Category: Business

Welcome to Amazon, Washington Post Employees

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Now that he has the Washington Post, he is getting ready to treat them like his Amazon employees:

The Washington Post announced large cuts in retirement benefits on Tuesday, declaring that it would eliminate future retirement medical benefits and freeze defined-benefit pensions for nonunion employees.

The company also said that in negotiations that started Tuesday, it will seek to impose the same conditions on employees covered by the union — one of the first indications of how The Post’s new owner, Amazon.com founder Jeffrey P. Bezos, will manage relations with the staff of the news organization.

The changes will hit hardest at employees hired before 2009 who could plan on receiving pension payments based on their income and years of service. Each of those employees could see scores — or hundreds — of thousands of dollars less over the course of a retirement. More recent hires do not have traditional pension plans.

Here is the kicker:

The Post’s existing pension plan was about $50 million, or approximately 20 percent overfunded, last Oct. 1 when Bezos bought The Post.

No money problems, he just wants to loot the WaPo pension fund, because that’s what capitalists do.

Anglo-Saxon hypercapitalism is a truly nasty piece of work.

Concept of the Day

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Edifice Complex:

Term coined by the lawyer and historian Professor Cyril Northcote Parkinson in Parkinson’s Law: The Pursuit of Progress, London (John Murray 1958, Houghton Mifflin, 1962) referring to the tendency of successful organizations to build new headquarters just before they begin to decline. See New Headquarters/Office Syndrome, Shiny; Business Week, Curse of.

I’m beginning to think that this has the germ of an investment strategy.

It Ain’t the Salt in the Pasta Water, and it Ain’t the Bread Sticks, It’s the Looting

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Have you read the story about the hedge fund that criticized the Olive Garden restaurants for how they boiled their pasta and complained that they served too many bread sticks?

Read further, past the cute suggestions about food prep, and it becomes clear that the Starboard Value hedge fund was interested in srtip mining the real casual dining chain and leaving nothing behind but its bleached bones:

Last week, you may have noticed a kooky story about a hedge fund named Starboard Value chastising Olive Garden for handing out too many unlimited breadsticks at a time, and failing to salt its pasta water. The snarky 294-page presentation highlighted everything wrong with Olive Garden, along with recommendations to fix it. And there was much laughter.

………

 Except Starboard Value does not spend its time crusading for better mid-market Italian meals for no reason. It owns a bunch of shares in Olive Garden’s parent company, Darden Restaurants, and wants to take control of the company’s board. The scheme it’s concocted to increase its share price has little to do with breadsticks and pasta water. It really wants to steal Olive Garden’s real estate, and make a billion dollars in the process.

Starboard Value doesn’t try to hide this. Right in the executive summary, it talks up Darden’s real estate holdings the way a starving man sizes up a steak. Darden, owner of LongHorn Steakhouse, Capital Grille and other chains, “has the largest real estate portfolio in the casual dining industry, owning both the land and buildings on nearly 600 stores and the buildings on another 670,” Starboard Value writes. “We believe that a real estate separation could create approximately $1 billion in shareholder value.” Here’s the actual slide:

This is a more common technique than you might realize. Private equity firms often buy businesses with lots of real estate assets, like nursing homes, restaurants or retail outlets. They then split the company in two: one owns all the real estate, and one manages the rest of the business. The operating company now has to lease back the real estate from the property company, paying rent on what it used to own. The private equity firm, meanwhile, can take profits from the lease payments or by selling the entire real estate portfolio, making back its initial investment. The more expensive the leases, the more the private equity firm makes.

 ………

 A sale-leaseback arrangement may make sense for a company with lots of real estate holdings, if it needs quick cash to make investments and cannot access a loan. Think of it like a company making a reverse mortgage. But Eileen Appelbaum of the Center for Economics and Policy Research, co-author of a recent book called “Private Equity at Work: When Wall Street Manages Main Street,” explains the key difference. “If the company does this themselves, they get to keep the money from the sale,” Appelbaum told Salon. “And they get to spend it to make improvements. In this case and the private equity case, the shareholders see the value.” Basically, Starboard Value wants to strip Darden’s assets, the Wall Street equivalent of pocketing the silverware.

 Starboard Value has a history of asset-stripping. Earlier this year, it forced Wausau Paper to change CEOs and consolidate mills, moving out of the century-old headquarters that gave the company its name. Starboard Value demanded the company use some of those savings from laying off workers to pay Starboard a dividend.

 In May, Starboard Value forced Darden to sell another of its chains, Red Lobster, to private equity fund Golden Gate Capital for $2.1 billion. The same day, Golden Gate sold the real estate of 500 Red Lobster locations to a real estate investment trust (REIT) for $1.5 billion. Darden used proceeds of the sale to give dividend payments to shareholders like Starboard Value. And Golden Gate made back most of the investment in a blink with the real estate sale. But Red Lobster now has to pay exorbitant rents on its restaurants. “The sale-leaseback will cut their net earnings roughly in half,” Eileen Appelbaum estimated.

 If Olive Garden has to cut its earnings in half to pay rent on properties it previously owned, you can forget about upgrading the menu or making any of the other improvements Starboard Value suggests. The restaurants will barely be able to keep afloat. But Olive Garden’s continued existence is of minimal importance to Starboard Value. “These are shareholders, they don’t really care what happens once they make their money,” said Eileen Appelbaum.

Note here that the ratf%$S who want to dismantle the chain, and sell it for parts, much like an chop shop for stolen cars.

This is what tools like Timothy Geithner call financial innovations. It’s not. It’s a pernicious form of parasitism.

As the old saying goes, “The best way to rob a bank is to own one.”

While a modern economy need a way to get capital from people who have it to people who need it, this has nothing to do with that.

I’m not sure what the whole solution is, but a Tobin Tax on financial transactions would be a good start.

Locking up some of these crooks would be nice too.

A Quick Announcement

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I really don’t give the proverbial flying f%$# in a rolling doughnut about any Apple product announcements.

Never been a fan of their products, and absent a major technological breakthrough, unlikely since Apple is about taking new technology to the mass market, not creating new technology, I will continue not to care.

Arbitration is a Corrupt Fraud

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This little story of the corruption that is a feature, not a bug, of the arbitration process has made it to the New York Times:

Five years ago, Sean Martin, a registered representative at Deutsche Bank Securities in New York, saw something troubling on his trading desk.

A few of his colleagues, he said, were letting preferred hedge fund clients listen in on confidential market commentary by the firm’s analysts before their views were made public. He alerted his superiors and was almost immediately given a negative review, a first in more than 10 years at the firm, he said. His bosses also removed him from the group he’d been working with and cut his compensation.

Mr. Martin, who continues to work at Deutsche Bank, said he believed that he was being punished for reporting misconduct and took the one avenue of redress that was open to him. In August 2012, he brought an arbitration case against the firm, contending retaliation and asking to recover his lost earnings. As is typical in the financial industry, his employment contract required that any dispute between him and his employer go through private arbitration, not the courts. Mr. Martin’s matter is being heard by three arbitrators associated with the Financial Industry Regulatory Authority, a self-regulatory organization that operates the largest dispute resolution forum in the securities industry.

But Mr. Martin’s experience with arbitration, both he and his lawyer say, has raised questions of fairness in the process. The three-member panel hearing his case has barred him from testifying about certain crucial aspects of what he saw at Deutsche Bank and disallowed the introduction of documents that bolster his claims. This led his lawyer to conclude that the panel was not interested in specifics of the behavior at the heart of his accusations — and to ask a state court to step in.

“When I filed this arbitration, I expected that Finra would resolve the dispute between Deutsche Bank and me in a fair way,” Mr. Martin, 41, said in a statement provided by his lawyer. “I was surprised and disappointed when the arbitrators refused to listen to important parts of what I wanted to say and rejected or redacted my exhibits. I can’t see how a dispute can be fairly resolved if one party is not even allowed to tell their side.”

………

“How can a panel of arbitrators for the regulator justify not hearing evidence of wrongdoing?” asked Robert Kraus, a partner at Kraus & Zuchlewski in New York, who represents Mr. Martin. “It is completely upside-down.”

………
But Mr. Kraus, worried that his client would not get a fair hearing, last week filed a motion in New York State Supreme Court asking to stay the arbitration hearings. Arguments are on the docket for Wednesday in Manhattan. If the judge grants Mr. Kraus’s request, the court will hear arguments on whether the arbitrators should be removed.

………

Mr. Kraus said he did not take the decision lightly to file his request with the court. He said he’s had success in other Finra arbitrations over the years but that this case was different.

“Unlike other hearings where you question a ruling here and there, these arbitrators repeatedly excluded evidence that lies at the heart of our case,” Mr. Kraus said. “From time to time, you get these panels that go off the rails, and then the question is how do you remedy that?”

This is not surprising.

The private arbitration system is inherently corrupt.

The continued employment of arbitrators is dependent upon satisfaction the firms, and not the employees of customers, so their rulings invariably favor the big corps, at the expense of due process for the little guys.

For Once, Labor Beats the Asset Strippers in Management

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Arthur T. Demoulas will be buying out the other side of the family for the Market Basket grocery chain:

After the intervention of two governors and an enormous public outcry, the chaos that has paralyzed the Market Basket supermarket chain ended Wednesday night with a deal between the two warring factions of the Demoulas family, the company said in a statement.

The deal approved by the chain’s board essentially meets the sole demand of the workers who have been staging huge public rallies for six weeks: that Arthur T. Demoulas, who was president until June, be reinstated to lead the company.

His cousin, Arthur S. Demoulas, and his allies agreed to sell their 50.5 percent stake in the company to Arthur T. Demoulas and his allies, who own 49.5 percent, according to the statement.

As part of the deal, Arthur T. Demoulas will return immediately “with day-to-day operational authority,” according to the statement. But he will not technically become chief executive until the deal is finalized over the next several months.

The current co-chief executives, Felicia Thornton and James Gooch, who were installed by Arthur S. Demoulas, will “remain in place” until the deal closes, the announcement said.

It was the firing of Arthur T. Demoulas and the installation of Ms. Thornton and Mr. Gooch that touched off protests by employees in mid-July. The deal includes a set of penalties and incentives intended to get Arthur T. Demoulas to finalize the transaction by the end of February.

The settlement would end one of the strangest labor actions in American business history, one that disrupted a low-price grocery chain that attracted two million shoppers in Massachusetts, New Hampshire and Maine. And perhaps most surprising, it ends with the sole demand of the workers, from top management to the lowliest clerks, being met.

Basically the good Arthur, Arthur T., was given the boot, and the evil Arthur, Arthur S., brought in some MBA types to do their magic:

After a long family feud, the majority stockholders fired their cousin, longtime CEO Arthur T DeMoulas. He had built the business on low prices, high wages, and ZERO company debt- All employees get profit sharing and a livable wage, and many have been with the company 20, 30, even 50 years.

Arthur T. was replaced with the former president of Radio Shack, with an evident goal of strip mining the wealth from the company–raising prices, cutting benefits, loading up with debt, and selling off real estate–in order to pay out higher stock dividends to the controlling shareholders.

The employees revolted. Top executives walked off the job and picketed in front of headquarters. Employees from managers to baggers are using their vacation time to protest outside stores. 68 out of 71 managers have pledged to quit unless Artie T is reinstated or allowed to purchase the remaining 51% of the family-owned company. Deliveries have stopped and twitter is full of photos of completely bare shelves. The board has responded with termination letters and threats.

In case you think that this was a fever dream, it should be noted that, at the start of this conflict,”The board voted to distribute $250 million to family shareholders, an action opposed by Arthur T.”

The 50.5% stake was purchased for $1.6 giving a market value of $3.2 billion (probably less; it appears that Arthur T. probably overpayed a bit.), and they wanted to make a payout of nearly 10% of the value of the company to shareholders.

You know how it works:

  • New management.
  • Financial engineering generating cash from monetizing assets.  (i.e. eating your seed corn)
  • Raiding the retirement fund
  • Destroy the lives of the employees.
  • The suits get golden parachutes.

For once, it got stopped.  The good guys won.

I will note that the culture of business in the United States is profoundly dysfunctional.

Stupid Uber Tricks

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It has been revealed that Uber has been mounting a sophisticated program of industrial sabotage against their rival Lyft:

Uber is arming teams of independent contractors with burner phones and credit cards as part of its sophisticated effort to undermine Lyft and other competitors. Interviews with current and former contractors, along with internal documents obtained by The Verge, outline the company’s evolving methods. Using contractors it calls “brand ambassadors,” Uber requests rides from Lyft and other competitors, recruits their drivers, and takes multiple precautions to avoid detection. The effort, which Uber appears to be rolling out nationally, has already resulted in thousands of canceled Lyft rides and made it more difficult for its rival to gain a foothold in new markets. Uber calls the program “SLOG,” and it’s a previously unreported aspect of the company’s ruthless efforts to undermine its competitors.

Together, the interviews and documents show the lengths to which Uber will go to halt its rivals’ momentum. The San Francisco startup has raised $1.5 billion in venture capital, giving it an enormous war chest with which to battle Lyft and others. While the company’s cutthroat nature is well documented, emails from Uber managers offer new insight into the shifting tactics it uses to siphon drivers away from competitors without getting caught. It also demonstrates the strong interest Uber has taken in crushing Lyft, its biggest rival in ridesharing, which is in the midst of a national expansion.

This kind of crap is why Uber, Lyft, and their ilk need to be required to actually have employees with hack licenses drive their cars.

What happens if Uber, a company that employs price gouging as a significant portion of its business model, actually becomes the 800 pound gorilla in the commercial personal transport market?

It won’t be pretty, it will make Comcast look like Mother Theresa.

I am Actually Familiar With the Turkish Cleric and His Charter Schools

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One of his charter schools is Chesapeake Science Point Public Charter School, which holds a Rubik’s cube competition, and so I’ve been down there a couple of times, and it seemed a bit different, so I Googled it, and discovered that it was a part of the Gülen movement schools, which is led by Fethullah Gülen, a Turkish preacher living in self-imposed exile in the United States.

To be clear, Chesapeake Science Point is not a religious schools in any way shape or form, it’s more of an international school.

One of the interesting things that I discovered about this is that Fethullah Gülen is an ally turned opponent of Islamist PM (now President) of Turkey, Recep Tayyip Erdoğan, despite his residing in Pennsylvania.

So, I found it rather interesting when The Atlantic found the movement, and looked at the schools. The initial discussion is measured and anodyne:

It reads like something out of a John Le Carre novel: The charismatic Sunni imam Fethullah Gülen, leader of a politically powerful Turkish religious movement likened by The Guardian to an “Islamic Opus Dei,” occasionally webcasts sermons from self-imposed exile in the Poconos while his organization quickly grows to head the largest chain of charter schools in America. It might sound quite foreboding—and it should, but not for the reasons you might think.

You can be excused if you’ve never heard of Fethullah Gülen or his eponymous movement. He isn’t known for his openness, despite the size of his organization, which is rumored to have between 1 and 8 million adherents. It’s difficult to estimate the depth of its bench, however, without an official roster of membership. Known informally in Turkey as Hizmet, or “the service”, the Gülen movement prides itself on being a pacifist, internationalist, modern, and moderate alternative to more extreme derivations of Sunni Islam. The group does emphasize the importance of interfaith dialogue, education, and a kind of cosmopolitanism. One prominent sociologist described it as “the world’s most global movement.”

Much of the praise for the Gülen movement comes from its emphasis on providing education to children worldwide. In countries like Pakistan, its schools often serve as an alternative to more fundamentalist madrassas. Gülen schools enroll an estimated two million students around the globe, usually with English as the language of instruction, and the tuition is often paid in full by the institution. In Islamic countries, where the Gülen schools aren’t entirely secular: The New York Times reported that in many of the Pakistani schools, “…teachers encourage Islam in their dormitories, where teachers set the example in lifestyle and prayers.” But the focus is still largely on academics. Fethullah Gülen put it in one of his sermons, “Studying physics, mathematics, and chemistry is worshipping Allah.”

In Western countries such as the United States, Germany, and France, there isn’t any evidence whatsoever that the nearly 120 Gülen charter schools in America include Islamic indoctrination in their curriculum. The schools are so secular that singling out the Gülen schools as particularly nefarious, simply for being run predominantly by Muslims, smacks of xenophobia.

He appears to be running modernist schools, some secular, and some Islamic (not Islamist).

The next part is interesting to me because, once it gets into the nitty gritty of charter schools, as in pretty much every case where I have looked into charter schools, the finances become disturbing:

However, these schools might be suspect for reasons that are completely unrelated to Islamic doctrine. One of their most troubling characteristics is that they don’t have a great track record when it comes to financial and legal transparency. ……… Furthermore, as the Deseret News reported, the school’s administrators seemed to be reserving coveted jobs for their own countrymen and women: “In a time of teacher layoffs, Beehive has recruited a high percentage of teachers from overseas, mainly Turkey.”

………

There are similar stories from other states. In Texas, where 33 Gülen charter schools receive close to $100 million a year in taxpayer funds, the New York Times reported in 2011 that two schools had given $50 million to Gülen-connected contractors, including the month-old Atlas Texas Construction and Training, even though other contractors had offered lower bids. It was the same thing in Georgia, where Fulton County audited three Gülen schools after allegations that they’d skipped the bidding process altogether and paid nearly half a million dollars to organizations associated with the Gülen movement.

………

There are similar stories from other states. In Texas, where 33 Gülen charter schools receive close to $100 million a year in taxpayer funds, the New York Times reported in 2011 that two schools had given $50 million to Gülen-connected contractors, including the month-old Atlas Texas Construction and Training, even though other contractors had offered lower bids. It was the same thing in Georgia, where Fulton County audited three Gülen schools after allegations that they’d skipped the bidding process altogether and paid nearly half a million dollars to organizations associated with the Gülen movement.

Let’s be clear here: This is actually typical behavior within the Charter school movement, as Diane Ravich notes when contacted by The Atlantic:

………Diane Ravitch, education professor at New York University and Assistant Secretary of Education under George H.W. Bush, writes about this larger transparency issue in her latest book, Reign of Error, explaining, “In 2009, New York Charter School Association successfully sued to prevent the state comptroller from auditing the finances of charter schools, even though they receive public funding. The association contended that charter school’s are not government agencies but ‘non-profit educational corporations carrying out a public purpose.’” The New York State Court of Appeals agreed with the organization in a 7 to 0 vote. It took an act of legislation from the state—specifically designed to allow the comptroller to audit charter schools—for this to change.

Ravitch also writes of a similar instance in North Carolina in which the state, urged on by lobbying giant ALEC (American Legislative Exchange Council), proposed the creation of a special commission, composed entirely of charter school advocates, as a way for charter schools to bypass the oversight of the State Board of Education or the local school boards. Ravitch writes, “The charters would not be required to hire certified teachers. Charter school staff would not be required to pass criminal background checks. The proposed law would not require any checks for conflicts of interest—not for commission members or for the charter schools.” In other words, it isn’t the Gülen movement that makes Gülen charter schools so secretive. It’s the charter school movement itself.

It turns out that the Gülen schools got raided by the FBI for steering money from the E-Rate program to favored contractors: (One wonders if the FBI, who has employed nut-job Islamophobic consultants, would have bother to investigated if the target wasn’t Islamic)

This comes across in the latest news story related to the Gülen schools: an FBI raid last month on the headquarters of over 19 Gülen-operated Horizon Science Academies in Midwest. According to search warrants obtained by the Chicago Sun-Times, federal authorities were interested in gathering general financial documents and records of communication. The warrant specifically mentions something called the E-rate program—a federal program that, according to the Sun-Times, “pays for schools to expand telecommunications and Internet access.” A handful of the Gülen-affiliated contractors assisting the schools were receiving money from this federal fund. It’s difficult speculate what this could all mean, as all documents pertaining to the investigation, save the warrants themselves, have been sealed from the public.

And then there is Ohio:

I contacted Matthew Blair, and he told me that the problems with the Gülen schools were merely symptomatic of a larger problem within the state’s education system. “The charter school system in Ohio is broken beyond repair,” he wrote in an email. “As it is, charter schools operate in a lawless frontier. Regulations are few and far between. Those that exist are consistently and consciously overlooked.”

The Gülen schools, he wrote, “are an excellent example” of this problem: “A Gülen organization controls the real estate companies that own their schools. They charge rent to their own schools and tax-payers foot the bill. They refuse to answer public records requests, falsify attendance records, and cheat on standardized tests. Yet, Ohio continues to grant them charters to operate.” He added, “It doesn’t hurt that the Gülen organization is politically active and treats state politicians to lavish trips abroad.” But overall, he said, “this Wild West atmosphere of few regulations creates incestuous relationships among politicians, vendors, and schools. Charter schools like Gülen’s give generously. In return, they are allowed to keep their saloons open and serve whatever they want. The only way to save the charter school system is to start over again by using the model of effective public schools.”

Let me reiterate: This is not a problem specific to the Gülen Schools. This is the standard way that charter schools do business.

I have already wrote about how Rocketship Schools loots taxpayer fund by paying exorbitant prices for software from a for-profit firm whose owners constitute a bulk of the board of directors of the nominally non profit schools, and the real-estate shenanigans are pretty much standard fare.

Charter schools as they are implemented in the United States are a remarkably criminogenic manner.

Google+ Won the Internet Today

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No, this is not The Onion.

I just came across an account f%#$ing with telemarketers that should win the Nobel Price for f%$#ing with telemarketers:*

Today is a good day. I just had a call from a telemarketer. Did I yell and scream at them, you ask? Certainly not. Like a good IT administrator I put my skills to use for their benefit. Here’s how the conversation went:

Computer: “Press 9 to not be contacted in the future. Press 4 to speak to someone about your mortgage issues”
TM: “Hello, are you having problems paying your mortgage?”
Me: “Hi, this is the IT department. We intercepted your call as we detected a problem with you phone and need to fix it.”

………

That’s right. I made a telemarketer unwittingly factory reset his phone which means he will be unable to make anymore calls until someone is able to reconfigure his phone and that will take at least an hour or longer if they can’t do it right away!

Needless to say, I am following the author of this, Chris Blasko, like forever.

Read the rest.  I had never thought to do this, but now, I am considering donating a dime to the NRSC, the RCCC, the RNC, Newsmax, and a couple of Teabagger groups to get on their call lists so that I can f%$# with them this way.

*I know that there is no Nobel Prize for f%$#ing with telemarketers, but there should be. If they have prizes for Peace, Literature, Physics, Chemistry, Medicine and Physiology, and Economics, they really should have one for f%$#ing with telemarketers.

Nerdgasm!!!!!!!

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Kewl!!!

I just came across a Kickstarter for a new Star Trek movie:

Axanar is the independent Star Trek film which proves that a feature-quality Star Trek film can be made on a small budget.

 (PLEASE NOTE: Kickstarter will not charge your pledge till the end of the campaign on August 31. So you have that much time to save up!)

 Our 20-minute short film, Prelude to Axanar, premiered Saturday, July 26th, 2014, at San Diego Comic Con and features Richard Hatch, Tony Todd, Kate Vernon, JG Hertzler and Gary Graham, who reprises his role of Soval from “Enterprise”. The makeup was done by Academy Award winner Kevin Haney and Star Trek veteran Brad Look and Make Up Effects Lab. Top that off with the amazing visual effects of Tobias Richter and The Light Works, and sound by Academy Award winner Frank Serafine, and the result is Prelude to Axanar: something unlike anything you have ever seen before. We have our loyal donors to thank for this!
This Kickstarter is for the full-length feature Axanar. Unlike the short film, which we shot in two days and cost $75,000, the 90-minute Axanar feature will take about 20 days and cost about $650,000. So we are breaking up our costs into discreet sections which should allow us to reach significant milestones, as we don’t expect to raise all $650,000 at once. This first Kickstarter will be for the sound stage and set construction. Anything over what we need for that will be applied to the feature production costs. Full details are below.

It should be noted that they have already raised $207,447 of their goal of $100,000 with 16 days to go, so I do not think that their funding goal is unrealistic, though I cannot see how they can do a whole feature length film for $650K.

The CGI might not be that much, what with the realitiess of Moore’s law, but I cannot see how they could do this on such a low budget.

I do not think I could even to decent set design for their whole budget.

Still, enjoy this nerd pr0n.

So, How is that Whole Efficiency of the Whole Profit Driven Market Based Thing Working In Healthcare?

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It turns out as more and more for-profit hospices are entering the market, more and more of hospice patients are leaving those hospices under their own power, largely because the for-profit hospices are taking non-terminal patients, and driving out expensive terminal ones, in order to maximize their bottom line:

At hundreds of U.S. hospices, more than one in three patients are dropping the service before dying, new research shows, a sign of trouble in an industry supposed to care for patients until death.

 When that many patients are leaving a hospice alive, experts said, the agencies are likely to be either driving them away with inadequate care or enrolling patients who aren’t really dying in order to pad their profits.

 It is normal for a hospice to release a small portion of patients before death — about 15 percent has been typical, often because a patient’s health unexpectedly improves.

 But researchers found that at some hospices, and particularly at new, for-profit companies, the rate of patients leaving hospice care alive is double that level or more.

 The number of “hospice survivors” was especially high in two states: in Mississippi, where 41 percent of hospice patients were discharged alive, and Alabama, where 35 percent were.

 “When you have a live discharge rate that is as high as 30 percent, you have to wonder whether a hospice program is living up to the vision and morality of the founders of hospice,” said Joan Teno, a Brown University hospice doctor and researcher and the lead author of the article published in the Journal of Palliative Medicine. “One part of the reason is some of the new hospice providers may not have the same values — they may be more concerned with profit margins than compassionate care.”

(emphasis mine)

When people call for “Market Based Solutions,” this is what you get.

Grifting from the Rick Scotts* of the world.

*While head of Columbia/HCA, the current governor of governor’s company engaged in activities leading to their having to pay nearly a billion dollars to the government for Medicare fraud.

A Bad Ruling for McDonalds, a Great Ruing for the Rest of Us

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The National Labor Relation’s board has ruled that the McDonalds corporation bears some of the responsibility for its franchisees working conditions:

The general counsel of the National Labor Relations Board ruled on Tuesday that McDonald’s could be held jointly liable for labor and wage violations by its franchise operators — a decision that, if upheld, would disrupt longtime practices in the fast-food industry and ease the way for unionizing nationwide.

Business groups called the decision outrageous. Some legal experts described it as a far-reaching move that could signal the labor board’s willingness to hold many other companies to the same standard of “joint employer,” making businesses that use subcontractors or temp agencies at least partly liable in cases of overtime, wage or union-organizing violations.

The ruling comes after the labor board’s legal team investigated myriad complaints that fast-food workers brought in the last 20 months, accusing McDonald’s and its franchisees of unfair labor practices.

Richard F. Griffin Jr., the labor board’s general counsel, said he found merit in 43 of the 181 claims, accusing McDonald’s restaurants of illegally firing, threatening or otherwise penalizing workers for their pro-labor activities.

………

The fast-food workers who filed cases asserted that McDonald’s was a joint employer on the grounds that it orders its franchise owners to strictly follow its rules on food, cleanliness and employment practices and that McDonald’s often owns the restaurants that franchisees use.

I am not sure how wide the application of this ruling will be.

McDonald’s exerts far more control over the operation of its franchisees than most other companies operating in this manner. Not only, as noted above, does McDonald’s have physical ownership of many of the restaurants that its franchisees operate, but:

In the current cases, the fast-food workers, backed by the Service Employees International Union, said that McDonald’s had significant control over its franchisees’ employment practices, noting that it supplies many with software telling them how many employees to use at any given hour. The workers pointed to an instance in which McDonald’s even told a franchise owner that it was paying its employees too much. The average fast-food wage is about $8.90 an hour.

While it is conceivable that a company might want to prevent its franchisees from underpaying its workers to preserve the reputation of the brand, there is no such justification for warnings about overpaying its worker.

This is pretty much a prima facie case that McDonald’s is an active co manager of those restaurants.

It appears to me that this level of direction is rare among the various franchise businesses, and I think that, as a result of this decision, it will become ever rarer, so this will likely only have minor impact.

Today’s Episode of Not Surprised at All: CEO Pay Edition

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It turns out that there is No relationship whatsoever between a CEO pay and performance:

With all the public chatter about exorbitant executive compensation and income inequality, it’s useful to look at the relationship between chief executive officer pay and corporate performance. Typically, when the subject of their big pay packages arises, CEOs—usually through their spokespeople—say they are paid for performance. Does data back that up?

An analysis of compensation data publicly released by Equilar shows little correlation between CEO pay and company performance. Equilar ranked the salaries of 200 highly paid CEOs. When compared to metrics such as revenue, profitability, and stock return, the scattering of data looks pretty random, as though performance doesn’t matter. The comparison makes it look as if there is zero relationship between pay and performance.

Actually, it’s on the order of 1%, and certainly not worth it. (Click on the image for a better view of the trend line)

The cult of the overpaid CEO has no basis in reality.

It’s  all a game where one hand washes the other.

Hoocoodanode?

This Makes Me Chuckle

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Hedge fund billionaire William Ackman promised to deliver a deathblow to Herbalife from a Manhattan stage, but his long presentation on Tuesday bombed with investors and left the diet shake seller unscathed.

 Herbalife CEO “Michael Johnson is a predator,” Ackman said fighting back tears as he wrapped up the second hour of the presentation while referring to his family’s American story, which started when Ackman’s great-grandfather immigrated to the U.S. from Russia. “This is a criminal enterprise.” Ackman called Herbalife a $24 billion “scam.” “The fraud is affecting more and more people,” said Ackman. “It is time to shut the company down.”

 Shares of Herbalife rose steadily in the morning after Ackman started giving his talk on Herbalife’s nutritional clubs, increasing by 8% to $58.40 in the first hour of the presentation. Two hours into the talk the stock had risen by 11% to $60. That’s a little higher than the shares were changing hands for on Monday before Ackman drove down the stock by 11%, saying he would be delivering “the most important presentation that I have made in my career.” Ackman had promised in a CNBC interview on Monday that “we won’t disappoint.” Ackman’s presentation was still going on at 1:07 p.m., with the stock up by 15% to $62.22. During the presentation, Ackman suggested that Herbalife had been repurchasing shares in a material way on Tuesday. Shares of Herbalife continued to rise after the three-hour presentation ended, closing at $67.77, up 25% for the day.

 ………

 The company, which has vigorously denied Ackman’s accusations, said on Tuesday that Ackman was trying to drive down Herbalife’s shares over a relatively short period because a “substantial portion of the bet expires on January 17, 2015,” referring to put options Ackman purchased when he restructured his short position in the company’s shares. Circumstantial evidence suggests Ackman’s put options are currently not in the money.

 ………

 During the presentation, Ackman invoked Enron, Bernard Madoff, totalitarian regimes and even the Nazis. “The big lie is used by totalitarian regimes, and by the Nazis and by lots of people and people generally believe big lies because they are so bold that how can they possibly be false,” Ackman said. He criticized former Secretary of State Madeleine Albright for supporting Herbalife and claimed that Albright had successfully used her connections to make sure the company could continue to operate in the key China market after Ackman had attacked Herbalife’s China operations earlier this year.

Oh, yeah, and then there is those accusations of free babysitting:

“They are not selling weight loss in these clubs, they are selling business opportunities,” Ackman said at the presentation to investors in New York, adding the clubs provided free babysitting and had people working making nutrition drinks without pay.

 “This is all free labor, totally illegal,” he said.

Herbalife jumped, and his short bet dropped in value as a result.

I joke about schadenfreude all the time, but this really does make me feel good.

Does that make me a bad person?

Your Moment of Science Fiction Awesome

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Click on the images for a larger slideshow

Rather unsurprisingly, they both involve Star Trek, the original series.

The first is a photograph of an an enciente Orion slave girl courtesy of Wil Wheaton.

The bottom two pictures are of a remote that is modeled on the original props for the Star Trek phaser:

The Phaser was created from meticulous 3D scans of the last-known TOS hero prop and is a fully functional, gesture-based universal remote control that can be used to control many home entertainment systems and other IR-controlled devices. The 1:1-scale Phaser is equipped with 10 authentic phaser firing sounds, a customizable personal lock code, tactile force-feedback, and it can store up to 36 remote commands.

I’d never thought about it before, but that pistol grip is profoundly non ergonomic.

If you were to use the phaser, it would be hard to hit the broad side of a barn.

It’s 150 bucks for the remote. The pregnant Orion slave girl: priceless.

The Answer is Price Controls, Not Generics

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The New York Times has a story showing how consolidation in the generic drug market led to skyrocketing prices:

The first sign of trouble came when Dr. Barry Lindenberg, a cardiologist, received a three-page insurance form in January, demanding he get preapproval to prescribe one of the oldest known heart medicines.

His patient had been on the drug, digoxin, for many years. A mainstay of treating older patients with rapid rhythm disturbances, it was first described in the medical literature in 1785. Millions of Americans still use it every day, and many had long paid just pennies a pill.

“I wrote on the form: ‘ARE YOU KIDDING ME?’ ” said Dr. Lindenberg, who practices in Schenectady, N.Y.

What the cardiologist did not know then was that the price of generic digoxin was rapidly rising. The three companies selling the drug in the United States had increased the price they charge pharmacies, at least nearly doubling it since late last year, according to EvaluatePharma, a London-based consulting firm.

………

Large price increases in the United States for vital medicines for the young, such as vaccines, have been mirrored by similar rises in some of the most basic treatments for older patients, like digoxin. Though there are many newer types of drugs to treat heart disease, for some patients there are no effective substitutes; digoxin is on the World Health Organization’s list of essential medicines.

………

But increasingly, experts say, the costs of some generic drugs are going the other way. The prices paid by pharmacies for some generic versions of Fiorinal with codeine (for migraines) and Synthroid (a thyroid medicine) as well as the generic steroid prednisolone have all more than doubled since last year, EvaluatePharma found. In January, the National Community Pharmacists Association called for a congressional hearing on generic drug prices, complaining that those for many essential medicines grew as much as “600, 1,000 percent or more” in recent years. The price jumps especially affected smaller pharmacies, which do not have the clout of big chains to bargain for discounts.

Digoxin provides a telling case study. There was no drug shortage, according to the Food and Drug Administration, that might explain the increase. There was no new patent or new formulation. Digoxin is not hard to make. What had changed most were the financial rewards of selling an ancient, lifesaving drug and company strategies intended to reap the benefits.

Though generic medicines are far cheaper to bring to market than brand-name drugs because they involve little research and development, they also are priced lower because generics typically face intense competition. But Dr. Aaron Kesselheim, a professor of health economics at the Harvard School of Public Health, noted, “Studies show it is not until you have four or five generics in the market that the prices really are down.”

By late 2013, a number of generic manufacturers had largely stopped producing and distributing digoxin, then a cheap medicine whose use had declined, leaving only two companies dominant in the market. Both businesses — the Lannett Company and Global Pharmaceuticals, a division of Impax Laboratories — are small companies whose bottom line can rise and fall on the sales of a single drug.

It’s very simple.

The drug companies, or for that matter most companies, competition is not a good, but it is cross that they have to bear.

If you have 5 products, and one has a highly competitive market, you are inclined to leave the market and move to more lucrative one.  It’s Econ 101.

It also f%$#s the rest of us.

We need a dose of government interference in this market.

The Depressing Thing is that this is a Close as a Googler will Ever get to Being as Cool as John Belushi.

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You know the story, a man, a femme fatale, injected heroine, and death:

Police have arrested a 26-year-old high-priced call girl from Georgia who is suspected of injecting heroin into a Santa Cruz tech executive on his yacht and then fleeing when he overdosed

Alix Catherine Tichelman and 51-year-old Forrest Timothy Hayes found each other online and had met a few times before their Nov. 26 encounter on Hayes’ 50-foot yacht, Escape, at the Santa Cruz Small Craft Harbor, said Santa Cruz Deputy Police Chief Steve Clark.

Tichelman provided heroin for Hayes, a Google executive, while they were inside the yacht, police said. A surveillance video from the boat shows that Hayes was “suffering medical complications” and lost consciousness, Clark said. She made no effort to help him, and instead gathered her belongings and even gulped a glass of wine before she drew a window blind and left, the video shows.

I am the worst person on the internet today, but the parallels to the death of John Belushi are striking.

Maybe the Taxi Business Needs to be Changed, but Until Uber is Out of the Picture, It Won’t Happen

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There are a whole host of issues of regulation, liability, etc., but the Objectivist Randroids at Uber are the sort of people who should be kept out of the business, because they are corrupt to the core:

It’s been pretty widely publicized here in San Francisco that Uber has just moved into fancy new office space at 1455 Market.

………

In any case, what has attracted slightly less publicity is the fact — mentioned only in passing by Re/Code — that on the same day, Uber opened a second office, on Vermont Street in Potrero. According to Uber’s blog…

We’ve heard a lot from our Uber SF partners about wanting easier ways to reach our team including parking and streamlined access to the office. With a new dedicated driver center in Potrero Hill, we are aiming to better connect with our partners and help make getting started with Uber, attending office hours and safety education processes more seamless.

Euphemistically called a “driver center,” one Uber driver told us the second office is actually more of a decoy: allowing the company to fulfill its promise to be more accessible to drivers without, you know, actually having them make Uber’s real office look untidy.

So the way of dealing with issues with drivers, things like insurance, liability, and complaints, is to hide from them.

The way to deal with customers is price gouging, and explicitly violating the law.

The founder of Uber is big into Ayn Rand, a woman who wrote that the philosophy of a serial killer who strangled and dismembered a little girl, was an inspiration to her.

If a company founder demonstrates compete contempt for the very concept of business ethics, and the company is in a consumer centered business, regulatory easements are simply not justified.

This is Prize

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I don’t hear a single here

An indy band needed to raise money for their tour, and the payments received from Spotify weren’t cutting it.

They came up with a remarkably innovative way to monetize the streaming service:

Last month, indie band Vulfpeck wanted to go on tour. Like most indie bands, though, they didn’t have the money. With streaming dominating the industry and music streaming giant Spotify paying a grand $0.007 per stream (Vulfpeck sights it at $0.005), it didn’t look like they’d be making money anytime soon. Spotify had been promising they’ll start paying more — just as soon as they grow their Premium user base from 6 million to 40 million. In short: never.

 So scrappy soul band Vulfpeck came up with a plan of their own.

 They uploaded 10 tracks of silence to Spotify under the name Sleepify. Then, they put out this video, urging fans to stream the album on repeat while they slept. The band pledged to use the royalty revenue they racked up to fund a tour, where all shows would have free admission. And it worked.

Short version, the netted over $20K before Spotify sent a C&D for violating their TOS,* but they have the folding green to tour.

I will note that while musicians compare about the rates for streaming, they typically compare it to selling an album, which a user can listen to many times, to a single streamed song listened to once.

Of course, bands have been f%$#ed by the middlemen since ……… forever ……… And the real question is how a model that disintermediates between them and the fans.

*E-I-E-I-O

WE Just Got Fracked

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A new analysis of what was previously considered the largest shale oil formation in the United States has just shrunk by 96%:

Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California’s vast Monterey Shale deposits, deflating its potential as a national “black gold mine” of petroleum.

Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.

The new estimate, expected to be released publicly next month, is a blow to the nation’s oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.

The Monterey Shale formation contains about two-thirds of the nation’s shale oil reserves. It had been seen as an enormous bonanza, reducing the nation’s need for foreign oil imports through the use of the latest in extraction techniques, including acid treatments, horizontal drilling and fracking.

The energy agency said the earlier estimate of recoverable oil, issued in 2011 by an independent firm under contract with the government, broadly assumed that deposits in the Monterey Shale formation were as easily recoverable as those found in shale formations elsewhere.

We are not going to frack our way into energy independence.

The problems that California is not like Texas, Pennsylvania, North Dakota, etc.  It is highly seismically active, and  this action has chopped the shale layer into isolated little pieces.