• Jockey supports changes to bra size


    video from Jockey International

    Jockey International--famous for its middle-market, practical underwear--is boldly attempting to revolutionize the bra industry by re-inventing the sizing standards and procedures. Their website promotes, "The Bra, Re-Invented."

    This is a big risk. Here is the procedure:

    • the customer has to put down $19.95 on their credit card to order a "fitting kit."
    • the price of the kit goes toward the purchase of a bra
    • the bra costs $60

    There are price-point issues here, and educational issues about sizing here--how many Americans even understand totally what "volume" really means, let alone volume bra sizing.  Bra fitting has come to be an ordeal already. Now--Jockey is adding "foreign" sizing to the mix?  This is pretty hard to take. How many American women know their European shoe size?

    I do know my European shoe size (39), but this might be a little more challenging.  I look forward to seeing how these fitting kits are received, and whether the $60 price point for the bras is sustainable.

    Source:   "A New Step in Wrestling With the Bra," by Stephanie Clifford, New York Times, May 29/30, 2013.

    Follow up:

    • Do you think this could work, or is it a marketing disaster waiting to happen? Cite the issues you can determine. Use details from the website to support your conclusion.
  • China brings home the bacon

    image from CNN

    The Chinese people, experiencing some economic stability, have a big need for pork as a diet mainstay in economically decent times. The problem: demand exceeds domestic supply. The solution: Buy American.

    image from npr.org

    China has entered into a contract to purchase the U.S corporation, Smithfield Packing Company, Inc., for $4.7 billion. Talk about bringing home the bacon! "This is a sign of a maturing agriculture industry in China," said Scott Rozelle, an expert on Chinese agriculture policy at Stanford University. "Chinese companies want more control over food. We're going to see a lot more deals like this."

    An article in the Wall Street Journal backs up this prediction:

    What will China be buying next????

    Source:   "Chinese Firm to Buy Pork Producer Smithfield Foods," by Ken Bensinger and Tiffany Hsu, Los Angeles Times, May 29, 2013.

    Follow up:

    • Do you like the idea of a Chinese firm owning a major American meat producer? Why or why not? Look at your reasoning...is it based on facts and evidence or fear of the unknown?
    • Read subsequent follow up articles by doing internet research. What U.S. entities were also behind this acquisition?
    • What does the idiom "bringing home the bacon" mean?
  • Philippines' growth rate higher than China's

    image from antipinoy.com

    The Philippines' GDP (Gross Domestic Product) rate for the last quarter was more than 7%...and more than China's GDP.  Why is this? Marketplace's David Brancaccio interviewed Mariko Oi to ask: "Why?"

    She reported that the Chinese economy growth has slowed, and that the Philippine economy has been underperforming in past quarters. The growth in GDP has come primarily because spending is up.  But the causes of spending might not be sustainable, and are not intrinsic to the Philippine business sector.

    The growth comes from two areas: money sent home from Philippine ex-patriots, and government spending on infrastructure.

    I am curious about the effect of US outsourcing of jobs to the Philippines.  I would have thought that would have been a contributor. We will see how things look next quarter... 

    Source:   "The Philippines Tops China in GDP Growth," Interview with Mariko Oi, Marketplace Morning Report, May 30, 2013.

    Follow up:

    • What is GDP?  Compare and contrast it with GNP. Which indicator measures the more sustainable factors?
    • What factor did Mariko Oi mention regarding the Philippine economy that was not a positive indicator?
  • Food boycotts: there's an app for that!

    boycott list from ascendingstarseed.wordpress.com; repurposed from Monsanto press materials

    If you don't like the effects of genetically modified ("GM") food production, you could carry around the "easily printable" one-page list above...or you could get the app "Buycott."

    image from veracitystew.com

    The convenience of the app makes it easy to know what to boycott (if that is what you want to do).  By the way, a boycott is a marketing tool used to spread awareness about (and have financial impact upon) companies' products or behaviors. A boycott is a way to voice an opinion in the marketplace. According to the article in Forbes, the Buycott app is useful because a scan of the barcode will display the "family tree" of the food--the corporate family, that is.

    If you don't know much about this particular boycott, you are not alone. Particularly in the United States, many people like genetically modified foods.  Some people have no opinion about them or are not interested in learning about what they are.  But genetically modified foods are not popular in Russia and Europe.

    The Ministry of Natural Resources and Environment (MNRE) of the Russian Federation released minutes from last week's meeting between Russian President Vladimir Putin and U. S. Secretary of State John Kerry. Putin had refused to meet with Kerry for three hours to register his country's "extreme outrage" at Obama's support for Monsanto and Syngenta AG. These companies are major producers of genetically modified foods and pesticide-laced plant seeds. But it was the seeds embedded with neonicotinoid pesticides* that caused the most outrage. Those pesticides have been implicated in the world-wide collapse of beehives, which may have long-term effects on food production.

    The European Union took action in April this year to ban neonicotinoid pesticides. Perhaps due to the political climate in the wake of that decision, Monsanto announced through its European spokesman, Brandon Mitchener, that it would no longer be lobbying to build any plants on the continent due to "low demand" by European farmers.

    But Monsanto is not withdrawing from the global food market. The business of food is the biggest business of all--a business with constant and growing demand. It will continue to be focus for production, sales, marketing and diverse opinions.

    Sources:   "Monsanto Gives Up Fight for GM Plants in Europe," hg/mz,  Deutsche Welle, via Organic Consumers, May 31, 2013.

    "New App Lets You Boycott Koch Brothers, Monsanto and More by Scanning Your Shopping Cart," by Clare O'Connor, Forbes, May 14, 2013.

    "Russia Warns Obama: Monsanto," from the minutes of the Ministry of Natural Resources and Environment of the Russian Federation (MNRE), reported by TopInformationPost, a Digital News Aggregation, May 28, 2013.

    * note: the neonicotinoid pesticides were developed by a different corporation, Bayer AG

    Follow up:

    • If you feel uncomfortable about GM (genetically modified) food, do you buy happen to buy any products on the Monsanto list? Do those particular products contain genetically modified foods? If you had an app, would you consider using the app to help you shop? Would you carry a paper list to keep track of items to boycott?
    • If you do not think GM food is an issue, do you think it is fair that boycott movements exist that seek to financially harm the companies that make these foods? What would you include in a marketing campaign to counteract the boycott?
  • Apple, Inc.: tax hero or tax villain?

    comic image from mashable.com

    Apple, Inc. uses aggressive tax-avoidance schemes to reduce their tax liability by billions. This is at a cost to American citizens, who must pick up the tab by paying taxes on their own income, or by forgoing the government services that those billions would provide. Tim Cook, CEO of Apple, is the first to admit this is true...and did so at recent Congressional hearings.

    Does he agree with the laws that allow Apple to pay so little in taxes?  He made it sound as though he did NOT agree with them.  But Cook and other Apple managers have a fiduciary responsibility to Apple shareholders to take advantage of all legal loopholes to maximize Apple's bottom line. So under current law, Apple will continue to avoid billions in taxes.

    It is up to Congress to change the tax code to fix this situation.

    Here's what Apple did: Early on, it set up foreign subsidiaries in Ireland. Apple directs its foreign earnings (which make up 60% of its profits) through the Irish subsidiaries. The tax on those earnings? Zero. Forbes reports that there are additional shell corporations, which own operations in China but are also housed in the tax haven of Ireland. Many of these entities have no "tax residence" and avoid taxes quite successfully.

    U.S. citizens could be losing 90 billion in revenues annually due to similar schemes. Should this situation be fixed? Even Tim Cook thinks so.

    Source:   "Apple's Taxes Expose the Rotten U.S. Code," Bloomberg editorial board, Bloomberg News, May 21, 2013.

    Follow up:

    • What do you think: should loopholes exist as a reward for smartest-entity-in-the-room corporations (and their tax lawyers)? Why or why not?
    • If the rules were suddenly changed, what might be the consequences for Apple shareholders?  Is this fair?
    • What should minimum tax rates be?
  • "Jedi mind trick" for the economy

    cartoon from www.dailybail.com

    "Quantitative Easing" ["QE"] is a controversial practice that seems difficult to understand. Cartoonists have had a field day with it. Now, in celebration of the 30-year anniversary of "The Return of the Jedi," there is a far-fetched analogy to "Star Wars" to help explain it.

    Here is how things are explained in the movie:

    "After Luke Skywalker found out that Darth Vader is his father, he accused Obi-Wan Kenobi of lying to him. Obi-Wan said it wasn't a lie from...a certain point of view.

    'A certain point of view?' Luke asks.

    'You're going to find that many of the truths we cling to depend greatly on our own point of view,' Obi-Wan replies."

    In other words, a "Jedi mind trick." Fans of the movie franchise will remember other instances where Obi-Wan tells an outright lie that seems like the truth to the extraterrestrial being hearing it.

    Quantitative Easing can be looked at from more than one point of view. QE is the practice of the central bank (the Federal Reserve) buying assets from big commercial banks...for the purpose of "keeping money flowing." It is supposed to stimulate lending, which in turn is supposed to create jobs.

    Critics see QE another way. They say:

    • "it's only a matter of time before QE causes inflation,"
    • "it's creating artificial price bubbles,"
    • "it hasn't had any noticeable impact on unemployment."

    Meanwhile, Ben Bernanke is spending $89 billion a month of the Fed's money on mortgage-backed securities and other bank assets. That's a lot more money than any of those "Star Wars" movies made.

    Source:   "What 'Star Wars' has to do with QE," by David Weinberg,  Marketplace, American Public Media,  May 24, 2013.

    Follow up:

    • What is a good analogy for "quantitative easing" relating to people of college age?
    • Who is Ben Bernanke and what is his monetary philosophy?
    • To put this spending in perspective, how much money did "Return of the Jedi" make in its initial release? How about over time, including DVDs?
  • Productivity issues that hurt employers

    image from cbsnews.com

    According to the first quarter report from the Bureau of Labor Statistics, unit labor costs increased, as they have over the last four quarters. When unit labor costs increase, it means that productivity has fallen per dollar paid.

    This will come as no surprise to those of us who have found ourselves wasting time when we should be working. YouTube, anyone? Pinterest? Of course, workplace distractions have existed in other forms for as long as workers have sat at a desk.

    But social networking is not the only drain on productivity for businesses. Here are some of the other ways that employees "cost their companies billions":

    • Turnover: it costs and average of $3,500 to hire and train an $8/hr worker.
    • Workers under high stress can cost employers 40% more (lost productivity, worker's comp claims, health care costs, ramifications of "shortcuts").
    • Workplace bullying can result in turnover, litigation and related costs (workdoctor.com).
    • Personal behaviors (substance abuse, including over-eating) can lead to lateness, absenteeism, and increased on-the-job accidents.
    • Mental and physical health issues related to grief or domestic violence have huge productivity costs.
    • Thievery and fraud--usually committed by those who have not committed other crimes--result in almost half of the inventory shrinkage experienced by employers.

    These problems could certainly explain why employers resist hiring!

    Sources:   "14 Surprising Ways Employees Cost Their Companies Billions in the Workplace," by Eric Goldschein and Kim Bhasin, The Business Insider,  November 29, 2011.

    "First Quarter 2013, Preliminary" Bureau of Labor Statistics, May 2, 2013.

    Follow up:

    • Has your employer absorbed any of the costs described for you? Or for your family or friends? How would you handle these issues if you were in charge?
    • If you have had any job for several years--or you know someone else who has--how has productivity INCREASED over the last decade? Which of the "costs" delineated above arise from that increase in productivity?
  • Budget chic day: Weddings by Target

    Target Bridal Collection; image from www.shefinds.com

    Target (or, as some pronounce it, "Tar-jhay' ") is a budget retailer that has done a good job of branding itself as more hip than other budget retailers such as Walmart. Target has recently entered what is often a very high-end market: wedding apparel.  Commentators have noted that the dresses look pretty good.  Even better, the line of dresses for bridesmaids offer a budget-conscious choice for an item of clothing that might only be used once.

    One time-honored way to evaluate a "capital purchase" is to spread the costs of that purchase over the number of times it will be used.  In manufacturing, a stamping machine's costs might be spread out over the number of products that it can make. In retail, the McDonald's "shake" machine might be costed out in terms of how many drinks it can produce over its useful life.

    The cost-per-use of a wedding dress or bridesmaid dress can usually be spread over only ONE use. So keeping the costs low is a good financial decision.

    Target wedding and bridesmaid dresses; image from www.glamour.com

    Sources:   "And the bride wore...Target: the growth of budget wedding dresses," by Sally Herships, Marketplace, American Public MediaMay 24, 2013.

    Follow up:

    • What is your favorite piece of clothing or footwear?  What did it cost? What is the cost-per-wear?
    • What piece of clothing have you only used or worn once or twice? What is the cost per wear of that item?
    • Have you ever been in a wedding party?  What did you spend on clothing? Would you consider Target as a clothing source for a wedding you were planning? Would a Walmart wedding get the same consideration? Why or why not?
  • IRS focus on "tea party" non-profits: Not all bad for the American taxpayer


    The IRS is responsible for approving organizational designations on corporations that have different responsibilities and privileges. An entity can be incorporated with various intentions:

    • as a profit-making, tax-paying corporation (C corporation, S corporation, LLC)
    • as a non-profit, charitable corporation--501(c)(3)--organized to conduct educational or other non-taxable activities
    • as a different kind of non-profit, 501 (c) corporation that is subject to additional scrutiny because its activities are not 100% non-taxable or not 100% charitable.

    One type of special-scrutiny non-profit corporation is a 501(c)(4) corporation, which is a "social welfare organization" that has sometimes been called a "charity-lite" corporation.  The bad news for organizations with this designation is that the contributions made to it are not deductible for tax purposes.  The good news for these organizations is that once they have received initial approval from the IRS, these types of organizations can spend freely on "social welfare" activities.  This is sometimes a euphemism for  lobbying. They can also support partisan political candidates without a limitation on contributions. In addition, this type of corporation can give benefits to individuals and groups that are not part of a charitable class.

    The recent scandal involving the IRS's scrutiny of "Tea Party" organizations stemmed from the Cincinnati office's decision to maximize their efficacy by investigating organizations whose names suggested "political" rather than primarily "social welfare" intent.  Some of these organizations had mistakenly applied to be charities [under the (c)(3) designation], so the scrutiny was, at least in some cases, well-founded and saved taxpayer dollars. The Cincinnati office also tapped left wing organizations in their sweep, but the number of "Tea Party" applications far outnumbered those with other political leanings. This created the appearance of bias, and led to managers being fired or placed on leave.

    Nevertheless, the attention that the scandal has brought to the 501(c)(4) status highlights the need for further study. 

    Sources:   "Confusion and Staff Troubles Rife at IRS Office in Ohio," by  Nicholas Confessore, David Kocieniewski and Michael Luo, New York Times, May 15, 2013

    "Don't Throw the IRS Under the Bus," by Peter Reinhart, The Daily Beast, May 20, 2013.

    "Should 501 (c) (4)'s be eliminated?" by  Rosemary Fei, John D. Colombo, et. al., Room For Debate, New York Times, May 15, 2013.

    Follow up:

    • Distinguish between a "C corporation," an "S corporation,"  an LLC (limited liability corporation), a 501(c).(3) corporation and a 501(c)(4) corporation.
    • Do you think that the 501(c)(4) designation for a political non-profit should be eliminated?  Why or why not? What specific changes could make the organizations more accountable to the public?
  • Major U.S. retailers refuse to sign Bangladesh safety agreement

    MSNBC clip posted on YouTube May 17, 2013

    "We are not even talking about wages here. We are just making sure that a building doesn't fall on top of you...and kill you...There is an obvious and irrefutable moral case for these companies to do that."

    image from www.demotix.com

    In response to the outrage in the face of the recent Rana Plaza tragedy (notwithstanding many previous accidents due to a lack of safety controls), several retailers, led by Swedish-based H&M, have signed on to a five year contract to improve safety conditions in Bangladesh. According to the New York Times, "The plan requires companies to have rigorous independent inspections and to help pay for fire safety upgrades, like adding fire escapes, which many factories still lack." These are the retailers who HAVE signed the pledge (it looks as though these are mostly foreign-based):

    • Benetton
    • H&M
    • Zara (Inditex)
    • Tesco
    • Marks & Spencer
    • PVH (Phillips-Van Heusen, USA), owners of Calvin Klein and Tommy Hilfiger

    These are some of the retailers who have refused to sign the pledge as of May 19, 2013:

    • GAP
    • Target
    • Walmart
    • Macy's
    • Sears
    • JC Penney
    • The North Face
    • Kohl's
    • Made In The Shade
    • OshKosh
    • Nordstrom's
    • American Eagle Outfitters
    • FootLocker

    Retailers refusing to sign the pledge have cited the risk of lawsuits. There are also concerns that participation may result in higher clothing prices for U.S. consumers.

    Sources:   "GAP, Target Walmart: American Retailers snub Safety Agreement for Bangladesh," reported by Chris Hayes, MSNBC, May 17, 2013.

    "As Firms Line Up on Factories, Walmart Plans Solo Effort," by Stephen Greenhouse, The New York Times, May 14, 2013.

    "H&M, Zara, and other Brands Pledge to Help Bangladesh," by Julie Ma, New York Magazine, May 13, 2013.

    "Bangladesh Factory Accord: At Least 14 Major North American Retailers Refuse to Sign," Huffington Post, May 17, 2013 and May 20, 2013.

    Follow up:

    • Is this a serious business dilemma, or a no-brainer, as the broadcaster seems to assert? What are the issues?
    • How many people were killed in the Rana Plaza factory, according to the video story? What would be the public reaction if that tragedy happened in the USA?
    • Would you pay more money for a pair of jeans if you knew they were produced in a safe factory? That is, would you be more likely, knowing about this agreement, to purchase clothes from H&M rather than the GAP? Why or why not?
  • Spanx Billionaire signs onto the Giving Pledge

    Sara Blakely, the 42-year-old billionaire-entrepreneur behind the shapewear company Spanx, signed the Bill Gates/Warren Buffett "Giving Pledge" this month.  She was one of eight new signatories to the visionary agreement, but made headlines because of her status as a young, female, self-made billionaire (she owns 100% of her company).

    The Giving Pledge is "is a commitment by the world's wealthiest individuals and families to dedicate the majority of their wealth to philanthropy." Its current page of "Pledger Profiles" includes 114 signers, among them:

    There has been some criticism that the Giving Pledge does not have a plan mapped out to achieve certain goals, and that it allows mega-foundations to influence public policy by influencing social services. Nevertheless, the commitment to spend wealth on philanthropic pursuits does keep the money in circulation--benefiting the economy--and it allows the wealthy individuals the right to direct their funds as they see fit. And, of course, philanthropic giving creates a tax deduction. 

    Sources:   "Spanx mogul Sara Blakely Becomes First Female Billionaire To Join Gates-Buffett Giving Pledge," by Clare O'Connor, Forbes Magazine, May 7, 2013

    "Philanthropic campaign by Gates and Buffett gets more pledges," by Tom Brown, Reuters, May 7, 2013.

    Follow up:

    • Read up on one of causes that Sara Blakely funds:  The Empowerment Plan. What would you invest in if you were a wealthy individual who had signed this pledge?
    • Do you think that the Giving Pledge is controversial? Why or why not?
  • Productivity stagnation in the internet age

    posted on YouTube, March 9, 2012

    The video posted above is just for fun. The humor works because those of us who have used Mac computers are all-too-familiar with the "Rainbow Circle of Death" that signals a computer "time-out." The appearance of the troubling animated icon during a public speech (particularly one as viral as a TED Talk!) should be a warning to all students and marketers getting ready for a presentation. Make sure that your materials are downloaded and working when timeliness counts. And bring that thumb drive as a back-up.

    But not all computer-related loss of productivity is due to the computer "hanging." Waiting for the computer to recover from whatever triggered its "time-out" is one form of lag-time in the computer world.  But there are other ways in which the computer environment has not delivered the efficiencies that were imagined or promised. John Cassidy laid out the history of our internet expectations in his New Yorker article from April 2013.

    • In the late 1990's, economists (including the Fed's Alan Greenspan) thought that computers and the internet would lead to a growth in productivity and its related growth in salaries and wages.
    • Between 1996 and 2000, labor productivity grew 2.75% annually.
    • After the internet bubble burst in 2000, labor productivity continued to rise: between 2001 and 2004, productivity went up 3.5% annually.
    • 2005: social networking begins; people became "permanently online." But: the productivity growth rate dropped to 1.5% per year.
    • 2011: productivity increase is only 0.6 to 0.7% annually.
    • 2012: productivity DECREASES by 1.9%.

    So, basically, since 2005 the rates of productivity have been worse than before the Web was a commercial presence. And the trend is getting worse. Of course, this trend is not all the fault of the Rainbow Circle of Death.

    One cause, according to Business Insider, is insomnia--which is partly the result of late-night internet surfing. But Cassidy cites other reasons in his New Yorker article. He quotes Robert J. Gordon of the Center for Economic Policy Research:

    "Many of the inventions that replaced tedious and repetitive clerical labor with computers happened a long time ago, in the 1970s and 1980s. Invention since 2000 has centered on entertainment and communication devices that are smaller, smarter, and more capable, but do not fundamentally change labor productivity or the standard of living in the way that electric light, motor cars, or indoor plumbing changed it."

    In other words, the iPad, the iPhone and the Samsung Galaxy may be fun and cool, but they are not "game-changers." They don't really do anything new that is productive. They just make leisure activities more accessible.  But not everyone agrees with Mr. Gordon. Kevin Kelly, of Wired, postulated that people 80 years in the future will have this view:

    "Gordon missed the impact from the real inventions of this revolution: big data, ubiquitous mobile, quantified self, cheap AI, and personal work robots. All of these were far more consequential than stand alone computation, and yet all of them were embryonic and visible when he wrote his paper. He was looking backwards instead of forward.”

    We'll have to wait and see who is right...

    Sources:   "What Happened to the Internet Productivity Miracle?," by John Cassidy, The New Yorker,  April 2, 2013.

    "Is U.S. Economic Growth Over?" by Robert J. Gordon, Center for Economic Policy Research (CEPR), September, 2012.

    Follow up:

    • How does internet access SAVE you time?  In what ways does the internet LOWER your productivity?
    • How does doing work on a computer--aside from the time you spend on the internet--save you time? In what ways does the computer
  • "Rich people like me don't create jobs"

    Nick Hanauer is a consultant, venture capitalist, and billionaire based in Seattle, Washington. He was an early investor in Amazon.com and in the predecessor company to Overstock.com. The controversial TED Talk posted above was delivered last year. Hanauer had previously written an editorial piece for Bloomberg on the same topic.

    Hanauer makes the following points in his talk:

    • "We capitalists are not job creators. New hiring is only done as a last resort."
    • "In a capitalist economy... the true job creators are middle class consumers."
    • "The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff."
    • "Taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich."
    • "Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent."

    His perspective is based on experience with dozens of companies in a wide range of industries. His viewpoint is not based on short-term self-interest, which would cause him to advocate anything that would lower his taxes on income produced by the wealth he has already accumulated.  Instead, he is advocating for a public policy position that would produce the most sustainable and robust economic climate for the greatest number.

    He is not the only billionaire that supports higher taxes and government policies that stimulate job creation in the public sector when unemployment is up and the economy is stagnant. Warren Buffett promoted a tax plan that was deemed "Smart, Fair and Reasonable," by Business Insider.  Nevertheless, Hanauer's ideas are controversial...but worth thinking about.

    Sources:   "A TED Talk on Income Inequality by Nick Hanauer," by Nick Hanauer, TED Talks, delivered in March 2012, but not published until May 12, 2012.
    "Employment Situation Summary," Bureau of Labor Statistics, April 2013.

    "Raise Taxes on Rich To Reward True Job Creators: Nick Hanauer," op-ed piece by Nick Hanauer, Bloomberg.com News, November 30, 2011.

    Follow up:

    • Read or listen to Nick Hanauer's piece, then research the Laffer Curve , which was a graph of government receipts versus tax rates that was supported by Republicans Gerald Ford, *** Cheney and Donald Rumsfeld. Based on these sources, what conclusions can you draw about the thesis that tax increases for the wealthy benefit everyone?
    • Looking at the Laffer curve model, what is the tax rate that is most beneficial for government revenues? Research the unemployment rates when a maximum marginal tax rates were equal to this rate. What conclusions might you infer from this data?
    • What other ways could you analyze the relationship between tax rates, unemployment, and government revenues (i.e. government expenditures), and what other conclusions might you draw?
  • Cyber bank robbery

    Seven sophisticated cyber criminals, part of a global network, recently stole $45 million from multiple locations in a matter of hours.  Here is the basic overview of how investigators are imagining the perpetrators pulled if off:

    • "hackers" invaded global bank information systems;
    • they stole prepaid debit card numbers;
    • they removed the restrictions on the maximum amounts that could be withdrawn;
    • they spread the information to others in their worldwide network;
    • across the world, these criminals coded the account information onto the magnetic strips that are on ATM cards;
    • the thieves began withdrawing money from as many ATMs as possible, before the accounts could be cut off;
    • they operated like a "virtual criminal flash mob"--at coordinated times;
    • the criminal network's trial run was on December 21, 2012 [4500 ATMs, $5,000,000];
    • on February 19, 2013 they hit 36,000 ATMs, stealing $40,000,000.

    Arrests have been made, and the suspected ringleader was found murdered in the Dominican Republic between the robbery dates, but the investigation is not yet complete.

    Bank robbers hold a special fascination in the American psyche. Willie Sutton, who stole (only) $2 million from banks over an infamous 40 year "career" as a bank robber, is credited (perhaps apocryphally) as answering the question, "Why do you rob banks?" with "Because that's where the money is." It seems as though these modern crooks have the same motivation...but use far more efficient methods.

    Sources:   "In Hours, Thieves Took $45 Million in ATM Scheme," by Marc Santora, New York Times, May 9, 2013.

    "$45 million stolen in cyber bank heist," (video embedded above) reported by Tom Costello and Brian Williams, NBC News Nightly Newscast, May 9, 2013. 

    Follow up:

    • What precautions do you take on a daily, weekly, monthly or yearly basis to ensure that your internet financial presence is secure?
    • What might this instance of cyber-crime mean for business and technology as we move into the future?
    • Research what Willie Sutton really said in his autobiography about why he robbed banks.  Do you think that these modern criminals would be influenced by the same feelings? Why or why not?
  • Choosing NOW to avoid boredom as a working adult

    this is an edited version of the commencement speech given by David Foster Wallace
    at Kenyon College in 2005. Posted on YouTube May 6, 2013.

    It is graduation season, and many college students--if they are lucky--are about to start jobs that will keep them employed 40 or more hours per week, plus commuting time, 50 weeks per year. If they stay employed, they will work week after week after week and year after year after year after year.

    How does a person keep a working routine--with all of its hurdles, hassles, annoyances and dailiness--from becoming mind-numbing and boring?  David Foster Wallace's commencement speech addresses this issue.  He calls upon the graduate to use his or her education to exercise the ability to choose to think differently, and to avoid being lulled into the automatic thinking that leads to separation and frustration.

    Although David Foster Wallace does not use the term "zero based thinking" in his speech, the attitude-adjusting approach he describes is similar to the process popularized by Brian Tracy.  Zero based thinking is derived from the accounting practice of "zero-based budgeting" and it epitomizes pure freedom. It is also the practice that is advocated by Elisha Goldstein in The Now Effect.The adjustment to focus on the realities of the present moment allows a person to let go of the burdens of the past, and let go of judgments about one's current predicaments. The changed perspective allows an individual to imagine his or her current circumstances with detachment and acceptance. It is a free platform for creativity and optimism, as it is unencumbered by preconceived ideas or thoughts of doom and failure.

    Great management problem-solving and entrepreneurial thinking can come from this place.  It can also lead to a happier experience of any life situation, thus making even difficult tasks more manageable, and one's work-life more sustainable. The technique is free and can produce instant results. If one remembers that one has the power to choose one's perspective, it can happen with one's next breath. Breathe in possibility...breathe out worries and burdens.

    Everything is OK.  What is possible now?

    Sources:   "Zero Based Thinking" by Dan Byrne, The Simplify Guy, May 10, 2012.

    "The Value of Zero Based Thinking," by Kathi Laughman, The Mackenzie Circle, March 20, 2013.

    "The Now Effect," by Elisha Goldstein, Simon & Schuster, reprinted February 12, 2012.

    Follow up:

    • What is your reaction to the "This is Water" video at the beginning of this post?
    • What are the pros and cons of worrying?
    • What are the pros and cons of complaining?
  • BuzzFeed's "King of Memes" shares somes secrets

    Jonah Peretti in the offices of BuzzFeed; photo by Benjamin Lowy

    Here is the official story of how BuzzFeed got started.  Its founder, Jonah Peretti, was a 27-year old grad student who ordered some customizable Nike shoes on a "break" while working on his master's thesis at MIT. Peretti wanted the word "sweatshop" printed on the shoes; this gave rise to a string of email's with Nike's customer service department.

    image from 2001 ad for customizable Nike shoes

    Peretti forwarded the amusing email thread to some friends, who forwarded it to more friends...and soon Peretti had his moment of fame--he was on the Today show talking about labor practices with Nike reps.

    The "viral" spread of the email was an "internet meme." Peretti pondered why goofy themes spread like crazy while important ideas did not seem to catch on. He developed BuzzFeed--which is an eclectic mix from the erudite to the ridiculous--to research what catches on and what does not.  He applies his evolving theories to both the articles and the ad content on the site. 

    By the way, the articles ARE the ad content. Virgin Mobile USA has posted several articles on BuzzFeed, and noted that one "paid-for-post" for Valentine's Day, "urging consumers to 'break up with their carrier'," produced a "95 percent spike in sales that day,” according to Ron Faris, Virgin Mobile's head of brand marketing.

    Virgin America has some informative "posts" as well. Detractors have complained that mixing up ads with content violates an important tenet of a free society (Andrew Sullivan, The Dish), but it seems to be working for BuzzFeed.

    Sources:   "Does BuzzFeed Know the Secret?" by Andrew Rice, New York Magazine, April 7, 2013. 

    Follow up:

    • What is the BuzzFeed headline today? Will this headline be "going viral" in your opinion? Why or why not?
    • What are the factors that contribute to an internet story becoming a meme? Read the entire article in New York Magazine and check out these sites for more data: Meme01 and Meme02
    • Who coined the term "meme"? What does it mean? Why are memes important to today's businesses?
  • Hospital price survey shows unconscionable price differences

    The recent publication of the Medicare survey of hospital prices shows that there really is no semblance of a fair market for medical services. The existence of insurance companies as go-betweens makes it impossible for the consumer to make any provider decision with respect to price. There is no consistency, no fairness, no rationale and no transparency with respect to hospital charges...even within the same market.

    Medicare and insurance companies only pay a small portion of the prices charged, because they negotiate prices. They have the clout to negotiate because of their size...the bigger the insurer, the more power they have in negotiations. That is one reason that individual consumers are at such a disadvantage.

    Here is also a place that individuals--even with insurance--can get surprised by costs, or even cheated. Let's say the insurance plan pays 80% of costs negotiated, and the consumer pays 20%.  The insurer may have made an overall deal with a hospital, based on surgeries that are very popular.  But a surgery that is unusual may have a very high price relative to other hospitals.  The patient needing the unusual surgery might end up paying 20% of a $200,000 bill--or $40,000 out-of-pocket. But, the way things are now--another hospital outside of the plan might only be charging $50,000 for the surgery.  Even at out-of-plan reimbursement rates of 40% co-payment, the patient would end up with "only" $20,000 in out-of-pocket costs--half of what they are stuck with by going with the hospital their insurance provider recommends.

    There is no way for the customer/patient to "shop around" because he has been led to believe that the co-payment amount of 20% will produce the lower price for him. When the insurance company is selling the policies, there is no disclosure about individual surgeries, and no disclosure about the real out-of-pocket costs to the patient.

    This violates the basic integrity of the marketplace.  

    Let's apply the situation to a different arena: shopping for an apartment. Let's say that a person could shop for an apartment on her own (= uninsured), or could hire a broker to find an apartment for her (= insured). Various brokers would have relationships with different real estate management companies or consortiums.  This reality exists in the rental real estate marketplace now.

    But let's say that rental prices were not regulated (as it is,the same rate is quoted to all potential apartment renters; price discrimination is illegal).  Let's change the reality for the sake of making an analogy with the health insurance industry: once the renter signs up with at broker, the renter is stuck with that broker in the search to get an apartment.

    One broker might be quoted a $1200/month rate; another broker might be quoted a $3500 per month rate for the same apartment. When the wanna-be renter signed up with the broker, the potential price differences would not have been disclosed. Would this be fair? There would be no relationship between price and value, and the renter would be powerless to make a choice at the decision point where the real costs would be revealed.

    ...just like the patient dealing with hospital costs.

    Since medical costs are the a leading factor in over 60% of personal bankruptcies in the U.S., the real costs of medical care are a life-changing issue for consumers.

    Some observers think that this publication of the wide discrepancies in price is the first step to fixing the problems...but maybe the system is too broken to be fixed. A "zero-based thinking" approach might be needed.

    Sources:   "U.S. releases data showing striking differences in hospital prices" by Dan Gorenstein, Marketplace, American Public Media, May 8, 2013. 

    "Hospital prices diverge wildly, U.S. data show," by Chad Terhune and Ben Poston, Los Angeles Times, May  8, 2013.

    Follow up:

    • What is "zero based thinking"?
    • Can you think of--or research--three possible solutions to this pricing dilemma? Who would benefit and who would be hurt in each situation?
    • How would you remedy the downsides of each of your scenarios?
    • What is your personal experience with hospital costs and insurance coverage?
  • "The Red": a movie about dealing with student debt

    from "The Red" the official short film, posted on YouTube

    "The Red" is a horror film about student debt. The film was developed by SALT, an offshoot of the American Student Assistance non-profit.  It was directed by the same folks who made the indie film Marcy Martha May Marlene, a film about being in a cult. The main theme of the film is to "borrow less, borrow smart and repay well,” according to Sue Burton, SALT's managing director of consumer products and marketing.

    SALT's mission is to help students manage their educational debt, and to deal with it without denial. Their motivation vehicle in the film is a strangulation metaphor. A young woman tries to escape from a red cloud that is wrapping itself around her neck. The young woman's fear increases as her attempts to escape fail. 

    Senator Elizabeth Warren is trying a different approach to help students with their debt burden.  She has introduced a bill called the Bank on Student Loan Fairness Act, which would cap the interest rate on Stafford student loans from the federal government so that students would get the same rate that big banks get on loans from the federal government.

    Two different approaches to confronting the problem of student debt. What do you think?

    Sources:   "A Film To Help Students Face Their Debt" by Ann Carrns, NYT Bucks Blog, May 7, 2013. 

    Face The Red (the eight-minute version of the film).

    "Elizabeth Warren: Students should get the same loan rate as big banks," by Joan McCarter, The Daily Kos, May 8, 2013.

    Follow up:

    • How much student debt do you have? If you have no debt, who paid for your education? What sacrifices (if any) did your education fund-ers (or you) make so that you could go to college without assuming any debt?
    • Do you think that a horror film is an appropriate way to motivate students to deal honestly with their debt? Are you motivated by fear? Compare, contract and evaluate the effectiveness of the fear motivation of this film to the activist/alleviation approach proposed by Elizabeth Warren.
  • The Van Halen contract: "No brown M&Ms"


    from youtube, posted by rockfan7777


    This is part of a rider, page 40, to the 1982 concert contract of the rock band Van Halen. It is sometimes joked about by those making fun of the excesses demanded by rock stars demanding diva treatment. 

    But, according to band singer David Lee Roth, there was a good reason for this clause.  Van Halen was the first band to travel with a huge number of big lights.  They would contract for facilities that could deal with their electricity and space requirements, but sometimes they would get to a venue and find that one thing after another that was clearly designated as needed in the contract was not available.

    Therefore, the M&M clause was inserted as a "bright line test." David Lee Roth explained: “If I came backstage and I saw brown M&M’s on the catering table, it guaranteed the promoter had not read the contract rider, and we had to do a serious line check.” 

    Sources:   "Van Halen explains the U.S .government" by Ezra Klein, Bloomberg News, April 30, 2013. 

    Follow up:

    • What is a "bright line test" or "bright line rule"?  Give some examples from other situations.
    • Note the disparity in reactions possible between hearing the short version of the M&M clause story, and the longer explanation. What miscommunications can occur from limited information?
  • The Entrepreneur Quiz

    image from www.entrepreneur.com

    Entrepreneur-aptitude quizzes cannot really predict who will be the next great success as an entrepreneur.  But they can help identify personality traits that might hinder entrepreneurship. So take this quiz (developed by Andy Yates of Huddlebuy, a website devoted to small business):

    Question 1: Why do you want to start up your own business?
    a. To make a difference.
    b. To make a lifestyle choice.
    c. To make a bundle of cash.

    Question 2: How committed are you?
    a. I will do whatever it takes.
    b. I will commit whatever time I can manage.
    c. I will do whatever makes sense - I have a lot of things on the go.

    Question 3: Are you a team player?
    a. I know I can’t do this alone - I do, or will, work with experienced people with complementary skills.
    b. I know I can work on my own or with other people.
    c. I know what I am doing and I can take this on myself - after all, the reason I am in this business is that I can do it better than other people.

    Question 4: Where do you want to be in five years' time?
    a. I want to see my product or service used by thousands of people.
    b. I want to be happy.
    c. I want to be sitting on a beach.

    Question 5: How are you going to make money?
    a. I have spoken to customers, I know what they want and what they would pay and I have worked out my supply and distribution costs.
    b. I have spoken to suppliers, worked out the costs and I reckon I can make a margin.
    c. I will provide it, customers will come.

    Question 6: How are you going to grow sales?
    a. I am going to lead initial sales and then hire more experienced people.
    b. I am not a sales person, so I will focus on getting the product right and sort out the rest later.
    c. I will provide it, customers will come.

    Question 7: Have you got any competitors?
    a. Yes, but I have identified the gap in the market, understand the market size and opportunity and outlined clear reasons why people would buy from me.
    b. Yes, there are some big competitors but I know who they are and I will watch them closely.
    c. No, I haven’t got any competitors - my business is unique.

    Question 8: How much profit is the business going to make in five years' time?
    a. I am ambitious and forecast strong growth based on reasonable assumptions from what I already know of the market and the opportunity. 
    b. As long as I pay the bills and do my best to grow, the business should make profits.
    c. The business is going to be massive. Revenues are going to go through the roof, while costs will stay really low.

    Question 9: How much do you know about your industry or sector?
    a. I and/or my team have experience and contacts in this sector.
    b. I have done a bit of work in this area and reckon I should be OK.
    c. I know what I am doing. How hard can it be?

    Question 10: What have you achieved so far?
    a. I have sorted out my initial product/service and got some initial sales/traction/data/PR/social media followers/marketing exposure.
    b. I have done a lot of research.
    c. I have a brilliant idea.

    According to Yates, those who answered mostly "a" stand a decent chance at being able to succeed. Those who answered mostly "b" might be aiming for the lifestyle associated with being one's own boss, but may not have the temperment for assuming the risk of managing a capital investment. Those who answered mostly "c" might be better off "sticking to their day job."

    Sources:   "The Great Entrepreneur Quiz: Have You Got What It Takes To Make It Big?" by Andy Yates and Huddlebuy, ThisIsMoney.uk.co, April 30, 2013. Follow: @MailOnline on Twitter | DailyMail on Facebook

    http://www.huddlebuy.co.uk -- "Europe's largest daily money-saving site for small business"

    Follow up:

    • If you took the quiz, what were the results? Are they what you predicted? If you have an entrepreneurial idea, what is it and how will you make it happen?
    • Why do you think that Yates judged the following as "c" items?:
      • "No, I haven't got any competitors. My business is unique."
      • "I have a brilliant idea."
  • Econ 101 by Stephen Colbert via Comedy Central

    Last week I cited a column written by Paul Krugman about the debunking of the "austerity" approach to economic downturns and debt that led to sequestration. Several political leaders promoted the austerity approach, partially based on a paper by Carmen Reinhart and Kenneth Rogoff of Harvard University. Thomas Herndon, a grad student at the University of Massachusetts, detected some math errors in the spreadsheets in the Reinhart/Rogoff paper, and also found that they had ignored data that did not support their hypothesis. Paul Krugman's article was a timely response to the "uproar" that ensued.

    Stephen Colbert weighed in about the Reinhart/Rogoff paper in the video clip above from The Colbert Report of April 23rd. Colbert also interviewed Thomas Herndon later in the same show.

    For those of you unfamiliar with Stephen Colbert, his on-screen persona symbolizes one point of view, but his message often connotes the opposite point of view. This works to his comic advantage, but could be a dangerous ploy for a marketer, as it may produce misunderstandings.

    Colbert's show is not likely to sway anyone's opinion, and the two sides to this issue continue to produce controversy. Nevertheless, the data delivered by Colbert (when it can be separated from the non-factual parody or satire) might hold a viewer's interest longer than the Krugman article on the same topic.

    Colbert's approach widens the possibilities for communicating information about economic issues.

    Sources:   "Stephen Colbert discusses and mocks the problems resulting in basic mistakes made in a study by Reinhart and Rogoff" episode of The Colbert Report, by Stephen Colbert, et. al., Comedy Central via YouTube, airing April 23, 2013, published April 24, 2013.

    "Reinhart-Rogoff uproar settles nothing," by Caroline Baum, Bloomberg View, May 1, 2013.

    Follow up:

    • Watch the video and read the Krugman article. Which did you enjoy the most and why? From which piece did you learn more, and what did you learn?
    • Watch the remainder of The Colbert Report for April 23, 2013, in which Colbert interviews Thomas Herndon.  What did you learn? Which segment of the show was more effective at communicating about the economic theories at issue?
    • Discuss the pros and cons of using humor to communicate about difficult (or boring) and controversial subjects.


  • Stop doing these 8 things for a better work day

    Increasing productivity and managing interfaces are obviously business goals in manufacturing operations and in service businesses with billable hours.  But productivity and interpersonal interactions in an office setting are vitally important to an individual's career growth as well. Here are some suggestions from a recent column from Inc. magazine's website:

    • Don't check your smartphone while you are having a conversation with someone. Pay attention. Be present. Let the other person know they are important.
    • Don't multi-task during a meeting--treat the meeting with importance.
    • Don't think about celebrities others who have no impact on your life...the people who actually ARE in your life are the ones who will help you grow and succeed.
    • Don't let your phone interrupt you with notifications of every email, tweet and message. You be in charge, and check your phone periodically when it is convenient for you.
    • Don't dwell on the past--learn from your mistakes and then take a breath and turn your thoughts to something else if your brain tries to start re-writing history, or makes you tense by dwelling on errors. "The past is just training."
    • Don't wait till you are certain of success...just act with the intention of doing your best. You don't want to miss opportunities.
    • Don't talk about anyone behind their back.
    • Don't say "Yes" when you mean "No." It's easier if you also remember this saying as well: "No" is a complete sentence. Don't try to convince yourself by giving excuses to someone else. It might be hard to say "No" but it is even harder to live through all the moments that result from saying "Yes" to something that doesn't work for you.

    Source:   "8 things you should NOT do every day," Jeff Haden, Inc.com, April 8, 2013.

    Follow up:

    • Which of these suggestions might you consider?
    • What additional "bad habits" are hampering you at work or school on a daily basis?
  • Apple borrows billions even though it has a pile of cash

    image from appleinsider.com

    Why would a company with $145 billion in cash reserves borrow $17 billion more by issuing bonds?

    • to take advantage of very low interest costs--at the U.S. Treasury rate
    • to pay more dividends to shareholders
    • to buy back some of its stock from existing shareholders
    • to avoid having to move cash from low-cost overseas locations to the United States, where it will be subject to higher differential tax rates

    Apple's action is also part of a trend--Nike recently issued bonds, and Microsoft issued bonds late in 2012. But the market was still hungry for Apple's bonds: investor demand was at $52 billion--more than 3 times the size of the bond issue.

    Source:   "To Satisfy Its Investors, Cash-Rich Apple Borrows Money," by Peter Lattman and Peter Eavis, 
    New York Times, April 30, 2013.

    Follow up:

    • When is it a good idea for an individual to borrow money, even if they have cash?
    • What is a poor source of loaned funds, especially if an individual has other resources?