Marketplace - American Public Media

China tells party officials to stop smoking in public

Thu, 2014-01-02 23:56

The new Party directive says smoking, “damages the image of the party and the government.”

So does rampant corruption – but smoking seems to be a more manageable vice among China’s ruling elite.

"The leadership wants local officials to change their style and become closer to the people," says Wu Yiqun, who helps head an anti-smoking NGO in Beijing. "Part of this is setting a good example by not smoking."

But old habits die hard.

When I approach three well-dressed smokers in their 50s outside a tobacco shop in Shanghai with my microphone, one of them drops his cigarette and dashes off. The second one retreats into the shop, and the third one, Gu Ziheng, takes a long drag of his cigarette before explaining the other two were "leaders," dodging the question of whether they’re government officials.

Gu thinks this smoking ban is a good idea. "To build a civilized society, you need economic support as a foundation," he says, conjuring Party talking points, "China’s developed into a stronger nation, so it must take care of its image."

As Gu says this, his friend who dashed off peeks his head out from behind a wall, and whispers loudly enough so we all can hear: “Don’t say anything bad about the party!”

Gu and I both nod, the man disappears, and we resume the interview.

Gu tells me this smoking ban has a lot to do with Xi Jinping’s crackdown on corruption. "Now - in China, you have high-end, and low-end, cigarettes," Gu explains, exhaling smoke. "Smoking high-end cigarettes means you’re corrupt."

Local officials in China have been caught using public money to buy expensive cigarettes as gifts to other officials. After Gu puts out his cigarette, his friend who retreated to the tobacco shop comes out with a red, shiny carton of Chunghwa cigarettes. They’re certainly not the highest-end cigarettes.  But Chunghwas, which cost a hundred dollars a carton, are commonly used as bribes in China.

As I stare at the candy apple red box, both men say awkwardly “we bought these with our own money.”

The third man remains partially hidden behind the wall, avoiding the microphone, unable to enjoy a smoke.

2014 Resolutions: Eric Sawchak

Thu, 2014-01-02 14:28

Happy New Year! In 2014, Marketplace Money will follow a few listeners from around the country who’ve resolved to make over their personal finance lives. We’ll be checking up on their financial New Year’s resolutions periodically throughout the year and see if they're achieving their goals!

Name: Eric Sawchak, 21
Location: Williamsburg, Virginia
Resolution: “I'm going to get a job this year after I graduate, hopefully. And I would like to start saving for all the long-term goals that I have, most specifically: retirement and planning ahead for the family that I'm probably going to have. My parents set me up with a Roth IRA a few years ago, so I kind of got the bug early."

"I'm not going to graduate with any debt because my parents set me up with a 529 [college savings plan], for which I owe my parents a whole load of thanks. I have a part-time internship, that provides me about $10 an hour for the 10 hours a week I work there, so I have a little bit of extra income. But when I graduate that's all pretty much going to stop, if I can't find a real job, full-time job, then ... geez, I don't even know what I'm going to do. But for the present, I'm in a pretty good situation."

Carmen says: “We can plan all we want, but it's gotta be: Start with now! So what are those immediate needs? What's going to happen is that your income ... that is going to fuel the expenses for your family in the future, your retirement. So without thinking about how that job is going to happen, you can't get at that money. Think about the practical about getting that job, which means living on your own. And what would those costs be? And you can estimate, 'How much would my budget be for rent? I would have to save up for first and last month's payment."

IBM was the only Dow company to fall in 2013, and yet ...

Thu, 2014-01-02 12:33

IBM finished last year with a sad-sounding distinction:  Its stock was the only one on the Dow Jones Industrial Average to lose value in 2013.  The average as a whole was up 26 percent—IBM’s share price went down 2 percent. 

But some say Big Blue, the company, looks a lot healthier than its stock’s performance.  IBM made money and paid dividends. And in the fast-changing tech world, it retains some big advantages. 

One of the biggest advantages is… being big. And being one of the companies big companies can rely on to take care of all their IT needs. Chief Information Officers for Fortune 500 Companies?  Not big risk takers. 

If I’ve got IBM, I’ve got a guy.

"And, I have one throat to choke," says Grady Burkett of Morningstar. "So if my guy messes up, I know exactly who to call."

All that integration means that for IBM’s customers, switching to another vendor isn’t a consumer's choice to switch from PC to Mac.  It’s more like getting a divorce.

IBM does its best to keep its customers happy by staying current, and playing catch-up when it needs to— sometimes by buying smaller, younger companies that have developed new technology.

For instance, cloud computing—which allows customers to rent server space instead of buying servers from vendors like IBM—is eating into sales. So last year IBM bought a company called Softlayer that specializes in providing cloud services. 

Andrew McAfee, a professor at MIT’s Sloan School of Business and author of Enterprise 2.0, thinks IBM’s star turn on TV a couple of years ago—as the builder of Jeopardy champ Watson—was a good sign.  "IBM did not build Watson just to play Jeopardy," he says.

Instead, IBM built Watson to compete with Google search, Apple’s SIRI, and other I-can-answer-that-question-for-you applications.  "Think about it applied to troubleshooting, applied to customer service, applied to medical diagnostics," he says. "The potential uses for a Watson-style technology are all over the place."  The company's website for Watson reflects these ideas.

The company's stock is likely to come back over time, according to Edward Jones analyst Josh Olson. "We think that over that longer horizon these fundamentals will shine through more, and that will be reflected in the stock price," he says.

In other words, the fast-moving stock market may yet catch up with this big, mature company.

The Edward Snowden effect: Tech in 2014

Thu, 2014-01-02 12:33

In 2013, the average U.S. citizen found out that almost everything we do on the web can be monitored by the NSA. 

Consumers responded with a collective shrug, at least in regards to their web browsing and spending habits. In other words, consumers haven't logged off of Google, Facebook, Yahoo or any of the PRISM companies en masse. 

The question for 2014 is how will enterprise -- or business customers -- respond?

"One of the things we do know is that a lot of these companies have come out saying that they're gonna put in extra measures like encrypting their emails as well as trying to figure out a way that the information going from server to server is secure. They're trying to up their game," says Marketplace's Queena Kim. "Of course, it's just a matter of time before the NSA ups their game and it becomes this arms race. Then the question is, 'Who starts paying for all these security measures.'"

Right now, analysts estimate that the NSA revelations could cost U.S. cloud computing providers anywhere from $35 billion to $180 billion in lost business. Analysts believe that foreign companies in Europe and Asia will be more hesitatant to do business with U.S. cloud providers.

Of course the difference betwee $35 billion and $180 billion is huge -- but it serves to highlight the uncertaintly facing those tech companies.  

Do people still try to 'Buy American?'

Thu, 2014-01-02 12:33

Fiat announced it is going to buy Chrysler in a $4.3 billion deal. Fiat had gotten control of Chrysler as part of a 2009 bailout deal overseen by the Obama Administration, but now Fiat will totally control Chrysler.

Chrysler is, of course, a very iconic American brand in a very iconic American industry, so should it brace for consumer backlash here in the U.S.? 

As it turns out, the answer might be yes.

We like to be patriotic when we shop. A recent survey by Perception Research Services found three-quarters of shoppers were more likely to buy something because it was 'Made in America.'

"What they tell us is it’s a concern for the economy," says Jonathan Asher, executive vice president the research firm. "They want to support jobs at home and that sort of thing."

Last year, Walmart launched a local product push and pledged to buy an additional $50 billion worth of U.S.-made goods over the next decade. A company spokesman said surveys showed 'Made in the USA' was very important to Walmart shoppers.

It also tends to be important to car shoppers.

"For some reason, automobile brands really get associated with the country that originated them," says Ira Kalb, a marketing professor at USC’s Marshall School of Business. But origins aren't so simple, especially when it comes to cars.

"What we've found is that Japanese, Korean as well as German manufacturers are increasingly building more and more of their product sold in North America in North America," says Michael Robinet, Managing Director of IHS Automotive.  

Still, people aren’t logical when it comes to brand loyalty and backlash says Kalb.

"Brand is a funny thing; it exists in the mind. In marketing, that’s what we do," says Kalb. "We’re sort of doing non-invasive brain surgery."

Kalb says a little brand-surgery might be in order for Chrysler. He says the company will need to address the fact it’s no longer American, especially with older consumers, who tend to care more about where things are made and tend to have more money to buy those things.

How Obamacare will change the emergency room

Thu, 2014-01-02 12:32

A new report looking at the Oregon Medicaid program compares emergency room use between the uninsured and people with Medicaid – the healthcare program for primarily low income and disabled people.

And the report already has pundits worked up, especially with 9 million Americans projected to newly sign up for Medicaid this year under the Affordable Care Act.

The reason this is so hot – at least politically - is because the report over turns conventional healthcare thinking. Harvard health economist Amitabh Chandra describes the theory.

“If we insure the uninsured, they are not going to use the emergency room and they are going to use less healthcare. So in the long run, insuring the uninsured saves us money,” says Chandra.

Affordable Care Act advocates have used this argument to say insurance should be expanded.

There’s just one thing: that’s not what happens.

“Its basic economics that I would teach my students,” says MIT economist Amy Finkelstein – one of the report’s authors.

“When you lower the price of something, people buy more of it," says Finkelstein. "That’s true of apples and bananas and it turns out it’s true of healthcare too.”

Finkelstein explains in Oregon the emergency room is free if you are enrolled in Medicaid. What she and her team found is that people on Medicaid use the emergency room 40 percent more than people without insurance. But it’s not just emergency room use that’s up.

Co-author Katherine Baicker says its primary care, preventative care, prescription drugs.

“That doesn’t mean that it’s inefficient, good or bad. It just means that insurance makes healthcare more affordable," Baicker says. "And that has both financial consequences and health consequences."

Based on this report, there are already estimates that increased ER use will cost taxpayers half a billion dollars a year. This is the very definition of a political football, which is why details in this report matter.

First, nearly 60 percent of all the people on Medicaid in the study didn’t go to the emergency room at all over 18 months.

Second, when people with private insurance were given more generous private health coverage they healthcare use went up, too. And perhaps most important, Harvard’s Amitabh Chandra says when it comes to money, this isn’t where the action is.

“The spending is not in the emergency room. The spending is on high cost patients. These are cancer patients. Many of them in the end of life,” he says.

The Oregon report found emergency room use accounted for between 10 and 15 percent of patient costs.

Chandra says it would be easy to use this report and argue that the Affordable Care Act is too costly.

He says the big question – the tough question – is how to limit the care everyone agrees is inefficient and expensive, regardless of who gets it or where that care is received.

Holocracy: How Zappos could change corporate America

Thu, 2014-01-02 12:27

First it was open office space, and now its open management.

The tech world continues to turn traditional office structure on its head with a radical operational system of self-governing with no job titles and no managers. It's called holocracy and the term derives from the greek word 'holon,' which means a whole that's part of a greater whole.

Nancy Koehn, historian at Harvard Business School, relates the organizational structure to an early tech startup.

"[They] work like little villages, everyone pitches in, everyone is responsible for solving the next problem or putting out the next bonfire," Koehn says. "There's very little attention and very little formal structure around things like job titles, the purview of one's responsibility, or how one's measuring up."

Holocracy is not a new concept in the tech world. Twitter co-founder Evan Williams uses the system to run his 50-employee publishing platform Medium. But this doesn't end the role of bosses entirely, especially when it comes to pay.

According to Koehn, CEO's are going to have to "give up some of the gold and some of the scepter."

Pope Francis drew 6.6 million to Vatican in 2013

Thu, 2014-01-02 11:47


Lizzie O'Leary at Palm Sunday Mass, 2013.

Our final note on the show today is about a CEO, of sorts, who had a banner year revitalizing a brand and essentially tripling business.

Pope Francis isn't always thought of as an executive, but these numbers are pretty startling. Pope Francis drew more than 6.6 million people to his masses, audiences and events in Vatican City from March 2013 until the end of the year. That contrasts with 2.3 million for Pope Benedict in all of 2012.

I was there for Francis's Palm Sunday Mass. Crowds farther than I could see.

New Year's resolution: Don't get hacked

Thu, 2014-01-02 08:07

For some tech companies, hopes to not get hacked in 2014 have already been dashed.

Self-destructing messaging app Snapchat is on the defensive this week. 4.6 million user names -- and their associated phone numbers -- were leaked in a security breach. And Microsoft calling service Skype has become the latest victim of the hacking unit calling itself the Syrian Electronic Army. That's after the S.E.A. apparently hacked into Skype's Twitter and Facebook accounts and started broadcasting messages telling people not to use Microsoft because the company sells data to governments. The BBC's Dave Lee joins us to help explain.

Click the audio player above to hear more.

After rescue, a question: Who owns Antarctica?

Thu, 2014-01-02 07:33

Down in Antarctica, those researchers trapped in the ice are finally on their way home.

The rescue operation was an international one. A Chinese helicopter shuttled stranded researchers from the Russian ship to an Australian icebreaker.

International cooperation is sort of the theme in Antarctica; a place for science, not business. But considering its untapped natural resources, can Antarctica remain unpolluted by economic interests?

For a long time, there’s been speculation about the natural resources buried under Antarctica. It remains only speculation for a good reason.

“At the South Pole, the ice is over 9,000 feet thick. So even getting down to terra firma to find out whether or not there were minerals or resources there would be very difficult,” says Frank Klotz, a senior fellow at the Council on Foreign Relations.

Klotz says the U.S. should keep a presence in Antarctica in order to maintain influence over how the continent is governed.

Under an international treaty, Antarctica is kept as an icy lab for scientists.

Ohio State University geologist Berry Lyons is headed to Antarctica next week.

“The international cooperation is probably unique. And a really good model for international cooperation,” says Lyons.

But that international model cuts both ways. For example, the governing body in Antarctica works on consensus.

“Their version of consensus is that everyone unanimously has to agree to a proposal in order for it to move forward,” says Andrea Kavanagh, director of The Pew Charitable Trusts’ Southern Ocean sanctuaries project.

She’s been working to extend protections for the marine life around Antarctica because fishing boats are finding their local waters are all fished-out.

“And that’s why Antarctica has become a great, new, lucrative fishing ground,” says Kavanagh.

The big prize in those waters is Chilean sea bass. Because of its high price per pound, fishermen call it ‘white gold.’

Instead of cooperation, there’s international competition to net the Antarctic fish.

Who owns Antarctica?

Thu, 2014-01-02 07:33

Down in Antarctica, those researchers trapped in the ice are finally on their way home.

The rescue operation was an international one. A Chinese helicopter shuttled stranded researchers from the Russian ship to an Australian icebreaker.

International cooperation is sort of the theme in Antarctica; a place for science, not business. But considering its untapped natural resources, can Antarctica remain unpolluted by economic interests?

For a long time, there’s been speculation about the natural resources buried under Antarctica. It remains only speculation for a good reason.

“At the South Pole, the ice is over 9,000 feet thick. So even getting down to terra firma to find out whether or not there were minerals or resources there would be very difficult,” says Frank Klotz, a senior fellow at the Council on Foreign Relations.

Klotz says the U.S. should keep a presence in Antarctica in order to maintain influence over how the continent is governed.

Under an international treaty, Antarctica is kept as an icy lab for scientists.

Ohio State University geologist Berry Lyons is headed to Antarctica next week.

“The international cooperation is probably unique. And a really good model for international cooperation,” says Lyons.

But that international model cuts both ways. For example, the governing body in Antarctica works on consensus.

“Their version of consensus is that everyone unanimously has to agree to a proposal in order for it to move forward,” says Andrea Kavanagh, director of The Pew Charitable Trusts’ Southern Ocean sanctuaries project.

She’s been working to extend protections for the marine life around Antarctica because fishing boats are finding their local waters are all fished-out.

“And that’s why Antarctica has become a great, new, lucrative fishing ground,” says Kavanagh.

The big prize in those waters is Chilean sea bass. Because of its high price per pound, fishermen call it ‘white gold.’

Instead of cooperation, there’s international competition to net the Antarctic fish.

PODCAST: Fiat buys the rest of Chrysler

Thu, 2014-01-02 06:39

The FT100 in London is down about a tenth percent on this first day of trading in 2014. Dow, S&P and Nasdaq futures are all down. The number of people signing up for unemployment benefits dipped slightly in the last week, a hint that the job market is holding steady.

The Italian carmaker Fiat has reached a deal to buy the rest of American automaker Chrysler, something it has wanted to do for years. Fiat hopes the deal will make it easier for them to compete with companies like Toyota and Volkswagen. Perhaps more importantly, Fiat desperately needs some of Chrysler’s cash.

And, foreclosures are way down from the worst of the housing crisis. But as we start this new year, don’t be surprised if some places see a rise in foreclosure sales. That’s because foreclosures that have been slowly working their way through judicial pipelines are now coming to market. That may prove a rude awakening in some areas.

Fiat hopes Chrysler deal will help it compete with VW, Toyota

Thu, 2014-01-02 06:07

The Italian carmaker Fiat has reached a deal to buy the rest of American automaker Chrysler, something it has wanted to do for years.

“The main reason is it will allow them to fully integrate as one company,” says Michelle Krebs, senior analyst with Edmunds.com.

Fiat hopes the deal will make it easier for them to compete with companies like Toyota and Volkswagen. Perhaps more importantly, Fiat desperately needs some of Chrysler’s cash.

According to analyst Dave Sullivan, with AutoPacific, Europe’s anemic economy hasn’t been good for auto sales.

“Chrysler is really helping to keep Fiat afloat during these difficult times,” he says.

Fiat’s relationship with Chrysler goes back to 2009, when Chrysler was in bankruptcy.

“I mean, you could say that Fiat was basically gifted a stake in Chrysler,” Sullivan says.

The rest of the company went to the UAW Retiree Medical Benefits Trust, which had considered an IPO to sell its shares.

With this agreement, that won’t happen. The UAW will sell its ownership stake in a deal valued at more than $4 billion.

Fiat reaches deal to buy rest of Chrysler

Thu, 2014-01-02 06:07

The Italian carmaker Fiat has reached a deal to buy the rest of American automaker Chrysler, something it has wanted to do for years.

“The main reason is it will allow them to fully integrate as one company,” says Michelle Krebs, senior analyst with Edmunds.com.

Fiat hopes the deal will make it easier for them to compete with companies like Toyota and Volkswagen. Perhaps more importantly, Fiat desperately needs some of Chrysler’s cash.

According to analyst Dave Sullivan, with AutoPacific, Europe’s anemic economy hasn’t been good for auto sales.

“Chrysler is really helping to keep Fiat afloat during these difficult times,” he says.

Fiat’s relationship with Chrysler goes back to 2009, when Chrysler was in bankruptcy.

“I mean, you could say that Fiat was basically gifted a stake in Chrysler,” Sullivan says.

The rest of the company went to the UAW Retiree Medical Benefits Trust, which had considered an IPO to sell its shares.

With this agreement, that won’t happen. The UAW will sell its ownership stake in a deal valued at more than $4 billion.

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