Wal-Mart Stores Inc. is forecasting a difficult holiday season, but Tiffany & Co. just exceeded their earnings estimates by the simple expedient of raising their prices. It’s hard to find a more vivid example of the segmenting taking place in American society: The wealthy are doing very well indeed, while even bargain retailers are having a harder time of things.
I thought of this when I read Charlotte Allen’s new piece in the Weekly Standard about the divide between the vast tech wealth of Silicon Valley and the people who provide them goods and services. It’s hard to excerpt, so you’ll have to read the whole thing, but to summarize, she looks at the way even affluent communities are dividing into the super-rich and the merely extremely well-to-do … who live in what used to be starter homes for the middle class. The regular middle class, meanwhile, seems to be disappearing, squashed outward to more distant suburbs by the immense pressure of housing prices. It is becoming an area of rich and poor, with little in between.Read more »
Yesterday, Wal-Mart Stores Inc. surprised everyone when it announced that its current chief executive officer, Mike Duke, would step down. He’ll be replaced by Doug McMillon, a career insider who has been touted as a possible future CEO for a while -- but not, until yesterday, the very immediate future.
McMillon is coming into a more challenging environment than the one that faced many of his predecessors. On the one side, he’s got Amazon.com Inc. pushing on his margins. I’m in the Florida Panhandle this week, and yesterday, I stopped by the local Wal-Mart to look at prices. The prices were still very good compared with my local stores in Washington (though we’re getting our first Wal-Mart on Dec. 4!). But they aren’t crazy-good compared with Amazon. They’re still at a very good price point for some of the stuff I buy from Target, such as clothes, and their toy prices seemed good. But their electronics and kitchen appliances weren’t particularly amazing compared with Amazon or Costco Wholesale Corp. Wal-Mart still has a competitive advantage among cash customers (a surprisingly high percentage of its customer base), but as Amazon builds warehouses closer and closer to the customer, I suspect Wal-Mart is in for a fight.Read more »
In the latest City Journal, Steve Malanga writes about an issue that hasn’t yet gotten a lot of attention but is virtually guaranteed to become a serious topic of national debate in the not-so-distant future: Do we bail out cities that have become insolvent?
Malanga quotes a Steve Rattner op-ed from the summer: “The 700,000 remaining residents of the Motor City are no more responsible for Detroit’s problems than were the victims of Hurricane Sandy for theirs, and eventually Congress decided to help them.” Rattner is right, of course; Detroit was largely undone by massive structural changes in the auto industry, which now employs only a small fraction of the people that it used to. And yet, there’s more to the story, isn't there? Detroit’s biggest problem is the combined burden of its pension funds and retiree health benefits. And the reason that its pensions are in such a state is that they were bizarrely mismanaged by people who apparently didn’t quite get fifth-grade math.
Back when I used to do technology consulting for banks and other financial firms, I found myself in the middle of a project with many of the characteristics that made the rollout of the Patient Protection and Affordable Care Act so difficult: hard deadlines fixed by lease expirations and some regulatory requirements, mission creep, and project requirements set by distant, hard-to-reach figures. For a month or so, I slept two to three hours a night, if at all, which has cognitive effects that I will save for a post on an even slower news day than this.
As you can imagine, not everything went smoothly on launch day. Amid the chaos, I got a call from the secretary of a very senior executive at the firm. His new voice-recognition software wasn’t working, and he needed me to come up right away.Read more »
Sometimes I imagine how our descendants will look back on our world. Unless something is done about antibiotic resistance, I’m very much afraid that they’ll look upon us the way 19th-century science fiction writers viewed Atlantis: as a lost paradise of magical technology -- in this case, one in which you could go to a child coughing her life out with pneumonia, stick a needle in her arm, and watch the disease melt away almost before your eyes. The first doctors who treated patients with antibiotics felt like they were witnessing miracles. Our grandchildren may feel much the same way about the ease with which we cured disease.
At Wired, Maryn McKenna outlines all the medical miracles that antibiotics have made possible:Read more »
I’m not going to insult your intelligence by pretending there’s a right and a wrong side in the just-concluded battle over the filibuster. At this point, arguments about the justice of the filibuster are entirely instrumental: To know what someone is going to write, you need only know which party they supported in the last election. Let us just note that this has been a long time coming, and at this point it was probably inevitable from one side or another; the grievances are long and deep, and both sides have joyously fed the wild tide of ill will that has swept the capital over the last few decades.
What’s left to discuss is what this means. In the short term, it obviously means that President Barack Obama can more easily fire people and confirm replacements, and that the D.C. circuit court, which hears regulatory appeals, is going to be a lot more liberal-leaning in the future. In the medium term -- if you think, as I do, that Republicans have a pretty good shot of taking the Senate and White House by 2017 -- we can expect Republicans to do away with the rest of the filibuster, accompanied by the writhings and groans and outraged cries of many now celebrating Senate Majority Leader Harry Reid’s courageous stand against minority obstructionism. In the long term, the Senate will be a more majoritarian body, for good and for ill; parties will enjoy new power when they are in the majority, and when they are not, they will bitterly lament the bygone respect for minority rights.Read more »
Last night brought two significant pieces of news in the saga of the Patient Protection and Affordable Care Act’s health insurance exchanges.
The first is that the government is delaying the second-year start of enrollment for health plans until Nov. 15, 2014. Various rationales have been suggested for this, but to me the most plausible explanation is that the administration does not want consumers finding out their health-care costs until after the midterm elections. Practically speaking, this is a terrible idea: It leaves millions of consumers only a month to get on the website and select a new plan to cover them by Jan. 1, 2015 (to allow for administrative processing, you generally need to buy next month’s insurance by the 15th of the current month). And substantively, it’s outrageous. The government seems to be making things harder on consumers in order to prevent them from having vital information about their health-care system before they go to the polls on Election Day.Read more »
Now is sort of an awkward time to bring this up, but being out of work for a long time is one of the worst things that can happen to you. Your work skills atrophy, and you’re more likely to be depressed. Your earning potential falls. Even very basic skills can decline -- one study found that people who lost their jobs did worse on tests of reading and basic math abilities.
That’s the bad news. Here’s the worse news: Those effects seem to be long-lasting. Income setbacks during a recession can stay with you throughout your career -- for example, studies of people who graduate into a recession show that even decades later, they’re not earning as much as people who graduated into sunnier environments. But a new study from Europe seems to show that even cognitive declines are persistent:Read more »
At the turn of the millennium, when I was in business school, the auto dealership business model seemed ripe for disruption. Dell Inc. was already doing a bang-up business building computers to order. It seemed only a matter of time before General Motors Co. did the same, and we could buy our cars easily over the Internet rather than having to haggle with a dealer.
Ah, the optimism of youth! Ten years later, auto dealers are still very much with us. It turns out that building and selling cars is a bit more complicated than doing the same with computers. Oh, and auto dealers are extremely well connected in Congress and especially in state legislatures; they are often among the richest people in a legislator’s district, which has translated, over the years, into protective franchise laws that make it very hard for automakers to prune their dealer networks.Read more »
The Treasury Department said in a statement that it plans to sell the last of its remaining General Motors Co. stock by the end of the year, at least if current trading volumes stay steady. The government poured $51 billion worth of Troubled Asset Relief Program funds into the ailing automaker back in 2009; so far, it has gotten $38.4 billion of that back. If it sells the remaining shares at today’s price of about $38.85, it will recoup another $1.2 billion, locking in a loss of roughly $10 billion.
Was it worth it? Well, the company has shown solid profits, beating estimates consistently, if not hugely, in recent quarters. It still employs tens of thousands of people in the U.S., and its suppliers employ many more. The bankruptcy has allowed GM to become more competitive on costs.Read more »