The Atlantic

It’s too bad that Felicity Huffman has been indicted. That probably so poisons her acting career that she can’t be cast as Paul Manafort’s wife, Kathleen, in the inevitable biopic of the lobbyist’s life. But Huffman and Manafort are spiritually connected, and the fact they are packed together above the fold today is more than an accident of timing. They are twin avatars of an elite that acts with impunity.

When Paul Manafort’s lawyers pressed their case for leniency in court on Wednesday, they made the argument that everyone knew about Paul Manafort’s malfeasance—and therefore, how bad could it possibly be? They pointed to the fact he met repeatedly with top government officials to kibitz about his clients in the government of Ukraine. (I wrote about such meetings in my profile of Manafort.) Obviously, those government officials knew him to be a lobbyist. So, really, what’s the harm of his failing to register as required by the Foreign Agents Registration Act?

In fact, the lawyers had a point. Manafort is being sent to prison for crimes that are systemic, hardly hidden, and usually elicit little more than a yawn or shrug. According to a Justice Department report in 2016, there had been seven prosecutions for failure to comply with FARA since 1966. What makes this figure so galling is how many eminent ex-government officials have served as “strategic advisers” to dictatorial governments.

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Read: Paul Manafort, American hustler

They might represent foreign governments, but technically do not lobby Congress on their behalf; they make millions, while never subjecting their work to public scrutiny—or themselves to personal embarrassment. (From filings in the Mueller case, we now know that the Justice Department investigated Manafort for brazen disregard of FARA in 1986, just as he was setting out in his career as a lobbyist representing foreign governments. But it could apparently never summon the will to prosecute someone so well connected.)

Or take the more rampant problem of tax evasion. While Manafort will serve time for failing to pay his bills to the government, armies of lawyers and accountants are feverishly devising novel methods of enabling the rich to cheat the IRS, depriving the U.S. of nearly $200 billion in revenue each year. As one old joke holds, the difference between tax avoidance (which is legal) and tax evasion (which is not) is the wall of a prison.

This is the same pattern made visible by the college admissions scandal. The public gets inflamed over a supposedly outrageous piece of behavior that is really not so far from the standard elite procedure. When a wealthy donor contributes $10 million to a university, imagining that their child will someday attend, administrators call it a “gift” and applaud the gesture of philanthropy. But it is, in effect, institutionalized bribery, and it creates new templates of moral behavior. It makes recognizing as wrong under-the-table payments to college coaches harder for parents, when these payment so resemble the gift-giving they see officially sanctioned.

America never had an edenic period, when the country resided in a state of pristine civic virtue. But the past half century has ushered in an era of rank indifference to the perils of corruption and bribery. Not so long ago, the United States had a far more robust definition of what counted as a bribe. That broad definition constrained the growth of the American lobbying industry. Back in the 1960s, lobbying hardly existed in Washington—at least not in the form and on the scale that we now know it. The ledger of officially registered lobbyists extended into the high double digits. By the 1990s, the population of lobbyists had swelled to well over 10,000.

If Americans are more comfortable living in a world of bribery, perhaps it’s because American jurisprudence has legalized so much of it. One accelerant was Justice Anthony Kennedy’s opinion in the Citizens United case, in 2010. Kennedy gave the Supreme Court’s official sanction to anonymous campaign contributions, overturning a long trajectory of reforms that prodded the political system in the direction of transparency and rigid limits. Kennedy’s decision made tracing how political giving shapes political decisions nearly impossible. But it was even worse than that. Kennedy’s justification officially circumscribed the legal definition of bribery, constraining it to encompass only the most explicit bribes and quid pro quos. He scrubbed away the Founders’ concern with the corrupting influence of gifts, which had been enshrined in the Constitution.

Paul Manafort also helped invent this world. He pioneered the structure and practices of the modern K Street lobbying firm. At each step in his career as a lobbyist and consultant, he kept pushing the boundaries of the acceptable, because his experience had shown that he would always get away with it. Until Robert Mueller came along, Manafort had every reason to believe that he would never pay a price for his malfeasance. The fact that he will now serve time is a victory in the war against corruption; that he will encounter so few of his own kind in prison is a testament to the fact that we are still losing the war.

Washington Post

Leisa Moten has a stable job as a church administrative assistant in West Virginia, but like some others in her town of Pipestem, which has a population of 846, she is living below the poverty line, earning $15,800 a year.

Where she lives in southern West Virginia, the poverty rate reaches as high as 28 percent in certain areas, and unemployment in some counties is more than twice the national average.

Making ends meet is sometimes a challenge, she said, and well-paying jobs can be hard to come by. So Moten, 58, was interested when she learned that a nonprofit in her community, Appalachian Beekeeping Collective, was looking for several dozen people to train as beekeepers, then buy their honey. It’s an effort to help rebuild 15 West Virginia counties harmed by job losses caused by the deep decline in coal mining.

“When coal mining jobs went away, our economy went with them,” Moten said.

Moten decided to give beekeeping a try. Her husband, Eddy Moten, a former hospital radiation therapy technician who is disabled and no longer able to work, joined her.

They received three hives last May, and their first honey will be harvested this spring for a profit of $6 per pound. She estimates that will bring in $1,200 and $1,800 to pay off a few bills and invest in her new business, Meant to Bee Apiary and Artisan Creations.

Moten plans to sell a few jars of honey to friends and also craft and sell homemade honey-scented soaps and lip balm made with organic beeswax.

Getting stung now and then is a small price to pay, she said, for some extra pocket money and fresh honey for her breakfast toast.

Moten is among 35 West Virginians who became apprentice beekeepers last year after taking Beekeeping 101 classes through the Appalachian Beekeeping Collective program operated by Appalachian Headwaters, a nonprofit started in 2016 to restore native hardwood forests and streams on former mining sites throughout central Appalachia.

With another 55 “wannabe” keepers currently being trained in a new round of classes, beehives are a “win-win-win” for the region, program co-founder Kate Asquith said.

Besides supplementing the incomes of West Virginians living at or below the poverty level, she said, beekeeping will help to pollinate scarred landscapes and perhaps give a boost to the threatened honeybee population. Worker bees fly away from their boxes to pollinate, then return to tell other bees through a “waggle” dance where to find a nectar source.

As an incentive for beekeepers, equipment is free for those who are part of the program, and staff workers will handle the sticky job of harvesting, cleaning and bottling the honey every spring and summer.

"The cost to each beekeeper is nothing except their time," Asquith said. "In West Virginia, even though many people live in poverty, they have a lot of open space, free of pesticides and herbicides, to keep hives."

Appalachians have been tied to their land for generations, said Asquith, but when mining jobs in the eastern United States began to dwindle after coal prices fell in the 1980s, young people often felt they had no choice but to leave.

"People are migrating out and not moving in, and entire communities built around the coal industry are in serious decline," she said. "But bees are good ambassadors. Our hope is that through beekeeping, people will be able to build up their skill base."

James Scyphers, a former coal miner and carpenter from Athens, W.Va., has been able to do just that. When he learned about two years ago that the Appalachian Beekeeping Collective was looking for somebody to help build beehives at the nonprofit’s new field office in Hinton, near Athens, he applied, thinking he might earn extra spending money for a few months.

"I really liked fooling with the honeybees, though, and pretty soon, I was taking beekeeping classes," he said.

Scyphers, 69, who followed his dad and grandfather into a life of working underground in narrow and sometimes dangerous passages, was laid off in the mid-1980s when the coal mine he worked for shut down, he said. Overnight, the father of two went from earning $20 an hour to $6 an hour as a carpenter — a job he was thankful to find.

"It was a struggle, but we got through it," he said. "We had to. We found out how much less we could really live on."

Now Scyphers is working full time for the collective, building bee boxes, tending bees and mixing sugar with water to form sugar cakes to help honeybees survive the winter, He also looks after four hives of his own at home. He says he’s never been happier.

“It’s the most satisfying job I’ve ever had, I wish we’d had this opportunity 30 years ago,” he said. “Beekeeping is something with the potential to help lots of people. I’d encourage anybody who worked in the mines to try it. You’re working with your hands, you’re outside in nature, and nothing else out there has the work ethic of the honeybee.”

For Jason Young, a school bus driver from White Oak, W.Va., who is raising six children with his wife, Angela, beekeeping will hopefully bring in enough extra income to grow the business he just started, White Oak Bee Co., he said.

Young has 13 hives and has developed a honey-roasted coffee called Appalachian Honey Bean.

“I’ve always loved coffee, and I thought that a honey coffee might help to separate me from the other local beekeepers,” he said.

There is another sweet incentive for Young to put on a bee suit once a week and check on the hives he keeps on his property and at a friend's small farm: his daughter, Rosalyn, 16, also enjoys beekeeping. They took classes together through the Appalachian Beekeeping Collective.

"She's a daddy's girl," said Young, 41. "I'd have to say that working with the bees has brought us closer together.”

Young and other new beekeepers have been motivated to succeed in part by one of their teachers, a master beekeeper named Cindy Bee. (Yes, that’s her real name.)

Bee, 64, comes from a long line of apiarists and learned the craft from her father. When she learned a year ago that an educator was needed for the Appalachian collective, she said she didn’t hesitate to move to Hinton from Portland, Maine.

“Beekeeping is a perfect fit here," she said.

With a colony of between 40,000 and 60,000 bees in each hive, a hive can produce around 100 pounds of honey every season, providing that the weather cooperates, said Bee, who oversees more than 1,000 hives. Current plans are for the honey harvest this spring to be sold by the collective online and in local stores. Once they get their flow, they’ll decide how much to sell it for, based on whether there is a plentiful or sparse harvest.

"The spring honey produced here is light and sweet with the flavor of blackberries, while the fall honey is dark, rich and delicious," she said. "Most of the fall honey is left for the bees to live on during the winter. But if the hives stay strong through spring, there should be a good crop of honey in June.”

The honey will be extracted, cleaned, bottled and sold by the collective’s employees, after each apprentice beekeeper is paid $6 per pound. Each participant will be allowed to keep 10 pounds of honey for their personal use, Asquith said.

Carie Ortman, 50, said she's looking forward to her first crop of honey from the beehives she put in her yard last year.

Ortman, who suffers from fibromyalgia, said she is unable to hold a full-time job. Her husband recently had triple heart bypass surgery and can’t yet return to the curio shop he owns near their home in Blue Sulphur Springs.

Ortman, who has been selling eggs from her flock of 400 chickens to get by, said she plans to use the extra income from her honey to catch up on some bills.

“Then I’m going to look into expanding my bees," she said, adding that she loves being around them.

Ortman said she finds them calming. “When I’m having a bad day, I always go out to the hives,” she said. “The humming of the bees and the serenity around the beehives helps me to focus and relax. It’s very therapeutic.”

CNN

Estimating inflation is a tricky and complex task. In the United States, the government's Bureau of Labor Statistics sends testers to stores to record the price of everything from cheese to tires, and surveys consumers over the phone about what they spent on gas and funeral services.

Amazon thinks it could do it better.

With help from outside researchers, the company's economists are working on a way to measure inflation using thousands of transactions across its own platform. Automatically analyzing product descriptions allows them to better assess the quality of a dress or a juicer or a bathmat, theoretically creating a more accurate, up-to-date index of how much things cost.

That's just one way Amazon is using the squad of economists it has recruited in recent years. The company has turned so many businesses, from retailing to cloud computing, inside out. Now Amazon is upending the traditional role of economists within companies, as well as the field of economics.

Amazon is now a large draw from the relatively small talent pool of PhD economists, which in the United States grows by about only 1,000 new graduates every year. Although the definition of "economist" is fuzzy, the discipline is generally understood as the study of how people use resources and respond to incentives.

In the past few years, Amazon has hired more than 150 PhD economists, making it probably the largest employer in the field behind institutions like the Federal Reserve, which has hundreds of economists on staff. It was the only company with a recruiting booth at the American Economics Association's annual conference in January, handing out free pens and logoed stress balls.

Unlike economists in academia or government, the work of Amazon's economists is almost entirely secret, and staff are required to sign non-disclosure agreements to keep it that way. But according to background interviews and Amazon itself, integrating economists has been critical to the company's phenomenal growth in e-commerce.

Amazon's economists game out real estate decisions, set the lowest prices that will deliver a profit, precisely determine what customers care about and whether advertisements are working — all using machine-learning algorithms that automate decisionmaking on a massive scale. It's the kind of asset that smaller companies can't always pay for, allowing Amazon to pull further and further away from the competition.

Other tech companies that also make effective use of economists — like Uber, which has a 30-person team — speak with frank admiration of the apparatus Amazon has built. "Amazon is the only firm that has hired a lot of economists, let alone done it successfully," Uber's chief economist, Jonathan Hall, said in a speech to the American Economics Association in January. While many companies have hired economists as public-facing spokespeople or to guide general corporate strategy, Hall explained, both he and Amazon try to integrate them as key advisers on nearly every business decision, using enormous amounts of data to replace intuition with science.

And in the meantime, Amazon is reshaping the economics field in its own image.

"The folks at Amazon and Uber are not doing the same sort of traditional chief economist's role," said Tom Beers, executive director of the National Association of Business Economics. "They're doing something completely different."

Economists are not new to private companies, where they've long helped forecast macroeconomic conditions to guide strategic decisions about what to produce, which markets to enter and where to source raw materials.

They're not even new to the tech industry: Companies like IBM, Intel and Microsoft have had them for decades. Google's chief economist, Hal Varian, helped design the novel auction model for the company's IPO and also helped make the case that Google wasn't violating antitrust laws. Google now says it has about 300 economists and statisticians on staff, though it wouldn't give a more detailed breakdown. It is believed in the field that Amazon employs more PhD economists than any other tech company.

In the past several years, a smattering of smaller consumer-facing tech companies — like the home-search platform Homeaway and the job website Indeed — have hired economists to crunch their user data and generate insights that can be packaged for journalists as a form of earned media. They also have a government relations function, generating analyses that quantify their company's positive impact on a particular community (and thereby arguing against regulation).

Two years ago, the National Association of Business Economics started an annual conference just for tech economists, featuring remarks by four different Amazon economists and a reception sponsored by the company.

"Imagine if you're a very large retailer that has a large number of locations," said Martin Fleming, chief economist at IBM. "We could typically predict with about 30% to 40% accuracy what the likely performance is of that retail location. With the current capabilities with machine learning and artificial intelligence, we can get close to 90% accuracy in forecasting business at a particular location."

That capability is perhaps most important to a company like Amazon, which has possibly more data than any other company — as well as a variety of lines of business that need data to operate, from lending to web services to last-mile delivery.

The architect of Amazon's massive team of data crunchers is Pat Bajari, and he's as respected an academic as they come.

Since getting his PhD at the University of Minnesota in 1993, he has churned out papers on subjects like home prices, government procurement, auctions and collusion. After working at Harvard, Stanford, and Duke, Bajari joined Amazon as a vice president and chief economist in 2010, and two years later took an appointment at the University of Washington.

Amazon declined to make any of its economists available for interviews, or to answer questions on the record about their work. But the economists occasionally speak publicly, and Bajari appeared at the American Economics Association's conference to present a paper about how big data affects firm performance, using Amazon's enormous trove of data and experiments on forecasting retail demand. After explaining the results, he shared some thoughts about how economics has shaped tech companies.

"What I've seen change in the industry, starting about eight years ago, is firms got more serious about using the scientific method and removing chunks of guesswork within companies," Bajari said, with a characteristic nervous laugh in between sentences. "You're basically trying to clean up waste."

At other companies, economists are often clustered in a small team, but at Amazon, they are integrated into many teams across the company. In a glossy recruiting brochure, Amazon describes how its economists help build risk models for lending to third-party sellers, advise on product design and engagement tracking for devices like Alexa and Kindle, help target customers for its booming cloud services business, and forecast server capacity needs for the consumer website.

Among the 46 jobs and internships currently posted for economists on Amazon's hiring website, there are positions open for economists to help fine-tune seller pricing, figure out the best way to route trucks through Amazon's vast distribution network and identify the characteristics of top-performing talent in order to make the best hires.

For example, Amazon runs a program called Connections, which sends out small questionnaires to employees: Does your work provide you with opportunities to learn new things? Does your team always put the customer first? How often does bureaucracy get in the way of your ability to deliver results?

To improve that feedback, Amazon tries out interventions like training managers to interact better with their subordinates. Originally, the company brought on a team of psychologists, other scientists and product managers, but before long, it became apparent that they weren't well suited to achieving what Amazon was ultimately after: Better performance. Economists, by contrast, were able to analyze which interventions led to higher worker productivity.

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A the root of figuring out whether an HR pilot program worked, and many other things economists do at Amazon, is something called "causal inference": Determining what caused what, and therefore what to do more of and what to cut off. Take a Prime subscription, for example. Do consumers sign up mostly for the free shipping? The streaming video? Or the discounts at Whole Foods? Economists can come close to an answer, enabling the company to make better decisions about which benefits to include and which to scrap. Other decisions — like how to target ads, where to put bookstores and warehouses, and how much an Echo device should cost — are also vetted by economists.

In most companies, that kind of work might be done by any data scientist. But according to another former Amazon economist, Bajari has advocated for hiring people with formal economics training to advise on as many business decisions as possible.

"They kind of make the point that economists have more specific skill sets that are better suited for a lot of business problems," the former Amazon staffer said. "Because if you're writing an economics paper, you're studying things like the impact of the minimum wage, often without the luxury of running experiments."

"Before, economists used to work on public data," said Beatrice Cherrier, an historian of economics at the University of Cergy Pontoise in France. "And now, if they want to study behavior, the tech companies have it, and it's proprietary."

Not only does that allow the Amazons of the world to not publish anything that might make them look bad, Cherrier explains — it also makes it difficult to replicate any studies that they might release, since the source data is under wraps.

But for those on the inside, Amazon is a playground full of delights.

Daryl Fairweather joined the company soon after receiving her PhD in economics from the University of Chicago in 2014. She was working for a consulting firm in San Diego, stressed out by deadlines on projects that she didn't find meaningful, when the Amazon option was suddenly everywhere.

"It wasn't like you had to go in and interview for just one job. You could interview for lots of jobs at the same time," said Fairweather, who left Amazon in 2018 to become the chief economist for the real estate website Redfin. Once hired, research questions were everywhere. "If I felt there was something really worth digging into, I could go dig into it. I wasn't told ahead of time what was important."

The other big draw: Even though the work Amazon's economists do may never see the light of day, within the company, it influences decisions that affect millions of people. The most junior economists can present their research before senior vice presidents, and they're evaluated on how their recommendations impact the company's bottom line.

"That was personally really exciting. The work that I do has clear value that you can see right away — it's not just hypothetical," Fairweather said. "When you publish in an academic journal, it's hard to know that lawmakers are making different choices based on what your results are. When you're in the company, it's very clear that you're changing peoples' minds."

Bloomberg

Look at much of what is written about the oil market and it may be tempting to conclude that crude oil is a homogenous commodity, the same the world over and seamlessly interchangeable. It’s not.

Once you appreciate that all crudes are not created equal, you can see how important it is that long-held expectations for a glut of the heaviest types have turned out to be incredibly wrong. Not a producer or refiner in the world is immune to this development, which is having a growing impact on prices and supplies.

Crude oil consists of a soup of molecules made up of varying numbers of hydrogen and carbon atoms – hence, hydrocarbons. The composition of crudes from different oil fields, and even from different parts of the same oil field, can diverge sharply. Many contain pollutants that have to be removed, with sulfur the most prevalent.

Quality is generally a function of two features. One is sulfur content. Crudes containing lots of sulfur are called sour, those with little are sweet. Sulfur needs to be removed to meet finished-product quality specifications, which adds to the cost of processing and limits the number of refineries that can handle sour grades.

The second is API gravity, a gauge of density. Crudes with a high API gravity are termed light, and those with a lower API gravity are heavy. Light crudes naturally contain lots of the smaller molecules, including those that form gasoline and diesel, while heavy crudes naturally contain lots of larger molecules that require more complex refining processes to break them up into these high-value products. The latter also tend to contain more sulfur than lighter ones, making them doubly costly to refine into useable products. For this reason, heavy, sour oil tends to be cheaper than light, sweet.

When the U.S. shale boom was still just a glint in the eye of George Phydias Mitchell, regarded as the father of the industry, the market’s overriding concern was that the world's supply of oil would get steadily heavier and sourer in the years ahead. That portended a mismatch with demand, which was expected to be increasingly concentrated in the higher-value light products used to move people and things, rather than the heavy ones used to generate heat or electricity. To add to the difficulty, environmental regulations were stipulating lower and lower levels of sulfur in fuels – a requirement that is to be extended to ships from January 2020.

As a result, refiners around the world, and particularly along the U.S. Gulf coast, invested in expensive equipment to crack big hydrocarbon molecules and remove sulfur. Meanwhile, emerging economies in Asia invested in big new plants to process heavy, sour crude from the Middle East. Those same Middle Eastern producers were also busy building new refineries for their cheaper heavy crudes. These developments are restricting the volume of heavy sour crude available for export to refiners that don’t have a long-term supply deal.

But George and his successors have turned the world on its head. Far from getting heavier, new global supply is now predominantly very light and very sweet. Almost 86 percent of the incremental production between 2015 and 2018 was light, according to recent data from Rystad Energy AS, and nearly three quarters of the additions expected by 2023 are also expected to fall into that category.

Meanwhile the supply of heavier oils is falling.

Soaring U.S. output has driven OPEC to implement another round of voluntary output cuts in an effort to balance global supply and demand. The combined production of Saudi Arabia, the U.A.E. and Kuwait has fallen by more than 1.2 million barrels a day since November. Off the coast of West Africa, steep decline rates at deepwater fields are cutting into the flow of heavy and medium grades from Angola, where a lack of investment has slowed the development of new fields to replace the losses.

And then there are the recent round of sanctions on Iran, which have cut the Persian Gulf country’s production by a similar amount. Waivers granted to eight buyers of Iranian oil expire in early May and President Donald Trump is yet to decide whether he will renew any of them. If he doesn’t, Iran’s oil production will fall further.

In the Caribbean, mismanagement of oil industries means that heavy oil production from two key countries is also dropping fast. Mexico and Venezuela are both in long-term decline and the sanctions recently imposed on Petroleos de Venezuela will accelerate the fall, particularly if they are extended to target non-U.S. buyers of the country’s crude.

The shortage of heavy crudes is already having a market impact. A useful way to see this is to compare what Saudi Arabia charges buyers of its Arabian Heavy grade to prices for its Arabian Extra Light. The chart above shows how the gap has narrowed. Expect that trend to continue if heavy crudes become even more scarce and an ever-greater proportion of the supply is locked into domestic refineries or long-term supply deals with Asian partners. Too bad for the refiners who have made all the expensive investment to prepare for a heavy-crude world.

Bloomberg

Last year, a Facebook user in Sri Lanka posted an angry message to the social network. “Kill all the Muslim babies without sparing even an infant,” the person wrote in Sinhala, the language of the country’s Buddhist majority. “F---ing dogs!”

The post went up early in 2018, in white text and on one of the playful pink and purple backgrounds that Facebook Inc. began offering in 2016 to encourage its users to share more with one another. The sentiment about killing Muslims got 30 likes before someone else found it troubling enough to click the “give feedback” button instead. The whistleblower selected the option for “hate speech,” one of nine possible categories for objectionable content on Facebook.

For years nonprofits in Sri Lanka have warned that Facebook posts are playing a role in escalating ethnic tensions between Sinhalese Buddhists and Tamil Muslims, but the company had ignored them. It took six days for Facebook to respond to the hate speech report. “Thanks for the feedback,” the company told the whistleblower, who posted the response to Twitter. The content, Facebook continued, “doesn’t go against one of our specific Community Standards.”

The post stayed online, part of a wave of calls for violence against Muslims that flooded the network last year. False rumors circulated widely on Facebook claiming Muslims were putting sterilization pills in Buddhists’ food. In late February 2018 a mob attacked a Muslim restaurant owner in Ampara, a small town in eastern Sri Lanka. He survived, but there were more riots in the midsize city of Kandy the following week, resulting in two deaths before the government stepped in, taking measures that included ordering Facebook offline for three days.

The shutdown got the company’s attention. It appointed Jessica Leinwand, a lawyer who served in the Obama White House, to figure out what had gone wrong. Her conclusion: Facebook needed to rethink its permissive attitude toward misinformation. Before the riots in Sri Lanka, the company had tolerated fake news and misinformation as a matter of policy. “There are real concerns with a private company determining truth or falsity,” Leinwand says, summing up the thinking.

But as she began looking into what had happened in Sri Lanka, Leinwand realized the policy needed a caveat. Starting that summer, Facebook would remove certain posts in some high-risk countries, including Sri Lanka, but only if they were reported by local nonprofits and would lead to “imminent violence.” When Facebook saw a similar string of sterilization rumors in June, the new process seemed to work. That, says Leinwand, was “personally gratifying”—a sign that Facebook was capable of policing its platform.

But is it? It’s been almost exactly a year since news broke that Facebook had allowed the personal data of tens of millions of users to be shared with Cambridge Analytica, a consulting company affiliated with Donald Trump’s 2016 presidential campaign. That revelation sparked an investigation by the U.S. Justice Department into the company's data-sharing practices, which has broadened to include a grand jury. Privacy breaches are hardly as serious as ethnic violence, but the ordeal did mark a palpable shift in public awareness about Facebook’s immense influence. Plus, it followed a familiar pattern: Facebook knew about the slip-up, ignored it for years, and, when exposed, tried to downplay it with a handy phrase that Chief Executive Officer Mark Zuckerberg repeated ad nauseam in his April congressional hearings: “We are taking a broader view of our responsibility.” He struck a similar note with a 3,000-word blog post in early March that promised the company would focus on private communications, attempting to solve Facebook’s trust problem while acknowledging that the company’s apps still contain “terrible things like child exploitation, terrorism, and extortion.”

If Facebook wants to stop those things, it will have to get a better handle on its 2.7 billion users, whose content powers its wildly profitable advertising engine. The company’s business depends on sifting through that content and showing users posts they’re apt to like, which has often had the side effect of amplifying fake news and extremism. Facebook made Leinwand and other executives available for interviews with Bloomberg Businessweek to argue that it’s making progress.

Unfortunately, the reporting system they described, which relies on low-wage human moderators and software, remains slow and under-resourced. Facebook could afford to pay its moderators more money, or hire more of them, or place much more stringent rules on what users can post—but any of those things would hurt the company’s profits and revenue. Instead, it’s adopted a reactive posture, attempting to make rules after problems have appeared. The rules are helping, but critics say Facebook needs to be much more proactive.

“The whole concept that you’re going to find things and fix them after they’ve gone into the system is flawed—it’s mathematically impossible,” says Roger McNamee, one of Facebook’s early investors and, now, its loudest critic. McNamee, who recently published a book titled Zucked, argues that because the company’s ability to offer personalized advertising is dependent on collecting and processing huge quantities of user data, it has a strong disincentive to limit questionable content. “The way they’re looking at this, it’s just to avoid fixing problems inherent with the business model,” he says.

Today, Facebook is governed by a 27-page document called Community Standards. Posted publicly for the first time in 2018, the rules specify, for instance, that instructions for making explosives aren’t allowed unless they’re for scientific or educational purposes. Images of “visible anuses” and “fully nude closeups of buttocks,” likewise, are forbidden, unless they’re superimposed onto a public figure, in which case they’re permitted as commentary.

The standards can seem comically absurd in their specificity. But, Facebook executives say, they’re an earnest effort to systematically address the worst of the site in a way that’s scalable. This means rules that are general enough to apply anywhere in the world—and are clear enough that a low-paid worker in one of Facebook’s content-scanning hubs in the Philippines, Ireland, and elsewhere, can decide within seconds what to do with a flagged post. The working conditions for the 15,000 employees and contractors who do this for Facebook have attracted controversy. In February the Verge reported that U.S. moderators make only $28,800 a year while being asked regularly to view images and videos that contain graphic violence, porn, and hate speech. Some suffer from post-traumatic stress disorder. Facebook responded that it’s conducting an audit of its contract-work providers and that it will keep in closer contact with them to uphold higher standards and pay a living wage.

Zuckerberg has said that artificial intelligence algorithms, which the company already uses to identify nudity and terrorist content, will eventually handle most of this sorting. But at the moment, even the most sophisticated AI software struggles in categories in which context matters. “Hate speech is one of those areas,” says Monika Bickert, Facebook’s head of global policy management, in a June 2018 interview at company headquarters. “So are bullying and harassment.”

On the day of the interview, Bickert was managing Facebook’s response to the mass shooting the day before at the Capital Gazette in Annapolis, Md. While the massacre was happening, Bickert instructed content reviewers to look out for posts praising the gunman and to block opportunists creating fake profiles in the names of the shooter or victims, five of whom died. Later her team took down the shooter’s profile and turned victims’ pages into what the company calls “memorialized accounts,” which are identical to regular Facebook pages but place the word “remembering” above the deceased person’s name.

Crises such as this happen weekly. “It’s not just shootings,” Bickert says. “It might be that a plane has crashed, and we’re waiting to find out who was on the plane and whether it was a terror attack. There may be a protest, and people are alleged to have been injured.”

And these are the easy cases, where the lines between good and evil are clear and Facebook has developed a formula for responding. On her laptop, Bickert pulls up a slide presentation from a meeting of the company’s Community Standards group, which gathers every other Thursday morning to come up with new rules. As many as 80 employees participate in the discussions, either in person or virtually. The slides show that, on a Thursday last year, the team discussed what to do with #MeToo posts created by women who named their assailants. If the posts were untrue, they could be construed as harassment of innocent men. In the same meeting, the company evaluated viral stunts that younger users attempt, such as the “condom-snorting challenge,” which, with apologies, involves snorting a lubricated prophylactic up a nostril and pulling it out through the mouth. There are dozens of challenges such as this—the chile pepper challenge, the Tide Pod challenge, and so on—that young people do (or pretend to do) to get views. If these stunts can hurt people, should Facebook stop people from promoting them?

In December, after months of discussion, Facebook added new rules. #MeToo accusations are OK, as long as they don’t encourage retaliation. Challenges are also fine, as long as they don’t encourage bodily harm, which would seem to put condom snorting in a gray area. “None of these issues are black and white,” Bickert says.

In congressional testimony and elsewhere, Facebook has deployed a practiced set of responses to criticism about its content decisions. If interrogated about something on the site that was already forbidden by the Community Standards, executives will reassure the public that such content is “not allowed” or that there is “no place” for it. If there’s no rule yet, Facebook will usually explain that it is trying to fix the problem, was “too slow” to recognize it, and is taking responsibility. The company has said dozens of times that it was “too slow” to recognize Russia’s manipulation of the 2016 U.S. presidential election, Myanmar’s genocide, and ethnic violence in Sri Lanka. But “too slow” could be fairly interpreted as a euphemism for deliberately ignoring a problem until someone important complains.

“They don’t want to be held liable for anything,” says Eileen Carey, a tech executive and activist. Since 2013 she’s kept records of drug dealers posting pictures of pills on the web, some of them captioned as OxyContin or Vicodin. Many of these posts include a phone number or an address where interested users can coordinate a handoff or delivery by mail. They are, in effect, classified ads for illegal opioids.

Carey’s obsession started while she worked for a consulting firm that was helping Purdue Pharma remove counterfeit pills. Most tech companies—including Alibaba, Craigslist, and EBay—were quick to agree to take down these images when Carey alerted them. Facebook and Facebook-owned Instagram were the exceptions, she says.

Carey, who like Zuckerberg is from Dobbs Ferry, N.Y., and lives in the Bay Area, would sometimes end up at parties with Facebook executives, where she’d kill the mood by complaining about the issue. “I started sucking at parties once I started working on the whole getting-rid-of-fake-drugs-on-the-internet thing,” she says. Also since 2013, Carey has kept an eye on the issue, spending a few minutes most days searching for (and reporting) drugs for sale on Facebook and Instagram. Usually she got a dismissive automated response, she says. Sometimes, she got no response at all. At the time, technology companies were advocating at conferences and in research reports for harsher enforcement of drug sales on the anonymous dark web. In reality, Carey came to believe, most of the illicit purchases occur on the regular web, on social media and other online marketplaces. “People were literally dying, and Facebook didn’t care,” she says.

In 2018, Carey began tweeting her complaints at journalists and Facebook employees. In April, Guy Rosen, a Facebook vice president who was training the company’s AI software, sent her a message, asking for more examples of the kind of content she was talking about. “Do a search for #fentanyl as well as #oxys on IG [Instagram] and you’ll see lots of pics of pills, those accounts are usually drug dealers,” she wrote to Rosen. She sent over some Instagram posts of drugs for sale. “I reported these earlier and they are still there in the #opiates search—there are 43,000 results.”

“Yikes,” Rosen wrote back. “This is SUPER helpful.” Facebook finally removed the searchable hashtags from Instagram in April—a week after being criticized by Food and Drug Administration commissioner Scott Gottlieb and just a day before Zuckerberg testified before Congress.

Since then, Carey has kept her eye on news reports from Kentucky, Ohio, and West Virginia, where deaths from opioid overdoses have declined this year. Some articles speculate that the reason may be a rise in community treatment centers or mental health resources, but Carey has a different theory: “The only thing that really changed was the hashtags.”

Even so, Facebook’s drug problem remains. In September the Washington Post described Instagram as “a sizable open marketplace for advertising illegal drugs.” In response, Bickert published a blog post explaining that Facebook blocks hundreds of hashtags and drug-related posts and has been working on computer imaging technology to better detect posts about drug sales. She included a predictable line: “There is no place for this on our services.”

The Atlantic

For the second time in just a few months, admissions at America’s elite colleges are under a microscope. In late 2018, the scrutiny was on T. M. Landry, a predominantly black private school in Louisiana that had garnered a national reputation for sending dozens of graduates to the Ivy League and other prestigious institutions. A New York Times report revealed the school as a fraud, faking transcripts and hiding allegations of abuse. The Landry scandal caused tremors in higher education, but damage was limited by the fact that colleges could plausibly claim victimhood—although, I argued at the time, it was difficult not to come away from the debacle with a sense that it called into question core tenets of the American educational meritocracy.

As explosive as the Landry affair was, it is now dwarfed by the bombshell dropped by the Justice Department on Tuesday, when federal lawyers indicted 50 people on racketeering charges for allegedly facilitating or taking part in a nationwide fraud to game admissions at top colleges. The accused include CEOs, wealthy investors, and at least two celebrities. According to the indictment, the conspiracy had been refined over many iterations, and was marketed as a service to the ultra-wealthy. Its creator described it as an innovation, a cost-effective “side door” into top colleges. In practice, it was a system of bribes to accomplices such as testing-center officials, who could help alter SAT and ACT scores, and college coaches in second-tier sports, who could help admit applicants who pretended to be athletes.

The story immediately went into the stratosphere. No one could resist the specter of the rich and famous engaging in lurid criminality to give their kids even more of an advantage. All the major news outlets led with the scandal. Twitter, the hub of the media elite, had a ball, alternating between mockery and fury. A tidal wave of scorn washed over the whole of American discourse. Ask Tom Brady, Lance Armstrong, or Goldman Sachs: The only thing people dislike more than cheaters winning is winners cheating.

Resenting the dynastically wealthy is practically a national sport, and for the most part, that’s what the admissions scandal has been understood to be about: the perfidy of the 1 percent. Many drew parallels to entirely legal ways the rich can rig college admissions, like pledging donations or enrolling in private prep schools. Implicit in the public contempt is the belief that none of this has anything to do with regular middle-class folk. In fact, some of the angriest responses came from people who attended the very colleges that had been part of the scam. For many, the scandal felt like a sign of the times, showing the divide between the rich, cheating their way to the top, and everyone else, who had climbed up the hard way.

Maybe that’s why an odd twist in Tuesday’s scandal stood out: Many of the students who benefited did not know about the fraud being committed for them. In several instances, their parents endeavored to keep the payoffs and cheating secret, arranging false tests so the children would never know that their scores had been deceitfully obtained. The kids were fakes, and ignorant of that fact.

It’s hard to blame people for mocking these oblivious teenagers, who thought they were walking on their own, but were in fact being carried. But it’s also worth considering how events would have appeared from their perspective. A high ACT score would have seemed like just another stroke of good fortune in a life full of it. The same goes for their acceptance into a selective college. In one tragicomic passage in the indictment, the scheme’s orchestrator describes how his student “clients” would sometimes come to him, surprised by their own high test scores, and suggest that maybe they’d do even better if they took the test again. They mistook the secret forces working on their behalf for their own natural talent. If you can’t see the hidden hand behind your success, what other explanations are there besides luck and ability?

In other words, from the students’ viewpoint, this is about as archetypal an instance of privilege as could be imagined. Advantage, after all, is rarely noticed by the advantaged. People don’t have an easy way to compare their lives with those of others, to see how the same situations might turn out differently if they themselves came from a different background. The first instinct is often to attribute disproportionate success to above-average aptitude, but most successful people know aptitude can’t explain everything that’s gone their way. That’s why, in many cases, privilege looks and feels like an accumulation of good luck, a series of little victories that make everything work okay in the end. In reality, luck and aptitude don’t tell the full story. Instead, wealth or caste or social standing work to load the dice in favor of the fortunate.

Now a confession: I too attended one of the colleges named in Tuesday's indictment. The news set me to wondering, Did I know someone who had bought his or her way into college? How could I tell? For that matter, how would I have known if secret forces had worked on my behalf?

At first, the question seemed ridiculous. I did not grow up fabulously wealthy, and I’m reasonably certain that my parents paid no bribes for me. I can say with total confidence that no one was seeking my athletic prowess, real or imagined.

Then I remembered that my father had also attended my alma mater. I hadn’t thought about that too much when I’d applied, believing that my grades spoke for themselves. No one ever brought it up to me, and I hadn’t really dwelled on it since. It was definitely not a fact that I had ever used to discount my own academic achievements.

But I’m nearly certain that somewhere in the application process, some admissions official, whose face I’d never see, took note that I was a legacy applicant, and moved me up a few spots on the list. Here was something I’d overlooked, a hidden hand behind my own good fortune, silently working to transmit my parents’ economic and social station downward to me. Perhaps less was separating me from the admissions-scandal students than I’d thought.

In this, I’m not alone. How many people who attended a good college, or secured a prestigious job, or otherwise climb one rung after another up the ladder of social and professional standing, can look back and see nothing similar?

While some people do start in remarkably disadvantaged places and rise through society, social mobility is the exception, not the rule. It’s true that most successful peoples’ parents have never paid an illegal fixer to secure them a college seat. But consider: If you attended a high-performing public high school, your parents probably did pay a premium on their house to live in the attendance zone. And what about the countless other, smaller outlays parents can make to help propel their children upward, things like test prep, sports equipment, after-school activities, travel? Even basic necessities like healthy food, medical care, or personal safety come at a financial cost. None of these expenditures are solely the province of the very wealthy, but nor are they guaranteed, and each serves as a little investment in the future, giving children a small leg up on peers who do not receive the same.

Parental wealth is hardly the only form of unearned advantage. Other privileges are even more deeply embedded, transmitted almost as birthright. In America, whiteness ranks highest among these. In education, in the workplace, in the criminal-justice system, white children and teenagers consistently receive hidden benefits that their nonwhite peers do not. How many white teenagers have gotten caught smoking weed or drinking, and were let off with a laugh and a warning? For a child of color—particularly a black child—the exact same episode is more likely to end with an arrest, and a ruined future. Where one person has a good chance of going home feeling lucky, another might leave in a squad car. How many white kids found it easy to get a summer job, while black children with the same applications were turned away? How many white students have been steered toward advanced-level courses, while their black peers were not? These advantages often persist across the income spectrum. For example, even after controlling for socioeconomic status, white students are significantly more likely to be assigned to a gifted-and-talented program than black students.

Legally speaking, none of these things remotely resemble paying off a test administrator. Pragmatically speaking, and from the perspective of the person who benefits? There is a certain symmetry. You have parents spending money to put their children in the place that best guarantees their success. You have many of those children growing up at least partially ignorant of the efforts expended to help them, and the forces working to protect them. Certainly, in both cases, the people who benefit are likely to end up thinking they’ve mostly earned what they’ve received, as a reward for hard work and natural aptitude. And if they got a lucky break or two along the way, well, that’s just life.

The lesson here isn’t to forgive the alleged fraudsters. Rather, it is that in a society stratified from top to bottom by race and wealth, privilege can’t be understood as something held exclusively by the richest 1 percent, or even the richest 10 percent, to the detriment of all others. If they’re propelled to their station by forces out of their sight and beyond their control, so too is everyone else lifted or confined by those same forces. Because of that, there is often no indicting the meritocracy without indicting oneself. One might even begin to wonder whether the real fraud is the idea of merit in the first place—that maybe “deservingness” is a shoddy basis for organizing a society altogether.

Recode

Home is the new gym.

Peloton, a company that makes high-end stationary bikes and treadmills that stream live classes, is snapping up new users and is currently valued at $4 billion. Similar devices replete with plenty of venture capital funding — Tonal, Hydrow, Mirror — are popping up every day, each with the promise of being the exercise routine that you’ll actually stick with.

But as many people know from failed New Years’ workout resolutions and weight machines gathering dust in the basement, fads change. Remember Zumba? Of course everyone knows they’re supposed to work out. But most people don’t make it past six months in any exercise regimen, according to Mark Eys, a professor in the kinesiology and psychology departments at Wilfrid Laurier University.

Why is it so hard to sustain exercise?

“People have to have a positive attitude toward the activity,” Eys said. “These are activities that people have to enjoy, that they can self regulate, that are convenient. Ultimately, people have to find the time and motivation to do these activities and put aside competing activities like Netflix or other things that are easy and quite attractive.”

People quit because they don’t enjoy the activity, or that “initial surge of optimism” passes, said Eys.

Even if people find an exercise that compels them, time is a major roadblock. Eys said the biggest issue with getting people to exercising is that they don’t perceive themselves to have enough time.

Enter these new, tech-laden, at-home brands — which are trying to create the gym experience without having to leave home. Classes vary in length but are usually about 30 to 45 minutes, and are marketed as workouts people can fit into their busy schedules.

There also are a number of other reasons the new crop of at-home work equipment might have longer staying power than previous generations.

These new companies combine at-home exercise devices with screens that stream live and pre-recorded classes, for which users pay a monthly access subscription.

In many ways, this is the natural progression of the old-school workout tape. But in addition to better screens, these companies are integrating other buzzy tech terms — social media, gamification, VR — to make exercise more habit forming and fun. Or at least less arduous than other forms of exercise.

“I think the reason this might be different is because of the zeitgeist we find ourselves in: We relate to people digitally and have conversations over social media,” Dr. Sari Shepphird, a sports psychologist with a private practice in LA, told Recode. “Now we can have a way to have the social aspect of working out in a way we’ve become used to.”

The social element could help people stick with exercise.

These exercise devices allow varying levels of interaction with other riders, from Facebook integration to being able to communicate with others during your classes.

“Theoretically, the coaching/social features should positively influence motivation while removing the potential for intimidation that comes with the physical presence of other people, who might be critical observers,” said Panteleimon Ekkekakis, a professor of kinesiology at Iowa State University, who studies what makes exercise pleasurable and what contributes to sustained behavior.

Eys, who studies group workout dynamics, agrees.

“A lot of the work we do focuses on the social component, so we would be the first to say that building a social aspect, if done correctly, would be a step in the right direction toward maintaining physical activity,” he said.

Still, he warned against “pseudo social environments” that might exist in online exercise groups. “We don’t know how genuine those interactions are,” Eys said.

Shepphird thinks the social groups geared around these devices might serve as an alternative place for people to post about their workouts, since it’s become passé on other social media.

Both she and Eys said that working out with your actual friends would be ideal.

“Having an app to do this with my friends and connect versus always having different partners would be a lot more successful,” Eys said.

At-home device makers are promoting their “community” in pages and pages of ad copy. These communities connect riders in the app, on social media and in real-world events. Riders can talk with each other and even in some cases with their instructors.

A number of these at-home devices are also adding in elements of gamification to capture people’s attention. Many include some form of public leaderboard. That means in addition to quantifying your own workout, you can see how well you performed compared to others — friends or total strangers.

Flywheel, which began as a studio-only bike workout but has recently branched out into selling bikes and live class subscriptions for at-home use, lets you compete against friends and strangers alike who are currently taking or have ever taken the class.

“We engage our at-home community in our broader community initiatives,” Matt O’Connor, Flywheel’s general manager of the company’s home fitness business, told Recode. “Later this month, one studio will be able to compete against another.” All at-home users constitute their own “studio.”

Turning activities into games has been used in everything from sales to education, and it’s shown some promising results, but it still needs more scientific study.

Home exercise devices are also incorporating virtual reality in varying ways. This comes in the form of seeing yourself race onscreen against other people or immersing yourself in beautiful locales (instead of your spare bedroom). People using Hydrow’s rowing machine can see the scull and hear their oars hitting the water. At-home biking startup VirZOOM is using full VR headsets to make riders not only feel like they’re racing in actual pelotons, but other more far-out scenarios like riding horses or flying a pegasus.

These efforts are in their early stages, but you should expect to see more advanced AR and VR with time.

Bells and whistles alone, though, aren’t likely to keep your attention.

“Electronic gizmos of all kinds typically have a ‘novelty’ effect that wears off after a while,” Ekkekakis said. “Anything that anyone says at this point is speculative since there are no long-term (or even short-term) studies on the subject.”

Flywheel, which has both in-studio and at-home classes, said its recurring user bases are growing but would not provide statistics on if workout habits differ between the two types of business.

What’s perhaps most promising about the at-home exercise devices is their ability to change. The devices’ digital screens allow companies to continually update their content.

“The background changes, the music can change, the options change — even the type of exercise can change,” Shepphird told Recode. “Most of us have complained at one point in time about being bored by the same old exercise. This type of technology allows us to change things up without fundamentally changing anything.”

Already, the existing field of at-home devices is altering their offerings to widen their customer base and to keep up with changing tastes.

Peloton now offers an app that lets people use their own devices to access routines, without having to spring for the $2,000 bike: It features yoga, meditation, and running classes. Flywheel owners can also take its streaming barre or crossfit classes.

“We believe that a product is a living, breathing thing,” Flywheel’s O’Connor said. “We’re constantly thinking about and investing in making our product better.”

That’s good, because the only thing constant about fads is that they’re always changing.

Koyfin

This year is setting up to be a blockbuster for IPOs particularly in the tech space. Over the past several weeks large companies such as Slack and Uber have voiced their intention to IPO. Others are even further along in the process. Lyft filed an S-1 on March 1 with details about its finances and even a ticker picked out (LYFT). In total, companies with about $250 billion of market cap are planning to IPO this year. With that, here are five things to keep in mind related to the IPO market.

1) IPO performance is an important risk-on, risk-off indicator for the stocks

The IPO market tells investors a lot about the risk environment based on the notional amount sold through IPOs, and how the shares trade after. A robust IPO market signals high liquidity and enthusiastic demand to invest in risky new shares. A muted IPO market suggests risk appetite is suppressed.

Over the past 3 years, IPO shares have generally outperformed the S&P 500. In 2006 – mid 2018, the amount of IPOs steadily increased and new shares outperformed the market. To track the performance post the offering, the IPO ETF is a good barometer.

The ETF tracks the rules based Renaissance IPO Index, which adds sizeable new companies on a fast entry basis and the rest upon scheduled quarterly reviews. Companies that have been public for two years are removed at the next quarterly review.

In July 2018, the IPO ETF peaked vs. the market and started underperforming. This was a harbinger of the market sell-off which started in October. The IPO ETF bottomed relative to the market at the end of December, and has rallied since.

Since 2016, performance of tech companies after IPO is a mixed bag with Software leading

Focusing on the tech sector, the largest IPOs over the past 3 years are a mixed bag. Some companies such as Docusign (+91.6% since IPO), Ceridian (+116%) and Pluralsight (+120%) have done very well. All three are in the software space. Others like GreenSky (-51%), Sogou (-53%) and Trivago (-52%) have disappointed investors since their IPO. The biggest IPO in recent memory, Snap is down 42% since its debut 2 years ago.

Smaller IPOs particularly in the SAAS sector have fared much better. For example, Okta (OKTA) went public on April 6, 2017 at $17 per share. Even buying the stock after its first day pop has produced a 230% return. However, not all SAAS IPOs have done well as Dropbox (DBX) is down 22% since its first day of trading

IPO offerings have slowed since 2014 before an expected pickup in 2019

The notional value of US IPOs was about $20B and declined through the end of 2015 as investors waited for the US election for clarity. After the presidential election in 4Q2016, the amount increased steadily to $15b per quarter in the middle of 2018. Since then, the offering amount per quarter has declined back to $5b per quarter.

The rush to IPO is probably related to the presidential election in 2020 and recent economic weakness

From a company’s perspective, deciding whether to IPO depends on many variables. However, the recent rush to IPO in 2019 is probably related to 2 macro factors. First, the presidential election in 2020 will likely cause uncertainty similar to 2016 when the IPO market took a pause. Second, recent economic slowdown has increased the odds of a recession in late 2019 or 2020. Private companies want to get ahead of any recession when the IPO market will undoubtedly cool.

5) Large tech IPOs in the pipeline have a combined private market value of $250 billion

The details of upcoming IPOs have only recently started to trickle in and most companies have not released any detailed filings about size or valuation. The combined private market value of the largest tech IPOs is $250b. Assuming that 20% of the market cap will be floated in an IPO suggests about $50b of notional offerings in the next 12 months in the tech sector.

The implications for the stock market depends on several factors. All else equal, IPOs are negative for the overall market because it increases the supply of overall equity. Investors need to sell other stocks in order to buy an IPO (unless there’s idle cash). However if IPOs are well received by investors and trade strongly after, this would indicate a bullish market with robust liquidity. This was the type of market in the late 90’s.

The New York Times

Every year, the National Association of Home Builders presents its vision for the New American Home, showcasing trends in home design and construction.

The association describes this effort as “America’s residential construction laboratory” and boasts that concepts first used in the New American Home project “often go on to become industry – and consumer – favorites.”

The idea of a residential construction laboratory is, in theory, great: Why not build a house that tests out the latest building and energy technologies, explores the functionality of different floor plans, and experiments with new materials and trends?

But in practice, it’s a failed experiment badly in need of a new hypothesis.

The first New American Home that N.A.H.B. built, in Houston in 1984, was 1,500 square feet and cost $80,000. By 2006, at the peak of the housing bubble, the N.A.H.B. home – a lakeside McMansion in Florida with a tri-level kitchen island and a waterfall off the master suite – was over 10,000 square feet and listed for $5.3 million in what is today one of the nation’s foreclosure capitals, Orlando.

That 1984 project was the smallest; square footage hasn’t dipped below 2,200 since 1985. The 2018 version, also in Florida, is “Tuscan”-inspired and is close to 11,000 square feet, with eight bathrooms and both an elevator and a car elevator in the garage. The 2019 version, to be unveiled soon, is 8,000 square feet and has an “inner sanctum lounge” and a view of the Vegas strip.

The N.A.H.B. house may be meant to highlight trends, but they’re not necessarily the trends homeowners want (and certainly not what most people need). Instead, they’re what builders, kitchen and bath manufacturers and real estate agents would like to sell them: Think cathedral ceilings, granite countertops, gift-wrapping rooms and, more recently, “smart” appliances like a refrigerator that can text you when you’re low on milk and eggs.

Many builders will tell you that though these houses are large, they are more efficient – even that they have a small carbon footprint. But this is like bragging about the good gas mileage of an S.U.V. While a 10,000-square-foot house built today uses less energy than a 10,000-square-foot house built a decade ago, a home of this size requires a phenomenal amount of energy to run. (And most likely has an S.U.V. or two in the garage.)

Does anyone need 10,000 square feet to live in?

Families are getting smaller, not larger. The average American household shrank by 30 percent from 1948 and 2012, to 2.55 people from 3.67. Yet houses have ballooned as family sizes have contracted.

The average new home today is 1,000 square feet larger than in 1973. The square footage of living space per person has increased to 971, from 507 – a 92 percent increase.

What if the next New American Home was a condo? And what if there was a new American dream, not of auto-dependent suburbia, but walkable urbanism?

In the Cloverdale749 building designed by Lorcan O’Herlihy Architects in Los Angeles, six families are housed – luxuriously – in a 10,500-square-foot building that has little else in common with the N.A.H.B. home.

No space is wasted here – it may not have multiple walk-in closets or “air-conditioned storerooms,” but it has high ceilings and roof decks.

Larger homes use more resources, typically require longer commutes, come with more expensive utility bills, and often contribute to more sedentary lifestyles (which in turn results in increased rates of conditions like obesity and heart disease).

The way the Cloverdale building is designed effectively reduces the need for (and costs of) heating and cooling, and increases natural light and circulation.

Thanks to its central location (and Los Angeles’s serious commitment to expanding public transit), it reduces the need for driving, too. Building this way has the highest potential to reduce greenhouse gas emissions in cities. The N.A.H.B. home, in contrast, is entirely self-contained, with no regard for neighbors or neighborhood. It might as well have a moat.

This approach to housing is not only socially isolating, it’s no longer sustainable.

Our way of building homes and neighborhoods lost the plot a long time ago.

Homes like those the N.A.H.B. is promoting ignore the changing nature of families and the imminent crisis in housing for the elderly – not to mention climate change, which we have no hope of combatting without a true reimagining of the American dream. Enter the Green New Deal: If it recognized the link between building more infill housing and reducing greenhouse gas emissions, it would be even greener. Taking a strong stand against the primacy of the single family home (and the zoning that encourages it), especially the 10,000-square-foot ones, would represent a bold move toward combating climate change.

Quartz

How much does Boeing Group, the US’s largest exporter, a top defense contractor, and key component of America’s most popular stock index, influence the federal government’s decision-making?

That’s a lingering question following days of uncertainty over the fate of Boeing’s 737 Max aircraft in the US, after the March 10 Ethiopian Airlines crash that killed 157. On Wednesday (March 13) afternoon, the US’s Federal Aviation Administration grounded the Boeing plane.

The FAA, normally one of the world’s leading aviation regulators, this time followed behind dozens of other governments, who cited concerns about similarities between the Ethiopian Airlines crash and an October 2018 Boeing 737 Max crash that killed 189. The FAA’s inaction came as US president Donald Trump got a personal reassurance March 12 from Boeing CEO Dennis Muilenburg that plane was safe, one of multiple conversations between the two in recent days, people familiar with the calls told Quartz.

The US government’s handling of the Boeing Max situation “raises the question whether the decision was made based on what’s in the public interest, or based off of relationships and influence,” said Brendan Fischer, the director of federal reform at the watchdog group Campaign Legal Center. Boeing “has a strong interest in government policy and contracting, and seeks to exert influence over government officials in any way possible,” he said.

The company benefits from Department of Defense contracts and other government spending—it makes Air Force One, the presidential plane—for its profits, and gets indirect subsidies from other US agencies, including NASA.

Here’s how the money flows.

Where Boeing’s lobbying money goes

Boeing has spent $275 million on lobbying since 1998 and $15.1 million in 2018, a slight decrease from previous years. They spent more on lobbying in the last Congressional session than any other company in the defense aerospace industry, ahead of global aerospace defense companies Northrop Grumman and Lockheed Martin.

Donations from these lobbyists tend to be concentrated on members of the House and Senate Appropriations subcommittees responsible for the allocation of federal defense money, and have favored Republicans in recent years, as they controlled both sides of Congress.

Lobbyists working for Boeing were active on issues from military spending to how the Export-Import Bank, which provides US companies financing for export deals, functions.

But by far their most frequent topic, according to 2018 filings, was the “Tax Cuts and Jobs Act,” the Republican and Trump-backed bill that slashed corporate income tax from 35% to 21%. (The bill passed in late 2017, and most of Boeing’s lobbying work on it in 2018 was around “implementation issues.”) Boeing also spent more than $3 million on a bill that would make the Clean Air Act weaker.

Where Boeing’s campaign donations go

As a government contractor, Boeing can’t make big corporate donations to elected politicians. But its employee-funded political action committees and individual employees have long been active in US elections, donating $32.6 million since 1990, according to Center for Responsive Politics data gathered from federal campaign filings. The last few election cycles have seen big jumps in spending, with a slight preference for Republicans.

In 2016, Boeing groups donated five times as much ($229,000) to presidential candidate Hillary Clinton as they did to Donald Trump ($42,500). Most polls at the time predicted a Clinton landslide.

The biggest recipient of Boeing-related campaign donations in the 2018 midterm elections was the “Senate Leadership Fund,” a political action committee that supports Republicans in the Senate. It was set up by allies of Senate majority leader Mitch McConnell, and is run by McConnell’s former chief of staff.

McConnell is married to Department of Transportation secretary Elaine Chao, who oversees the FAA. On March 13, Dan Elwell, the acting FAA administrator, told reporters that the FAA’s decision on the Boeing planes was made “in constant consultation” with Chao.”

How Boeing helps finance inaugurations

Boeing was among dozens of corporate donors who gave to Trump’s lavish inauguration, which raised more money than any other in history, an estimated $107 million. (Government contractors can donate to post-election activities). Boeing donated $1 million, according to Federal Election Commission documents

That was not unusual: Other million-dollar or more donors included Bank of America and Kraft Group, as well as individuals, including SAC Capital’s Steven Cohen and casino mogul Sheldon Adelson. Boeing also gave about $1 million to Barack Obama’s 2013 inauguration fund.

How Boeing helped keep markets up

The Trump tax cuts, which trimmed US corporate taxes across the board by 40%, gave Boeing a $1.1 billion windfall in its 2017 year-end results. Boeing said it would spend $300 million on employee retraining and other worker-related upgrades, but plowed much more back into its own shares, instigating a $20 billion share buyback that helped lift its stock prices above $400 a share in early February 2019 for the first time ever.

Since Sunday’s crash, they have fluctuated between $371 and $399.

The company has an outsized impact on the Dow Jones Industrial Average, the most commonly-used metric of US stock market performance, as Quartz reported earlier. Boeing is the largest corporate contributor to the DJIA, with an 11% weighted share of the DJIA, almost double the next-weighted company.

Despite concerns about the rising US deficit, a “sugar rush” from the tax cuts artificially inflating corporate profits, and economic headwinds, the DJIA and other US indices have stayed relatively strong throughout 2018. Trump has often touted the markets’ strength as an indication the US economy is going gangbusters

The DJIA closed over 25,000 on Wednesday (March 13), after a brief dip earlier in the week on the Ethiopian Airlines crash, well above the 18,259.60 where it closed the day before Trump was elected in November of 2016.

Shanahan and the revolving door

Washington, DC’s “revolving door” shuffles policy-making experts between government jobs, industry posts, and lobbying groups. Boeing has a particularly active one.

From 2008 until the present, Boeing hired 19 officials from the Department of Defense, according to the Project on Government Oversight.

Trump appointed Patrick Shanahan, a Boeing executive for more than three decades with no military experience, to be deputy secretary of Defense in July of 2017. When James Mattis, the former Marine Corps. general who Trump named Defense secretary, quit with a warning about Trump’s world view in December of 2018, Shanahan was named acting Secretary of Defense, putting him in charge of the Pentagon’s over $700-billion budget.

Before joining the federal government, Shanahan oversaw the 787 Dreamliner and the company’s missile defense system, among other projects. As acting Secretary, Shanahan has “made numerous statements promoting his former employer Boeing and has disparaged the company’s competitors,” according a complaint filed by watchdog group Citizens for Responsibility and Ethics in Washington. The group asked the Inspector General to investigate whether Shanahan violated ethics rules on March 13.

Dan Elwell, the acting head of the FAA, is a former lobbyist, and airline executive, who worked for the Aerospace Industries Association which “advocates for effective federal investments” and whose members include Boeing.

Boeing has also hired dozens of former Congressional aides and executive branch officials, including the former Senate Appropriations Committee staffer Arthur Cameron, who is the company’s vice president of federal affairs, and House Transportation and Infrastructure committee aide Amy Smith, who is now director of aviation policy and integration.

Boeing received $21 billion in government contracts in 2017 from the Pentagon, or about 22% of its net revenues. In the second half of 2018, the company was awarded three multibillion-dollar contracts for major Department of Defense aircraft programs, even as it remains behind schedule for other work.

Boeing’s impact

Boeing employs over 153,000 US employees, and has a big footprint in Washington state, California, and Missouri, among others. While some members of Congress demanded that the Boeing Max planes be grounded immediately, lawmakers from states where Boeing facilities are based said they’d put their faith in regulators and the company. “The important thing is that relevant agencies are allowed to conduct a thorough and careful investigation,” said Rick Larsen, a Democrat from Washington, during a hearing March 12.

The company says its activities in Washington are a natural part of its business activities. “As the nation’s largest exporter and a leading producer of both commercial and defense aerospace products, there are a number of significant policy issues at the federal, state and local levels with the potential to impact our business, our diverse workforce, and our supply chain,” a Boeing spokesman said. “Our team is focused on telling Boeing’s story and supporting policies that advance the aviation industry and U.S. manufacturing in the communities where we live and work.”