Moneybox
A blog about business and economics.

July 20 2016 7:48 PM

This Bizarre Convention Speaker Is a Big Reminder That the GOP Is the Party of Scams

Ponder this: Of all the speakers who will be appearing at the GOP convention Wednesday night, who is the most apt symbol of the Republican Party in 2016? It can’t be Ted Cruz, given how thoroughly Trump vanquished him in the primary. Mike Pence? He’s the concession prize to a hapless donor class. Marco Rubio? Please.

Personally, I think a case can be made for Michelle Van Etten. You probably haven’t heard of her. She might not even get any real airtime; my guess is that some networks will cut away to pundit commentary during her speech, as they’ve tended to do during more obscure speakers. I frankly have no idea how she was picked to appear, and while Van Etten confirmed for me via LinkedIn that she would be attending, she did not respond to my request for an interview. But her scheduled onstage presence is a wonderful example of conservative subtext suddenly becoming text—the Republican Party is the party of scams.

You see, Van Etten is a small-business woman who has made a go of it in the world of multilevel marketing, aka the legal yet deeply unsavory cousin of the pyramid scheme. For those unfamiliar with the basic hustle, it works like this: Companies like Amway, Mary Kay, and Herbalife recruit independent salespeople to move wares like kitchen knives, makeup, or vitamins. Of course, those men and women are expected to stock up on inventory. But rather than harass their Facebook friends and co-workers about the wonders of anti-aging nutritional supplements or whatnot, they can also make money by recruiting new members of the sales force, whose revenue they will get a cut of. As the network grows, the money moves from the suckers at the bottom of the pyramid back to the top.

How is this different from a pure pyramid scheme, where all the money comes from roping more marks into fraud? Theoretically, legitimate multilevel marketing firms are supposed to sell a certain percentage of their product to actual end consumers. But as the recent controversy over supplements company Herbalife shows, the boundaries between what’s a fraud and what’s legal can get a tad blurry. And in the end, data from court cases suggest that people who sign up to sell for these companies tend to lose money in the bargain. (And you too can experience those joys in Slate’s new multilevel-marketing game).

Van Etten, for her part, is associated with Youngevity, a company started by a former veterinarian and naturopath, Joel Wallach, that largely hawks nutritional supplements.* Wallach promotes fringe theories about human health and mineral intake and is an occasional guest on conspiracymonger Alex Jones’ program, InfoWars. The two men also have a tight business relationship; you can join the “InfoWarsTeam” to sell Youngevity’s goods, and you can buy an “Alex Pack” of supplements. (As the Daily Beast reported, Jones has said the company’s “Tangy Tangerine” mix makes him “feel crazed” with energy “to stomp some people.” You know, in a good way.) To her credit, Van Etten seems to focus less on the powders and pills than on selling clothes and accessories through a Youngevity subsidiary, MK Collab, which is a sort of boutique. Apparently, she’s quite good at her work; she’s achieved the rank of “senior vice chariman marketing director,” and her RNC bio says she has more than 100,000 in her network. She’s pretty high up on the pyramid.

So, distant association with quacks and chemtrails believers aside, what makes Van Etten such a spot-on avatar for contemporary Republicanism?

On the most literal level, the modern Republican Party is remarkably entangled with the multilevel marketing industry—perhaps nobody more so than Donald Trump himself. The GOP nominee did paid speaking engagements with ACN, a company that sells phones, and struck a licensing deal with the supplement seller Ideal Health, to turn it into the the Trump Network. (Like many of his naming-rights side-projects, this one ended in tears.) Dr. Ben Carson, meanwhile, had a long relationship with Mannatech, a supplement company that was sued for claiming its products could cure cancer. Multilevel-marketing firms are also prodigious political donors and have given money to groups supporting George W. Bush, Mitt Romney, and Jeb Bush, among others.

Like Trump’s nomination, bringing a multilevel marketer to talk at the national convention speaks to the GOP's increasingly unabashed embrace of obvious cons (as Paul Krugman's clever headline writer put it, it's a “Party Agrift.”) Movement conservatism has a long history of entanglement with get-rich-quick schemes and snake oil salesmen hawking miracle cures or gold bullion (just think about Glenn Beck’s advertisers). But this stuff is no longer at the periphery of the party. It’s on the convention stage. Likewise, Republicans have long sold magical thinking in public policy, like tax cuts for the wealthy that will pay for themselves. But now its presidential standard-bearer is promising to make Mexico pay for a border wall.

And then there’s the resonance with GOP public policy thinking—which, as much as anything else, stands for the notion that Americans have a right to get ripped off. On a small scale, they want to undo the Obama administration’s fiduciary rule, which merely requires retirement investment advisers to work in their client’s best interests. Much bigger: They want to cripple or kill the Consumer Financial Protection Bureau, which is dedicated to making sure Americans aren’t preyed upon by financial companies.

So while Van Etten may not end up saying much of note, her presence Wednesday night still speaks volumes.

*Correction July 20, 2016: I originally referred to Joel Wallach as Ben Wallach, for some inexplicable reason.

July 20 2016 5:02 PM

Why Unilever Thinks Dollar Shave Club Is Worth $1 Billion

On Tuesday, consumer-goods giant Unilever announced it had purchased Dollar Shave Club. The reported price for the 4-year-old razor subscription service is $1 billion—about five times the projected 2016 revenue of the company. That price tag may sound steep, but Unilever—the company behind such everyday retail brands as Dove and Axe—is buying a lot more than razors. It’s buying its way into the growing subscription model, which sidesteps brick-and-mortar retail—and it’s buying Dollar Shave Club’s 3.2 million subscribers.

Razor subscription services, in particular, have been popping up over the past few years; Dollar Shave Club’s main competitor is Harry’s, which was founded in 2013. That’s left Procter & Gamble, the makers of Gillette, playing catch-up. According to Euromonitor, P&G’s share of the shaving market fell from 71 percent in 2010 to 59 percent last year. That might explain why the company is finally entering the game—albeit a little late—with its own mail order outfit, Gillette Shave Club. P&G already competes with Unilever in the U.S. shampoo and deodorant market; now the two companies have opened a new front for competition.

But as much as Unilever and P&G are competing to sell you every single one of your toiletries, they’re also eyeing another competitor: Amazon Prime. P&G is even launching other services to compete with Amazon’s ubiquitous subscription offers. This month, P&G launched the Tide Wash Club in Atlanta, a service promising to send consumers Pods refills for a flat monthly fee. The company’s other experiment, Tide Spin, operates in Chicago and is a laundry pickup and delivery service for “the busy consumer.” The company has yet to reveal any compelling information about the success of either program, but it’s clear that the success of Amazon’s subscription-based services is making major corporations rethink how they do business.

July 20 2016 1:21 PM

The Republican Party’s Terrible, No-Good Plan for American Cities

Those of us eagerly awaiting the Republicans’ return to urban policy will have to wait a little longer. While the party was once considered a credible, reform-minded alternative, or at least a counterweight, to Democratic political machines, the GOP’s radical rightward shift has left its pols struggling to compete in urban America. Of America’s 25 biggest metropolises, only three have Republican mayors. The current softening of the GOP’s position on drug-crime sentencing and imprisonment isn’t enough to make the party a serious contender in U.S. cities.

A quick glance at the Republican platform shows why, and it has nothing to do with social conservatism. To the extent that the Republican Party offers an urban agenda, it is a Godzilla policy: a program for destroying cities, not restoring them.

The urban philosophy of the GOP can be summarized by its opposition to the Obama administration, which, the 66-page document suggests, “subordinates civil engineering to social engineering as it pursues an exclusively urban vision of dense housing and government transit” and seeks to “coerce people out of their cars.” (If only that were the Democratic agenda. The truth is that neither Bernie nor Hillary has talked much about urban poverty, transit, evictions, rents, or growth restrictions, and Obama—once heralded as the “urban president”—has not much changed the status quo. We’ll have more on their platform shortly.)

In this, the GOP platform’s approach to land use and transportation is ideologically indebted to the Agenda 21 movement, a popular grassroots conspiracy theory that alleges that a nonbinding U.N plan from 1992 is herding Americans into cities as a form of social control.

One of the GOP’s more potent suggestions is that the federal government abandon the Highway Trust Fund’s support for mass transit and sidewalks, among other extraneous outlays. Transit, the document says, is “an inherently local affair that serves only a small portion of the population, concentrated in six big cities.” (The six metro areas with the nation’s biggest transit systems contain about 60 million people and account for more than one-fifth of U.S. GDP.)

On housing, the Republicans pay lip service to the ongoing rental crisis, noting that “nearly 12 million families spend more than 50 percent of their incomes just on rent.” But there is no subsequent mention of Section 8, the severely underfunded housing voucher program (and GOP brainchild) that covers only a fraction of eligible families. The party also calls for a comprehensive review of regulations impeding the growth of the housing supply, particularly environmental laws.

The biggest opening for the GOP at the metropolitan level is to position itself as the anti-regulation party, particularly with respect to schools, small businesses and zoning. Republican support for charter schools could be a part of that platform (though many powerful Democrats are also in that camp).

If there’s one roll of red tape conservatives like, though, it’s restrictive zoning. Echoing Stanley Kurtz’s periodic op-eds in National Review, the platform blasts the U.S. Department of Housing and Urban Development’s efforts to bring low-income housing to wealthy communities:

Zoning decisions have always been, and must remain, under local control. The current Administration is trying to seize control of the zoning process through its Affirmatively Furthering Fair Housing regulation. It threatens to undermine zoning laws in order to socially engineer every community in the country.

That market just isn’t ready to be free.

The other great paradox of the free-market/devolution party is that there’s one American community that isn’t ready for local control: the District of Columbia. Why not? Because unlike less populous Wyoming or Vermont, “it belongs both to its residents and to all Americans, millions of whom visit it every year.”

The Americans it belongs to most, though, are the visiting members of Congress, who have the power to oversee elements of budget and policy for the District’s 660,000 inhabitants.

July 20 2016 1:15 PM

Donald Trump’s Casual Plan to Transform Washington Into a Cesspool of Corruption

Perhaps you think Washington, D.C., has a problem with corruption. Perhaps you are tired of politicians toadying to lobbyists for campaign donations, of regulators swinging through the revolving door between government and big business.

However awful you may think Washington is now, Donald Trump appears to have a plan that would make it far, far worse.

On Tuesday, Reuters reported on Trump's chilling plan to “purge” the government of civil servants hired during the Obama administration. During a private meeting with donors, New Jersey Gov. Chris Christie, who in addition to being Trump's tragic manservant is also charged with running his presidential transition team, said he had already put together a list of federal employees the Republican nominee would sack once in the White House. Christie said as well that he thought Congress should change the law to make firing civil servants simpler, all in order to prevent “burrowing”—the practice of turning political appointees into career employees so that they can continue on in the next administration.

As my colleague Elliot Hannon noted, cleansing the government of opposition party members is something you would expect from a third-world strongman, not an American president. It would be a fundamentally destabilizing attack on the basic functions of government, which rely on the continuity provided by career officials insulated from electoral politics. It would bring back the specter of rampant political patronage. It is completely nuts.

And yet that's not even close to where things end. Tacked onto the end of its report, Reuters notes the following:

Christie added that the Trump team wants to let businesspeople serve in government part time without having to give up their jobs in the private sector. Trump frequently says he is better equipped to be president because of his business experience.

Now, there are certainly examples of presidents appointing advisers from the private sector—General Electric CEO Jeff Immelt was Obama's "jobs czar," which is to say, he headed up a panel on creating work.

That's not what this sounds like. It sounds like Donald Trump's plan to shake up Washington is to pack it chock full of conflicts of interests. Forget the revolving door. In Trumplandia, there will be no door. Business people will be able to happily continue drawing a salary from their corporate employers while pulling the levers of government. Given the atrophied state of our anti-corruption laws, there wouldn't be much to prevent the transformation of Washington into an exercise in grift far more explicit and pervasive than anything that exists now.

The charitable reading here is that the Trump camp just doesn't sense why any of this might be a problem—that it quaintly views this tossed off idea as a convenient way to lure more private-sector talent into the halls of government. But the fact that Christie is sharing these plans behind closed doors with donors casts a serious shadow of impropriety over the whole thing. (Reuters obtained recordings of the meeting. The Trump campaign declined the wire service's request for comment.) It doesn't take a great leap of imagination to read this as him saying, “Hey, look how easy it will be to get your man on the inside.”

In a way, this is predictable, coming as it does from a nominee who has refused to give up his vast international business interests while campaigning for the White House, and who will just hand them off to his children if elected. Trump is nothing if not a walking conflict of interest. Apparently, he'd like to reshape Washington in his own image.

July 20 2016 12:08 AM

Donald Trump Jr., Wharton Grad, Talks About How He Was Educated by Construction Workers

Like his father, by whom he is employed, Donald Trump Jr. is a Wharton graduate* who enjoys some of the finer things in life (in his case, things like big game hunting in Africa). He also has the bearing of a pushy bond trader with slicked-back hair reminiscent of one Patrick Bateman. That, on its face, might make him seem like an odd choice for delivering a message about how much Trump the elder cherishes and respects blue-collar Americans. And yet, on the second night of the Republican National Convention, he did a surprisingly effective job of it.

In the most memorable chunk of the speech, Trump Jr. talked about growing up watching his father at work. “He didn't hide out behind some desk in an executive suite, he spent his career with regular Americans,” he said. “He hung out with the guys on construction sites, pouring sheetrock and hanging—pouring concrete and hanging sheetrock. He listened to them and he valued their opinions as much and often more than the guys from Harvard and Wharton locked away in offices, away from the real work.” On the nose? Sure. Obvious pandering? Sure. But it's also believable enough, in part because Trump himself talks like a carpenter from Middle Village. And when Trump Jr. told the crowd that many of his father's executives started off in blue-collar jobs, he wasn't lying.

The next section, meanwhile, was a master class in catering to your audience:

His true gift as a leader is that he sees the potential in people that they don't even see in themselves. The potential that other executives will overlook because their resumes don't include the name of fancy colleges and degrees. I know he values those workers and those qualities in people, because those are the individuals he had my siblings and me work under when we started out, that he would trust his own children's formative years to these men and women says all you need to know about Donald Trump. We didn't learn from MBAs. We learned from people who had doctorates in common sense. Guys like Vinny who taught us how to drive heavy equipment operate tractors and chainsaws who worked his way through the ranks to become an entrusted father. It's why we're the only children of billionaires as comfortable in a Caterpillar as we are in our own cars.

Coming from a man who did, in fact, go to business school (albeit undergrad)—whose father regularly brags about his own Ivy League degree—this all a bit funny. But never mind that. It gets in a dig at fancy, college-educated folks. It flatters the good sense of working-class men. And Vinny! How can you not trust a man who trusts his own kids to Vinny?

And there is probably a lot of sincerity in this. Regardless of Trump's habit of running get-rich-quick schemes that prey on desperate, hard-up families, or his apparent desire to deliver tax cuts to billionaires, he is at his core a “kid from Queens,” as his son put it, who first made his fortune in real estate and construction, one of the last industries in America that has a way of breaking down class barriers. He shares plenty of blue-collar values and blue-collar resentments. And while Donald Trump might not be able to offer guys like Vinny much in the way of policy, he can probably offer them some of his own respect. For a lot of voters, that's enough.

*Correction, July 20, 2016: This post misstated that Donald Trump Jr. and his father are Wharton MBAs. They both have undergraduate degrees from the business school.

July 19 2016 5:47 PM

Fox News Said Roger Ailes Is Out, Then Said He’s Not. What the Hell Is Happening?

Update, 6:50 p.m.: OK, it looks like Ailes is still headed for the door, but the brief saga of Ailes’ ouster at Fox took a new turn Tuesday evening with reports from Drudge Report that the network’s other top talent isn’t happy with the move. Drudge reports that network stars Bill O’Reilly, Sean Hannity, and Greta Van Susteren, along with the hosts of Fox & Friends and The Five are scheduled to meet to discuss the possibility of a walkout in support of Ailes.

Original Post: What the hell is going on with Fox News chairman and CEO Roger Ailes? For days, reports have proliferated that Ailes’ boss, 21st Century Fox honcho Rupert Murdoch, and Murdoch’s sons were preparing to oust the Fox News chief in the wake of a sexual harassment lawsuit filed earlier this month by former Fox host Gretchen Carlson.

On Tuesday afternoon, the Drudge Report broke the news that Ailes would be out by Friday with a buyout package worth tens of millions. NPR reported the same, citing two anonymous sources. Fox News confirmed Ailes' exit to the Daily Beast but then walked it back. Then Drudge deleted an initial tweet, which appeared to show the terms of departure, and tamped down its home page's headline to the vague, "AILES FOX NEWS DRAMA." Deadline reports he is out. CNN’s Brian Stelter said exit talks were underway.

“Roger is at work,” the network said in a statement to several reporters. “The review is ongoing. And the only agreement that is in place is his existing employment agreement.”

Ailes has been one of the most powerful and influential figures in American media since he established the cable news network in 1996, and his departure would signal the end of an era in television and politics. Fox News is the nation’s most-watched cable news network and has tremendous influence among American conservatives in particular.

Carlson’s lawsuit, filed in New Jersey state court last week, alleges that, “Ailes has unlawfully retaliated against Carlson and sabotaged her career because she refused his sexual advances and complained about severe and pervasive sexual harassment.” Carlson had been a host of The Real Story With Gretchen Carlson until June.*

In the days after the suit was made public, Carlson’s attorney announced that more than a dozen women had come forward with similar stories about Ailes. Six spoke publicly to New York's Gabriel Sherman, portraying the Fox News chief as “a boss who spoke openly of expecting women to perform sexual favors in exchange for job opportunities.” On Tuesday, Sherman reported that Fox star Megyn Kelly had relayed her own account of harassment by Ailes to lawyers investigating on behalf of 21st Century Fox, the network’s parent company.

One way or another, it does seem like Ailes’ exit is in progress. We’ll update this post when we know more.

*Correction, July 19, 2016: This article originally misstated that Gretchen Carlson had been the host of Fox & Friends until June. Her last job at Fox News was as the host of The Real Story With Gretchen Carlson.

July 19 2016 5:31 PM

The Trump Camp Is Sending Very Mixed Signals About How Much It Plans to Shill for Wall Street

Donald Trump has made no secret of his desire to win over disaffected Bernie Sanders voters who have difficulty stomaching the idea of a Hillary Clinton presidency. To do so, he has tried to paint her as a  pawn controlled by Wall Street donors while attempting to position himself as a untainted populist. On Monday, this resulted in the weird spectacle of Republicans including a plank in their party platform calling for the breakup of large financial institutions like Goldman Sachs and JPMorgan. The only obvious purpose of this otherwise philosophically aberrant decision was to place Trump somewhere to the left of Clinton on financial reform. “We believe that the Obama-Clinton years have passed legislation that has been favorable to the big banks,” Trump campaign manager Paul Manafort told reporters, “which is one of the reason why you see all of the Wall Street money going to her."

This is both absurd and savvy. Trump is no anti-bank crusader; quite to the contrary, he has promised to dismantle most of the Wall Street reforms passed under the Dodd-Frank Act while drastically slashing taxes for billionaires. But thanks to her paid (and still unreleased) speeches at Goldman Sachs, her husband's role in banking deregulation, and the fact that Clinton has done a fair bit of fundraising on Wall Street, many on the left still can't shake the feeling that Clinton has been bought and paid for by the banking industry. One can imagine Trump's act peeling off at least a handful of resentful Sanders fans.

On Tuesday, though, Fortune brings us some additional news that, if true, should make a complete mockery of those efforts. According to the magazine, “Trump has told prospective donors that, if elected president, he plans to nominate former Goldman Sachs banker Steve Mnuchin for U.S. Treasury Secretary.” Currently, Mnuchin is a hedge fund CEO, as well as Trump's chief fundraiser.

Promising to pick a Wall Street banker whom you have charged with the task of raising money for your campaign from other Wall Street bankers to head the Treasury Department may be the single most straightforward way a presidential candidate could auction himself off to the financial services sector. Presumably, Fortune's source, hedge funder manager and Trump fundraiser Anthony Scaramucci, is trying to reassure his fellow financiers that they need not take Monday’s platform news too seriously. Indirectly, he's telling Sanders diehards the same.

Of course, some believe Clinton herself might be eyeing a Goldman alum for Treasury Secretary—namely, her campaign's chief financial officer, Gary Gensler. Moreover, Gensler played his own role in the deregulatory mania of the 1990s as an official at the department. But the differences are two-fold. First, Gensler manages the Clinton campaign's money but doesn't raise it. Second, bankers hate him. In 2009 Gensler went to work for the Obama administration as head of the Commodities Futures Trading Commission, where “he surprisingly became the regulator Wall Street feared most in the wake of the financial crisis,” as Reuters put it. He pushed hard for strict rules about swaps trading, and was extremely aggressive about cranking out regs his agency was required to write up under Dodd-Frank. The man watched Wall Street burst into flames thanks to its own fecklessness and converted into a regulatory crusader.

But yeah, sure, Clinton's the pawn.

July 19 2016 2:55 PM

A New Lawsuit Says Snapchat Is Illegally Collecting Biometric Data

This post originally appeared on Inc.

A law passed eight years ago in Illinois is causing legal problems for some of the largest social media companies in the U.S.

In May, two men filed a lawsuit against Snapchat under a state law passed in 2008 that requires a company to obtain written consent before using a person’s biometric information. The case, which was originally filed in Los Angeles County court, has been moved to U.S. District Court for the Central District of California last week.

The class-action suit alleges that Snapchat has been illegally collecting, storing, and using biometric information, including face geometry and iris scans, of its users without obtaining permission, which violates the Illinois Biometric Information Privacy Act.

Snapchat, through a company spokesperson, dismisses the lawsuit: “Contrary to the claims of this frivolous lawsuit, we are very careful not to collect, store or obtain any biometric information or identifiers about our community,” Snapchat says via email.

The plaintiffs, Jose Luis Martinez and Malcolm Neal, are suing Snapchat for allegedly “collecting, storing and using Plaintiffs’ and other similarly situated Illinois users’ biometric identifiers’ and information without informed written consent in violation of the Biometric Information Privacy Act (BIPA),” the lawsuit states.

The suit says that Snapchat collects biometric information when users take selfies with the Lenses feature, which allows users to augment their photos by adding animated features like a dog’s floppy ears, bee’s eyes, or a stream of rainbow vomit.

Snapchat, on its website, explains that the Lenses feature does not use facial recognition:

Some of the magic behind Lenses is object recognition. Object recognition is an algorithm designed to understand the general nature of things that appear in an image. It lets us know that a nose is a nose or an eye is an eye. But object recognition isn’t the same as facial recognition. While Lenses can recognize faces in general, they can't recognize a specific face.

The Illinois Biometric Information Privacy Act, was passed in the state in 2008, in an effort to control how companies collect and use biometric identifiers. The law bans companies from collecting and storing a person’s unique biometric data without first obtaining permission and notifying the user.

The plaintiffs are seeking damages in the form of $5,000 for each intentional violation of BIPA, or $1,000 if the court decides Snapchat was negligent. The Chicago Tribune says the plaintiffs are seeing over $5 million.

Facebook has been sued over its facial recognition technology under the same Illinois law. Texas and Illinois are the only two states in the U.S. that regulate how companies use and store biometric data.

July 18 2016 7:24 PM

Wall Street Is Worried That Netflix Has Reached Its Saturation Point

Netflix released its second-quarter earnings on Monday, and though the company had mostly good news to report, its stock dropped 15 percent in after-hours trade because of one big problem: Its once unstoppable subscriber growth is slowing down.

The streaming service reported $1.97 billion in revenue and a profit of $40.8 million, but it admitted that it had only added 1.54 million subscribers, a pretty big fail considering its own prediction that it would collect 2.5 million this quarter. The company wrote in its report, "We are growing, but not as fast as we would like or have been. Disrupting a big market can be bumpy." Bump.

Netflix added 160,000 U.S. subscribers and 1.52 million international subscribers in the second quarter, but it had projected that those numbers would be 500,000 and 2 million respectively. Meanwhile, the company has had slowing U.S. subscriber growth in every one of the last four quarters compared to the previous year.

The company's $40.8 million profit, or 9 cents per share, beat analyst predictions of 2 cents per share, but the good news couldn't overshadow the bad. Netflix said that some subscriber "churn" (users canceling their subscriptions) was attributable to a $1 per month price increase that rolled out for new customers last year and is taking effect for grandfathered customers in 2016. "We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering," the company said in its statement.

Netflix is still powerful in the streaming sector, of course, and is doing reasonably well financially, but the question is whether the company has reached a saturation point, both in the U.S. market and internationally. As with iPhones, there will eventually come a time when everyone who wants to subscribe to Netflix already does. And the company reported that streaming services have had setbacks in China, a potentially crucial market. It said, "We continue to explore options [in China] and, in the meantime, have plenty of work to do in our newly opened markets." It's never promising when you're using "in the meantime" in an earnings report.

July 18 2016 5:59 PM

The Open-Gangway Train Arrives in a Big Way to the U.S.

The New York City subway will order up to 750 open-gangway subway cars, Gov. Andrew Cuomo announced on Monday, bringing the nation’s largest transit system in line with its global peers. Open-gangway cars—known here as the “open car end” design, and allowing free passage through the train interior—may not be familiar to American riders, but they’ve helped improve subway systems around the world. For New York, this move is long overdue.

Together with wider doors and seats that fold into the walls, this design shift will make the subway faster, less crowded, and more on time. Other customer-friendly improvements will include bifurcating poles on trains, canopies over stairways to the sidewalk, and at some future date, a second wave of countdown clocks.

The plan had been to request just one of these open trains, which eliminate separations between cars to increase capacity by as much as 10 percent, as a trial run. While the language leaves room for backtracking, a strongly worded press release suggests Cuomo has his eye on the examples of Toronto, Paris and London…and perhaps that he has been readingSlate, in which I encouraged the governor to order these open cars back in February.

Over the next few days, tabloid columnists will probably start the drumbeat against the open gangway trains, arguing—as one of my colleagues did this morning—that they will provide a fertile habitat for New York’s “unusually colorful culture of vagrancy.”

Don’t believe it.

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