A blog about business and economics.

Dec. 1 2015 7:48 PM

Why I'm Sort of Optimistic That Mark Zuckerberg Won’t Mess Up This Philanthropy Thing

To mark the birth of their baby daughter Max, Facebook founder Mark Zuckerberg and his wife, Dr. Priscilla Chan, announced today that they will give away 99 percent of their Facebook stock to philanthropic efforts over their lifetimes. At the moment, said stock is worth $45 billion.

This is admirable. Some of us might be a tad wary of megasized charitable gestures from billionaires because they a) tend to come at public expense via tax deductions; and b) often seem geared more toward satisfying the donor's ego that doing demonstrable good in the world. But I think that as a rule, we would all prefer that our modern overlords give away their riches rather than pass them on to their children. 


But the move is a tiny bit worrisome, because Mark Zuckerberg's record with philanthropy is somewhat checkered—and has arguably fueled some political havoc in one major American city. So, let's discuss: Should we be optimistic here about how that $45 billion is about to be used?  

To start, let's talk about what, precisely, the actual news is today. We already knew that Zuckerberg and Chan planned to give away most of their wealth. How? Because they signed onto the Warren Buffet's and Bill and Melinda Gates' "giving pledge," in which America's richest promise to donate most of their money to philanthropy. So the first story here is that Zuckerberg and Chan are, like Buffett, going to give away substantially all of their fortune, rather than just the majoirty of it. (Gates is aiming for a mere 95 percent, for some reason.) The second big story is how they're planning to distribute that money. Rather than, say, follow Buffett's footsteps and dole out their resources to other people's foundations, the couple is starting the Chan and Zuckerberg Initiative, an organization that will initially focus its efforts on “personalized learning, curing disease, connecting people and building strong communities.”1 The upshot is that the couple see themselves as philanthropists in the Gates/Mike Bloomberg mold, using their money to fund very specific causes close to their hearts. 

Which is why it's worth recalling Zuckeberg's past charitable exploits. His first major philanthropic gesture, a $100 million gift in 2010 to help the city of Newark reform its public school system, has been described as something of a fiasco. As Dale Russakoff memorably reported in the New Yorker, Zuckerberg knew little to nothing about urban education policy before he met Newark Mayor Cory Booker at the Sun Valley Conference, an annual gathering for power brokers in tech, media, and finance. For that matter, he'd never been to Newark. But Booker impressed him, and eventually talked the young billionaire into the nine-figure gift. In Silicon Valley, it's common for venture capitalists to invest in people, not business plans. And ultimately, that seemed to be Zuckerberg's approach. When he appeared on Oprah with Booker and New Jersey Gov. Chris Christie, he explained, “Newark is really just because I believe in these guys.”

What followed was a fairly messy political drama, as Booker and Christie attempted to push a reform plan that involved closing low-performing public schools and expanding charter schools while transitioning teachers to a pay-for-performance system. Regardless of its merits, the program brought on an angry public backlash that eventually helped elect one of the effort's loudest opponents, Ras Baraka, as mayor once Booker left for the U.S. Senate. All the while, the city spent tens of millions of dollars on expensive education consultants, leading Vivian Cox Fraser, the president of the Urban League of Essex County, to memorably quip, “Everybody’s getting paid, but Raheem still can’t read.” Five years later, the argument about how effective Newark's school reforms have been is still simmering. For his part Zuckerberg argued in a Facebook post this month that the gift was a success, noting that graduation rates were up and that teachers had moved on to a new contract that gave bonuses based on student results, paid for partly through his donation.

Stepping back from the question of whether Newark schools are better off today than they were half a decade ago, though, the entire story should make it pretty clear that blindly plopping $100 million onto an unfamiliar city to tinker with its public institutions because you generally trust the public officials in charge is probably not a recipe for repeated or sustainable philanthropic success. And insofar as Zuckerberg thinks that's a good way to spread his wealth, I'd be concerned.

That said, I'm feeling guardedly optimistic, because it seems like Zuckerberg and Chan might have learned a few lessons from their adventures in New Jersey. Last year, they made a similarly huge $120 million dollar donation to improve Bay Area schools, but targeted the first installments at incremental changes like improved classroom technology and better teacher training. Meanwhile, his most high-profile public health move to date has been a $25 million donation to the Centers for Disease Control Foundation to fight ebola, which seems like a fairly sober and smart way to spend your philanthropic dollars.

Judging by their announcement today, it seems as if Zuckerberg and Chan are moving further away from the helicopter-drop approach to charity. In their joint letter (addressed, a little awkwardly, to their daughter) they talk about spreading Internet access, helping develop better personalized education technology, and building a “new type of school” better connected to public health centers and government services. (It's a bit vague, but sounds an awful lot to me like Harlem Children's Zone.) And, of course, they want to funnel money into medical research. Again, these seem like the sorts of endeavors that aren't going to cause a lot collateral damage, and may well do some actual good.

1 Side-note: I'm honestly still puzzling over what, exactly, the Chan Zuckerberg Initiative is, but judging by this SEC filing it appears to be an LLC formed to manage Zuckerberg's philanthropic efforts while maintaining his personal control over Facebook, which would be pretty different than, say, the Bill & Melinda Gates Foundation.

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Nov. 30 2015 2:11 PM

This Is Your Life. As a Single Line. Drawn on a Chart by a British Bank.

When it comes to the spiritual and narrative dimensions of how we make our way through the world, I generally subscribe to Paul Auster's view that "lives make no sense." But, speaking strictly in economic terms, they're actually kind of boring and predictable. The graph below, courtesy of a recent report on demographics and the global economy by the British bank HSBC, does a pretty good job rendering that arc as a single line.


The basic message: When it comes to productivity (i.e. what they contribute to the economy), people see their most rapid, exciting growth during their 20s and maybe early 30s. After that it's a longer, slower slog to peak personal output around 50, before a modest decline as they ease themselves toward retirement and, eventually, a plunge into economic obsolescence during old age.


Over at Business Insider, Jim Edwards sums it up thusly: “HSBC's point is that if you're in a country with a very young population, then you can expect to see productivity gains kick in over the next few years ... but Jeez that's depressing.”

HSBC's red line of mortality is just a rough approximation. But it actually tracks pretty well with research based on Social Security data tracking the earnings trajectories of American men. The finding there was, again, the majority of income growth happens between 25 and 35. So, you know, try to make something of your 20s. If you've still got time, that is.

Nov. 30 2015 9:53 AM

How SoulCycle Reinvented the Stationary Wheel 

This post originally appeared in Inc.

Designing a bike that doesn't go anywhere is harder than you think.


Just ask Melanie Whelan, CEO of spin class chain SoulCycle. In 2012, six years after the company's founding, SoulCycle set out to design a stationary bike from scratch to replace the Schwinn bikes used in its classes. Co-founders Elizabeth Cutler and Julie Rice wanted a bike designed specifically around SoulCycle's unique exercise experience that involves elements of dance and weight training. "Functionality was the primary driver behind the design of the bike," Whelan says. 

Today, SoulCycle's investment in proprietary equipment looks like a smart one. The company generated $112 million in revenue in 2014, $26.5 million in net income, and SoulCycle's branded bikes fetch $2,200 a piece from consumers who want one in their homes. 

For the design of SoulCycle's bike, the company turned to boutique fitness designer Eric Villency, CEO of Villency Design Group. Here are three crucial design elements that Villency and SoulCycle incorporated to help reinvent the stationary wheel. 

One of the first design decisions for SoulCycle's bike was to extend the distance between the handlebars and seat relative to many other stationary bikes, forcing riders to exercise more than just their legs. "That enables you to extend your upper body and pull from your core throughout the entire workout, so you're not not pushing from your quads as much," says Whelan.

Because SoulCycle workouts incorporate a number of "signature moves" similar to pushups and other exercises, the bikes needed to withstand the movement of the company's riders, regardless of their height and weight. To make the bikes sturdy enough for this movement, Villency designed a carbon steel frame weighing 137 pounds, 10–30 percent heavier than comparable bikes. "Having that weight and stability was a big part of the thought process behind the design," Villency says.

With 12 different people riding each SoulCycle bike per day, minimizing wear and tear on the bike was one of the design team's key objectives. Villency used hand-sanded joints that allow sweat to naturally roll off the frame, preventing rust that comes with unsanded weld points. The chain guard was also designed with an extra tight seal to keep sweat and moisture out of the chain area. "That's a level of attention to detail that you just don't find in indoor bikes," Villency says. "Most of them are utilitarian and look like soviet spies made them."

Though it's been three years since SoulCycle debuted its bike, the design continues to evolve to account for changes to the company's workout. For example, because riders are using heavier hand weights during the routines, the company has redesigned the weight holder on the frame of the bike.

"Functionality and innovation together are really the top priority," Whelan says. "We continue to challenge ourselves to do it better each time."

Nov. 25 2015 11:57 AM

The U.K. Doesn’t Have Thanksgiving. Why Does It Have Black Friday?

Black Friday is rapidly approaching … in Great Britain. And it promises to be as full of crazed bargain-hunting shoppers as the American version. What makes this even more ridiculous? The British don’t celebrate Thanksgiving. (After all, the Pilgrims hosted the first Thanksgiving dinner after their successful exit from England.) And until recently, they didn’t celebrate Black Friday, either. Enter Amazon.

The e-commerce juggernaut first introduced Black Friday to Britain in 2010. The concept proved popular. As a result, other U.K. retailers began to offer Black Friday discounts, both online and in stores.


But it wasn’t until 2013 that the day achieved something near the legendary status in Britain that it enjoys in the States. That’s when Asda, a U.K.-based superstore owned by, yes, Walmart, began to run Black Friday promotions in its physical stores promising “earth-shattering deals” with “unbeatable” prices. The chain’s chief merchandising officer specifically cited Walmart’s Black Friday sales as an inspiration. Guess what happened next?

British consumers, who for years had thrill-watched American Black Friday shoppers on YouTube, knew exactly what to do. They mobbed the front doors of Asdas across the British isles hours before the 2013 Black Friday sales began, and then, as if on cue, began to fight over the goods when allowed inside. There were reports of a “stampede over cut-price televisions” at a Belfast, Northern Ireland, Asda, and a “scuffle” over the same product at one located near Bristol, England.

The Mirror launched a blog to report on retail mayhem, from the Leeds neighborhood of Pudsey to New York City. In a marvelous bit of British understatement, an Asda representative told the media, “Our customers were eager to take advantage of the great offers available to them. ” But from a bottom-line perspective, the day was a resounding success for Asda. The chain subsequently reported, according the Telegraph, that it sold 16,000 tablet devices in the space of 60 minutes.

Not surprisingly, even more U.K. retailers decided to join in 2014’s Black Friday sales bacchanalia. The result was predictable. What the police described as “disturbances” occurred at retailers holding sales across the country. In one store, customers were almost trampled in the rush to get deals:

At a number of Tescos, the staff called the police on their own shoppers. Reports from customers caught offguard—British Black Friday is only a few years old, after all—abounded. One Jamie Hook, who made the mistake of going supermarket shopping at a Tesco that Thursday night, told the BBC he saw “people climbing over shelves and displays, staff running for cover, fights breaking out, stock flying through air, people breaking through carrying televisions—and this was before the sale had even started.” Police futilely begged both stores and people to keep better control:

“They were scenes that shamed Britain,” the Independent recently opined.

Now, it seems, the British are stuck with Black Friday much as American retailers are—their shoppers now expect it. Some retail analysts predict customers will spend more than 1 billion pounds on combined online and in-store shopping this Friday.

Nonetheless, it’s not even clear Black Friday is a win for British or American retailers, never mind shoppers. LCP Consulting reported only a third of retail executives they surveyed in the United States and Britain claimed the shopping holiday was profitable, with another 28 percent saying it was not only a money loser, but “unsustainable.”

As for those looking for discounts, they’re likely not doing much better. The experts say more than a few items can be gotten on sale again in the days closer to Christmas. As for the too-good-to-be-true sale items? Quantity is limited and few customers actually get them. My advice, no matter what country you live in? Stay home and fire up the computer or mobile. The YouTube viewing is bound to be entertaining.

One last thing: There won’t be any Asda videos this year. The chain decided to sit this Black Friday out. It turned out all the marauding bargain hunters were scaring off the regular shoppers. “This year customers have told us loud and clear that they don’t want to be held hostage to a day or two of sales,” Asda’s CEO Andy Clarke explained.

Nov. 24 2015 8:01 PM

Study: Obamacare Has Made Young Adults Lazier and Happier

Under the Affordable Care Act, young adults are allowed to stay on their parents' health insurance up to age 26. Since people generally like the idea of helping their own children avoid sickness and financial ruin, this has been one of the law's more popular features. But how exactly has the rule changed life for American twentysomethings?

According to one new study, it seems to have given them a bit more leeway to bum around and find themselves—which is just about what you'd expect to happen when getting a job isn't a prerequisite for getting insurance. In a working paper released earlier this month, economists Gregory Colman and Dhaval Dave conclude that thanks to Obamacare's coverage rules, young adults are now less likely to work but a bit more personally content, as they spend more time with friends, in school, and searching for (presumably) fulfilling employment. They might be a little lazier. But that's not necessarily such a bad thing.


A number of previous studies have found that letting twentysomethings remain on their parents' health plans reduced their uninsured rates by about 4 or 5 percentage points and led them to work fewer hours. Colman and Dave's paper is an interesting addition to the conversation because it both looks at how millennials have used their extra free time and what the changes have done for them emotionally.

Here's how the researchers go about it. Based on data from the American Time Use Survey, they compare how 19-to-25-year-olds changed their work and leisure habits after the ACA went into effect with the way 27-to-34-year olds changed their behavior. Since the younger group was affected by Obamacare's rule change while the older group was not, the researchers argue that differences between them should show the influence of the health law. To make sure other variables aren't effecting their findings, they also adjust their calculations to control for factors like demographics, socioeconomic status, and the peculiarities of individual states.

Ultimately, they find that the health care law led to a roughly 5 percentage point drop in employment among the under-26 crowd. (Among those who worked, there wasn't a statistically significant change in hours on the job.) What did the unemployed do with themselves? For one, some headed back to school. Among all 19-to-25 year-olds, time spent on education went up, though the change was both smaller and statistically insignificant among those ages 23 to 25. Other than that, “Most of the freed-up time from the reduction in labor supply (at least 50% or so) is reallocated into socializing and relaxing,” Colman and Dave write. The group also devoted more time to searching for jobs and interviewing.

“The main takeaway is that Obamacare allowed young adults who perhaps weren’t in the job they wanted to be to either look for the job they wanted or perhaps go back to school,” Colman, who is a professor at Pace University in New York, told me.1 Another possible interpretation: Safe in the warm embrace of their parents' health insurance, young folks who had trouble finding work after graduation were more willing to shop around for a job they actually wanted, rather than rushing into the first soul-crushing 9-to-5 gig that came along.

This all seems to have left them a bit more at ease with the world. After health reform, young adults were relatively more likely to report feeling that they were doing something meaningful with their time and that they generally felt happy.

So Obamacare has made finding a job slightly less urgent for your typical kid out of college or high school, while giving him or her a little more time to grab a beer with friends and look around for a reasonably satisfying career opportunity. That pretty much mirrors what the law is expected to do for older Americans as well. Early last year, you may recall, the Congressional Budget Office predicted that the health reform law would lead Americans to work fewer hours, as some men and women discovered they could either find affordable health coverage through the individual market, or with the help of Mom and Dad. The reaction to that largely split among left-right lines, with conservatives noting that a decline in labor force participation would probably dampen economic growth somewhat, and liberals pointing out that the ACA was giving Americans the freedom to leave crappy jobs they were only staying in for the insurance.

Which is more important? The answer is going to hinge on what you think the point of public policy is. If you believe the government's one and only goal should be to encourage GDP growth for the sake of GDP growth, then any change that encourages fewer people to work is probably going to rub you the wrong way. But if you think the most important aim of government is to help people lead happy, healthy, satisfied lives, then giving them the option to laze around or figure out their lives without having to worry about a devastating hospital bill is probably the way to go.

1 Technical note about causality: During our chat, I asked Colman why he and Dave were so sure the sudden surge in free time among younger millennials was due to Obamacare, and not the fact that the aftermath of the Great Recession was a bit harsher on teens and early twentysomethings than it was on those closer to 30. First, he said, before the ACA, the trends in how the two age groups spent their time were fairly similar. After the ACA, the trends diverged, which strongly hints that the law had something to do with it. Second, though this bit didn't actually make it into their paper, he said they tested all of their models while controlling for state unemployment rates divided by age, and it didn't make a difference in their findings. 

Nov. 24 2015 3:59 PM

It’s Time to Change Your Amazon Password. Like, Immediately.

Just when Amazon’s account security was looking good, things have taken a turn for the worrisome. Last week, the online retailer added two-factor authentication, a crucial security feature that had previously been unavailable to its users. As Lily Hay Newman explained in Slate, enabling it is a critical step if you want to protect your account. If that doesn’t sound necessary, consider this: Amazon just acknowledged that some users’ passwords may have been compromised.

ZDNet reports that Amazon has contacted some of its customers, informing them by email—and through their actual user accounts on the site itself—that their passwords “may have been improperly stored on [their] device[s] in a way that could potentially expose [them] to a third party.” The company claims that it has already corrected the issue.


As security concerns go, this sounds like a fairly moderate one. Indeed, it’s important to note that Amazon has not been “hacked”: In its communications with users, the site claims that it does not believe user passwords actually were exposed to third parties. Nevertheless, to protect those who might have been exposed by this vulnerability, the company is forcing them to reset their passwords. Such caution is common for Amazon: ZDNet notes that it has taken similar steps in the past.

Those who haven’t been contacted are likely in the clear this time. Nevertheless, this story should provide an important reminder to those of us who rely too lightly on Amazon’s security features: Consider turning on two-factor now (Newman outlines the steps in her post; it’s simple and surprisingly convenient) and, because you can never be too safe, changing your password as well.

Nov. 24 2015 2:21 PM

Don’t Fly Home for Thanksgiving. Leave the Country.

There’s one thing Americans are rarely thankful for on Thanksgiving: affordable airfare. According to Hopper, a data-driven travel site that monitors about 2 billion price quotes a day, flights over Thanksgiving can be up to 75 percent higher than flights during the rest of the year. That means a domestic flight that would normally be $300 might cost $525­, depending on how far you plan ahead.

That’s a nauseating price point for broke millennials living in expensive cities like New York or San Francisco. “Flying across the country is fucking expensive,” a friend who’s a 22-year-old intern from Seattle living in New York told me. With another holiday coming up so soon, she’d rather shell out the $500 to go home for Christmas. But even if you can comfortably afford the Thanksgiving markup, is spending that kind of money for only a few days of family time still worth it? Especially when “Friendsgiving” and “Skypesgiving” seem like perfectly good (and cheap) alternatives?


Consider another alternative: going somewhere that doesn’t celebrate Thanksgiving at all. Although international flights aren’t necessarily cheaper over Thanksgiving, with airfare up to 20 percent higher in some cases, as values they’re not nearly as bad as what you’ll pay for domestic flights. Plus, if you monitor travel apps like Hitlist or and Hopper’s GTFO (Get the Flight Out), you can usually find some tempting last-minute holiday deals. Kayak’s new Holiday Tracker Hacker site has an “Escapes” tab that shows the top 10 global cities where Thanksgiving and Christmas airfares have dropped the most since last year. Hong Kong and Taipei, Taiwan, are on the top of that list.

There are myriad reasons to skip Thanksgiving in your hometown, depending on your mileage (and air-carrier miles). Perhaps your family is stressful. Perhaps the dinner-table political arguments are heated and awkward. Perhaps you’d rather skip the domestic terminal at the airport—that hive of crowds, crankiness, and flight delays—and kick back in the international departures area, plotting the final details of your four-day sojourn abroad.

So where should you go? Skipping your turkey dinner for a quick trip to Turkey may no longer seem like a great idea this week, but if you’re curious, when I checked Hipmunk, another flight aggregation tool, round-trip tickets from Boston to Istanbul were running between $600 and $700. If you’re willing to wait until the Sunday after Thanksgiving, Fiji Airways has 40 percent off flights to Fiji, Australia, and New Zealand on Nov. 29 and 30.

Here’s an idea of other round-trip overseas flights that you can still spontaneously book in the next few days using Hopper’s GTFO and Hitlist:

  • Washington, D.C., to Guadalajara, Mexico, for $417­—leaving Tuesday at 5:45 p.m. and returning Monday, Nov. 30.
  • New York City to Port of Spain, Trinidad and Tobago, for $334—leaving Friday and returning Monday, Nov. 30
  • Chicago to Moscow for $555—leaving Thursday and returning Monday, Nov. 30.
  • Los Angeles to Bangkok, Thailand for $603—leaving Thursday and returning Tuesday, Dec. 1.
  • Seattle to Seoul, South Korea, for $670—leaving Wednesday and returning Sunday, Nov. 29.

And if you just realized that you do want to go home for Thanksgiving, there’s still a chance you can find a domestic deal before Thursday.

Nov. 24 2015 12:58 PM

China Is Expanding Its Economic Influence in Africa. What Is Africa Getting Out of It?

The Conversation

This article originally appeared in The Conversation.

The Conversation

China’s ties to Africa are likely to get stronger this year as the world’s biggest economy appears poised to once again double its investments across the fast-growing continent.


The run-up to the sixth Forum on China-Africa Cooperation (FOCAC) to be held early next month in South Africa is under way. The forum—in its 15th year and the first held under President Xi Jinping’s administration—has been the main venue for setting the investment, trade and integration agenda between China and countries in Africa.

But has this relationship been as good for Africa as it has been for China? And what can other countries beginning to receive more of its largesse learn from it?

As the poster child for economic growth in recent decades, China has been increasingly keen to spread its wealth and influence around. Even though the country is suffering from a slowdown and expected to achieve “only” single-digit growth rate in the coming years, it remains one of the fastest-growing economies in the world. Its success has been, in part, the result of it being the recipient of huge amounts of foreign direct investment itself.

As China gradually embraces the roles and responsibilities of the world’s biggest economy as well, it is increasingly reversing that flow of cash and is expected to soon surpass the U.S. as the largest investor in other countries.

The inauguration of the China-led Asian Infrastructure Investment Bank, a rival to the World Bank and International Monetary Fund, is a sign of that, with its $100 billion in financial firepower, as is the new China-Pakistan Economic Corridor (CPEC), which will run from Gwadar in Pakistan to China’s western Xinjiang region, supported by a historical agreement of over $46 billion.

Indeed, the amount of investments made by China abroad is estimated to be $531 billion in outward foreign direct investment, with 4 percent of it—$22 billion—going to investments in natural resource extraction, finance, infrastructure, power generation, textiles, and home appliances in Africa.

That’s a small sum at first glance, but its economic impact to the region is both huge and far-reaching, especially in Sub-Saharan Africa, with the biggest investments made in Nigeria, Sudan, South Africa, and Angola.

In addition to investment projects, China has quickly become the continent’s biggest trading partner, with trade volume of $166 billion in 2014. This is likely to continue to increase and reach an estimated $1.7 trillion by 2030. But despite the substantial investments, most of them have been routinely cast as detrimental to Africa’s overall competitiveness.

The projects are dependent on deals made at the highest political levels. They lack competitive and transparent bidding processes, and most of the work force employed at these ventures has been Chinese. Promises of job creation have not been fulfilled. Further, when Africans are hired, local rules and regulations are often flouted, leading at times to poor safety.

For instance, at Chinese-run mines in Zambia’s copper belt, employees must work for two years before they get safety helmets. Ventilation below ground is poor, and deadly accidents occur almost on a daily basis.

More frequently, jobs are lost to Chinese employees, who are ferried in project by project. For example, the growing Chinese presence in South Africa may have cost the country 75,000 jobs from 2000 to 2011. In Nigeria, the influx of low-priced Chinese textile goods has caused 80 percent of Nigerian companies in this industry to close.

Africans' impression of Chinese firms could also be shaped by illegal practices carried out by them.

For example, by law, mining on small plots of 25 acres or less is restricted to Ghanaian nationals. However, many Chinese continue to explore for gold in conjunction with local landowners, even though regulations have made it clear that such practice is illegal. The result: Many Africans see themselves to be exploited by the newcomers.

Perhaps making matter worse, the kinds of goods that the two partners trade with each other have done little to change such perception.

Whereas China buys from Africa mainly natural resources—minerals and metals—African countries import primarily the finished results, ranging from machinery and electrical goods to plastics and rubber.

Such an arrangement could benefit both parties, but it’s more often seen as China exploiting Africa’s natural resources to feed its need for industrial output. At the same time, by exporting cheap—and often shoddy—manufactured goods to African countries, local companies not only become less competitive but they also grow increasingly dependent on China.

Recent research has also suggested that the Chinese presence has failed to bring significant skill developments, adequate technological transfer or any measurable upgrade to the productivity levels to this part of the world.

Recently, China has become more tactful in its approach to Africa, trying to preempt the perception that its presence in Africa may be one-sided only.

In this year’s China-Africa forum, for example, the Middle Kingdom is believed to be making efforts to mitigate the broad criticisms of its “mercantilist” approach toward Africa by, among other things, offering more access to capital for local companies. The fact is that China’s Export-Import Bank extended $62.7 billion in loans to African countries from 2001 to 2010, some $12.5 billion more than the World Bank.

And contrary to what many may believe, China’s investment is not concentrated in countries with inadequate rule of law. The biggest recipient is in fact South Africa—though the Chinese presence is often more visible in other countries from which Western governments have shied away.

Indeed, as researchers have pointed out, Chinese investments are not concentrated in natural resources: Services are the most common sector, with significant investments in manufacturing as well. This suggests that China is now doing more to help African countries to build up their competitiveness.

Lately, the Middle Kingdom has tended to reduce to publicize major oil and mining contracts and instead has focused more on areas where it’s creating jobs, investing in infrastructure and transferring technology. And the latest Forum on China-Africa Cooperation is meant to showcase that. But will loans to support new railroads and other infrastructure projects be enough to make up for concerns that African resources are being exploited?

The challenge for Xi, and China, is to further develop the relationship and at the same time alter sometimes negative perceptions. That’s the opportunity presented by the forum, which could be a game changer for China, its external policy model and its growing footprint beyond its borders. Key to that is ensuring Chinese companies operating in Africa comply with local rules and regulations. They also have to change their views of the locals, so that the latter are seen as equal business partners.

Only by making such fundamental shifts can China capture people’s hearts and minds, and not just their mines.

Nov. 24 2015 11:36 AM

If You’re Buying a Turkey From Whole Foods Because It Was “Humanely” Raised, Read This First                                                  

In preparation for this year’s Thanksgiving feast, more consumers than ever before will seek turkeys that have been humanely raised. For these shoppers, optimistic messages offered by Whole Foods and other animal welfare–oriented food retailers will provide assurance that they’re making an ethical food choice. “Our birds live in harmony with the environment and we allow them plenty of room to roam,” explains a Diestel Turkey Ranch brochure, prominently displayed at many Whole Foods meat counters. Diestel turkeys raised at the Ranch’s main farm earn a 5+ welfare mark—the highest—from the nonprofit Global Animal Partnership, which contracts with third-party certifiers and administers the company’s rating system for humanely raised animal products. Diestel is one of only a handful of Whole Foods meat suppliers out of about 2,100 to achieve this remarkable distinction. So, along with the Diestel’s  promise that “on our ranch a turkey can truly be a turkey,” it seems safe to assume that the Diestel turkeys sold at Whole Foods lived a decent life.

But a recent undercover investigation by the animal advocacy group Direct Action Everywhere tells a more complicated story. Located in Sonora, California, Diestel’s showcase farm gives every appearance of being a model operation. According to its brochure, as well as videos on the company’s website, healthy-looking turkeys roam shaded pastures in a natural setting. Yet, as investigators discovered, the birds roaming in Sonora may be at best a token sampling of Diestel’s overall turkey population. The main source of Diestel’s turkey output appears to be an industrial operation with 26 barns (housing about 10,000 birds each) located 3.5 miles down the highway in Jamestown, California.* (This location earned a 3 from the Global Animal Partnership.) Direct Action investigators became suspicious in part because of a 2013 water discharge report—something the regional water board filed in response to complaints that toxic waste from a Diestel facility was making its way into local drinking water. The report also revealed that the Sonora farm produced about 1 percent of Diestel’s turkeys. So something didn’t add up. 


Visits to Diestel’s Jamestown facility—conducted by Direct Action investigators over nine months (they just “walked right in”)—revealed horrific conditions, even by the standards of industrial agriculture. The group saw turkeys that had been jammed into overcrowded barns, trapped in piles of feces, and afflicted with swollen eyes and open sores. Technically, the birds were allowed outdoor access, but investigators said they saw only one bird outside over the course of the nine-month investigation—an escaped turkey at that. In some cases investigators found dead turkeys strewn across the barn floor. In others, they were overwhelmed by noxious odors and had to leave. Company records (posted on the side of the barn) showed that up to 7 percent of the birds died in a single week. All of which is to say: Diestel Turkey Ranch is a factory farm.

When asked how Global Animal Partnership certifiers could have possibly failed to understand that the showcase farm did not represent the company’s standard model of production, Wayne Hsiung, a former Northwestern University law professor who founded Direct Action Everywhere, explained that the Global Animal Partnership itself “has a tiny staff … claiming to supervise the lives of 300 million animals.” (According to a 2014 tax form, the group pays just $96,711 in salaries and wages, and the bulk of its revenue for that year came from a $300,000 contribution from Whole Foods.) Whole Foods has responded to Direct Action Everywhere’s video footage of the abuse, writing, “Whole Foods Market is proud to stand behind the many hard working farmers such as the Diestel family, who are committed to maintaining a high level of animal welfare.” It noted that an “expert team” who visited the farm “within hours of the video being brought to our attention” declared the conditions at Jamestown to be “not as they were portrayed in the video.” Diestel also dismissed the allegations to the Wall Street Journal, saying that the video only focuses on a small window of time and that the Turkey flock is healthy.

Those responses notwithstanding, consumers worried about the treatment of farm animals should be more than a little disturbed by Direct Action Everywhere’s report. In an era in which we are increasingly asking to know where food comes from, the documented conditions at Diestel remind us of a reality easily overlooked: The task of seeking transparency goes well beyond monitoring conditions at the industrial behemoths. Small, less-industrialized family farms that stress welfare and sustainability should be considered equally suspect, and oversight should be equally rigorous for every kind of farm.

The reason for this is rooted in a kind of paradox. As consumers become increasingly knowledgeable about the terrible circumstances on factory farms, we’ve come to demand that animal products be sourced from smaller ones—farms that fit our mythologized notion of preindustrial agriculture. As the rise of a powerful food movement confirms, we are, appropriately enough, willing to pay more to support such alternatives to the factory farm. For good reasons, these developments are to be celebrated. They point the way to a healthier food system. But producing humane alternatives comes with unavoidable limitations. When corporations such as Whole Foods and Chipotle—to name the most notable supporters of alternative agriculture—attempt to meet consumer demand for responsibly sourced goods, they run into a frustrating economic reality, one that nobody seems to want to discuss: Compassion for animals—that is, practicing true welfare—makes it impossible to raise them en masse.

It’s a hard fact to swallow, but the humane treatment of farm animals is not only more expensive than the industrial option, it’s a substantially more time-consuming endeavor. To the extent that a free-roaming bird fattens on its own terms, it deviates from the rigid production schedule dictated by a large company like Whole Foods. Imagine hiring an independent seamstress working from home to manufacture the uniforms for an army in a week’s time. That’s what Whole Foods and other companies seeking humane animal products do when they knock on the small farmer’s door and ask for an industrial quantity of birds to be delivered for the holidays. So while the Diestel revelation is disturbing, it shouldn’t be surprising. A farm can’t produce upwards of 2 million turkeys—as the Diestal ranch does—to fulfill (in part) the demands of a major retailer wanting birds that were raised according to the highest welfare standards. Doing that, as the Diestel case shows, requires a factory.

The takeaway from this incident might be unpalatable but, when it comes to Thanksgiving dinner, concerned consumers have a hard choice to make: forget about animal welfare or, while menu planning, forget about the turkey.

*Correction, Nov. 24, 2015: This post originally misstated the distance between Sonora and Jamestown, California. They are separated by 3.5 miles, not 45 miles.

Nov. 24 2015 10:04 AM

Be a Decent Human Being and Don’t Go Shopping on Thanksgiving

Black Friday, the traditional and chaotic start to the holiday shopping season, has now creeped into the territory of Thursday’s turkey and pie. In 2014, Jordan Weissmann wrote against shopping on Thanksgiving. The original is reprinted below.

This Thanksgiving, millions of Americans will slide back from their dinner tables, get in their cars, and head for a postprandial shopping trip to snap up deals at a holiday sale.


Please, please do not be one of those people—both for your own sake, and out of respect for the retail staff who get dragooned into coming to work on a day they should have off with family. 

I know. Complaining about our mania for holiday bargain-hunting, and that Black Friday now begins on Brown Thursday, is already a bit of a cliché. Progressive-minded writers seem to spend every November lamenting the misfortune of employees forced to show up to their job on Thanksgiving. The econ bloggers at ThinkProgress have practically devoted an entire month of coverage to the subject. Meanwhile, stores like Costco, Crate and Barrel, and Marshalls now brag about the fact that they don’t open on our national day of gluttony as a way of painting themselves as family-friendly.

But it bears repeating. Thanksgiving shopping, as it currently stands, is an awful tradition that should be boycotted.

To start, Black Friday (and its Thursday lead-in) is a bit of a sham. Yes, some of those cut-rate flat-screen TVs are a real steal. But, as the Wall Street Journal explained last year, many of the supposedly great deals are a “carefully engineered illusion.” Retailers regularly mark down merchandise from heavily inflated prices to trick shoppers into believing they’re getting a bargain. Meanwhile, prices often drop further as the holiday season progresses and stores try to clear out inventory, and better deals can sometimes be found at other times of the year. Plus, in binge-shopping over Thanksgiving weekend, behavioral psychology suggests you’re pretty much dooming yourself to overspend, including on full-price items that just happen to be sitting next to those marked-down toaster ovens.

In short, those who shop on Thanksgiving are practically begging to be fleeced.

Now about all those poor Walmart, Best Buy, and JCPenney* employees who are stuck working instead of watching football. The big-picture problem here is that the United States is, of course, the only rich nation where workers aren’t guaranteed paid vacations or holidays, which is why companies like Walmart, which has stayed open on every Thanksgiving since 1988, can ask their staff to come in whether they want to or not. If we had a humane national vacation policy, none of this would be an issue.

But we don’t. And so retailers are mostly free to keep whatever hours they choose, and demand their workforce deal with it. Some companies, like Walmart and Kmart, do say they offer their staff bonus pay for working Thanksgiving (though exactly how much, in Walmart’s case, is a bit of a question). But in some cases, workers don’t have any choice but to clock in. Kmart employees, for instance, say they’ve been told they could lose their jobs or be otherwise punished if they don’t come in. Target workers are also reportedly not allowed to ask for time off work. Lots of retail workers are probably thankful for the extra holiday paycheck. But many would probably prefer not to be forced to babysit while a bunch of rampaging bargain-hunters tears through the television aisle.

What’s especially galling about this is that early Thanksgiving day sales don’t necessarily benefit the retail industry as a whole. Instead, they’re the product of a massive collective action problem. Opening up on Thursday doesn’t increase sales overall. But companies are worried that if they don’t, their customers will simply do their shopping elsewhere. “Retailers are trying to get a jump on the competition,” Bill Martin of mall-traffic tracker ShopperTrak told MarketWatch last year. “Thursday is simply selling the stuff at the expense of Black Friday.” Many of the stores that do choose to stay closed on Thanksgiving, like Neiman Marcus, Sam’s Club, Costco, and Crate and Barrel cater to somewhat wealthier clientele and don’t rely on massive markdowns to court customers. They have the luxury of sitting out of the competition. But we can’t rationally expect big-box stores like Best Buy, Walmart, and Kmart that cater to the cash-strapped middle class to do the same.

We could try to solve this problem with regulation. Massachusetts, Maine, and Rhode Island ban stores from opening on Thanksgiving. A state lawmaker in Ohio has introduced a bill that would force stores to pay employees triple wages for working on the holiday and allow them to take the day off without facing retaliation.

But until workers can freely choose whether to show up for the job on Thanksgiving, consumers who take advantage of these overhyped sales are simply voting for the gross status quo. Right now, Brown Thursday is a terrible bargain for society. Don’t fall for it.

*Correction, Nov. 26, 2014: This post originally misspelled the name of retailer JCPenney.