Category: Business

Asshole of the Week

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No, he’s not an asshole, an asshole asshole actually serves an essential function.

Comcast CEO Brian Roberts is just a parasite:

Everybody hates Comcast. The cable giant consistently ranks last or near last among all companies on consumer satisfaction surveys. Hurling insults at Comcast — its prices, its speeds, its customer service — has risen nearly to the level of a national pastime.

But what if there’s nothing the company can do to change its customers’ minds? What if most of what people hate about Comcast has its roots in the structure of America’s cable market?

That’s what the company’s CEO, Brian Roberts, suggested last weekend when asked about the company’s poor record in an interview with Business Insider founder Henry Blodget.

………

The problem isn’t Comcast’s service, Roberts is saying; it’s that people have to pay for it. Comcast operates by striking deals with content creators and publishers — ABC, CBS, FOX, ESPN, HBO, and the rest — for the right to broadcast their shows, movies, football, baseball, and basketball games. And as Roberts said, it doesn’t come cheap.

………

One problem with Robert’s argument is that Comcast makes money too — a lot of it.

In 2014, it brought in nearly $69 billion in revenue, with $14.9 billion of that being operating income, a.k.a. profits.

So, yes, Comcast has to charge its customers, but it could charge them less if it wanted to. It could also invest more heavily in more and better-trained customer service workers. It could boost those data caps that customers are always complaining about.

………

But he seems to believe that it may just never be enough. No matter how hard Comcast tries to make its customers happy, they still wind up disgruntled. Customers just can’t stand paying for things, and the only way Comcast could really earn their love is by giving away its product, as Google and Facebook do.

The problem with this argument is that most companies do charge for their products, and few if any are as hated as Comcast. Indeed, the cable TV industry’s upstart rivals — Netflix, Hulu, Amazon Prime — charge their customers as well.

And customers don’t hate Netflix the way they hate Comcast. In 2014, Comcast scored a 54 out of 100 on the American Customer Satisfaction survey — down from 64 in 2001. On the same survey, Netflix came in at 81. In eight years of measurement, it’s never dropped below a 74.

Comcast’s business model is predicated on monopoly rents.

To paraphrase Lily Tomlin from a long time ago, “We’re the Cable Company, we don’t care, we don’t have to.”

They treat their customers, and their employees with complete contempt, and the customers, return the favor.

Can Someone Please Hang Him from the Empire State Building by His Underwear?

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Martin Shkreli is at it again:

After dropping $2 million on a Wu-Tang Clan album, the pharmaceutical executive Martin Shkreli has found a new project: making an essential treatment unaffordable for poor immigrants from Latin America.

Shkreli, otherwise known as “pharma bro,” gained notoriety earlier this year when his company, Turing Pharmaceuticals, increased the price of a drug used to treat AIDS patients from around $13.50 to $750. He’s now the CEO of KaloBios Pharmaceuticals, which recently announced its plans to submit benznidazole, a treatment for Chagas disease purchased earlier this month, for Food and Drug Administration approval next year. The Centers for Disease Control and Prevention estimates that about 300,000 people in the United States have the deadly disease. Most of them are immigrants from Latin America, where as many as 8 million people are infected.

………

Right now, doctors in the U.S. obtain benznidazole free of charge through the CDC. According to Rachel Cohen, the regional executive director of the Drugs for Neglected Disease Initiative in North America, the drug sells in Latin America for somewhere between $60 and $100 for each course of treatment. Both of these would change the moment the FDA approved benznidazole from any company—and Shkreli, in particular, seems determined to price this drug out of reach of the people who need it. In filings with the Securities and Exchange Commission, KaloBios wrote that it expects to price the Chagas drug similarly to antivirals for Hepatitis C, which can cost almost $100,000 for a single course of treatment in the United States.

………

The CDC currently purchases benznidazole from a Brazilian company. They used to send less than a dozen treatments a year to physicians across the country, according to Susan Montgomery, who leads the epidemiology team at the CDC’s Parasitic Diseases Branch. But after blood banks started testing people for Chagas in 2007, that number spiked.

In theory, FDA approval for benznidazole would make it more accessible to patients: Right now, because benznidazole isn’t approved, a patient who needs the drug has to be enrolled in a clinical trial in order to receive it from the CDC. In practice, though, the current plans for pricing will negate any good that could come from removing the drug’s “experimental” label.

………

Recently, the FDA added Chagas to a special program for neglected diseases. If a pharmaceutical company submits a drug for a disease on the program’s list, the FDA gives the company a “priority review voucher.” That voucher lets companies bring another drug to the FDA for expedited review, usually around six months between submitting the application and receiving a decision (a process that usually takes years. The hope is that the program will incentivize companies to invest in new treatments for neglected diseases that afflict the poorest regions of the world. But companies aren’t required to come up with new drugs to get those fast-track vouchers. The drugs only have to be new to the FDA. (Companies can also sell those vouchers for big money—last August, for example, United Therapeutics sold its voucher for $350 million.)

Last month, Doctors Without Borders, joined by a number of other public-health organizations, asked the Senate Committee on Health, Education, Labor, and Pensions to amend this voucher program. The groups argued that companies should be eligible only if they actually invest in researching and developing new treatments for neglected diseases, and that they should be required to submit a strategy for how they would keep the drugs accessible for patients.

“If this price hike were to happen, it would be a complete disaster for Chagas patients in the United States,” Cohen said. “People affected by this disease in the United States are poor, are marginalized, have very limited access to health care to begin with. It would be catastrophic.”

2 years ago, on the occasion of actor Jack Klugman’s death, I noted that one of the things that he was lauded for was lobbying for the Orphan Drug Act of 1983.

I took issue, and said that the effect of the act was to manufacture non-patent monopolies that primarily served to raise the cost of drugs through rent-seeking behavior.

The IP restrictions and incentives that are a part of the US medication development regime are killing and impoverishing us.

How about price controls and compulsory licensing?  That sounds good.

Nice Work if You Can Get It

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The lobbying operation Purple Strategies is lobbying for the NRA and for the gun control advocacy group Everytown for Gun Safety:

The growing frequency of mass shootings has done little to change the political stalemate over guns in Washington, with gun rights and gun control groups each declaring that the latest massacre — for now, the one in San Bernardino — supports their diametrically opposed arguments.

In this environment, no one can predict the future of gun policy in America. But at least one thing is certain: The team of political consultants at Purple Strategies will get paid.

The partners at Purple Strategies — a bipartisan lobbying firm and consulting agency formed in 2008 through a merger of Issue & Image, a Democratic-led company, and National Media, a Republican campaign firm — have developed business relationships on both sides of the gun control debate, working with both the National Rifle Association and Everytown for Gun Safety, the umbrella organization for pro-gun control advocacy groups.

Everytown did not respond to multiple requests for comment. Officials from the NRA declined to provide a comment for this article — although they did ask us for more information about Everytown’s ties to Purple Strategies.

A spokesperson for Purple Strategies denied that the firm has relationships on both sides of the gun policy debate.

………

We had asked Morgante to describe what appeared to be a close relationship between Purple and National Media, Red Eagle Media Group, and the American Media & Advocacy Group, all of which had done work for the NRA.

“The founding partners of Issue & Image and National Media Public Affairs founded Purple, however, Purple Strategies operates independently and does not share clients or employees with any other company that you referenced,” Morgante wrote.

Notwithstanding Morgante’s claims, however, documents and business filings reviewed by The Intercept show considerable overlap between National Media and Purple Strategies when it comes to clients, staff, office space, and leadership.

Consider how this works for gun-related clients:

Everytown and Mayors Against Illegal Guns, two groups heavily funded by billionaire Michael Bloomberg to enact gun restrictions, have relied on Purple Strategies’ Margie Omera and her firm, Momentum Analysis, for multiple polling services in 2014 and this year. Momentum Analysis was acquired by Purple Strategies in 2013. In a memo to Everytown, Omera identified herself as working for Purple Insights, “the in-house opinion research group at Purple Strategies.”

The NRA’s relationship with Purple and National Media is obscured through a network of affiliate companies. But documents filed with the Federal Communications Commission show that the NRA regularly buys political advertising through American Media & Advocacy Group and Red Eagle Media, two firms that share an address in Alexandria, Virginia, with Purple Strategies and National Media.

Records maintained by the Alexandria Circuit Court reveal that Red Eagle Media is an “assumed or fictitious” business created and owned by National Media. Robin Roberts, a co-founding partner of Purple Strategies and the president of National Media, registered the name.

They are laughing their way to the bank.

Not a Good Sign

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One of the features of Obamacare is the not for profit co-ops that are supposed to find an alternative to for profit insurers.

Many of them have failed, and now what is arguably the most successful co-op, Maine’s Community Health Options, has shut down individual enrollment:

Community Health Options, a not-for-profit co-op insurance company based in Maine that also sells health plans in New Hampshire, will limit individual enrollments later this month because of “higher-than-expected claims costs.”

It’s an inauspicious sign for the company, which was one of the few successful co-ops created by the Affordable Care Act. Twelve of the ACA’s 23 co-ops have folded or are in the process of closing down, all of which occurred this year.

Community Health Options is one of three insurers selling individual plans in Maine and one of five insurers in New Hampshire. Both states use the federal HealthCare.gov website for enrollment. The co-op will stop directly enrolling people in individual coverage on Dec. 15, and people who are signing up for its plans through HealthCare.gov will only have until Dec. 26, the co-op said on its website Wednesday.

The decision to halt enrollment early will not affect current members, and Community Health Options still plans on pursuing small employers into next year. “We aim to resume individual enrollment as soon as possible, but in the meantime continue to focus on group business,” CEO Kevin Lewis said in an e-mail Wednesday.

Community Health Options, which has 76,000 members, was one of the only ACA co-ops that didn’t lose money out of the gate. Several of the failed co-ops—written into the ACA as an alternative to the so-called public option—lost millions of dollars due to costly claims. Many older and sicker members chose the co-ops during the first two open enrollments due to their low premiums, but they also used a lot of healthcare services, which crushed the co-ops and their limited financial reserves.

The co-ops were supposed to be two things, a weak tea alternative to a public option, and to provide some cost competition with the for profit insurers who dominate their respective markets.

They are failing, and the largest insurer in the US,  UnitedHealth is threatening to leave the exchanges completely.

We are not yet in an adverse selection death spiral, but this is troubling.

Maybe He Will Go to Jail After All

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It looks like Andrew Cuomo got a $700,000.00 advance from a subsidiary of News Corp, and then they got a multi-million dollar subsidy:

New York’s state government has committed millions of dollars in taxpayer support to News Corporation for a real estate deal — less than three years after a subsidiary of that company gave New York Gov. Andrew Cuomo a book deal worth up to $700,000. The commitment was disclosed in documents released by the Port Authority — an agency jointly controlled by Cuomo and New Jersey Republican Gov. Chris Christie.

The documents say the Port Authority, News Corporation and 21st Century Fox “have received commitments from New York State” for a “one-time payment of $15 million in 2016 and the utilization of a $15 million” state tax credit as part of the agency’s push to make the companies “anchor tenants” for 2 World Trade Center. The documents say the transactions are part of an initiative to reduce News Corporation’s and 21st Century Fox’s rent payments at the new building by $155 million.

The Cuomo-appointed executive director of the Port Authority, Patrick Foye, told International Business Times Wednesday night that he is recommending that the Port Authority’s board approve the package because, he said, the agency will get significant bang for its buck. “That is objectively a good deal, a good transaction for the Port Authority and the region,” he said.

This is not a surprise.

Murdoch has a long history of using political connections for business advantage, and Andrew Cuomo swims in the sea of corruption that is Albany like a fish.

29 Dead, and Only a Misdemeanor?

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Donald Blankenship, former President of Massey Energy, was convicted of only a misdemeanor for his role in the deaths of miners in a mine explosion:

Donald L. Blankenship, whose leadership of the Massey Energy Company was widely criticized after 29 workers were killed in the Upper Big Branch mine in 2010, was convicted Thursday of conspiring to violate federal safety standards, becoming the most prominent American coal executive ever convicted of a crime related to mining deaths.

But in a substantial defeat for the Justice Department, the verdict, announced in Federal District Court here, exonerated Mr. Blankenship, Massey’s former chief executive, of three felony charges that could have led to a prison term of 30 years. Instead, after a protracted and complex trial that began on Oct. 1, jurors convicted Mr. Blankenship only of a single misdemeanor charge that carried a maximum of a year in prison.

“We are disappointed, but not as disappointed as we could have been,” said William W. Taylor III, a defense lawyer for Mr. Blankenship, who will appeal the conviction and is expected to be sentenced next spring.

Mr. Blankenship was not tried on any charges that accused him of direct responsibility for the deaths at Upper Big Branch, which investigators said exploded because of improper ventilation that allowed gases to accumulate. But prosecutors argued that Mr. Blankenship’s leadership had laid the groundwork for a catastrophe. There was not necessarily a formal conspiracy, prosecutors acknowledged, but they said that Mr. Blankenship’s example and tone had set Massey on a course that put profits ahead of lives.

I hope that the judge sentences him to the full year, but somehow I doubt it.

I expect him to get probation, or possibly house arrest, which would be far less satisfying than his ass getting shivved while he is in the stir.

Rule Number 1: Mark Zuckerberg Leaves a Trail of People Who Feel that he Cheated Them in His Wake

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Rule Number 2:  See rule number 1.

As such, I am dubious of Mark Zuckerberg’s pledge to donate 99% of his Facebook fortune to charity:

In a public post on Facebook, CEO Mark Zuckerberg and his wife Priscilla Chan announced Tuesday that they will donate 99 percent of their Facebook shares “during their lives”—an amount currently worth $45 billion—to their new charity, the Chan Zuckerberg Initiative.

 The organization, which seems to be modeled on the Gates Foundation, states its laudable albeit vague goal to “join people across the world to advance human potential and promote equality for all children in the next generation.”

 The announcement came in the form of a public letter to their newly born daughter Max. It addresses important long-term goals that are often stymied in the public sector, things like “advancing human potential and promoting equality.”

But when one dives into the details, it gets seriously hinky on closer examination:

When Mark Zuckerberg announced he would give away 99% of his Facebook shares — currently worth around $45 billion — the initial impulse from many was to assume the money would all go to charity. Indeed, very many news organizations described the donation as either going to charity, or a charitable trust.

 Not so, a Facebook spokeswoman confirmed in an email to BuzzFeed News. The spokeswoman further confirmed the initiative is structured as an LLC, and not as a charitable trust.

 While charity will certainly be one of the money’s destinations, it will be far from the only one.

It’s beginning to look more and more like a way to avoid income and inheritance taxes than anything else.

I would also argue that relying on the altruism of today’s robber barons is misguided, and  notes, so does German billionaire Peter Krämer:

SPIEGEL: Forty super wealthy Americans have just announced that they would donate half of their assets, at the very latest after their deaths. As a person who often likes to say that rich people should be asked to contribute more to society, what were your first thoughts?

Krämer: I find the US initiative highly problematic. You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes? The donors are taking the place of the state. That’s unacceptable.

SPIEGEL: But doesn’t the money that is donated serve the common good?

Krämer: It is all just a bad transfer of power from the state to billionaires. So it’s not the state that determines what is good for the people, but rather the rich want to decide. That’s a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow?

SPIEGEL: It is their money at the end of the day.

Krämer: In this case, 40 superwealthy people want to decide what their money will be used for. That runs counter to the democratically legitimate state. In the end the billionaires are indulging in hobbies that might be in the common good, but are very personal.

 Your mouth to God’s ear, Herr Krämer.

Read This………

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A transportation expert takes Pando to task regarding their analysis of Uber, and Pando sees fit to publish his letter.

Basically, Pando has gone after Uber as being a bunch of Silicon Valley snake oil, and Hubert Horan believes that this is not true.

Specifically, notwithstanding their somewhat horrifying business practices, Amazon and eBay actually innovate, reducing the costs and increase the selection relative to brick and mortar alternatives, while Uber provides the exact same service as any taxi or limo service, while adding the “benefits” of price gouging and drivers who have not passed a background check:

The letter is fascinating, insightful, and critical. I don’t agree with his characterizations of some of my arguments; but I do agree with his own arguments and explanations in this letter, and more than that, I appreciate the time and serious effort Horan put into this letter to educate all of us. Few people in America have his decades-long industry perspective and his unique political insights on the politics of transportation, antitrust, markets, and tech. Here’s the letter in full.

-Mark Ames

………

I agree that Convoy, which appears to be closely mimicking the Uber playbook, raises major issues that fully warrant the attention you’ve given it, and I am grateful for the effort and critical thinking that you and Pando have brought to these unicorn issues over the last several years. Apologies in advance if the tone of what follows seems excessively critical, but I have four major concerns based on my background in transport and regulatory economics: (A) I think the Convoy piece (as well as most previous Pando reporting on Uber) misses the critical point that neither company has an underlying business model linked to any rational evidence of sustainable competitive advantage, and you’ve misled readers by equating the Uber/Convoy models with companies like Amazon, and EBay, which did have plans based on solid economics; (B) You correctly noted that the investors behind Convoy (and Uber) are seeking quasi-monopolistic dominance (trying to build a rent-extractive “narrow in the stream”) but you failed to lay out for your readers the critical difference between driving thousands of less-efficient existing suppliers out of business because you’ve built an overwhelmingly better mousetrap, versus driving more efficient suppliers out of business using artificial market power; (C) You correctly note the already lean conditions in trucking, and it is quite reasonable to discuss Uber-type companies in a broader historical/political context. But I think you’ve improperly equated the politics and economic thinking behind Ford/Carter transportation deregulation with much more radical finance-driven changes 20-30 years later, and I think the 1970s points you raise aren’t critical to your readers’ understanding of Uber/Convoy; (D) I imagine that Pando doesn’t get many letters attacking its failure to fully appreciate the problem of Uber and Uber-type companies, but if one fails to focus on the complete lack of competitive economics, and the huge dependence on (eventually) exploiting artificial market power, then I think you end up seriously understating the damage these companies could impose on the rest of society.

………

  1. You’ve improperly equated the Uber/Convoy and Amazon/EBay business models—one is based on legitimate /competitive economics; the other isn’t. Your post said that even if it’s not Convoy, “it’s safe to assume that sometime soon, tech will transform and restructure the $749 billion trucking sector” in a similar way to Uber and taxis, Amazon and booksellers, and EBay and newspaper classifieds. This totally misses a critical distinction– Amazon/EBay type business models were based on powerful competitive advantages over the businesses they were seeking to supplant while the Uber (and apparently Convoy) models seek to “disrupt” an industry with economics that are actually worse than existing competitors. Despite other issues, Amazon could offer consumers much wider choices than they ever had before, eliminated all of the costs of retailing, achieved huge warehousing and distribution efficiencies and clearly had scale economies that no traditional competitor could match. On the other hand, the Uber business model (software/brand company plus its “independent” contractors) fails each of these efficiency/competitive/technological tests. Uber isn’t transforming the consumer product—it offers the exact same service as traditional taxi/limo operators. Uber—even a future, more mature Uber– will have much higher driver, insurance, training, ownership and maintenance costs. The massive subsidies that create the appearance that Uber offers better/cheaper service are not sustainable. Since the mature Uber won’t be able to produce urban car service at significantly lower cost, there are no welfare gains from increased service or lower prices. There is no evidence that a reasonably well run taxi/limo company has bloated costs that cry out for new market entrants, and there’s ample evidence (dirty cars, horribly paid drivers) that industry costs are already extremely lean. Even Uber’s vaunted app is irrelevant to competitive economics. The ordering/pricing aspects of the app are a tiny piece of total costs, they don’t drive any big network economies, and apps can easily be copied. The app actually illustrates a serious Uber structural disadvantage. The economic key to any transportation company is the ability to balance supply (i.e. assets) against volatile demand in the medium/longer term. Thus profits depend on managers with long experience dealing with complex markets, and with sophisticated tools for capital planning and shorter-term price/supply adjustments. Airlines, railroads and shipping companies use some of the most advanced management systems anywhere in the private sector. Yellow Cab isn’t in the same league, but has managers with serious fleet management capabilities, and dispatchers who understand all the idiosyncrasies of local demand patterns (factory night shifts, conventions, bar/restaurant patterns). Uber has an app that ignores the both vehicle management, and market demand forecasting, has no local market knowledge and simply reacts to short-term car requests. Any urban transport operator faces much tougher economics than freight or intercity passenger operators, because there’s no way to reduce costs by smoothing demand peaks. Airline revenue management can massively reduce capital costs by getting price sensitive people to not fly on Friday afternoon. The Long Island Railroad has had peak/off-peak pricing for a hundred years, but rush hour is still rush hour, and the LIRR suffers with the cost of hundreds of cars that only get used ten hours a week. Surge pricing will not get anyone to shift their Saturday night out to fill empty cabs midday Tuesday, and there’s nothing else in the Uber model that addresses any of these fundamental problems with the economics of urban transport. Given the vastly greater complexity of trucking, the idea that a company with a software app could produce new efficiencies great enough to drive most existing trucking companies out of business seems too ludicrous to take seriously. As you clearly point out, there is lots of historical evidence that the last few decades of competition have already made existing operators pretty efficient. Unlike urban car services, trucking includes lots of companies (UPS, JB Hunt) with incredibly advanced industrial engineering capabilities. Anyone who thinks that there are tens of billions worth of trucking efficiencies out there—efficiencies that absolutely no one anywhere in the trucking industry could see—and that these billions can be generated by a scheduling app, but will be so huge that they’ll totally disrupt a$749 billion industry—is either delusional or willfully dishonest.

Uber-type companies need to be understood as a radical departure from Amazon/EBay type models. Instead of displacing competitors through actual efficiencies, or by creating entirely new markets, its model is entirely based on getting the world to believe that it will inevitably dominate the entire industry. This requires aggressively suppressing any discussion of empirical economic evidence (which would undermine its case) and emphasizing the factors driving inevitability–the brilliance of its early stage investors, the ruthlessness of management, and the raw political power of the company’s wealthy supporters. PR is a component of every start-up; at Amazon/EBay it played a supporting role and relied heavily on economic evidence of competitive strengths, but at Uber PR is the heart of the plan, and replaces the need to figure out how to provide much better service at much lower cost. As with 97% of Uber’s media coverage, the Fortune and Bloomberg pieces you cited totally avoided any discussion of competitive economics and tried to pass off its faithful repetition of Convoy’s “industry disruption is inevitable” PR theme as “news reporting”. But by equating the Amazon and Uber approaches you’ve fallen into the same trap. You’ve failed to tell your readers that there are no competitive economics behind the “inevitability” claim, and you’ve helped spread their “our valuation is legitimate because we’ll produce huge economic value just like Amazon and EBay” PR claim.

Read the rest.

While my (and Mark Ames’) point have made the point that Uber is designed to succeed by fobbing off many of its costs onto its employees and society, in doing so, we had ceded that Uber had in some way a built a better mousetrap.

He argues that it’s all an exercise in PR where the real business is to create a monopoly, or oligopoly, model where they sit astride the market extracting rents.

No wonder Wall Street loves Uber.

Martin Shkreli Has Just Made Express Scripts® a Hero

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This is a bigger shock than Darth Vader being Luke Skywalker’s father.

Deeply and ineluctiblky evil pharmacy benefits manager Express Scripts®, in partnership with the compounding pharmacy Imprimis®, will offer a $1.00 clone of Turing Pharmaceutical’s Dataprim anti-parasite drug:

Express Scripts, the largest pharmacy benefits manager in the U.S., said on Tuesday it will partner with Imprimis Pharmaceuticals to provide a $1 alternative to Daraprim, the 62-year-old drug for a rare parasitic infection. In September, the company that owned the drug stoked outrage when it hiked the drug’s price by more than 5,000 percent overnight.

 Imprimis, a California compounding pharmaceutical company, said in October it would make the alternative—a compounded formulation of the active ingredient in Daraprim, pyrimethamine, and another drug, leucovorin—available for $99 for a 100-count bottle, or less than $1 per pill.

 That compares with a price of $750 per pill for the drug provided by Turing Pharmaceuticals, the company that acquired Daraprim earlier this year and dramatically raised its price from $13.50 a tablet to $750.

Express Scripts® is so evil and incompetent that it stuns Richard Bruce Cheney, but Martin Shkreli has just allowed them to be heroes.

This is a mindf%$# on a level I would heretofore think impossible.

If Only the Ruling Included a Kick to the ‘Nads

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The 7th Circuit Court of Appeals just issued a permanent injunction against the Cook County Sheriff enjoining them from contacting credit card companies to threaten them into dropping n adult web site:

Nov 30 A federal appeals court on Monday ordered an injunction blocking the Cook County, Illinois, sheriff from pursuing any effort to stop credit card companies from handling transactions for Backpage.com, a classified ad website that the sheriff said promotes sex trafficking.

The 7th U.S. Circuit Court of Appeals in Chicago said Sheriff Thomas Dart, whose jurisdiction includes Chicago, violated Backpage’s First Amendment free speech rights by demanding that companies such as MasterCard Inc and Visa Inc ban the use of their cards to buy ads on the website.

Writing for a three-judge panel, Circuit Judge Richard Posner said Dart’s “official bullying” and “campaign of suffocation” amounted to censorship, preventing even transactions for ads touting “indisputably legal” activities from being processed.

“As a citizen or father, or in any other private capacity, Sheriff Dart can denounce Backpage to his heart’s content. He is in good company; many people are disturbed or revolted by the kind of sex ads found on Backpage’s website,” Posner wrote.

But as sheriff of a county with more than 5.2 million people, Dart cannot make “dire threats,” including of possible prosecution, in a campaign “to crush Backpage’s adult section – crush Backpage, period, it seems,” the judge added.

………

The injunction bars Dart from coercing or threatening sanctions against card companies, processors and financial companies that do business with Backpage.com, while the company pursues its lawsuit to stop his campaign.

In August, U.S. District Judge John Tharp had rejected Backpage.com’s bid for a preliminary injunction.

Posner said that was a mistake because Backpage.com would probably succeed on the merits, and suffered “irreparable injury” from its loss of First Amendment freedoms.

Dart’s office did not immediately respond to a request for comment. His office has said it has made more than 800 arrests since 2009 connected to Backpage.com ads.

800 arrests from lurking on an internet web site looking for sex workers.

How about policing those gun shops in Cook County, just over the border from Chicago who are selling to any sort of skeevy straw buyers with two nickels to rub together instead of pursuing some masseuses giving tug jobs?

I hope that Backpage.com takes him to the cleaners in a civil suit.

I also would like to see the Department of Justice go after Sheriff Dart for criminal conspiracy to deprive Backpage.com of its civil rights, but I don’t expect to see that happen.

It should happen, but it won’t.

He’s Back!

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Remember Martin Shkreli?

The parasite who (ironically) bought the anti-parasite, and then raised the price by over 5,000%.

After the media sh%$ storm, he promised to lower the price.

He lied:

Turing Pharmaceuticals AG will not reverse its decision to raise the price of a decades-old drug, Daraprim, by more than 5,000 percent, backing out of previous statements that it would cut the cost by the end of the year.

In an announcement on Tuesday, the company said that the list price of Daraprim, which jumped from $13.50 a pill to $750 a pill earlier this year, will not change. Instead, the company will offer hospitals up to 50 percent discounts and will make other adjustments to help patients afford Daraprim, a drug used to treat a parasitic infection and often given to HIV patients.

Out of the goodness of their hearts though, they will be selling a smaller bottle to make it a bit easier for hospitals to stock the drug.

We need villagers, torches, and pitchforks.

And While We are on the Subject of Uber………

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It appears that they retaliated against one of their drivers for talking to the press:

An Uber driver who critiqued the company’s top-brass at a highly publicized event now tells the San Francisco Examiner he’s facing backlash from the tech company.

Last Friday Eric Barajas, a Bay Area-based Uber driver who works in San Francisco, leveled criticism to Uber which garnered exposure in national news. The next day, he said, he was unable to get fares via the Uber app.

Barajas showed the Examiner video of two phones with two Uber driver accounts side by side, one showing “pings” for ride requests, while Barajas’ phone had no pings. Now he says he isn’t sure what to do – his three children and wife depend on his earnings to live, and without his income from Uber he may face dire financial straits.

The Examiner contacted Uber, and only an hour after a phone conversation with an Uber spokeswoman, Barjas saw his account suddenly reactivated.

He also reported “strange” modifications to his profile and Uber login screen, what he said are clear signs Uber was trying to shore up the story they told this reporter.

“You call them, and then its active,” Barajas told the Examiner. “That says to me they’re trying to cover their tracks.”

He still worries that his account may be deactivated or otherwise modified in the future, once media exposure dies down. That exposure began last Friday, when former Obama campaign manager turned-Uber advisor David Plouffe was onstage at the Next Economy Conference in San Francisco.

As cameras rolled, Plouffe invited drivers to speak at a microphone. Barajas made his voice heard.

“I just wanted to know how you guys are helping the economy when there are full time drivers like me… who are struggling to make ends meet, barely making minimum wage,” he said. On Craigslist, Uber in the past has said drivers could make $35 an hour, Barajas said, but that isn’t near what he earns.

“After all the expenses I’m really struggling, I don’t know if I can pay my PG&E bill and my water bill,” he said.

Uber is founded and run by bad people whose goal is to privatize their profits and to socialize their losses.

It is a fundamentally evil and hypocritical business model.

When Your Business Model Is to Use Law Breaking to Enter Markets, This Is Inevitable

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In Pennsylvania, a $50 million dollar fine against Uber in response to their deliberately and knowingly breaking the law:

Judges for the Pennsylvania agency that regulates buses and taxis recommended on Tuesday a record $50 million fine against ride-sharing company Uber for operating in the state without approval.

Two administrative law judges issued the decision, subject to approval by the Public Utility Commission, to punish Uber Technologies Inc. for rides by its subsidiaries from February 2014 until it received experimental authority six months later.

The judges rejected Uber’s argument that it did not run afoul of commission rules because it’s a software company whose services aren’t necessarily available to the public at large.

“Uber took a more active role in providing transportation service than simply providing the Uber app for people with cars to use to provide rides for people who need transportation — it was not a disinterested invisible entity in the background,” wrote judges Mary Long and Jeffrey Watson.

Uber spokesman Taylor Bennett said the San Francisco-based company was disappointed and hoped to come to a “reasonable resolution” after being unable to settle with the commission.

After a 30-day period to allow both sides to respond, the Public Utility Commission will consider the recommendation. If approved, it would be the largest fine ever imposed by the agency.

Uber’s arguments in this hearing describe their business model in a nutshell:

  • Break the law.
  • Profit
  • When the hammer falls, blame their employees while claiming that their employees aren’t their employees.

While there are a tech business models that make no sense, Uber’s business model makes a lot of sense.

It’s been used by con men and organized crime for years.

Blow Up One Mainframe, and Shut Down the Entire F-35 Fleet

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The US military, and Lockheed-Martin have structured the software of the F-35 so that the plane cannot fly without a direct connection to a L-M mainframe:

The unilateral decision by the United States to locate all F-35 software laboratories on its territory, and to manage the operation and sustainment of the global F-35 fleet from its territory, has introduced vulnerabilities that are only beginning to emerge.

The biggest risk is that, since the F-35 cannot operate effectively without permanent data exchanges with its software labs and logistic support computers in the United States, any disruption in the two-way flow of information would compromise its effectiveness.

All F-35 aircraft operating across the world will have to update their mission data files and their Autonomic Logistic Information System (ALIS) profiles before and after every sortie, to ensure that on-board systems are programmed with the latest available operational data and that ALIS is kept permanently informed of each aircraft’s technical status and maintenance requirements. ALIS can, and has, prevented aircraft taking off because of an incomplete data file.

Given that the United States hopes to sell hundreds of F-35s to allies in Europe, Asia and Australia, the volume of data that must travel to and from the United States is gigantic, and any disruption in Internet traffic could cripple air forces as the F-35 cannot operate unless it is logged into, and cleared by, ALIS.

For example, “Mission data load development and testing is a critical path to combat capability,” Pentagon OT&E director Michael Gilmore said in his fiscal 2014 report. “Accuracy of threat identification and location depend on how well the mission data loads are optimized to perform in ambiguous operational environments.”

Updating and uploading mission data loads depends on a functioning Internet, and as Wired.com noted in an Oct. 29 story, “undersea Internet cables are surprisingly vulnerable.” It quoted Nicole Starosielski, a media scholar at New York University, as saying that “people would be surprised to know that there are a little over 200 systems that carry all of the internet traffic across the ocean, and these are by and large concentrated in very few areas. The cables end up getting funneled through these narrow pressure points all around the globe.”

………

The fear is that an “ultimate Russian hack on the United States could involve severing the fiber-optic cables at some of their hardest-to-access locations to halt the instant communications on which the West’s governments, economies and citizens have grown dependent,” the article said.

Whatever the other repercussions, such an event would severely limit the ability of the world’s F-35 fighters to fly – due to a loss of ALIS link – and to operate effectively, as their fighting ability would disappear if their software and mission data files could not be updated.

………

Given that the ALIS mainframe is located at Fort Worth, Texas, operating the F-35 will require three very large data conduits to and from these locations, again using Internet cables as the volume of data is too great for satellite transmission.

In fact, if the F-35 performs as advertised, it should gather very argue amounts of tactical data during each mission – data that it will have to transmit to the software labs in the US so they can be used to update the mission data files, adding another large volume data flow in both directions.

They don’t need to cut internet cables.  They send some guy in with an explosives vest to the mainframe, and the fleet is grounded.

More important to our foreign “Partners” is that this also means that an F-35 fleet can shut down by Lockheed-Martin over a  billing or maintenance dispute, or by the US over a foreign policy dispute.

This is not a bug, this is a feature, and it is one that almost certainly came from L-M, because it creates a captive customer:  No one can maintain the aircraft without paying a toll to them.

Even if the aircraft performs as promised, the basic concept for its operation is untenable.

Run away from this clusterf%$#.

Shades of Razorfish

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In the late 1990s, one of the darlings of the Dotcom boom was a company called Razorfish.

It all came crashing down in 2000, when its hipster founders appeared on CBS, and they were incapable of describing what their company actually did, despite thousands of employees worldwide and a market valuation in the billions.

In a very real way, it was a seminal moment in the dotcom boom became the dotcom bust, because suddenly it became clear to those ordinary people for who the whole “Internet thing” went from a dazzling mystery to a bunch of hipster snake oil.

The Dotcom bubble, like bubbles, had run out of stupider people who would buy their crap,

Well, I just came across this profile of Famo.us, and I think that it is a clear indicator that it is time to head for the exits, because if this nothing burger can get this sort of funding, the inmates are running the asylum once again:

Famo.us’ 15 minutes of open source fame have come to an end. JavaScript rendering engine Famo.us has pivoted away from its hardcore open sourced engineering platform which had raised over $31 million. It’s now refocused on commercializing the idea of powerful mobile web apps with a content management system for branded marketing apps.

The startup changed its website to famous.co, stuffed its old open source information on famous.org, and laid off a big chunk of the team, including its VP of Engineering, Head of Open Source, and a dozen engineers. But at least now Famo.us has the runway to take another shot at the spotlight.

 ………

Famo.us’ 15 minutes of open source fame have come to an end. JavaScript rendering engine Famo.us has pivoted away from its hardcore open sourced engineering platform which had raised over $31 million. It’s now refocused on commercializing the idea of powerful mobile web apps with a content management system for branded marketing apps.

The startup changed its website to famous.co, stuffed its old open source information on famous.org, and laid off a big chunk of the team, including its VP of Engineering, Head of Open Source, and a dozen engineers. But at least now Famo.us has the runway to take another shot at the spotlight.
 ………(emphasis mine)

Though it was tough to tell if Famo.us would work, investors gave it the benefit of the doubt. That was in large part thanks to Newcomb, who had sold his last startup, natural language search engine Powerset, to Microsoft for $100 million. In early 2013, Famo.us added a $4 million Series A from Javelin Venture Partners and Samsung to its $1.1 million in seed funding from Greylock, Naval Ravikant, Roger Dickey, [and, disclosure, TechCrunch founder Michael Arrington’s CrunchFund].

But Newcomb’s quest to redefine mobile with open source threatened to make Famo.us unsustainable. He told TechCrunch when announcing the funding, “That lean startup style — I don’t believe that” and that he was purposefully trying to be a perfectionist.

Newcomb knocked down the wall between his San Francisco penthouse apartment and the one next to it to create a lavish office for Famo.us. When TechCrunch reporter Anthony Ha visited, Newcomb pointed to some desks that seemed adequate, but insisted they would be replaced soon because they weren’t the right kind of wood.

He told Ha that since Famo.us was a platform for building beautiful apps “everything we do has to represent perfection and elegance.” You can take a tour of the office in TechCrunch’s Cribs video above.

 ………

By August 2014, Famo.us had grown to 25 employees and had 90,000 sign-ups for the platform, still awaiting the finished platform’s public open source release. It managed to raise another $20 million plus $5 million of debt from New York’s Insight Venture Partners. Newcomb told VentureBeat it planned to hire up to 40 more staffers with that cash, though Fetterman departed.

Finally, in June Famo.us “launched.” From a different site Famous.org, it fully open sourced its Engine that improves performance for hardware, and its Framework for integrating Famo.us into apps with blog posts by Myles Borin and Zack Brown.
 ………

I spoke to Newcomb, who confesses that for six months the company struggled to come up with a way to actually earn money. A source close to the company tells me Newcomb pushed the engineer-heavy company into “ideation mode” that made some employees feel like the startup lacked direction. They described engineers as being “fed up.”

………

 There the company laid out an entirely new business: “Our mission at Famous is to empower digital marketing professionals to build beautiful branded apps that amplify every aspect of their digital marketing campaigns.” The product is a content management system for digital marketers. It allows them to create “micro-apps” that are basically mobile-optimized websites that can be easily shared and opened without being installed like a native app.

(emphasis mine)

Look at the highlighted portions.

Venture capitalists are throwing money at this, because they believe that there are bigger suckers willing to take a piece of this.

At some point, you always run out of pigeons, and Famo.us is an indicator that the supply is getting thin.

I’m not saying that it’s time to put your money in a mattress, I’m just saying that keeping it in San Jose might be ill advised.

That’s Gonna Leave a Mark

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The Sith lord of academic journal publishing is Elsevier.

They charge thousands of dollars a year for subscriptions, jacked their prices in a way that makes Martin Shkreli salivate, and they have threated lawsuits to keep researchers from publishing their own research.

They are widely loathed in their field, and now the entire staff of one of their journals has resigned to start up and independent open access journal:

It’s really somewhat astounding just how absolutely hated journal publishing giant Elsevier has become in certain academic circles. The company seems to have perfected its role of being about as evil as possible in trying to lock up knowledge and making it expensive and difficult to access. A few years ago, we noted that a bunch of academics were banding together to boycott journals published by the company, as more and more people were looking at open access journals, allowing them to more freely share their research, rather than locking it up. Elsevier’s response has been to basically crack down on efforts to share knowledge. The company has been known to charge for open access research — sometimes even buying up journals and ignoring the open licenses on the works. The company has also been demanding professors takedown copies of their own research. Because how dare anyone actually benefit from knowledge without paying Elsevier its toll. And that’s not even mentioning Elsevier’s history of publishing fake journals as a way to help giant pharmaceutical companies pretend their treatments were effective.

Basically on the list of companies which really are pushing to get themselves declared “evil,” Elsevier has a prime spot.

And now even its employees are revolting. The editorial staff of an Elsevier journal have all resigned to go start an open access journal instead:

All six editors and all 31 editorial board members of Lingua, one of the top journals in linguistics, last week resigned to protest Elsevier’s policies on pricing and its refusal to convert the journal to an open-access publication that would be free online. As soon as January, when the departing editors’ noncompete contracts expire, they plan to start a new open-access journal to be called Glossa.

The editors and editorial board members quit, they say, after telling Elsevier of the frustrations of libraries reporting that they could not afford to subscribe to the journal and in some cases couldn’t even figure out what it would cost to subscribe. Prices quoted on the Elsevier website suggest that an academic library in the United States with a total student and faculty full-time equivalent number of around 10,000 would pay $2,211 for shared online access, and $1,966 for a print copy.

One of the editors who quit notes that he’d “be better off going to flip burgers” in the time he spent working for the journal, rather than accepting the tiny amount Elsevier pays him.

Note that the authors of these papers are not paid to publish.

In fact, in a number of cases, they pay to offset the cost of publishing.

And Elsevier is determined to suck the marrow out of learning, and dance on its bones.

F%$# Rupert Murdoch

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Less than a week after taking control of the magazine, Rupert Murdoch’s News Corp has instituted huge layoffs at National Geographic:

National Geographic informed employees Tuesday it would lay off about 9% of its staff, months after announcing it would partner with Rupert Murdoch’s 21st Century Fox as part of an expanded joint venture.

That would amount to about 180 people out of the total 2,000 employees under the new partnership with Fox.

In September, 21st Century Fox announced a for-profit venture in which it paid $725m for control of the National Geographic Society, to create National Geographic Partners, which includes National Geographic Channels.

Magazine staffers received an email from CEO Gary Knell on Tuesday morning with instructions to make themselves available throughout the day and monitor their inboxes for information about their employment status.

“The National Geographic Society and the National Geographic Channels are in the process of reorganizing in order to move forward strategically following the closing [of] the National Geographic Partners deal, which is expected to occur in mid-November,” a spokesperson for National Geographic Society said in an emailed statement.

According to the statement, layoffs will represent about 9% of the overall workforce reduction. A “voluntary separation” offer has been made to other eligible employees.

“All staff have been advised as to their status as of closing,” the spokesperson said.

It’s like Murdoch bought Nat Geo just to kill it.

It’s like amusing yourself by pulling the wings and legs off of flies, and then putting them in the water and watching them sink.

And thus an American treasure is destroyed.

College Costs: It Ain’t Climbing Walls

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In response to a particularly egregious post by an overpaid (aren’t they all?) sales weasel about marketing to the “4 Ps”*, Paul Campos of LGM notes the remuneration of the 15 highest paid staff at the school, and the size of the school (less than 200 faculty), and draws obvious conclusions.

First, let me say, read the comments on his post.  They are a wealth of information as well.

Second, as is my wont, let me run the numbers:

The top 15 luminaries at this institution earn a total of $3,928,000.00, with the 15th most highly paid getting $145,000.00 a year.

There are 200 teaching staff, none of whom make $145,000.00 a year, or their names would be on the tax records used at LGM.

Assuming that they each average $100,000.00 a year, this means $20,000,000.00 spent on teaching staff, which means that 14% of the teaching budget is spent on such notables as the , “Vice President of Campus Environment ,” “Associate Assistant Vice President/Dean”, “Vice President of Institutional Advancement, ” and “Associate Vice President and Chief of Staff”.

According to the comments, almost all the teacher are adjuncts, so that number is probably less than $60K, it’s primarily a liberal arts institution, which would mean that of these people have get the ⅓ of what is spent on instructors.

When you further consider that it is likely that each of these bits of administrative deadwood have 5 flunkies working directly for them on average (and my guess would be that there are at least 10 working for both the marketing and alumni development chiefs) , and that each of them earn $30K a year, and this goes up to more than 50% of the teacher budget.

Note from the comments also, “It is telling that she refers to customers rather than students.”

A major problem with higher education, and higher education costs, is the explosion of overpaid and under-worked administrators.

Another one is that, particularly at the top schools, there is monopolistic collusion as to prices and aid awards, allowing prices to skyrocket.

Instead, we have people talking about climbing walls for students, and those palatial some new dorms.†

College is a microcosm of society, where an unproductive and parasitic managerial class suck the marrow out of business, the economy, society, and the “customer”.

*Product – What product or products should we offer? Price – How should our products be priced? Place – Where should we offer our products for sale? Promotion – What’s the compelling story we tell about our product and where do we tell the story to get people to buy our product?
†In fact, the high end student amenities are predicted by monopoly theory. Once monopolists stop competing on price, they jack up prices and compete on bling.

Because Grave Robbing is the Christian Thing to Do

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It looks like everyone favorite arts and crafts themed band of Talibaptist bigots have expanded their activities into dealing in stolen archaeological artifacts:

This is how it’s done. Oligarchs pillage and loot so they can push their own version of history on everyone.

In 2011, a shipment of somewhere between 200 to 300 small clay tablets on their way to Oklahoma City from Israel was seized by U.S. Customs agents in Memphis. The tablets were inscribed in cuneiform—the script of ancient Assyria and Babylonia, present-day Iraq—and were thousands of years old. Their destination was the compound of the Hobby Lobby corporation, which became famous last year for winning a landmark Supreme Court case on religious freedom and government mandates. A senior law enforcement source with extensive knowledge of antiquities smuggling confirmed that these ancient artifacts had been purchased and were being imported by the deeply-religious owners of the crafting giant, the Green family of Oklahoma City. For the last four years, law enforcement sources tell The Daily Beast, the Greens have been under federal investigation for the illicit importation of cultural heritage from Iraq.

These tablets, like the other 40,000 or so ancient artifacts owned by the Green family, were destined for the Museum of the Bible, the giant new museum funded by the Greens, slated to open in Washington, D.C., in 2017. Both the seizure of the cuneiform tablets and the subsequent federal investigation were confirmed to us by Cary Summers, the president of the Museum of the Bible.

For their part, Hobby Lobby is claiming it’s just screwed-up paperwork. Nothing more than that. Just a customs mix-up that has taken well over 4 years to resolve. Not really.

Here’s hoping that there will be a criminal prosecution, and a very pious Muslim cellmate, in their future.