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PODCAST: The inflation-interest paradox

Thu, 2014-05-15 07:55

Today we're trying to resolve a paradox. Inflation is on the rise in America, yet interest rates are getting lower still. On the one hand, there's word this morning the Consumer Price Index went up three tenths percent in April, the most in 10 months.  Yet, look at benchmark interest rates. To look at this we turn to Diane Swonk, chief economist at Mesirow Financial in Chicago.

And, we been covering an ongoing swarm of protests by fast food workers looking for higher pay in the U.S. Now the protests are going global, involving fast food workers across more than 30 countries, from Argentina to New Zealand. Marketplace's Krissy Clark has some international comparisons.

Meanwhile, in Jersey City and other towns along the New Jersey side of the Hudson River, small-scale entrepreneurs are taking aim at that urban ritual of waiting for the darned bus.  Private operators of mini-buses now ply the streets. Amid questions about safety and traffic, there are new regulations on the way. Marketplace's Dan Weissmann takes us to the "Wild West" of the Hudson.

 

Statuettes and medals

Thu, 2014-05-15 07:20

From the Marketplace Datebook, here's a look at what's coming up Friday, May 16:

In Washington, the Commerce Department reports on construction of new homes for April.

Viewers tune in to "The View" for Barbara Walters' final regular appearance.

Skip the gas pump. Fuel up on Wheaties instead. It's Bike to Work Day.

Gymnast Olga Korbut celebrates her 59th birthday. She wowed crowds with her gold medal winning moves in Munich at the 1972 Olympics.

And the first Academy Awards ceremony was held in 1929. "Wings" took top honors for best picture, the only silent film to do so.

The cost of fast food meals calculated in worker wages

Thu, 2014-05-15 04:50

The push to raise fast food worker pay in the U.S. has just gone global. As day broke on May 15 around the world this morning, fast food restaurants from the Filipino capital of Manila, to mid-town Manhattan have seen flash mobs and protest signs. Workers at McDonalds, Burger Kings, Wendy’s and KFC’s across more than 30 countries are planning actions today.

How does fast-food work in the U.S. compare to other countries? First, you need to understand how important international markets have become for the fast food industry, which has by now just about saturated the U.S. market.

Take, for example, McDonalds. Today more than 70 percent of its sales come from overseas. One of the people who rings up all those burgers and fries is Taylor McLoon, 18, a McDonald’s cashier in Auckland, New Zealand. In New Zealand minimum wage is much higher than in the U.S., and McDonald's workers are unionized.

After three years working at the company, McLoon says she now makes $14.80 an hour in New Zealand Dollars—that’s about $12.80 in U.S. Dollars. When she recently visited Philadelphia, and told some McDonald's workers there how much she earns, they were “shocked, surprised, excited,” she recalls. “A lot of the expressions were ‘Holy—‘ Something-I’m-Not-Gonna-Say.”

But in other parts of the world, the $8 an hour or so wage that many U.S. fast food workers get seems pretty good, according to restaurant analyst Peter Saleh with Telsey Advisory Group. He came up with an interesting calculation to compare wages for KFC workers in China and the U.S.: how many hours did they need to work to afford a typical meal at the restaurant that employs them.

In the U.S., it takes about an hour’s worth of wages, Saleh says. “In China, you probably have to work three or four hours to be able to afford one of those meals.”

Navy sailors get an e-reader called 'NeRD'

Thu, 2014-05-15 02:12

The latest e-reader to hit the market has no internet connection. There are no apps. You can’t download any book you want. There’s definitely no camera. 

Just about all you can do on it is read any of its 300 preloaded books.

This is an e-reader for a very niche market: bored sailors on Navy submarines. 

“It’s a little funny to be rolling out a new tech product that’s a couple generations behind,” jokes Nilya Carrato, program assistant with the Navy General Library Program.

Subs are cramped quarters. Most have a small library on board with 25 paperbacks. So, the Navy wanted a device that could hold far more, take up less space, but not pose a threat to security. That’s why it has no wireless connection or camera.  

The priorities in its development were “Ensuring security, durability, and really access to all of the titles that they want,” says Ralph Lazaro, vice president of digital products at Findaway World, the Ohio company building the device. 

And, like any new tech product, it needed a catchy name. The Navy first tried NR, for Navy Reader. Then, they thought Navy eReader, or “Ner” for short. Eventually, Carrato says, it clicked, and they came up with NeRD, for "Navy eReader Device".

“‘Nerd’ definitely doesn’t have the stigma it used to,” Carrato says.  

For now, the Navy has ordered 385 NeRDs. They cost $3,000 a piece, but most of that pays for the book titles. The Navy says the devices’ costs are minimal.  

The NeRDs have a mix of fiction and nonfiction, from best sellers to Pulizer winners. The Adventures of Cavalier and Clay is on board. 

Submarine sailors are allowed to bring along smartphones and Kindles, but there are restrictions on where devices with cameras can be used on board, and they must have their wireless connections disabled. 

“A submarine is a secure environment,” Carrato says.  

The NeRD is designed to expand the on-board library and give sailors options when they run out of their own books and downloads on long assignments. 

Food prices rise but shoppers won't pay more

Thu, 2014-05-15 02:07

Wholesale food prices are soaring and consumers are still struggling in a challenging economy. That puts grocery stores in rather nasty bind.

“Retailers face that challenge as to whether to pass it on to consumers or suck it up and take lower margins,” says Timothy Richards, professor at Arizona State University’s Carey School of Business.

Profit margins in the grocery business aren’t that high in the first place. They’re generally around 1-2 percent. Even with these razor thin margins, grocers work hard to keep prices consumers pay low. With so many Americans unemployed or underemployed, stores that raise prices risk losing shoppers.

“We’re seeing consumers at an all-time high in thriftiness,” says Rich Nanda, principal at Deloitte Consulting. “They’re really trying to stretch every penny.”

Retailers worry that this may be a permanent shift. In Deloitte’s recent survey of food shoppers, 94 percent agreed with the statement “even if the economy improves, I will remain cautious and keep my spending at its current level.”

Mark Garrison: When stores have to pay more for food, something’s gotta give, says Arizona State University business professor Timothy Richards.

Timothy Richards: Retailers face that challenge as to whether to pass it on to consumers or suck it up and take lower margins.

And profit margins aren’t high anyway, says Boston College marketing professor Kathleen Seiders.

Kathleen Seiders: Around 1%, 2%, sometimes even lower.

Even so, stores must keep the price we consumers pay low, or risk losing shoppers.

Rich Nanda: We’re seeing consumers at an all-time high in thriftiness. They’re really trying to stretch every penny.

Rich Nanda with Deloitte Consulting says grocers could try pushing their cheaper store brands harder. They may have to, as the firm’s latest research on shoppers shows this thrift is not temporary.

Nanda: 9 in 10 told us that they’re not gonna change if and when the economy improves.

In any event, food prices will likely rise further this summer, at which point most retailers will have to pass more of the cost onto us. I'm Mark Garrison, for Marketplace.

In New Jersey, mass transit for the masses

Thu, 2014-05-15 01:45

In Jersey City and other towns along the Hudson, home-grown capitalists have wiped out the urban ritual called waiting for the bus.

Private operators jam commercial streets with mini-buses— and in turn spark new issues. (Think: traffic jams.)  Longtime complaints peaked last summer, when a wayward bus killed a baby girl, and the state created new regulations, which take effect next year.

Meanwhile, to hear Haroun Khan tell it, most drivers regulate themselves. He drives part-time, but today he’s a passenger. Sitting near the front of a jitney heading down Bergenline Avenue, he explains to a fellow-rider how drivers keep out of each other’s way.  

“They try to keep two or three traffic lights before or ahead," he says. "Wait, see what he did? There’s a bus behind him. So he’ll skip that passenger, try to get the space, and he’ll pick the other passengers up. So that way, they can both make money.”

People call the buses jitneys, collectivos, immi-vans. They’ve got maybe 20 seats.  They charge less than New Jersey Transit buses. They stop on any corner when a passenger hails. And they always make change, something New Jersey Transit drivers will not do. 

They’ve been driving through towns like Jersey City, Weehawken, and Bergen for decades. And they’re still growing, 40 percent just in the last four years, according to regulators.

Big operators rent out branded buses to drivers like Pasquale Gomez. At the end of his route, he waits in line for a dispatcher to call his turn.

He pays$100 a shift and buys the gas. Asked how much he makes, he says, “Well, it depends, man. Today, I don’t have a dime for me yet.”

He plays by the rules. Waiting for a dispatcher to call his turn, he says, “Sometimes we’re here maybe 20 minutes. Sometimes an hour.”

Nicholas Sacco, the state Senator who sponsored the new regulations, seems surprised when he hears about Gomez’s situation.

“If they were all that organized, maybe we wouldn’t have needed the bill,” he says. “We had no desire to get rid of the omnibuses. Just to  make them safe.”

The new regulations include higher insurance minimums— $1 million — and a hotline for riders to report anything unsafe.

Many of the jitneys fall under federal regulation— taking passengers back and forth to Manhattan, that’s interstate commerce. Anne Ferro, who runs the Federal Motor Carrier Safety Administration, doesn’t expect tighter regulation to slow business.

“It’s a supply/demand situation,” she says. "Trucks and buses are like water: They will always find a way through.”

Pasquale Gomez would like to see things more tightly regulated, even if it meant fewer buses.

“We are too many,” he says, “going up and down like crazy. That will make us doing things we don’t want to do.”

Meaning: Not all drivers follow the rules.

“They have three blocks to work on, they want five,” he says. So greedy drivers block the way for other buses, slowing up traffic in the process.

And misbehavior begets misbehavior— or at least, aggressive driving. “I see him doing that to me—playing games— and what am I going to do?” he says. “I’m not going to stay behind him.”

What's the best analogy for the Net Neutrality mess?

Thu, 2014-05-15 01:00

Truth: sometimes we journalists get tired of reporting a story. And I'll admit it -- trying to describe Net Neutrality a different way every day this week hasn't been easy. But most people we talk to about the issue of whether Internet service providers should deliver all data to the user with equal speed agree it's significant -- maybe the most significant Internet issue of the decade.

For as long as we've all been online, we've basically been able to access web pages with equal speed -- no matter what web page we're trying to get to and what company is helping us get there. But that could be changing; today's Federal Communications Commission vote on new Open Internet Rules could allow for so-called "fast lane" deals, where a company like Netflix pays a company like Verizon or Comcast to make sure you don't get the spinning pinwheel of sadness. Many people say these deals would stifle innovation (making it hard for the next Netflix-like startup to get off the ground without forking over money it doesn't have yet), and allow service providers to degrade the quality of our connections. Others say that more oversight from the FCC would do the same. It's always super helpful when two sides in a debate use the exact same potentialities to argue their case, isn't it?

But the real question is this: what analogy is best for this big, hot mess? Because a hot mess it is. And part of the mess is that it's so hard to describe and understand. On Wednesday, Sen. Al Franken told me Internet service providers should be considered common carriers -- just like the companies that have covered the country in a web of phone lines. He's even made a video to promote his position: 

 

On today's show, University of Pennsylvania professor Christopher Yoo explains his opposition to that idea by comparing the Internet to the postal service. Sometimes, Yoo says, you should be allowed to pay extra for FedEx or Priority Mail Express, so that your package gets to its destination faster than it would with regular old snail mail. Maybe it's like electricity?

I was arguing with Stacey Vanek Smith a few weeks back about Netflix making a deal with Comcast and trying to use the highway analogy -- but I got fouled up trying to decide who the toll booth operators were. I was talking with Vox managing editor Nilay Patel this week -- he thinks the FCC is about to turn the Internet into airport security.

The idea I keep coming back to is that of the Gordian knot -- an intractible problem that seems like it should have a simple solution. But a simple solution isn't in sight, so that doesn't work. So I put it to you: how would you describe the movement of information on the Internet? And what does that say about your position in the debate? 

Is an internet 'fast lane' inevitable?

Thu, 2014-05-15 01:00

The recently-announced plans by chairman Tom Wheeler and the FCC to create an internet "fast lane" have been met by a great deal of skepticism from those who worry that large companies could pay to speed past the competition. But Christopher Yoo, professor of Law, Communication, and Computer and Information Science at the University of Pennsylvania, argues that offering a pricing system for internet speed makes sense.

Yoo points to the varying services one can pay for when sending a package. If a package can take longer to get somewhere, you pay less. But if the arrival date is imperative, then you should pay more.

"If you force everything into a single class of service, you would force people who would have been willing to take slower service to pay more, and you would deny people really fast service the ability to get it at any price."

Others believe that the internet should be re-classified by the FCC as a common carrier. Yoo argues that in light of recent Supreme Court rulings, it would be difficult for the FCC to claim authority to do so.

To Yoo, its also a moot point. He says that even services defined as common carriers are allowed to create different tiers of service as long as they don't have rules explicitly prohibiting anyone from paying for the better service.

"The 'Common Carrier' regime has always acknolwedged that providers can create different classes of service as long as they charge everyone who wants that class of service the same amount....it wouldn’t prevent internet service providers from creating a fast lane in the first place."

The $24 admission fee to the 9/11 Museum in context

Wed, 2014-05-14 15:00

The 9/11 Memorial Museum opens to the public this week, but the journey to its unveiling has not been without controversy. Questions over the purpose of the museum have been well-reported, but recent concerns have been raised over the relatively high cost of admission.

Those wishing to visit the memorial will have to pay a $24 admission fee.

At a recent press conference, former Mayor Michael Bloomberg said that those upset by the high cost should write to Congress. His point? While the U.S. government has provided $250 million towards the contruction of the 9/11 Memorial, more financial resources are needed to maintain security and its high operating costs.

Federal and state support are issues that factor into the price of admission at other memorials in the U.S. and around the world.

Brandi Simons/Getty Images

The Oklahoma City National Memorial, for example, does not receive any federal funding to contribute to the cost of its annual operation. Though, like the 9/11 Memorial, the museum did receive funding for the initial construction costs. Along with the $10 entrance fee paid by visitors, the self-sustaining museum covers its expenses using "store sales, the OKC Memorial Marathon, [and] earnings from an endowment and private fundraising."

Getty Images

The Anne Frank House in Amsterdam also charges an admission fee -- a practice it began in the early 1970s when the Anne Frank Foundation began having diffuclty shouldering the costs of maintaining the house. Revenue from visitors to the museum now covers 95 percent of the organization's annual budget. While it does receive funding from the EU and the Dutch government, the money is reserved exclusively for projects not involved in running the museum.

Back in the U.S, while legislation was introduced in 2011 to set up a regular subsidy for the 9/11 Memorial, it was basically shelved. It would seem that for now, the price of admission remains.

Electricity as utility. A model for the internet?

Wed, 2014-05-14 14:54

As Federal Communications Commission chair Tom Wheeler moves closer to releasing new rules on net neutrality and internet "fast lanes," many open internet advocates have been calling for the FCC to reclassify internet service providers as "common carriers."

Doing so would effectively turn them into public utilities like power, gas and water services, and thereby subject them to more strict regulation.

But some of those utilities themselves started out as products sold on the open market, just like internet service. So how did they get regulated as public utilities? For the best comparison with the internet's current situation, look at how another "new" technology went from market good to public good: electricity.

In the case of electricity, it starts with Edison.

With a patent for the first practical light bulb in 1879, Thomas Edison needed an actual market of people who could use his invention, meaning a way to get power to his customers. In 1882 his Edison Illuminating Company constructed the first central power plant in the United States, the Pearl Street Station in New York.

The catch with early direct current power plants, however, was that they couldn't generate power at very high voltages. The power couldn't travel that far along the copper wires without weakening the further it went. But as electricity gained popularity and more appliances were created to use it, numerous companies began building power plants to supply electricity to individual neighborhoods, each station selling power to customers within a small radius.

This is where goverment regulation entered the picture, in the form of municipal franchise agreements. Those agreements allowed the companies to dig up streets and build infrastructure. In exchange, they had to meet certain price caps and service standards. These controls, usually administered by city governments, were in fact very weak.

The large investment costs usually prohibited one company from owning all the power stations in a single city at first, but the different firms would often compete over customers in areas where their services overlapped. As companies were able to expand their reach, customers in large cities like New York and Chicago actually experienced a sort of golden age of price wars with many local companies competing against each other.

The competition was short lived, however, as single companies gained monopolies over large cities and increasingly advancing technology made for high barriers of investment in infrastructure needed for a new competitor to enter a market. The market for internet service providers is kind of at the same point right now in terms of barriers to entry, as telecom and cable companies have consolidated to a certain extent, buying up smaller regional ISPs. This has made it pretty much unfeasable for new competitors to get in the the game without considerable resources.

The old municipal franchises that governed electric companies also became prone to corruption from city politicians. In the early 1900s, an entrepreneur named Samuel Insull who had exploited the economies of scale to dominate the Chicago market argued along with other electric utilites that they were "natural monopolies," that resulted from the inherent barriers to competition in large markets.

State governments attempted to regulate these monopolies with legislation, but power barons like Insull were able to outmaneuver the efforts by restructuring their businesses with holding companies that were not covered by the reforms. By the late 1920s, the Federal Trade Commission was investigating the holding companies for market manipulations.

It wasn't until the onset of the Great Depression, and the strong reforms of the New Deal that power over electric utilites was taken away from the holding companies in the form of the Public Utility Holding Company Act and the Federal Power Act of 1935, transferring much of the regulatory power over eletricity over to the federal goverment.

This was significant not because power utility monopolies were split up, but that the "natural monopolies" were in fact legitimated; they could exist, but they had to be under government control. The federal legislation, along with other New Deal legislation, actually provided for the creation of a number of government monopolies over public goods.

As it stands now, internet service providers are sort of stuck in between being a wholly private good or a heavily-regulated public utility. Until recently, the FCC has successfully imposed on ISPs to treat all content the same in terms of speed of access, but they haven't set caps on how much they can charge or set standards for quality of service as are required of utilites like water and power.

The federal government has also subsidized ISPs to the tune of $200 billion to build a fiber broadband infrastructure for schools and low-income regions, which many activists contend they never completed. Following the model of electic utilites, further government investment could hypothetically result in internet infrastructure owned by the government itself.

It's unclear whether the internet will go along the same route to regulation as a utility, but with nearly a third of Americans having no choice for their internet service provider, the circumstances are starting to look very similar.

Where do nudists keep their bitcoin?

Wed, 2014-05-14 14:04

The following public relations email landed in my inbox this morning:   I'll just paste the first line here: "Bitcoin is now accpeted for payment at Bare Oaks Family Naturist Park."   It brings to mind the opening scene in my colleague David Brancaccio's book from a decade or so ago in which he went to report on the economics of a French nudist colony, and finds himself clutching a a fistful of French banknotes... with nowhere to put them.   Think about it.   The book's called "Squandering Aimlessly".  It's on Amazon.  

At the end of tonight's @Marketplace, @kairyssdal references a book by @DavidBrancaccio WITH AN AMAZING COVER. pic.twitter.com/iNJ5PIu3RA

— David Gura (@davidgura) May 14, 2014

Why retailers still bother to print catalogs

Wed, 2014-05-14 13:49

Whether it's yoga pants or fruit dipped in chocolate, Americans spend an average of $850 a year on catalog purchases, according to FGI Research.

In fact, check the mail at the beginning of the workweek, and you'll probably find a catalog in there.  According to research, Monday and Tuesday are the biggest catalog mail days. Every week, Americans get about two to three of them in the mail.

You'd think online retail would've killed catalogs. But no, says Paul Miller, vice-president of the American Catalog Mailers Association: "Catalog companies are still vibrant businesses."

Miller says postage hikes, cyber retail, and the recession all hurt catalogs. But he says catalogs offer something to retailers that the internet can't: customer loyalty.

"There have been studies that have shown that if somebody purchases an item online, they're much less likely to be a loyal customer than if they purchase something as a result of seeing it in a catalog," Miller says.

Companies have gotten smarter about getting their catalogs into the right hands with the help of huge databases containing all sorts of info on millions of households.

"In many of the databases they'll have every purchase you've basically made for years," says John Lenser,  president of CohereOne, a consulting firm that works with catalog companies. "So they will know whether you're buying in different product categories, they'll know how much you've spent."

Database companies track a lot about our lifestyles. If someone moves, furniture catalogs start appearing. They know who buys office supplies in bulk, and who's developing a taste for wine. It's really specific.

The result? Fewer catalogs immediately tossed into the recycle bin.

Places like American Printing Company, a catalog printer in Birmingham, are all about efficiency. Craig McConnell, sales manager there, says there's a ton of potential waste in the printing business.

"So if you're not very efficient, if you don't do a good job and if you don't provide some extra value to your customers, it's very difficult to compete," he says.

The cost of postage and paper have gone up over the years. On the upside, McConnell says, "For every dollar that someone spends for the production of a catalog, they expect to generate at least $4 of additional sales revenues."

For retailers, that might be the best dollar they've ever spent. 

In New Jersey, mass transit for the masses

Wed, 2014-05-14 13:45

In Jersey City and other towns along the Hudson, home-grown capitalists have wiped out the urban ritual called waiting for the bus.

Private operators jam commercial streets with mini-buses— and in turn spark new issues. (Think: traffic jams.)  Longtime complaints peaked last summer, when a wayward bus killed a baby girl, and the state created new regulations, which take effect next year.

Meanwhile, to hear Haroun Khan tell it, most drivers regulate themselves. He drives part-time, but today he’s a passenger. Sitting near the front of a jitney heading down Bergenline Avenue, he explains to a fellow-rider how drivers keep out of each other’s way.  

“They try to keep two or three traffic lights before or ahead," he says. "Wait, see what he did? There’s a bus behind him. So he’ll skip that passenger, try to get the space, and he’ll pick the other passengers up. So that way, they can both make money.”

People call the buses jitneys, collectivos, immi-vans. They’ve got maybe 20 seats.  They charge less than New Jersey Transit buses. They stop on any corner when a passenger hails. And they always make change, something New Jersey Transit drivers will not do. 

They’ve been driving through towns like Jersey City, Weehawken, and Bergen for decades. And they’re still growing, 40 percent just in the last four years, according to regulators.

Big operators rent out branded buses to drivers like Pasquale Gomez. At the end of his route, he waits in line for a dispatcher to call his turn.

He pays$100 a shift and buys the gas. Asked how much he makes, he says, “Well, it depends, man. Today, I don’t have a dime for me yet.”

He plays by the rules. Waiting for a dispatcher to call his turn, he says, “Sometimes we’re here maybe 20 minutes. Sometimes an hour.”

Nicholas Sacco, the state Senator who sponsored the new regulations, seems surprised when he hears about Gomez’s situation.

“If they were all that organized, maybe we wouldn’t have needed the bill,” he says. “We had no desire to get rid of the omnibuses. Just to  make them safe.”

The new regulations include higher insurance minimums— $1 million — and a hotline for riders to report anything unsafe.

Many of the jitneys fall under federal regulation— taking passengers back and forth to Manhattan, that’s interstate commerce. Anne Ferro, who runs the Federal Motor Carrier Safety Administration, doesn’t expect tighter regulation to slow business.

“It’s a supply/demand situation,” she says. "Trucks and buses are like water: They will always find a way through.”

Pasquale Gomez would like to see things more tightly regulated, even if it meant fewer buses.

“We are too many,” he says, “going up and down like crazy. That will make us doing things we don’t want to do.”

Meaning: Not all drivers follow the rules.

“They have three blocks to work on, they want five,” he says. So greedy drivers block the way for other buses, slowing up traffic in the process.

And misbehavior begets misbehavior— or at least, aggressive driving. “I see him doing that to me—playing games— and what am I going to do?” he says. “I’m not going to stay behind him.”

Why 'infrastructure' may be the new political buzzword

Wed, 2014-05-14 13:30

One of the biggest economic problems facing the nation has become something of a buzzword in politics of late: "infrastructure."

President Barack Obama was in Tarrytown, New York on Wednesday, just up the Hudson River from New York City, talking about the need to upgrade infrastructure, in the shadow of the Tappan Zee Bridge, which is being replaced.

The President isn't the only one who's been talking about infrastructure, and it's enough to make you wonder if it's the new "addicted to foreign oil," i.e., something politicians say over and over again, knowing full well how hard it is to change.

"We laid in place a very good infrastructure, but a lot of those investments were made 50, 80, 100 years ago, and it is time for the U.S. to upgrade and modernize," says Casey Dinges, a senior managing director at the American Society of Engineers (ASCE), a group that gave U.S. infrastructure a “D+” grade last year.

According to Rob Puentes, who directs the Metropolitan Infrastructure Initiative at the Brookings Institution, the numbers are staggering.

"I mean we have 63,000 bridges that are structurally deficient," he says. "Two hundred and forty thousand water mains break every year."

 You can get lost in those numbers, and that is part of the problem. It helps, Puentes says, to talk about what constitutes infrastructure. Yes, it is roads and bridges and waterways, but it is also broadband – pipes of a different sort.

"It's not true that Americans don't understand this," Puentes argues. "When they're confronted with these choices, they are willing to pay for infrastructure projects."

And they have demonstrated that at the local level. States have raised gas taxes, to pay for renovations and modernization, and cities are improving their infrastructure.

But there's another problem, according to Rae Zimmerman a professor of planning and public administration at New York University's Robert F. Wagner Graduate School of Public Service. Fixing infrastructure often becomes urgent only after disasters happen.

"And then there seems to be a lull, and then it comes back, and a lull, and comes back, and hopefully, this time it is going to stick," she says, noting the fact that we are talking about infrastructure now, absent a big disaster, can’t be such a bad thing.

To illustrate part of the infrastructure problem facing the U.S., check out a map showing the 20 worst bottlenecks of traffic congestion, as well as the metropolitan regions around the country with the highest percentage of structurally deficient bridges, organized by population size. All data is based on the 2013 Report Card for America's Infrastructure, from the American Society of Civil Engineers and the 2012 Metropolitan Bridge Rankings, from Transportation for America.

One piece of healthcare jargon worth knowing

Wed, 2014-05-14 13:28

In healthcare there’s a ton of mind-numbing jargon – "providers", "carriers", "the dual eligibles", "fee-for-service".

But if there’s one acronym that should take up just a bit of brain space – other than the ACA, which stands for the Affordable Care Act, of course – it’s ACO. What does it stand for? Accountable Care Organization.

There are more than 600 ACOs up and running across the country. And while you may not know what it means, you may be in one, with an estimated 1 in 7 Americans served by one.

So what is it?

It’s basically a group of doctors, nurses and pharmacists who work together to improve care and lower the cost of that care. Sometimes it’s a simple follow-up call to a patient. Sometimes it’s unraveling a mystery.

Jeff Brown – who works with three New Jersey-based ACOs remembers one Trenton guy who kept showing up in the ER.

“His wife had recently passed away, and he didn’t know how to cook for himself or go to the grocery store," Brown recalled. "And so what the Trenton health team determined was they needed to take this guy home and [show him] how to shop for himself and how to prepare some meals."

If that sounds like more work for doctors and nurses, it is. Shifting people away from expensive ER and hospital stays, and moving them towards cheaper primary doctor visits takes effort. What’s the incentive for healthcare providers? In a word: Money.

In an ACO, providers can get paid more if they meet patient quality benchmarks and keep costs down, said Dr. Kavita Patel at the Brookings Institution.

“This is one of the few ways that we have of trying to change how we actually interact with patients and providers and cut costs at the same time,” she said.

But Northwestern economist David Dranove said, based on 20 years experimenting with similar concepts, when healthcare providers have teamed up, we’ve seen prices rise and consumer choice shrink, leaving communities with partnerships that can stymie future change.

“The way they decide to deliver medical care in a community will become the way that that community receives its medical care, for better or for worse,” he said. Dranove said he hopes that as the creation of ACOs is on the rise, they'll proceed slowly.

Who will pay for climate change? Not us, insurer says

Wed, 2014-05-14 13:28

Climate change is shaping up to be really expensive. So who picks up the tab? That’s the issue in a lawsuit filed recently by Farmers Insurance against Chicago and its suburbs.

A big two-day rainstorm hit the Chicago area in April 2013. Sewers backed up into hundreds of homes. Some people had to leave their homes. Clean-up was a nightmare.

The company wants local governments to pay for damages, and experts say this marks the beginning of a trend.

Andrew Logan looks at the insurance industry for Ceres, a non-profit that coordinates private-sector efforts to address climate change.

“I think what the insurers are saying is: ‘We’re in the business of covering unforeseen risks. Things that are basically accidents,’” Logan says. “‘But we’re now at a point with the science where climate change is now a foreseeable risk.’”

That would make local governments liable, in theory, for not upgrading their stormwater-management systems to account for that risk.  

Legal experts say this theory faces an uphill fight. Very strong legal doctrines protect governments in these kinds of cases, says attorney James Bruen, a partner at Farella Braun + Martell LLP.

“They can say, ‘You can’t second-guess us on that,’” says Bruen. “‘We have to make a decision politically about where to put our services, and just because you don’t have as many services as you’d like is not a basis to sue us. Sorry.’”

So, why bother filing this kind of suit?

“It’s the lottery,” Bruen says.  In other words, the cost of the ticket— filing the suit— is nothing compared to the potential payout: Getting off the hook for climate-related liabilities.

Insurers may also hope lawsuits will influence future government decisions.  “They want to put cities on notice that they’re not going to walk away quietly,” says Robert Verchick, who teaches environmental law at Loyola University in New Orleans.

“Even if a city is likely to win a lawsuit, it still is going to have to spend quite a bit in defending itself,” he says. “And it might just be better for everybody involved for cities to take climate change seriously.”

Michael Gerrard, who runs the Center for Climate Change Law at Columbia University, says he’s been waiting to see a lawsuit like this for a long time.

“There will be many such lawsuits,” says Gerrard. “Some against governments, some against private entities. Often, insurance companies will be in the mix, and we’ll see who pays what.”

For instance, he says, architecture firms could become targets. “If someone designs a building and the building doesn’t survive a foreseeable storm, is there malpractice liability on the part of the architect or the builder?”

 

How to survive the next economic collapse

Wed, 2014-05-14 12:57

Our global financial system relies on so many unpredictable factors that a total economic crash is all but inevitable.

But with careful planning now, you can still win in a post-crash economy where money doesn’t matter. Daniel Kibblesmith and Sam Weiner, authors of "How to Win At Everything" have some tips:
 
1. Immediately withdraw all the money from your 401K and invest it in burlap futures. Twenty-four hours after the coming crash, all clothing will be made from itchy sacks.
 
2. Sell all your stocks and bonds - soon, hearty grains will be more valuable than gold. Fill up a sock with millet seeds - it can be used as currency and doubles as a blackjack for self-defense.
 
3.Abandon your house right this minute and move to nature’s mansion - a cave. The huge home you worked so hard for will make you a target for roving gangs of bandits.
 
4. Gasoline will be impossible to find, so trade in your obsolete gas guzzler for a faithful donkey. Then trade any useless children you have lying around for a second donkey.
 
5. Your current white collar job won’t prepare you for a future where the only available jobs are warlord, balladeer, and widow. Start learning a practical skill today, like identifying poison berries or tricking your enemies into eating poison berries.
 
6. As society continues to crumble, strength will be the only law, so your civilized name is meaningless. Change it to something that inspires people to follow you. Goodbye John Smith, hello Dirk StormRider.
 
We’re headed for a brave new world where crime is legal, family is a liability and wild dogs will be everywhere. But if you follow our tips, you’ll become a pillar of the post-money economy, paving the way for future generations to become just as reckless and complacent as the investors of today.
 

How to survive the next economic collapse

Wed, 2014-05-14 12:57

Our global financial system relies on so many unpredictable factors that a total economic crash is all but inevitable.

But with careful planning now, you can still win in a post-crash economy where money doesn’t matter. Daniel Kibblesmith and Sam Weiner, authors of "How to Win At Everything" have some tips:
 
1. Immediately withdraw all the money from your 401K and invest it in burlap futures. Twenty-four hours after the coming crash, all clothing will be made from itchy sacks.
 
2. Sell all your stocks and bonds - soon, hearty grains will be more valuable than gold. Fill up a sock with millet seeds - it can be used as currency and doubles as a blackjack for self-defense.
 
3.Abandon your house right this minute and move to nature’s mansion - a cave. The huge home you worked so hard for will make you a target for roving gangs of bandits.
 
4. Gasoline will be impossible to find, so trade in your obsolete gas guzzler for a faithful donkey. Then trade any useless children you have lying around for a second donkey.
 
5. Your current white collar job won’t prepare you for a future where the only available jobs are warlord, balladeer, and widow. Start learning a practical skill today, like identifying poison berries or tricking your enemies into eating poison berries.
 
6. As society continues to crumble, strength will be the only law, so your civilized name is meaningless. Change it to something that inspires people to follow you. Goodbye John Smith, hello Dirk StormRider.
 
We’re headed for a brave new world where crime is legal, family is a liability and wild dogs will be everywhere. But if you follow our tips, you’ll become a pillar of the post-money economy, paving the way for future generations to become just as reckless and complacent as the investors of today.
 

So, you wanna be a flipper?

Wed, 2014-05-14 12:50

Believe it or not, house flipping is back with the housing recovery. And while there’s money to be made from flipping houses, there's also money to be made from selling things to would-be flippers. Flipping workshops are crowded again.  

At a recent workshop just outside Baltimore on a recent Saturday, Terry Royce, who’s been flipping houses for seven years, was sharing some of his secrets. Everything from how to find a seller, or a buyer, even time management tips.

“I always like to say, this is work, stuff gonna go wrong," he said later.  "It is. And it’s the reality.”

It was Royce’s first workshop. He charged $97 for a morning seminar and afternoon bus tour of some homes that are being flipped.

Zane Watkins was among those on the bus. He said he’d been to four or five other workshops, one that cost him and his wife $300 and ended with a hard sell for another series of seminars.

“They had three different versions of the package,” he recalled. “One was like $10,000, and $15,000 and $22,000 that you would pay overall.”

The Better Business Bureau rates these types of workshops. It's now tracking 130 of them.

“Of that, only one is a BBB accredited business with an A," said spokeswoman Katherine Hutt. "We have one that has a B+, 13 that have Cs and all the rest have Ds or Fs.”

Hutt said the BBB gets several hundred complaints a year from consumers saying they didn’t get what they paid for from flipping workshops. And, when they tried to get their money back, they ran into a brick wall. Hutt said, just like buying a home, when it comes to flipping workshops, it’s buyer beware.

Harvard's Kennedy School denies 'privilege class' story

Wed, 2014-05-14 12:08

The Harvard Kennedy School responded to reports that it has created an orientation class on "power and privilege" with a flat denial.

Doug Gavel, the school's Associate Director for Media Relations, told Marketplace's Mitchell Hartman that there is "false information in the media" about a class that administrators at the school were reported to have committed to scheduling for first-year students. Several media outlets picked up the story, first reported in New York Magazine's "The Cut" that, "In response to growing demand from student activists, administrators committed Friday to adding a class in power and privilege to its orientation program for incoming first-year students."

The story comes in the wake of a controversial essay on privilege written by a student at Princeton earlier this month. 

Here's the text of Gavel's email to Mitchell:

There appears to be false information in the media being conveyed by reporters who have not contacted Harvard Kennedy School (HKS) officials to verify the accuracy of the information.  Contrary to one article that has been picked up by others, the school is not planning to offer classes, coursework, or sessions devoted specifically to "power and privilege."  The school currently offers a number of opportunities for students to discuss and learn about issues of diversity.  Learning to have constructive conversations in the context of differences in race, gender, cultural background, political viewpoints and many other perspectives is important in any graduate school, particularly one dedicated to preparing its students to be effective leaders and policymakers. HKS examines opportunities offered to students to engage in these discussions, regularly assessing their effectiveness and value.  We look forward to continuing to work with our faculty and students to provide the most valuable learning opportunities in this area. 

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