say what is this and why is it important?” says Marlene Morris Towns, Teaching Professor of Marketing at Georgetown University’s McDonough School of Business. 

Backers of the symbol are talking with Macy’s and Office Depot about expanding its use to those stores.

 

When is an app art?

Mon, 2014-07-07 02:00

The Museum of Modern Art in New York added the first downloadable app to its collection this month: Björk’s Biophilia, which the singer released in 2011 along with an album of the same name.  

The app opens to a swirling constellation with a brightly colored star for each song from the album. In a recent demo, Paul Galloway, who manages MoMA’s Architecture and Design collection, selects a song called “Virus,” the screen of his iPad filling with gently jostling pink cells

“It’s like looking in a microscope down at cells,” he says, noting that Björk is using the virus as a metaphor for love.

 As the song progresses, small green virus cells come into view and start to attack the existing pink cells.

“Like a virus needs a body, soft tissue, as soft tissue feeds on blood,” Björk sings. “Someday I'll find you, the urge is here.”

If Galloway flicks the green virus cells off screen, the vocals stop.

The whole display is oddly beautiful and mesmerizing. Each song has its own unique design and way for users to interact with it.

“You now becomce a part of the team that’s creating Björk’s music,” says Galloway. “That’s a really powerful thing to enable your users to do.”

Beauty and interactivity – these are two elements of Biophilia that make the app art, says Galloway.

“[What] we also look for is this something that’s moving the field forward,” he adds. “Is it a masterpiece? Because we aspire to be a museum that’s chock full of masterpieces.”

Galloway thinks this is Björk’s equivalent of Van Gogh’s Starry Night.

While it’s the museum’s first downloadable app, it follows other digital acquisitions in typography and video games like Tetris.

It’s the latest example that museums are taking digital art seriously, says Heather Corcoran, the executive director of Rhizome, an art and technology organization. She says it’s natural for artists to work with technology as a medium given its current impact on culture. But even still, she notes this app is part of MoMA’s design department.

“I think that design within museums has a lot more freedom to push boundaries,” she says. “It’s not quite as attached to this really established canon of art history, so a lot of the most adventurous collecting is happening within the design departments.”

Corcoran says digital art can also present new preservation challenges for museums, as technology becomes obsolete very quickly -- much faster than a painting would need restoration.

It’s something MoMA is very aware of.

“This iPad is going to look hilariously dated in five years,” says Galloway. “That’s really soon, so how do we make sure this thing lives and continues to impact people? It’s a headache.”

Allan Sloan is angry about the flight of corporations

Mon, 2014-07-07 02:00

When Bank of America merged with NationsBank and moved out of its headquarters in San Francisco after 94 years to decamp to North Carolina, people said that's just business. When Boeing announced it was moving its headquarters halfway across the country after 85 years as a mainstay of the Seattle economy, people said that's just business, too.

So, isn't it just business when companies move their headquarters to places like Bermuda or Ireland for the purpose of saving on taxes out of the U.S. completely? Executives of the cruise ship company Carnival work out of Miami, but the company's tax home is Panama. The GPS navigation company Garmin has letterhead that reads Kansas, but its tax home is Switzerland. The medical devices company Medtronic is based in St. Paul, but after its planned merger with Covidien, its tax home could also move to a foreign land.

The insider lingo for this tax maneuver is "inversion," and inversions are perfectly legal. Let me say that again: they break no law. But, longtime Marketplace contributor Allan Sloan is angry and thinks companies should stop with the inversions, and stop now.

It may matter that Mr. Sloan is angry. He is senior editor-at-large for Fortune Magazine and a veteran business writer who knows now to kick up a ruckus when he wants to. His Newsweek cover story in 1996 about mass layoffs in corporate America is the stuff of legend. Its headline, "Corporate Killers," drew the ire of many a corporate chief and went on to become a topic of national conversation.

Sloan has written the cover story for the latest Fortune. The article is about these inversions but its headline is in plain English. Sloan's article carries the title: "Positively Un-American." Sloan argues American taxpayers get stuck paying what the companies who shift their tax home to other countries save. By one estimate, we are talking more than $19 billion over 10 years.

Again, Sloan acknowledges that inversions are legal. Companies say they adopt this strategy to increase shareholder value. Sloan rejects that argument, saying long-term shareholder value will come from investing in the USA, not from leaving it. Then, in case anyone has missed that he is angry about this, Sloan calls the companies who switched tax homes "deserters."

Yes, fighting words, I know.

What bugs Sloan most is seeing companies that benefit in so many ways from being in America seeming to abandon it. Sloan told me he is the grandson of immigrants and comes from a family that would have been destroyed if the United States hadn't welcomed them. He thinks it is just plain wrong for companies to switch their tax home just to make more money.

"They don't even leave," Sloan told me. "They just go off and stick you and me with the tab, and that makes me pretty angry." Did I mention he's angry?

Some elected officials are talking about legislation to make switching tax homes less attractive to companies. Many corporations oppose this, arguing a better strategy would be for the U.S. to lower corporate taxes. Sloan is not opposed to comprehensive tax reform, he just doesn't see it happening any time soon. What is happening soon is that more and more U.S. companies are running the numbers on this "inversion" thing and switching to foreign addresses.

Speaking of which, there is a pharmacy on almost every American street corner by the name of Walgreen's. It is a brand so American that you can see a Walgreen's in the background of that famous photo of the sailor kissing a lady on VE day in Times Square. The Walgreen company is now thinking of moving its tax residence out of the United States, with a decision possible any day now.

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