A blog about business and economics.

Oct. 7 2016 9:50 PM

Hillary Clinton’s Wall Street Speeches Have Leaked. No Wonder She Didn’t Want Them to Get Out.

Throughout the Democratic presidential primary, Sen. Bernie Sanders challenged Hillary Clinton to release excerpts of the paid, private speeches she delivered to Wall Street audiences following her time as secretary of state. She refused—which occasionally made things pretty awkward, since her resistance suggested the remarks could contain something explosive.

Now excerpts of the speech transcripts appear to be out. On Friday evening, WikiLeaks released a trove of hacked emails belonging to Clinton campaign chairman John Podesta. These include a long missive from the candidate's research director, Tony Carrk, in which he flags portions of Clinton's remarks that could potentially trip up the campaign. “There is a lot of policy positions that we should give an extra scrub with Policy,” Carrk wrote to his colleagues.*

BuzzFeed reporter Ruby Cramer dug up the email, and Clinton's team declined to confirm to her whether the passages are authentic, adding that the Obama administration has “removed any reasonable doubt that the Kremlin has weaponized WikiLeaks to meddle in our election and benefit Donald Trump’s candidacy.” Assuming the excerpts are the real deal, however, it seems fairly obvious why Clinton would not want them to see the light of day in the primary—when she was trying to prove her progressive bona fides and was fighting the perception that she'd be soft on banks—or even the general election. In the excerpts, Clinton presents herself as a finance-friendly moderate who is willing to criticize the industry but who also believes it took an excessive amount of heat for the financial crisis. She also suggests politicians need to hide their true policy positions from the public—not great for a candidate voters already tend to distrust—and that her long-term “dream is a hemispheric common market, with open trade and open borders,” which Donald Trump is sure to pounce on. Breitbart is already screaming about the open borders bit.

The choicest excerpts fall neatly into three categories: Stuff that would have played badly in the primaries; stuff that plays badly against Trump; and stuff where Hillary comes off looking reasonably well. You can read the emails in their entirety at BuzzFeed.

Remarks That Would Have Played Terribly in the Primary

One of Clinton's big weaknesses as a candidate is that, fairly or not, a good many Americans think of her as a liar. Her Wall Street speeches were controversial because voters suspected she might have told a room full of wealthy bankers one thing while telling voters another. And the transcripts probably wouldn't have helped that impression. During a talk before the National Multi-Housing Council in 2013, she talked about the need to keep political negotiations secret, for instance, citing the example of Abraham Lincoln's wheeling and dealing to get the 13th amendment passed. "I mean, politics is like sausage being made," she said. "It is unsavory, and it always has been that way, but we usually end up where we need to be. But if everybody’s watching, you know, all of the back room discussions and the deals, you know, then people get a little nervous, to say the least. So, you need both a public and a private position."

I'd argue Clinton is probably right here. But the phrase, "you need both a public and a private position" isn't going to soothe anyone's doubts about her trustworthiness.

Clinton also comes off fairly amenable to the financial services industry—which isn't surprising, given banks were paying her good money to come and chat. Take this passage, which Carrk flagged under the heading, "CLINTON TALKS ABOUT HOLDING WALL STREET ACCOUNTABLE ONLY FOR POLITICAL REASONS,” from a 2013 speech at a Goldman Sachs event, in which she appears to suggest American banks were criticized more than they deserved following the financial crisis.

That was one of the reasons that I started traveling in February of ‘09, so people could, you know, literally yell at me for the United States and our banking system causing this everywhere. Now, that’s an oversimplification we know, but it was the conventional wisdom. And I think that there’s a lot that could have been avoided in terms of both misunderstanding and really politicizing what happened with greater transparency, with greater openness on all sides, you know, what happened, how did it happen, how do we prevent it from happening? You guys help us figure it out and let’s make sure that we do it right this time.

Clinton's is actually offering a subtle criticism of the financial services industry here: She's saying that if the banks had been more transparent they would have been treated less harshly. But fundamentally, she's still opining that much of the criticism of Wall Street after 2008 was “politicized” and that the “conventional wisdom” that U.S. banks were to blame for the worldwide meltdown was an inaccurate “oversimplification.” On a substantive level, that should be a little worrisome for financial-regulation advocates. And politically, Sanders would have had a field day. He also likely would have hammered her for remarks Carrk labeled, “CLINTON SUGGESTS WALL STREET INSIDERS ARE WHAT IS NEEDED TO FIX WALL STREET,” which she offered at the same Goldman symposium:

There’s nothing magic about regulations, too much is bad, too little is bad. How do you get to the golden key, how do we figure out what works? And the people that know the industry better than anybody are the people who work in the industry.

Clinton isn't outright saying she would populate the Treasury Department with Goldman and J.P. Morgan alums (though in a separate excerpt, she does suggest politicians have made it too hard for people who have been successful in business to serve in government). But she clearly is saying she's open to their input on how their companies should be regulated.

Then there are the bits that sound OK in context but cringe-worthy in isolation. Take this bit from an event in San Diego:

When I was a Senator from New York, I represented and worked with so many talented principled people who made their living in finance. But even thought I represented them and did all I could to make sure they continued to prosper, I called for closing the carried interest loophole and addressing skyrocketing CEO pay. I also was calling in ‘06, ‘07 for doing something about the mortgage crisis, because I saw every day from Wall Street literally to main streets across New York how a well-functioning financial system is essential. So when I raised early warnings about early warnings about subprime mortgages and called for regulating derivatives and over complex financial products, I didn’t get some big arguments, because people sort of said, no, that makes sense. But boy, have we had fights about it ever since.

The big idea here is that Clinton takes a balanced approach to regulation, making sure the industry could thrive while calling out its dangerous excesses. It's a reasonable position, though there's still plenty to argue with on the merits; one might say Wall Street's profits should be curbed regardless of whether it's presently endangering the entire world economy. But how long do you think it would have taken the line, “I represented them and did all I could to make sure they continued to prosper” to meme its way around Facebook and Twitter?

Some of Clinton's other attempts to position herself as a centrist might trouble progressive Democrats as well. At one point, she tells a crowd at Xerox that America needs “two sensible, moderate, pragmatic parties,” which in these sorts of settings comes off as code for “pro-corporate.” And at a Morgan Stanley get-together, she says the framework and big elements of the Simpson-Bowles deficit reduction plan, loathed by many progressives because of its cuts to the welfare state, “were right.”

Is the Hillary Clinton of 2016 still secretly a debt hawk who thinks Wall Street needs generous input on the laws governing it? Who knows. But up against an anti-bank crusader like Sanders, who wanted to radically expand the social welfare state, these remarks would have left her with a lot of explaining to do.

Remarks That Could Play Terribly Now

Clinton's speeches are also going to hand Donald Trump some easy fodder—his own Friday evening problems notwithstanding. First, there are long disquisitions on the State Department's security protocols and the cyber threats posed by foreign governments—which again raise the question of why she thought it was kosher to use a private email server. The worst bit in this vein might be this part, from a talk at the University of Connecticut:

At the State Department we were attacked every hour, more than once an hour by incoming efforts to penetrate everything we had. And that was true across the U.S. government. And we knew it was going on when I would go to China, or I would go to Russia, we would leave all of our electronic equipment on the plane, with the batteries out, because this is a new frontier.


Then there's the bit on globalization. Trump and surrogates like Rudy Giuliani have said Clinton is in favor of open borders, full stop. Clinton has said this is false. But in a 2013 appearance at Banco Itau, she apparently said, “My dream is a hemispheric common market, with open trade and open borders, some time in the future with energy that is as green and sustainable as we can get it, powering growth and opportunity for every person in the hemisphere.” This may thrill the editors at Vox, but presumably not white working-class voters in Ohio. Point Trump.

Remarks That Come Off Well for Clinton

There are also sections of the transcripts where I'd argue Clinton comes off in a fairly positive light, even though her campaign seemed concerned about them. At one point she admits she's a bit “out of touch” with the struggles of middle-class families—but, if anything, that suggests encouraging self-awareness. She says that the mere perception that “the game is rigged” in favor of the wealthy is harmful for the country, and that those guilty of wrongdoing need to be “held accountable.” She talks about how the Supreme Court has turned campaign finance into the “wild west,” which suggests she's a sincere critic of Citizens United. Even a seemingly incriminating bit about how Wall Street donors should exercise their power, shared at Goldman Sachs, turns out to be pretty benign on closer inspection:

Secondly, running for office in our country takes a lot of money, and candidates have to go out and raise it. New York is probably the leading site for contributions for fundraising for candidates on both sides of the aisle, and it’s also our economic center. And there are a lot of people here who should ask some tough questions before handing over campaign contributions to people who were really playing chicken with our whole economy.

The key part here is “playing chicken with our whole economy.” This event took place in 2013, so it's pretty clear she was referring to the Republican Party's repeated showdowns over the debt ceiling.

So the transcripts, if they're authentic, aren't all bad. It's conceivable that had Clinton released them of her own accord earlier in the campaign, the progressive heresies eventually would have blown over, and she'd have avoided raising people's suspicions about her secrecy. But would they have been a headache for the campaign? Obviously. And now that they're out, I'm guessing they'll cause trouble all the way until Election Day.

*Correction, Oct. 7, 2016: This article incorrectly identified Tony Carrk as Tony Clark.

Oct. 7 2016 5:43 PM

These Florida Congressmen Must Be Regretting Their 2013 Votes Against Sandy Relief

Watching Hurricane Matthew chew up Florida’s Atlantic coastline, it’s hard not to think of Superstorm Sandy, which devastated parts of New York and New Jersey in October 2012. The videos showing the ocean pushing into Jacksonville neighborhoods resemble nothing in recent memory so much as those of the Northeast during Sandy. The value of the comparison has not been lost on emergency management personnel in Nassau County, north of Jacksonville, who measured the storm’s severity in Sandy terms—and reminded residents that Sandy’s storm surge had killed those who didn’t heed evacuation orders.


Matthew has killed more than 800 people in Haiti. Here, whatever else happens, it seems certain that the storm will have caused substantial damage to coastal Florida. The region will almost certainly ask for federal aid.


Again, the comparison with Sandy is instructive. When Congress finally got around to passing the Sandy aid package, two-and-a-half months after the storm, 180 representatives voted against it.


Among them? Republican Bill Posey, who represents Florida’s 8th Congressional District, which stretches from Vero Beach to Titusville and includes the Kennedy Space Center. And Republican Ron DeSantis

Oct. 7 2016 2:57 PM

Report: Only 1 in 5 Millennials Have Ever Tried a Big Mac

McDonald's hamburgers are not excellent. You know it. I know it. And, as the Wall Street Journal reports, McDonald's knows it. The company and its operators are acutely aware of how they've struggled in the face of competition from higher-end chains like Five Guys, Steak ’n Shake, and Shake Shack that have peeled off younger consumers by offering, well, better burgers. The Journal quotes a memo from a “top McDonald's franchisee” stating that only 1 in 5 millennials have even tried a Big Mac in their lives; we are apparently a generation immune to the charms of the special sauce. “The number of hamburgers sold at McDonald’s U.S. restaurants has been flat for the past few years,” the paper adds, “and was growing only at a 1% to 2% annual rate before that, according to former high-ranking McDonald’s executives.”

The trouble McDonald's is having with the youngs isn't so different from what other aging, iconic brands are experiencing. In 2014, for instance, the Journal reported that 44 percent of adults between 21 and 27 had never sipped a Budweiser (aka Bud Heavy, aka not Bud Light). The parallels between the two stories are somewhat obvious—both are somewhat bland flagship products aimed at a mass market that's been fragmented by a new variety of tastier (or, in some cases, cheaper) options popular among young consumers. American food and drink are getting better and more regionalized, which makes it tough to keep people interested in boring Big Macs and Buds.

But McDonald's, which racks up about 20 percent of its sales from burgers, is facing an especially tough structural problem when it comes to fixing its product. As the Journal notes, its restaurants are built around drive-through business, which is responsible for about 70 percent of the company's U.S. sales. And the trick with drive-through is that everything has to be optimized for speed. “Burgers are usually made in advance and held in warming cabinets so they are ready when customers pull up,” the paper explains. “McDonald’s said its goal for delivery time, from when the order is placed to when it is delivered to the customer, is a mere 90 seconds.” Unfortunately, the sorts of tweaks that would improve McDonalds' burgers—like cooking fresh meat off the grill—increase wait times, which makes it hard to adopt them across the chain. Just think about the last time you went to a Five Guys; you probably had to wait five or 10 minutes for your food. That doesn't seem so awful while sitting in a restaurant with a little plate of salted peanuts, but it’s unacceptable in the drive-through.

Apparently McDonald's is experimenting with innovations like fresh beef in select franchises. But while the company may be able to make changes around the edges to improve quality, it seems like crap burgers might be a piece of the McDonald's business model for as long as it caters primarily to drivers, which is to say, indefinitely. There is a silver lining in that. The qualities that make Five Guys and Shake Shack burgers so tasty will probably make it tough, if not impossible, for those companies to ever take on McDonald's for drive-through window supremacy. But others could try. I mean, In-N-Out does drive-through, and people actually like their burgers.

Oct. 7 2016 10:39 AM

The British Pound Crashed Because of Robot Traders

The British pound has been losing value lately thanks to anxiety over Brexit. But things took a turn for the bizarre during early morning trading in Asia on Friday, when the currency suddenly plunged 6.1 percent in about two minutes before recovering some of its losses. It was like the pound sterling had decided to go bungee jumping while most of the U.K. was slumbering.


The culprit behind the flash crash? Well, nobody’s quite sure what started the selling. It may have had something to do with French President François Hollande's comments that Europe would have to take a firm, unforgiving stand while negotiating Brexit terms, which strongly implies Britain's banks are going to get roughed up in the deal. Others suggest the drop may have started with a “fat finger error”—which is Wall Street–ese for an accidental trade. (Oops! Butterfingers! Sorry about your currency!) Another hypothesis is that it may have involved a “barrier option,” a kind of derivative trade that triggers when an underlying asset hits a certain price.

Whatever started the crash, though, everyone seems to agree it quickly snowballed thanks to computerized trades that automatically piled on. It was also exacerbated by the fact that trading in the pound is pretty light during the Asian morning hours—the crash occurred around midnight London time, which one analyst called a “twilight zone” for the foreign exchange market—meaning that just a few sellers can make a major difference in prices. As one analyst summed up the odd event to Bloomberg: “It would seem that it caught the market wrong-footed and triggered a lot of algorithmic selling.”

So, is there any broader significance to this, aside from the obvious implication that Brexit has made a formerly stable currency go loopy? Why, yes there is. As Bloomberg notes, flash currency crashes have become more common lately. One struck South Africa's rand in January and another hit New Zealand's dollar in August. A major reason seems to be that the markets have become less liquid and more volatile thanks to “regulatory changes that have seen global investment banks pull back from dealing, leaving fewer parties to take the other side of trade.” That, combined with the rise of robot traders, has set the stage for more of the kind of chaos that just sent the pound swinging.

And maybe someone saw that as an opportunity. As the Wall Street Journal notes, there's speculation that “opportunistic investors such as hedge funds could have aimed to capitalize on thin trading to sell the pound aggressively.” Or, in other words, someone may have tried to crash the pound intentionally, however briefly. Aren't markets a blast?

Oct. 7 2016 9:41 AM

Actually, Facebook’s New Craigslist Competitor Should Be a Little Debauched

Facebook began rolling out Marketplace this week, a prominently placed new section that’s designed to help users buy and sell their stuff. It’s a photo-heavy, mobile-friendly product that seems to be aimed squarely at supplanting Craigslist. Given Facebook’s global audience of 1.7 billion, Marketplace represents a cleaned-up, Type A threat to the aging but delightfully scrappy online market.

But so far, Marketplace’s rollout has had all the weirdness of a medieval bazaar—and some of the illicitness of Silk Road. Just hours after the ribbon-cutting, a company product manager apologized for the number of posts that had violated Facebook’s commerce policies. Those included offers of drugs, guns, sex, animals, and babies. (Human babies. As a joke, I think.)

It was an unsavory debut, another misstep following a handful involving Facebook’s regulation of speech. Last month, the company removed a famous war photograph, which features a naked 9-year-old girl, that had been posted by the Norwegian prime minister. The photo was restored after a public outcry, the latest skirmish over Facebook’s nudity policies. The company has also struggled with its “trending” news feature, which has been lambasted after promoting fake stories and hiding real ones. There are thousands of stories about Facebook algorithms wrongly deleting pages, posts, or photos.

So far, Marketplace has gotten weird in the opposite way. But expect that to change; Facebook has promised it will. And in that sense, Marketplace’s risqué beginning is more than a slip at the starting dock. It’s a test. The more Facebook polices Marketplace, the more it risks cutting out products at the margins of what’s allowed, frustrating sellers and reducing the site’s viability as a Craigslist competitor. The problem is analogous to the network’s speech issues—except that Facebook already has a successful rival for selling stuff.

You can see why buyers might prefer a marketplace with identity verification, as Facebook’s effectively has. But for sellers, what are the advantages in a tightly regulated Facebook marketplace that might censor at the margins, mistaking a Beanie Baby for a baby, a motorcycle for a hog, or a Supersoaker for a gun?

The alternative, of course, is Craigslist, the great souk of the web. It’s hard to overstate the site’s size or impact in the U.S. It was among the country’s 15 most-visited websites last year, according to Alexa. One fifth of the country visits every month. In the rental apartment market, where Craigslist is dominant, researchers have shown that the site so improved on the old, printed classified listings that it caused the average metropolitan rental vacancy rate to plummet by 10 percent.

At 21 years old, though, it is an internet dinosaur—older than Google, older even than Slate! It acts like it, too. When Padmapper tried to overlay Craigslist rental listings on Google Maps—a simple innovation that would make looking for an apartment much easier—Craigslist sued. After three years, Padmapper and 3Taps, which also aggregated Craigslist real estate data, agreed to stop using data from the site. Craigslist operates in 70 countries, but not in Arabic, Chinese, Hindi, Russian, Swahili, or Japanese. It’s the rare successful tech company that has shown little interest in constant optimization.

All this is to say that the giant and slow-moving site, which looks virtually the same now as it did in 2005, could use a kick in the pants. No wonder that VCs have lustily eyed OfferUp and VarageSale, a pair of wannabe competitors. It’s not the first time, either, that Facebook has tried to convert its social network into a commercial exchange. In 2007, when it had 22 million users, Facebook unveiled its first Craigslist competitor. But the company let it go in 2009, and it was fully shut down in 2014.

Now Facebook is a behemoth. Each month, more than a quarter of its users visit buy-and-sell groups, where Facebook enabled a “For Sale” post option last year. Facebook may find particular success in this area in the developing world, where no dominant internet marketplace exists and its high user numbers offer an enticing network effect.

Here, though, building the premier peer-to-peer marketplace will require some nice incentives to sellers. If Facebook approaches postings like it approaches breastfeeding photos—i.e. censor first and answer questions later—an easier, looser, and more libertine forum of exchange will challenge it for their loyalty. In the U.S., Craigslist already exists. Hopefully, the competition will force it to become more responsive to the needs of its users.

Craigslist of course has its own code of conduct that bans weapons, drugs, counterfeits, food stamps, pets, prostitution, and recalled items. But the site takes an evidently more laid-back approach to policing its submissions. To take an innocuous example, it took me all of five seconds to find a Samsung Galaxy Note 7, the recalled exploding phone, for sale.

Facebook, in short, makes a strong case for buyers. But for sellers? Craigslist could work better, but it has been working well enough.

Oct. 6 2016 5:49 PM

How Paul Ryan Will Rule in a Trump Presidency

Lately, Donald Trump has been cranking the grandiosity at his rallies up to 11 by promising the crowds that electing him “will make every dream you ever dreamed for your country come true.” This is obviously absurd, at least insofar as the man is talking to downscale whites pining for a return to the 1970s. Trump is not going to deport every undocumented immigrant, and even if he did, America would still become more diverse over time. No amount of tariffs will bring back all factory jobs that have gone to China. We're not turning back time.

But for a certain kind of conservative, Trump really could promise to make dreams come true—namely, the GOP's donor class, which can count on a raft of tax cuts should the nominee overcome his current odds and win the White House next month.

How can we be so sure? Because in any environment where Trump wins, there's a pretty strong chance the Republicans will hold onto both the House and Senate. And with just 51 votes in the upper chamber, they will be able to use the budget reconciliation process to push through all sorts of priorities the right has longed for. As Politico reported earlier Thursday, House Speaker Paul Ryan is already promising to do just that.

About a year ago, I wrote about the history of reconciliation and how a Republican-controlled government could use it to immolate both the tax code and the social safety net if it felt so inclined. The process prevents filibusters on tax and spending bills, allowing the Senate to pass them with a bare majority vote. It's an astonishingly flexible tool that can be used to tinker with any mandatory spending program except for Social Security—think food stamps, Medicare, unemployment benefits, and Medicaid—and cut or raise taxes. Democrats famously used it to push Obamacare over the legislative finish line after they lost their 60-vote majority due to Sen. Ted Kennedy's death. Republicans recently used it to pass an Obamacare repeal bill that the president promptly vetoed. President George W. Bush used it to force through his tax cuts.

And if Trump somehow demagogues his way into the Oval Office, it's a sure bet Ryan will place a massive tax-cut bill on his desk to sign. Whatever differences there are between the two men, they see eye to eye on the need to eliminate the estate tax, lower the top income tax rates, and drastically lower the corporate rate. They may have some substantial disagreements—Paul Ryan wants to stop companies from deducting the interest they pay on debt, while Trump apparently does not, for instance. But given that Trump lacks even a modicum of policy expertise and has generally relied on advice from generic supply-siders like Stephen Moore and Larry Kudlow who'd big-league love to see Ryan's ideas signed into law, it seems unlikely Trump would veto anything the speaker sent him.

This is obviously one of the major reasons why Paul Ryan has swallowed his pride and supported Donald Trump, despite acknowledging Trump’s penchant for wildly racist outbursts. It's essentially the same argument Grover Norquist made for Mitt Romney years ago:

We are not auditioning for fearless leader. We don't need a president to tell us in what direction to go. We know what direction to go. We want the Ryan budget. ... We just need a president to sign this stuff. We don't need someone to think it up or design it. The leadership now for the modern conservative movement for the next 20 years will be coming out of the House and the Senate.

So it's probably more accurate to say that if Donald Trump is elected, Paul Ryan will be able to finally make wealthy conservatives' dreams come true—a tax cut in which 99 percent of the benefits go to the top 1 percent.

Oct. 5 2016 4:11 PM

A Samsung Smartphone That Was Supposed to Not Explode Just Caused a Southwest Flight to Evacuate

A passenger’s Galaxy Note 7 began emitting plumes of smoke on an airplane Wednesday morning, forcing the Southwest Airlines flight to evacuate while still at the gate.

Here’s the thing: The passenger bought his Note 7 after the exploding smartphones had been recalled.

Brian Green told the Verge that he had just picked up the phone on Sept. 21. This is bad news for Samsung, which recalled the Galaxy Note 7 in September after several instances in which the phone’s battery exploded. A week after the recall announcement on Sept. 2, Samsung instructed customers with affected phones to power down their phones immediately and replace them with a purportedly safer version, and the Federal Aviation Administration warned passengers not to use or charge their Note 7 phones while in flight or stow them in their carry-on luggage.

But following this incident, it seems possible that the battery issue might not be quite fixed—or that the company is still distributing older models that have the problem.

The Verge reports:

Green said that he had powered down the phone as requested by the flight crew and put it in his pocket when it began smoking. He dropped it on the floor of the plane and a "thick grey-green angry smoke" was pouring out of the device. Green’s colleague went back onto the plane to retrieve some personal belongings and said that the phone had burned through the carpet and scorched the subfloor of the plane.

The Verge reported that Green had already replaced his phone with an iPhone 7, which was released Sept. 7, just days before Samsung’s recall. Samsung did not respond to the Verge, nor to a request for comment from Slate.*

Exploding batteries are hardly a new phenomenon. As Matthew N. Eisler recently wrote in Slate, lithium-ion batteries, which are used in the Galaxy Note 7 and most other wireless devices, have been exploding since the 1990s. In 2006, Sony recalled 9.6 million batteries; just this year, the International Civil Aviation Organization issued a ban on shipping lithium-ion batteries as cargo on passenger aircrafts. In his piece, Eisler suggested that the exploding batteries could in part be a result of the U.S.’s lack of uniform safety protocols, specifically regarding how the chemically precarious batteries are transported and disposed.

“Scientists are working on safer alternatives, but we should expect many more unpleasant surprises from the existing technology in the interim,” Eisler ominously predicted after the Samsung recall.

Clearly he was right.

* Update, 4:28 p.m. A Samsung representative emailed the following statement about the phone incident:

Until we are able to retrieve the device, we cannot confirm that this incident involves the new Note7. We are working with the authorities and Southwest now to recover the device and confirm the cause. Once we have examined the device we will have more information to share.

Oct. 5 2016 10:36 AM

The U.K.’s Dire Post-Brexit Future: “Innovative Jams and Marmalades”

On July 14, the day after Theresa May assumed office as prime minister of the United Kingdom, she created a Department for International Trade to help the country negotiate trade deals after it leaves the European Union. The leader of that department is the conservative politician and prominent “Leave” campaigner Liam Fox, who believes British businesses must start thinking about exports as a duty rather than an opportunity. “We have become too lazy, and too fat on our success in previous generations,” he told a private gathering last month. “The demand is out there. You could be too,” urges the ministry’s website, Exporting Is Great.

Remainers always thought that making exporting great again, on the back of the battered pound sterling (which hit a new 31-year low against the dollar this week), was a bit of magical thinking; services-oriented Britain, after all, hasn’t had that kind of economy for a long time. And on Monday, Fox’s Department for International Trade posted a listing that, while in itself inconsequential, seemed to confirm that impression.

Oct. 4 2016 5:08 PM

Bill Clinton Sort of Had a Point When He Trashed Obamacare

Ever since her primary campaign, Hillary Clinton has toed a careful and consistent line on Obamacare. On the one hand, she's praised the health-reform law, which has expanded health coverage to millions of Americans, “as one of the great accomplishments of the Obama Administration” and “of the Democratic party going back to Harry Truman.” On the other, she's promised to fix the legislation's noticeable flaws, in part by creating publicly sponsored insurance plans or allowing Americans to buy their way into Medicare. In short: Obamacare is good—now let's make it even better. This is not an especially hard political script to follow.

Except, apparently, for her husband. During a campaign appearance on Monday in Michigan, Bill Clinton unleashed a riff about the Affordable Care Act in which he argued the law had left us with a “crazy system” that was hurting small businesses and middle-class Americans. His larger point was that his wife's reforms were urgently needed. But that's been mostly lost in headlines about Bill going nuclear on President Obama's signature legislative achievement, even after his attempts Tuesday to dial back the comments. It was one of those not infrequent moments this election cycle where you kind of had to wonder: Is Bill trying to throw this race?

The thing about all of this is that Clinton's comments weren't necessarily wrong. Exaggerated and bizarrely delivered in a way that seemed custom-designed for a Republican attack ad? Definitely. But broadly speaking, he was making a sound point about the flaws of the ACA, as it currently exists, that many liberal policy types essentially agree with. Here are his full comments, for context:

We gotta figure out what to do now on health care. Her opponent said oh just repeal it all the market will take care of it. That didn’t work out very well for us, did it? We wound up with the most expensive system in the world and insured the smallest percentage of people. On the other hand, the current system works fine if you’re eligible for Medicaid, if you’re a lower-income working person, if you’re already on Medicare, or if you get enough subsidies on a modest income that you can afford your health care. But the people who are getting killed in this deal are small business people and who make just a little bit too much to get any of these subsidies. Why? Because they’re not organized. They don’t have any bargaining power with insurance companies. And they’re getting whacked. So you’ve got this crazy system where all of a sudden 25 million more people have health care, and then the people out there bustin’ it sometimes 60 hours a week end up with their premiums doubled and their coverage cut in half. It’s the craziest thing in the world.
So here’s the simplest thing. Figure out an affordable rate and let people use that, something that won’t undermine your quality of life, won’t interfere with your ability to make expenses, wont’ interfere with your ability to save for your kids’ college education, and let people buy into Medicare or Medicaid.

It seems that Clinton got carried away making a point that even Obamacare's ardent supporters have begun to accept: While the law has done an excellent job expanding insurance coverage among the poor and sick, it has not worked out as well for healthy Americans with somewhat higher incomes, who receive less generous subsidies to buy private coverage. It is not a coincidence that enrollment rates on the insurance exchanges created by the law seem to be much lower for middle-class families, who have to pay more for their coverage, than for low-income households whose premiums are by and large covered by the feds. And if you don't qualify for subsidies at all because your household earns more than 400 percent of the poverty line—$97,000 for a family of four in 2016—Obamacare might feel like a bit of a rip-off, especially if your premiums and out-of-pocket costs have been rising. Frankly, it is kind of crazy that after a once-in-a-generation reform, our health insurance system still contains a giant hole that it lets middle- and upper-middle-class families fall through. Fixing the law through more generous subsidies, or creating options like the Medicare buy-in, could help that.

It's just Clinton's framing that's so politically bizarre. Instead of taking a cue from his wife, who stresses that she wants to advance reforms or do the work that has yet to be done, he pretty much echoes standard GOP talking points by going on about people who have ended up “with their premiums doubled and their coverage cut in half.” Suffice to say, it is not actually clear how many of those individuals exist—there's a bit of a debate about whether or how much Obamacare has actually driven up average premiums—but they're almost certainly not the norm. They're the anecdotes that Fox News likes to trot out.

Anyway, it might be time for the Clinton campaign to rethink that whole explainer in chief thing.

Oct. 4 2016 1:53 PM

Has Google Finally Made a Phone That People Will Buy?

Google is good at many things, but marketing new products isn’t always one of them. In fact, as the generally sluggish sales of its Nexus phones demonstrate, it sometimes doesn't even seem to be trying. Nevertheless, it may have just made a good case for its latest piece of hardware, almost in spite of itself. Showing off its new Pixel smartphones at its Tuesday press event, the company stumbled through a lengthy explanation of the integration of its personal assistant software into the phone itself. Only later did the company’s Brian Rakowski turn to the device’s most impressive feature, the one that might actually convince you to buy it: the camera.

True to Google fashion, Rakowski led with a statistic that may have seemed less than impressive on first pass than it actually was. “There’s actually an industry group, DxOMark, that rates camera quality in almost all popular DSLR and smartphone cameras on the market. … We’re proud to report that Pixel received a rating of 89,” Rakowski said, as the number appeared on the screen behind him. Congratulations, Google! You got a B+!

As it happens, though, this number was the highest a smartphone camera has ever received from the group. Indeed, it beat out the potentially-DSLR-killing camera in the iPhone 7 Plus by three whole points. (That Google led with the raw number rather than with the all-time superlative, as Apple would have, speaks to the search-focused company's typically flimsy salesmanship.)

In what followed, Rakowski stressed that the success of Pixel’s camera isn’t just a question of hardware. To be sure, that hardware itself—built, Rakowski explained, around a 12.3 megapixel camera and a 2.0 aperture capable of capturing “significantly more light than other cameras”—sounds impressive, but it’s the way the phone processes images algorithmically that may be most significant. Its HDR+ mode, for example, pieces together images to create an optimal version of a photograph, even in poor lighting conditions.

The most intriguing feature, however, appears to be the Pixel’s video stabilization system, a sort of built-in Steadicam mode that allows users to film smooth movies while on the go. In a side-by-side comparison of a trip down a steep city street, the mode appeared to effectively eliminate shakiness. As Rakowski explained, Pixel’s video stabilization “works by sampling the gyroscope at 200 times a second to figure out how the camera is moving … instantaneously compensating for each part of the image, so you can avoid that Jell-O effect you see with other types of image stabilization.”

What's more, in an apparent attempt to encourage users to actually take advantage of these features, Google is also offering Pixel owners free online storage of all their photos and videos at full resolution, Rakowski announced. Some have already suggested that this alone might be enough of a reason to buy the phone.

Not sold yet? Maybe this will convince you: Unlike some phones, the Pixel actually has a headphone jack.