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Ford's new assembly line jobs: less middle class

Tue, 2014-11-11 11:00

In Dearborn, Michigan this morning, Ford’s brand new F-150 truck rolled off the line. What’s new? The body. It’s aluminum instead of steel. That sheds 700 pounds, or 15 percent,  from its predecessor. They call it lightweighting.

Ford boasts 850 new jobs on the truck line. Are they good jobs? Think of them as lightweighted, too.

New workers at Ford – as well as GM and Chrysler – start at around $18 an hour. That’s generous relative to other sectors. But put that next to $30 an hour. That’s what auto workers hired before 2007 make.

Bureau of Labor Statistics

This is the new, two-tiered economy of auto workers.

“The people who are bearing the brunt of the adjustment to a more competitive world are the new hires,” says University of Michigan economist Don Grimes. “And they don’t get nearly as good benefits.”

On the shop floor, the high and low paid workers often do the same job.

“It would be interesting how the employees are getting along,” Grimes says. “I mean the guy working right next to you may be making a third less than you are.”

For new hires, life comes with lots of "if"s.

You can retire well, if your investments grow. Get a raise, if the company profits. It’s all in the new contract between the Big Three and the United Auto Workers union.

It worked out well last year.

“The workers went home with lots of money in their pockets,” Kristin Dziczek at the Center for Automotive Research says. “The profit sharing payouts at Ford were $8,800 last year. But, you know, if Ford makes no money this year, they don’t get that.”

So goes the brave new industrial world. U.S. automakers have to be lean to compete. More factory work is done by technology instead of people.

IBIS World

And the United Auto Workers has lost leverage. Back in the 1970's, the UAW set wages that Toyota and Honda plants in non-union states felt compelled to match.

No longer. The bottom came with the 2009 auto bankruptcies.

“A provision of those bankruptcies was that the automakers would become cost competitive with the internationals in the United States,” Dziczek says. “So that was a complete turn of the books. The internationals set the wage and benefit package for the auto industry.”

How important is a CEO to a company's success? It depends.

Tue, 2014-11-11 11:00

The question of how much a CEO has to do with a company’s success became critical in an Oklahoma divorce case this week.  Lawyers for the multi-billionaire who runs Continental Resources, Harold Hamm, argued that other factors  – including luck – had more to do with the oil company's success than the CEO himself.

The judge in Hamm's divorce case ruled otherwise on Monday. He said the CEO - credited with leading Continental's acquisition of fracking sites in North Dakota and neighboring areas - played a central role in his company’s success, and awarded Sue Ann Hamm $1 billion, the largest divorce settlement in U.S. history.

Since the ruling concluded that Hamm's wealth - a reported net worth of $17 billion - had been earned due to his efforts or skills, Oklahoma law mandated that it would have to be shared with his ex-wife.

Continental's expansion began in the mid-1980s, when Continental was an Oklahoma-centric natural gas and oil company. Over the last three decades, the company’s value has increased 400-fold.

“The record is pretty clear that Continental made a whole series of decisions that were timely, and shrewd and courageous,” says Joseph Bower, a professor emeritus at Harvard Business school who taught management for 51 years.

Bower says when a company changes course, like Continental did, the CEO is the pilot. But while a visionary CEO can set the course for a company’s future, it doesn't usually happen that way: The trajectory the company is already on has a greater impact on its future success or failure, says  assistant professor of management at the University of Georgia Timothy Quigley, who co-authored a study on the impact CEOs have on companies.

Quigley’s research shows CEOs account for up to a quarter of a company’s success or failure, while trajectory accounts for as much as a third.

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“If we were to put my mom in charge of Wal-Mart tomorrow, Wal-Mart would probably still outperform Kmart for the foreseeable future," he says. "The point is: The trajectory that the company is on matters."

While the impact of chief executives may be limited in the U.S., it’s even more so in much of the rest of the world. In the U.S., CEOs have more power and discretion, according to assistant professor of management at the University of Notre Dame Craig Crossland, who has studied international business culture surrounding CEOs.

In societies where CEOs are given more discretion, "we’re more likely to see big hits and big misses,” says Crossland, giving the U.S. and UK as two examples.

Western Europe and Asia differ, he says, because in those countries collectivism is more important than individualism, so CEOs are less empowered and decisions are more often made by consensus.

"And the places we tend to see CEOs being given least discretion is in East Asia. So societies like Japan, like South Korea,” Crossland says.

How crab fishing was made safer

Tue, 2014-11-11 11:00

The dangers of the Bering Sea crab fishery have been made famous by the reality TV show "Deadliest Catch." But in the last 15 years, that industry has become much safer, in large part thanks to collaboration between industry, scientists and regulators. Are there lessons that the oil and gas industry could learn from the crab industry’s safety gains?

We started on the docks in Dutch Harbor, Alaska, with skipper Rip Carlton. He described one of the most memorable close calls during his nearly 40 years as a crab fisherman. “I saw a guy get ripped off the side of a boat right in front of me by a huge sea,” he recalled. “He was on the side of the stack, probably 25 feet up and the wave came up and took him right off. And I could not believe what I had just seen.”

The crew managed to get the man back onto the boat -- and then almost killed him again. “He’d been in the water I don’t know, two or three minutes. He was definitely hypothermic,” Carlton said. “First thing we did is take his clothes off, throw him in a hot shower, and give him a shot of whiskey. That’s exact opposite of what you should do!”

In the 80s and 90s, safety wasn’t so much an afterthought as an absent thought for the crab fleet. “Back then we had no safety training, we didn’t have life raft drills, some boats didn’t even have survival suits that can help you stay alive if you go into the water,” Carlton said.

All of that contributed to the Bering Sea crab fishery’s fatality rate in the 90's of 770 per 100,000 fishermen. “Which is astronomical,” said Mary O’Connor, the deputy director of the Alaska Pacific division of the National Institute for Occupational Safety and Health or NIOSH. By comparison, the worst oil and gas fatality rate in the nation right now, in North Dakota, is 10 times lower.

It was clear something had to be done. So, NIOSH tried what’s called the public health approach. The first step was getting information. For commercial fishing, NIOSH asked the Coast Guard to share detailed reports about vessel accidents.“They found that at least eight of the twelve vessels that were lost en route from the crab grounds were loaded,” O’Connor said. Overloaded, to be precise -- with too many crab pots. In freezing spray conditions, that was causing vessels to capsize and sink.

So, then came step two: intervention. NIOSH isn’t a regulatory agency, but it shared the information with the Coast Guard, which started mandating dockside safety inspections. “If they were compliant, that was all good and well,” O’Connor said. “If they weren’t compliant, then they weren’t allowed to leave the dock.”

The results were dramatic. While 73 Bering sea crab fishermen died in the decade prior to the safety checks, 12 have died since then. Although there are other factors that also played a role, Rip Carlton, the skipper, says having more information and more people looking over the industry’s shoulder changed the culture of safety aboard vessels. “You’re at the dinner table and you talk about the danger -- what’s out there, what you guys should be looking at. So the guys keep being reminded about safe practices and things to do and not to do,” he said.

But can the public health approach - information followed by intervention -  be successfully applied to oil and gas? The short answer, according to Kyla Retzer, the head of NIOSH’s oil and gas safety program, is yes. But there are complicating factors. Unlike for the fisheries, there’s no Coast Guard for the oil and gas industry, collecting fatality information.

“Sometimes there’s very, very little information about the event,” Retzer said. “So, in order to use data and use this public health approach, we have to figure out a way to get more information about the circumstances.” Not only is data limited -- so is access. Retzer points out that it’s harder to get onto drill sites than fishing vessels. Anyone could walk onto a harbor and talk to commercial fishermen,” Retzer said.

Still, Retzer and her colleagues are working on developing an approach for oil and gas that follows the Alaska model -- and she’s hopeful that it will work. “People in this industry work really hard in dangerous environments with heavy equipment. And they deserve the right to have every step taken to keep them safe.”

This is the last article in a series, "Dark Side of the Boom," produced by Inside Energy, a public media collaboration focused on America's energy issues.

Let's do the numbers of Obamacare enrollment

Tue, 2014-11-11 11:00

The Congressional Budget Office  thinks a total of 13 million people will be insured through the heath care exchanges under the Affordable Care Act in 2015.

The Department of Health and Human Services says, no, it’ll be in the 9 million range.

One reason for the discrepancy: The CBO assumes lots of employers will shift more workers from company insurance plans, to the exchanges next year. But in reality, they may not be in any rush.

“The technical problems in the first year of the Affordable Care Act may have given employers some pause about putting their workers in these marketplaces,” says Larry Levitt, senior vice president at the Kaiser Family Foundation.

And,  it’s going to be a lot harder to sign people up this year.  There's only a three-month enrollment period, versus six months last year.

But also, people who were most interested in getting insured signed up last year.   

The people left are harder to reach. Some are healthy and don’t think they need insurance.

Or they’re immigrants - worried about deportation. 

“Even if the individual is here legally maybe they have family members that aren’t," says Linda Blumberg, a senior fellow in the Urban Institute’s Health Policy Center. "And that creates anxiety about interacting with government programs.”

So, if fewer people sign up for coverage next year, what does that do to premiums?  Does it jack them up?  Maybe.

That's because if you have more people on the exchanges, you could get a better mix of healthy people. If you have too many people needing lots of care, premiums go up.

“You’re going to be left with people who have higher health needs," says Sabrina Corlette, senior research fellow at the Georgetown University Center on Health Insurance Reform. "They’re going to end up costing more money.  And that’s going to come out in the premiums.” 

However you crunch the numbers, Corlette says, higher numbers are better. 

The numbers for November 11, 2014

Tue, 2014-11-11 10:13

It's Veterans Day in the U.S., Armistice Day and Remembrance Day abroad. We have at least one veteran on staff at Marketplace: Kai Ryssdal, who served as a Navy pilot during the Cold War.

Kai flew fighter jets from the U.S.S. Theodore Roosevelt along the coast of Norway in search of Russian nuclear bombers. He wrote about the experience for our series, "The New Cold War?

A Pew study found nearly half of post-9/11 veterans served with someone who was killed in the line of duty. Two-thirds of veterans said they had been exposed to casualties, either because they were injured themselves, or served with someone who was hurt or killed. That exposure meant vets were far more likely to experience post-traumatic stress disorder.

Poppy Field is a comprehensive and interactive visualization of all war deaths since the start of the 20th century, and Vox has a good breakdown looking at American fatalities in major wars.  

Here are some other numbers we're watching and stories we're reading Tuesday:

$100,000

Tension in Ferguson, Missouri is mounting ahead of a grand jury decision on the death of teenager Michael Brown, and the evidence is in the numbers. According to the AP, local police have spent $65,500 on batons, shields and other gear, plus another $35,500 on pepper spray and the like since August.  Meanwhile, residents are preparing, too. CNN reported a spike in weapons sales and spoke with business owners who are boarding up their windows

$972.7 million

A different side of the oil boom – that's how much Continental Resources chief executive Harold Hamm will pay his ex-wife Sue Ann Hamm to settle their divorce. Continental is the largest oil producer in North Dakota. Hamm might have gotten off easy – the Wall Street Journal reported Mrs. Hamm originally sought several billion, and analysts predicted the split would cost him twice as much.

The numbers for November 11, 2014

Tue, 2014-11-11 10:13

It's Veterans Day in the U.S., Armistice Day and Remembrance Day abroad. We have at least one veteran on staff at "Marketplace": Kai Ryssdal, who served as a Navy pilot during the Cold War.

Kai flew fighter jets from the U.S.S. Theodore Roosevelt along the coast of Norway in search of Russian nuclear bombers, and wrote about the experience for our series, "The New Cold War?

A Pew study found nearly half of post-9/11 veterans served with someone who was killed in the line of duty. Two-thirds of veterans said they had been exposed to casualties, either because they were injured themselves or served with someone who was hurt or killed. That exposure meant vets were far more likely to experience post-traumatic stress disorder.

Poppy Field is a comprehensive and interactive visualization of all war deaths since the start of the 20th century, and Vox has a good breakdown looking at American fatalities in major wars.  

Here are some other numbers we're watching and stories we're reading Tuesday:

$100,000

Tension in Ferguson, Missouri is mounting ahead of a grand jury decision on the death of teenager Michael Brown, and the evidence is in the numbers. According to the AP, local police have spent $65,500 on batons, shields and other gear, plus another $35,500 on pepper spray and the like since August. The big business of tear gas, explained. Meanwhile, residents are preparing, too. CNN reported a spike in weapons sales and spoke with business owners who are boarding up their windows

$972.7 million

A different side of the oil boom -- that's how much Continental Resources chief executive Harold Hamm will pay his ex-wife Sue Ann Hamm to settle their divorce. Continental is the largest oil producer in North Dakota. Hamm might have gotten off easy, the Wall Street Journal reported Mrs. Hamm originally sought several billion and analysts predicted the split would cost him twice as much.

Former Secretary Robert Gates on recruiting veterans

Tue, 2014-11-11 07:38

Unemployment rates for veterans, both men and women, who have recently served in Iraq and Afghanistan is still relatively high. But companies like Wal-Mart, Uber, and Starbucks are putting great effort into their recruiting and hiring vets.  

Former Secretary of Defense Robert Gates is no stranger to the military's training programs. Having served as Secretary of Defense from 2006 to 2011, he's now on the Starbucks board.

"There’s transition training that the troops have to go through," Gates says. "More and more employers are actually going on to bases to meet with military people who are facing transition out of the military."

There are many steps the military is taking to help give young people a smooth transition over to the civilian workforce, Gates says, and many employers are being a lot more aggressive in providing guidance for vets, as well.

"I know that the ideas at Starbucks came from a couple of people in the management chain who had been in the military," he says. "I think it’s actually been self-generated often in these companies by young veterans who have been hired and then are telling their own management 'you guys need to get more involved.'"

 

China and U.S. reach agreement on high tech products

Tue, 2014-11-11 05:00

United States Trade Representative Michael Froman announced a "breakthrough" in negotiations with China over high tech products Monday night. The agreement could herald the first major tariff-cutting agreement at the World Trade Organization in 17 years, covering an estimated $1 trillion of products ranging from MRI machines to video game consoles. 

The negotiations concerned an update to the Information Technology Agreement, or ITA, signed in the late 1990s, under which countries agreed to cut tariffs to zero for a list of high-tech products. 

"For high tech products, every country wished to be a leader in that," says Wing Thye Woo, professor of economics at UC Davis and president of the Jeffrey Cheah Institute on Southeast Asia. "So when high tech products started appearing quickly, some countries started putting tariffs on them.

Woo says the ITA didn't follow the model of other free trade agreements: cut tariffs for the entire sector, with certain products singled out as exceptions. 

"You do not say mackerel is not free trade but salmon is free trade," says Woo. "All fish is free trade, unless we specify certain fish."

"This one is the other way around: The following are free trade items, and what is not mentioned is not free trade," he says.

Signatories of the ITA agreed to cut tariffs only for products that fit into certain categories such as computers and data-storage media. 

China signed on to this agreement when it joined the WTO in 2001. "It had to," says Woo. "But then the number of high-tech products kind of exploded."

Efforts to increase the list stalled.

"China was the main opposition on this issue of broadening the Information Technology agreement," says Gary Hufbauer, senior fellow at the Peterson Institute for International Economics. China had, for instance, maintained tariffs of up to 25 percent to protect its burgeoning semiconductor industry.

The agreement with the United States could un-stick negotiations with the other 54 economies involved in the ITA negotiations. "The presumption is those other countries will agree because they have been negotiating pretty much alongside the United States," say Hufbauer.

"And I think it foreshadows more agreements on other issues between the US and China," he says. "It’s really a new day."

Quiz: Hidden cameras in the classroom

Tue, 2014-11-11 04:40

Harvard researchers secretly photographed more than 2,000 students to study classroom behavior last spring. News reports and other Harvard faculty have called out the study’s questionable ethics. Two years ago Harvard administrators reportedly read the emails of resident deans – you guessed it – in secret.

Harvard researchers studied student behavior with secret cameras. What did they uncover?

You can watch a presentation by one of the photo researchers on YouTube.

PODCAST: Powerful and profitable art

Tue, 2014-11-11 03:00

First up, in China, what's called "Single's Day" is drawing to a close. It's a new-ish celebration that is to single people what Mother's Day is to mother's. But it's now morphed into the day people go online to buy things, often with their office computer. China's Alibaba said sales broke through $8 billion so far today in an orgy of commerce that, if you do the math, dwarfs America's so-called Black Friday. And tech products could soon travel across borders with less baggage as a result of the first major cut in international tariffs in 17 years, and it affects a range of technology products from MRI medical scanners to video games. More on that. Plus, it's Veterans Day in the U.S. and this summer marked 100 years since the outbreak of hostilities that became what was then called The Great War. To commemorate Britain's lost lives, an artist has staged a powerful installation at the Tower of London. It's really popular, and lucrative for veterans' charities.

Garth Brooks album is online, but not for streaming

Tue, 2014-11-11 02:00

Garth Brooks is following Taylor Swift’s lead, away from streaming music services. Not even a month after Swift pulled her catalog from Spotify, Brooks is releasing a new album that you can download, but not stream, for free. 

The album is called "Man Against Machine," but it may as well be called "Man Against Streaming Machine."

Garth Brooks is releasing the album on a new website he helped create, called GhostTunes. The site only allows you to buy music from Brooks and many others.

“It’s a sale, not a stream," says Stephanie Kellar, the lead marketing professor at Berklee College of Music in Boston. She says Brooks faces a huge challenge: “How does he get people to go to his site and purchase music there?”

But GhostTunes says it's not trying to be Spotify.

“There’s no question that we’re the smallest ant on this molehill,” says Randy Bernard, CEO of GhostTunes. 

Bernard says they’re aiming for a niche market, appealing to Garth Brooks fans, and offering extras.

“When you go on the site, you’ll be able to purchase merchandise or tickets from Ticketmaster," he says. "We offer a one-stop shop."

And, unlike Spotify, the site also offers Taylor Swift’s music.

London’s poppies prove the value of public art

Tue, 2014-11-11 02:00

London has gone poppy mad. Many people, throughout the UK and Ireland, wear poppies at this time of year to show their support for veterans and their families. So it’s not uncommon to see glimpses of scarlet everywhere; on business suits, overcoats, sweaters and even T-shirts. This year, though, the poppies that are really attracting attention are on the ground, filling the moat of the Tower of London, in a display of 888,246 ceramic flowers, one for each colonial or military fatality of the first world war.

The display, called "Blood Swept Lands and Seas of Red," has been a money-spinner for charities, which will raise as much as GBP15 million from the sale of the two-foot tall poppies. The drive to raise money around the event knocked even the most successful Kickstarter campaign into a cocked hat, raising GBP2.5 million in just six days.  

The poppies have also been good for London. Again, estimates vary, but news reports from the capital said as many as four million people, mostly from other parts of the UK and Ireland, have visited the Tower to see the display. The poppies have been such a resounding success that the exhibit is to go on tour: 10,000 poppies will be displayed around the country before they become housed by the Imperial War Museum.

The enormous display didn’t cost the UK government or the City of London a penny. The thousands of volunteers who hammered the flowers into the moat were volunteers. The flowers sold for GBP25, 10 percent of which will go to six service charities: Combat Stress, Coming Home, Help For Heroes, the Royal British Legion, SSAFA and the Confederation of Service Charities. All net proceeds from the sale will also go to those charities, and the government said recently it will waive the tax bill resulting from the sale of the poppies. UK Chancellor George Osborne said the government will make up some of the cost with GBP500,000 in LIBOR fixing fines collected from banks.

Best of all, the installation has been good for art. It has shown that great works of art don’t have to be static or permanent; they can be broken up and bought by the public; they can be successfully sponsored, and they can be of enormous benefit to society. How many other works of art in London get four million visitors in a quarter? And how many have the kind of impact that Blood-swept Lands and Seas of Red has had on those who’ve visited it? Millions of children have learned something about the history of their country, and probably their family, that they might never have otherwise known. The fact that they learned it for free is a bonus for the government. And it’s a lesson, too: art can be a good investment, not just socially, but financially. Which is why governments should work hard to fund and promote their countries’ artworks whenever possible.

Economic recovery drives growth in low-paid jobs

Tue, 2014-11-11 02:00

The October 2014 employment report from the Bureau of Labor Statistics showed the U.S. economy is continuing to deliver steady job growth and lower unemployment, even as consumer demand and business activity remain lackluster compared to previous recoveries.

And signs increasingly point to a solid finish to the year. Outplacement firm Challenger, Gray & Christmas reports that retailers and shippers—including both brick-and-mortar and online operations—added 180,600 jobs in October, more than any previous October on record. That’s an increase of 13 percent from 2013.

Employment in the transportation sector has been going up all year in tandem with the recovery of consumer spending.

“We’re seeing a huge demand for truck drivers,” said Michael Gritton of Kentuckiana Works, the regional workforce development agency in Louisville, Kentucky, which has become a logistics hub for the Midwest.

Nationwide, the U.S. economy has added more than 35,000 truck drivers since October 2013, according to data from the Bureau of Labor Statistics.

Gritton points out that the cost of commercial-driver training is high—as much as $5,000—and it's not easy to find government funding or student loans to cover the cost. But a typical course only takes four to six weeks. Starting pay is typically in the $15/hour range (though it can rise to nearly double that with experience).

Other service sectors in which jobs are now consistently growing are also low-pay, explains economist Paul Edelstein at IHS.

“We’re seeing a big shift towards the leisure and hospitality sector, restaurants and bars, where the wages aren’t very good,” said Edelstein. Employment in leisure and hospitality has increased by 380,000 in the past year.

Daycare is another low-paid occupation that is now adding jobs consistently (nearly 19,000 since October 2013), driven by the overall expansion of the economy. As more parents become two-income households again, they need to pay someone else to watch the kids.

U.S. leaves other big world economies behind

Mon, 2014-11-10 12:27

One reason for recent volatility in U.S. equity markets — and for remaining uncertainties about the resilience of the U.S. recovery — is a myriad of signs that the rest of the world is sinking economically. 

America's biggest trading partners in every direction face troubles: China is attempting to manage a measured slowdown in growth (from the 10 percent to the 7 percent range); Brazil’s boom has turned sour with lower commodity prices and corruption scandals; Europe’s malaise has not lifted after the recession, with rickety banks and risky government debt levels still unresolved; and Russia faces a host of troubles — from sinking oil prices and economic sanctions, to Olympic debts and a lack of rule of law.

By contrast, the U.S. economy is clearly on a path back to relative health and strength, says economist Paul Ashworth at Capital Economics in Toronto.

“It may sound strange, but the U.S. is the stand-out performer of the G7,” Ashworth says. The G7 includes the U.S. Canada, Germany, Italy, France, the U.K., and Japan. “Everything in the U.S. seems to be going in the right direction — the unemployment rate, the federal budget deficit below 3 percent of GPD.”

And some of what ails the rest of the world, actually juices the American economy, at least in the short run. In an uncertain world, rich foreigners and overseas companies are investing their money in U.S. equities and government bonds, explains Dean Baker at the Center for Economic and Policy Research.

“People buy up U.S. Treasuries because in the scheme of things the U.S. looks relatively safe,” Baker says. “That lowers interest rates, meaning people can refinance their homes, and pay lower rates if they buy a car or get a car loan.” 

But there is a flip-side — at least for many U.S.-based businesses — to the United States being the global standout among major developed and developing economies: a strengthening U.S. dollar. 

That makes it cheaper for Americans to buy Italian sunglasses, Japanese cars or foreign oil. But U.S. companies that export face more price competition from cheaper foreign-made goods.

And, says investment strategist Anthony Valeri at LPL Financial, U.S. companies may lose significant sales overseas, especially if the eurozone goes into recession again.

“If we do get a slowdown in Europe and in emerging markets, it will impact the profitability of domestic companies,” Valeri says. And that in turn could depress job-creation in the U.S. next year.

Doritos-flavored Mountain Dew exists

Mon, 2014-11-10 11:00

The Bahn Mi proved flavor fusion can taste great. Then cappuccino-flavored Lay's potato chips proved it can be a horrible mistake.

Now, in an effort toward total and complete flavor fusion chaos, Pepsico has confirmed reports that they are working on Doritos-flavored Mountain Dew. 

The "Dewitos" flavor apparently tastes strikingly similar to the traditional nacho cheesy, triangular chips, according to a post on Reddit. Sadly, it isn't Cool Ranch flavored. 

Your ultimate junk food fantasy (or nightmare) just came true.

Obama calls for net neutrality

Mon, 2014-11-10 11:00

Should there be slow lanes and fast lanes for content on the Internet? This is the province of the Federal Communications Commission, and has been long debated and litigated.

But President Obama today decided he needed to speak loud and clear on this, and tell the FCC what he thinks it should do. The president has long been against special fast lanes online. But this is the most direct he’s been, calling for “an explicit ban on paid prioritization and any other restriction that has a similar effect.”

The Federal Communications Commission is an independent agency. But the President called on the FCC to “create a new set of rules protecting net neutrality and ensuring that neither the cable company nor the phone company will be able to act as a gatekeeper, restricting what you can do or see online.”

The FCC is currently considering whether to treat Internet service providers like Verizon and Comcast like phone companies, which are regulated under Title II of the telecommunications law. Obama endorsed Title II today.

“We’re experiencing Title II right here,” says Craig Aaron by phone. He heads Free Press, an advocacy group lobbying for such neutrality. “Your call to me gets treated the same way as your call to the White House. You get to decide what the priority is going to be.”

For their part, Internet providers proclaimed “unprecedented government interference” and a predicted a crippling future of Mother-May-I rules.

“Let me be clear: this is all about how do you regulate the Internet,” says former FCC commissioner Harold Furchtgott-Roth, now with the Hudson Institute think tank. “And the obvious answer is, you regulate it the way you have the past 20 years, which is not at all.”

For all the sound bites, this issue is incredibly complicated, litigated, obfuscated.

But emerging from the weeds, Daniel Weitzner of MIT’s Computer Science and Artificial Intelligence Laboratory says the task for the FCC really is to keep the Web working as it does today. In his view, it does work.

“We know that companies both on the network side and on the edge as it were – the Amazons and Google and Twitters of the world – have all been able to grow,” says Weitzner.

The issue is where the Internet goes from here. Some analysts already see it moving in a direction of pay-to-play and more speed for the rich.

“That would be contrary to the way the Internet has worked and grown,” Weitzner says.

Businesses start to text, and problems emerge

Mon, 2014-11-10 11:00

In the Internet age, the line "I didn't get your text" has a real "The dog ate my homework”-feel to it. But it's also the truth for some Android users who are not getting messages sent from iPhones.

Those messages, sent to those who switched to an Android phone from an iPhone, was sometimes getting caught up in something of a iMessage black hole, because newly-Android phone numbers were stuck in their previous iMessage ecosystem.

"Anecdotally, I’ve experienced it with my wife’s friends,” says Wayne Lam, a senior analyst at Telecom Electronics.

Now, Apple has a website where you can delist your phone number from iMessage. But the fix comes long after anecdotes surfaced of not only lost personal texts, but of the bug causing problems for businesses.

Scott Irwin with Rembrandt Venture Partners, which focuses its investments on enterprise and business technologies, sees a growing trend in businesses adopting texts as an integral part of their daily operations.

"We think that the timing is good, and the need is very real,” says Irwin. “Employees… use various texting platforms in their personal lives, and that tends to bleed over into their professional lives as well, so this is creating the problem and therefore the opportunity.”

Irwin says employees are adopting consumer texting services for business use, which can have all kinds of problematic implications from the stand point of confidentiality, information security and compliance issues.

A number of services are now vying for the business texting market to help solve those problems. And anlysts there may be a shake-out coming among texting providers, as the business world increasingly adapts to the technology.

Meanwhile, companies are also looking at texting as an important tool in how they communicate with customers. 

Airlines are a perfect example, when they send text alerts with changed flight information, says independent telecom analyst Jeff Kagan.

"Some businesses are really moving into this aggressively. And other competitors in the same space are not,” says Kagan. "But over the course of the next several years, as other companies start to implement it themselves… then, you’ve got to use it or you’re in a disadvantage.”

“We’re in the early stages of seeing this form of communication become a real productivity tool,” says Lam, who adds that there are now a lot of companies entering the field.  

More texts from Nova and Dave.

(Photo: David Shaw)

The numbers for November 10, 2014

Mon, 2014-11-10 10:18

Stakes have been raised in the fight for an open Internet.

President Barack Obama took a strong stance for net neutrality on Monday morning. In a recorded statement, Obama called for the Federal Communications Commission to reclassify broadband as a utility, like water or electricity, under Title II of the Communications Act.

The FCC, which is independent from Congress and the White House, actively sought comment from the outside on the issue. FCC Chairman Tom Wheeler said the Commission would add Obama's input to the 3.7 million-comment pile that they've already received.

The FCC was originally expected to introduce new rules by the end of the year, but Wheeler has said they will take more time.

Republicans hope to update the Communications Act for the first time since 1996, and net neutrality will play a role. Texas Senator Ted Cruz signaled further politicization of the issue by calling net neutrality, "Obamacare for the Internet," in a tweet after the president's announcement.

Here are the other stories we're reading and numbers we're watching: 

45

"Sesame Street" debuted 45 years ago, on November 10, 1969. For the occasion, The Atlantic dug up their initial review of the show, which praised the muppets but lambasted the show's potential, thanks in part to its "great stress on the alphabet." On "Marketplace," we've explored Elmo's dominance in toy sales, "Sesame Street"-branded schools overseas and where different characters fall on the economic spectrum. What does Oscar the Grouch care about most during the election? Stimulus spending.

8,019,763

That's how many people bought a health plan using an insurance marketplace under the Affordable Care Act. The Kaiser Family Foundation estimates there are about 20 million more potential buyers. The latest iteration of Healthcare.gov went live Sunday night and open enrollment starts this weekend. Vox breaks down what to expect from round two of the ACA.

1 percent

That's the portion of Internet time people spend on Twitter, according to a Morgan Stanley chart featured on Quartz. Compare that to Facebook, which accounts to about 15 percent of time spent online. It's no wonder the company wants to publish content directly.  

Stuxnet, Digital Weapons, and Countdown to Zero Day

Mon, 2014-11-10 09:29

Stuxnet is a computer worm that was discovered in 2010 and was used against Iran's uranium enrichment program.

Kim Zetter's book "Countdown to Zero Day: Stuxnet and the Launch of the World’s First Digital Weapon" goes deep into the discovery of Stuxnet, how it was used and discovered in the past decade and the future of digital weapons. 

Stuxnet was designed not to steal anything or harm computers, but for mere sabotage of physical equipment. While Zetter agrees Stuxnet may have prevented a "kinetic war," she suggests it also opened the possibility of damage to critical digital infrastructure in the not-too-distant future.

"There’s no going back," she says.

Read an excerpt from "Countdown to Zero Day":

Prologue

The Case of the Centrifuges

 

It was January 2010 when officials with the International Atomic Energy Agency (IAEA), the United Nations body charged with monitoring Iran’s nuclear program, first began to notice something unusual happening at the uranium enrichment plant outside Natanz in central Iran.

Inside the facility’s large centrifuge hall, buried like a bunker more than fifty feet beneath the desert surface, thousands of gleaming aluminum centrifuges were spinning at supersonic speed, enriching uranium hexafluoride gas as they had been for nearly two years. But over the last weeks, workers at the plant had been removing batches of centrifuges and replacing them with new ones. And they were doing so at a startling rate.

At Natanz each centrifuge, known as an IR-1, has a life expectancy of about ten years. But the devices are fragile and prone to break easily. Even under normal conditions, Iran has to replace up to 10 percent of the centrifuges each year due to material defects, maintenance issues, and worker accidents.

In November 2009, Iran had about 8,700 centrifuges installed at Natanz, so it would have been perfectly normal to see technicians decommission about 800 of them over the course of the year as the devices failed for one reason or another. But as IAEA officials added up the centrifuges removed over several weeks in December 2009 and early January, they realized that Iran was plowing through them at an unusual rate.

Inspectors with the IAEA’s Department of Safeguards visited Natanz an average of twice a month—sometimes by appointment, sometimes unannounced—to track Iran’s  enrichment activity and progress. Anytime workers at the plant decommissioned damaged or otherwise unusable centrifuges, they were required to line them up in a control area just inside the door of the centrifuge rooms until IAEA inspectors arrived at their next visit to examine them. The inspectors would run a handheld gamma spectrometer around each centrifuge to ensure that no nuclear material was being smuggled out in them, then approve the centrifuges for removal, making note in reports sent back to IAEA headquarters in Vienna of the number that were decommissioned each time.

IAEA digital surveillance cameras, installed outside the door of each centrifuge room to monitor Iran’s enrichment activity, captured the technicians scurrying about in their white lab coats, blue plastic booties on their feet, as they trotted out the shiny cylinders one by one, each about six feet long and about half a foot in diameter. The workers, by agreement with the IAEA, had to cradle the delicate devices in their arms, wrapped in plastic sleeves or in open boxes, so the cameras could register each item as it was removed from the room.

The surveillance cameras, which weren’t allowed inside the centrifuge rooms, stored the images for later perusal. Each time inspectors visited Natanz, they examined the recorded images to ensure that Iran hadn’t removed additional centrifuges or done anything else prohibited during their absence. But as weeks passed and the inspectors sent their reports back to Vienna, officials there realized that the number of centrifuges being removed far exceeded what was normal.

Officially, the IAEA won’t say how many centrifuges Iran replaced during this period. But news reports quoting European “diplomats” put the number at 900 to 1,000. A former top IAEA official, however, thinks the actual number was much higher. “My educated guess is that 2,000 were damaged,” says Olli Heinonen, who was deputy director of the Safeguards Division until he resigned in October 2010.

Whatever the number, it was clear that something was wrong with the devices. Unfortunately, Iran wasn’t required to tell inspectors why they had replaced them, and, officially, the IAEA inspectors had no right to ask. The agency’s mandate was to monitor what happened to uranium at the enrichment plant, not keep track of failed equipment.

What the inspectors didn’t know was that the answer to their question was right beneath their noses, buried in the bits and memory of the computers in Natanz’s industrial control room. Months earlier, in June 2009, someone had quietly unleashed a destructive digital warhead on computers in Iran, where it had silently slithered its way into critical systems at Natanz, all with a single goal in mind—to sabotage Iran’s uranium enrichment program and prevent President Mahmoud Ahmadinejad from building a nuclear bomb.

The answer was there at Natanz, but it would be nearly a year before the inspectors would obtain it, and even then it would come only after more than a dozen computer security experts around the world spent months deconstructing what would ultimately become known as one of the most sophisticated viruses ever discovered—a piece of software so unique it would make history as the world’s first digital weapon and the first shot across the bow announcing the age of digital warfare.

Profits increase for luxury homebuilder Toll Brothers.

Mon, 2014-11-10 09:18

The luxury home builder Toll Brothers had some good news for shareholders today. Revenues for the quarter ending in October shot up by 29 percent.  Strong demand, especially on the West Coast, boosted the company's sales. 

This past year Toll Brothers has been aggressively expanding on the West Coast.  In southern California alone it’s developing five new communities.

But the strong quarterly showing from Toll may not say much about a wider housing market recovery. Toll focuses on the higher end of the homebuilding market, something that many homebuilders have been doing the past few years.

“Homebuilders have been serving the part of the market that’s been the healthiest, which has been older, move-up buyers that have home equity, that have more wealth,” says Robert Dietz, an economist with the National Association of Homebuilders.  

That trend has been reinforced by lenders chasing wealthy buyers, offering them surprisingly low rates on large “jumbo” mortgages.  The rates, in some cases, are even lower than those for standard loans. Housing economist Brad Hunter at Metrostudy hopes by next year, there will be signs of a broader recovery in the housing market.

“Our take is that rents are getting so high and job formations are getting better,” says Hunter.

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