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Archive for February 12th, 2019

‘Mark Is an Authoritarian’: A Facebook Investor Sounds the Alarm About the Company He Helped Build

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Benjamin Hart writes in New York:

Like many people, Roger McNamee has recently come to believe that Facebook is, in his words, “terrible for America.” Unlike many people, he played an integral role in helping the 15-year-old juggernaut wield so much power in the first place. A longtime venture capitalist, McNamee made a key early investment in the company, and served as a mentor to a young Mark Zuckerberg, who was then agonizing about whether to sell his creation or keep running it himself. McNamee also fatefully helped persuade Sheryl Sandberg to meet with Zuckerberg; she became Facebook’s COO in 2008.

But since 2016, McNamee — who had by then ceased involvement with Facebook — has grown into a full-time skeptic of the company he once championed, joining a chorus of onetime tech evangelists who have reevaluated tech’s role in society. His new book Zucked is a cri de coeur against a corporation and a chief executive who he thinks have badly lost their way. Intelligencer spoke with him about the dangers of Facebook’s unchecked power, whether he thinks the company is salvageable, and why Mark Zuckerberg just needs some sleep.

You said that you first started to really have misgivings about Facebook in the run-up to the 2016 election, when you noticed a series of suspicious-looking memes that were denigrating Hillary Clinton — at which point you realized that outside groups were manipulating the platform.
It was “Bay Area for Bernie” and “whatever for Bernie” type groups. Things that seemed legit, that seemed associated with the Sanders campaign. But the viral spread of them, where one day one of my friends was in that group, the next day four of my friends, the day after that, eight of my friends … there was something about it that said to me: in all probability, somebody was spending money to draw people into these groups. And then they were sharing stuff. These memes were so nasty, and so obviously not real in terms of information content, that I just couldn’t imagine even the Sanders campaign doing something like that. You know, they had a reputation, the Bernie bros.

But it just seemed too intense. I had no idea what it meant, but it got stuck in my head, and so, when a month later we had the report about that group that used Facebook advertising tools to gather data on people expressing an interest in Black Lives Matter, and then they were selling those names to police departments? That was obviously evil. The first thing was just a suspicion, the second thing was like, “Oh my God.” Facebook did the right thing, mind you. They expelled the group. But obviously the damage had been done, the data was sold to police departments, and harassment could take place. And that just struck me as completely not fitting my perception of what Facebook was all about, which was puppies and babies.

So you warned Mark Zuckerberg and Sheryl Sandberg. 
Yes, but keep in mind that wasn’t ’til October. Brexit happens in June, and then I think, Oh my god, what if it’s possible that in a campaign setting, the candidate that has the more inflammatory message gets a structural advantage from Facebook? And then in August, we hear about Manafort, so we need to introduce the Russians into the equation. And then in October, we hear about Facebook using its ad tools to enable people in the housing market to discriminate in violation of the Fair Housing Act. At that point I write an op-ed for Recodeand instead of publishing it, I share it with Mark and Sheryl because I’m trying to warn them. I’m going, “Guys, there is something really wrong here” — the only logical explanation is there is something about the algorithm and the business model that enable bad actors to harm innocent people using Facebook.

I didn’t expect them to throw up their arms and promise to change everything, but I hoped that they would investigate and take it seriously. Of course, nine days later, you have the election, at which point I’m going, “Okay, guys, we cannot screw around, this is a disaster. Your brand is at stake, you’re a trust business. You must engage. You must treat this the way Johnson & Johnson treated the poisoning of Tylenol. You gotta protect the people who use your product.” And I tried that for three months, but with no luck. And so after that, I became an activist.

We’re now more than two years out from that experience, and obviously the controversies have not gone away — they’ve actually multiplied. Do you think Zuckerberg and Sandberg have made any progress on the stuff you warned about? 
I want to avoid absolutes, but I think it’s safe to say that the business model is the source of the problem, and that it’s the same business model as before. And to the extent that they made progress, it’s in going after different moles in the Whack-a-Mole game. From the point of view of the audience, Facebook is as threatening as ever.

You’ve said it’s the ad-based business model that creates, in your opinion, damaging incentives that sort of reward the basest human emotions: fear, anger …
Can I take a moment to describe how it works?

Because if you think about the ad model — in a traditional ad model, you collect data in order to improve your product or service, with respect to the customers that you have. At Facebook and Google, they collect data in order to essentially create new products that take advantage of the weakness of the audience. It’s a fundamentally different thing. So if, in a traditional ad product, the consumer is the product, not the customer — in Facebook and Google they’re the fuel. They aren’t even the product. And here’s why it’s a problem: They need your attention. To get your attention, they appeal to low-level emotions like outrage and fear, and they tickle you with rewards, things like notifications. And those things are really habit-forming. And for many people, when you’re checking Facebook or Google two or three times a day for periods of years, habits become addictions. And when you’re addicted, you are vulnerable to manipulation.

Is this ad-based business model, which is the foundation of so many of these important internet companies, fundamentally flawed, in your view? Is there a more benevolent way of doing it?
To be clear, I think there was always a much more benevolent way of doing this, and I wish they had gone there. When I first met Mark in 2006, the company had $9 million in revenues, and he had solved what I thought was the fundamental issue for the social network, which was that anonymity basically allowed bullies to take over chat rooms, comment boards, and any kind of social thing. And Mark realized that he could provide authenticated identity, and in the early days, that, I felt, was the most exciting thing. He also gave people genuine privacy control. And I bet he could’ve gone to 100 million, maybe 200 million users, mostly in the English-speaking world, without any problems and a really reasonable ad business. But as they started to grow, they found a business model that really did require this surveillance, and they realized that there were no limits at all. The more friction they could get rid of, the faster they would grow. And so what they did was they basically said, “You know what, we’re not gonna enforce this identity thing. And we’re not going to enforce the privacy protections.”

The next thing you know, they’re growing like a bat out of hell, and the bad actors start coming in. To me, the miracle is that they got all the way to 2 billion active users before any problems showed up. And it’s a real tribute to how smart they were that it took that long. If they had a more traditional advertising business, I think everything would be fine. But now they’re at a scale where I don’t see how they can get back to that. You know what I would do? I think the best way to solve this problem from a policy point of view is to do what we did with the chemical industry, which is to say — there are all these externalities that come from your success, all this damage that right now society is paying? From now on, it’s on you. You have to pay all of that. And that would change the incentives pretty quickly.

But it’s pretty hard to measure what, exactly, the cost of the harm is. It gets very nebulous. 
Well, yes and no. Because remember, some of the harm shows up at the individual level, so if everybody has the ability to sue for what they think the cost to them was …

Well that would be …
No, I’m not joking about this, right? I mean, a lot of this is letting litigation take its course. And, you’re right: I suspect that estimating the value of a Rohingya life in Myanmar would wind up producing the same kind of horrible outcome you got in Bhopal. But right now there’s no consequence at all, right? And so it would be better to make them do something. But I agree with you, I don’t think this is easy. And that’s the reason why we’re having this conversation, right? I mean, I didn’t write this book because I had all the answers, I wrote this book because I think I know what the questions are, and I’m trying to get the whole world to get engaged.

And I don’t really think people understand the issue that well, either …Dude, I’ve spent an entire life doing this and don’t understand it! I’m serious! Thirty-four years as a professional tech investor, studying this stuff day and night, being at these companies as they created these models in the early days. Not so much in recent years, so I really missed the model that they’re running now until I became an activist. But I’ve spent 30 years doing nothing but! So when somebody comes up to me and says, “Roger, this is really complicated,” I go, “I’m with you. You’re absolutely correct.” But it turns out that the parts that matter aren’t that complicated. These people were never elected, they are not accountable, and yet they have the most important voice in our politics. Every candidate is running his or her campaign on Instagram. You don’t think that gives these guys an enormous amount of power? Of course it does. We think that that’s inevitable, right? Collectively, we learned how to trust tech in the ’60s, ’70s, ’80s and ’90s. And we don’t realize that we should be not only very skeptical right now, we should actively be suspicious of the biggest companies on the internet.

You were in close contact with Zuckerberg years ago, but you haven’t been in close contact with him for a while. Do you think that Facebook can develop into the kind of company you want it to be with him in charge? 
I think that Mark is one good night’s sleep from understanding this. The problem is …

Do you really?
No, hang on. I’m saying from understanding it, right?  Now doing it is another whole animal. And the doing requires a dramatic change to the business model.

There’s been such a now-familiar cycle of these breaches of trust every two weeks …
No, no, no, no, no. I get it. We’re talking about two different things. You asked me, “Is he capable of making this change?” And I’m saying to you I think it’s not crazy for him to wake up one day the way I did and say, “You know what? This thing that I believed in so much is deeply flawed, and I owe everybody. I do need to fix it.” I believe Mark Zuckerberg is totally capable of that moment of illumination. Now, there is zero evidence that he has had it, or that he is going to have it, but I think he’s capable of it.

And the trick is, let’s assume he has it. Then you have to actually effect the change. And that would be difficult, but like I said, I think he has the gravitas inside the company to persuade people: “You know what guys, what we’ve been doing here’s wrong, we’ve gotta do it differently.” But I don’t want you to come out of this call thinking I’m optimistic that that’s how things are going to go down.

That’s not what I took from it. 
I’m saying to you I’m really, really, really afraid of what these companies could do. And I’m afraid in no small measure because there are hundreds of millions of people — really, billions of people — affected by their actions. And you can fit every single person in the world who understands the problem I’m talking about at the level I’m talking about it, you know, in a basketball arena or something much smaller. And, you know, we still have a huge awareness-building campaign to complete, and we have to get the people in power up to speed. And they’re getting there very rapidly. Like the rest of us, they had every reason to trust these guys for 50, 60 years and, you know, it didn’t look like they needed any regulation, so why would anybody become a pro?

But we just elected 40 freshmen members of Congress where the average age is like, 40, right? And we retired a whole bunch of the people who understood it the least well, and the intersection of those two things is very positive. And here’s the good news: I think there are members on both sides who get how important it is to do something here. And they may not agree on what the path is, but at least if you understand that we need to find common ground, that’s good. And the other piece that’s really important is that we, the people formerly known as “users” — we have more power than we realize. We have the power to withdraw some or all of our attention from these guys, and they need that attention to make this model work. Facebook has seen a really significant decline in hours of use per month per user in North America in the last year. And there’s a reason they don’t report it anymore, because it’s not a good number — fortunately Nielsen keeps track of it. And it’s not exact, but it shows like a 20 percent decline, and that’s a big number. And that gives you some hope.

Again and again, Zuckerberg has said over the last 15 years that his whole mission with Facebook — and he always uses this kind of platitude-heavy language — is that it’s about “connecting the world” and “bringing people together,” etc., etc. And I think people have a difficulty reconciling that with the strange figure he cuts in public. Did you ever feel like you got a handle on what’s driving him, or what he believes in? . . .

Continue reading.

Written by LeisureGuy

12 February 2019 at 3:44 pm

Trump offers socialism for the rich, capitalism for everyone else

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Robert Reich, a former US secretary of labor and professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good, writes in the Guardian:

“America will never be a socialist country,” Donald Trump declared in his State of the Union address. Someone should alert Trump that America is now a hotbed of socialism. But it is socialism for the rich. Everyone else is treated to harsh capitalism.

In the conservative mind, socialism means getting something for doing nothing. That pretty much describes the $21bn saved by the nation’s largest banks last year thanks to Trump’s tax cuts, some of which went into massive bonuses for bank executives. On the other hand, more than 4,000 lower-level bank employees got a big dose of harsh capitalism. They lost their jobs.

Banks that are too big to fail – courtesy of the 2008 bank bailout – enjoy a hidden subsidy of some $83bn a year, because creditors facing less risk accept lower interest on deposits and loans. Last year, Wall Street’s bonus pool was $31.4bn. Take away the hidden subsidy and the bonus pool disappears.

Trump and his appointees at the Federal Reserve are easing bank requirements put in place after the bailout. They’ll make sure the biggest banks remain too big to fail.

Trump is promoting socialism for the rich and harsh capitalism for everyone else in other ways. GM has got more than $600m in federal contracts, plus $500m in tax breaks. Some of this has gone into the pockets of GM executives. Chairman and CEO Mary Barra raked in almost $22m in total compensation in 2017 alone.

But GM employees are subject to harsh capitalism. GM is planning to lay off more than 14,000 workers and close three assembly plants and two component factories in North America by the end of 2019.

When he was in business, Trump perfected the art of using bankruptcy to shield himself from the consequences of bad decisions – socialism for the rich at its worst – while leaving employees twisting in the wind.

Now, all over America, executives who run their companies into the ground are getting gold-plated exit packages while their workers get pink slips.

Sears is doling out $25m to the executives who stripped its remaining assets and drove it into bankruptcy, but has no money for the thousands of workers it laid off.

As Pacific Gas and Electric hurtles toward bankruptcy, the person who was in charge when the deadly infernos roared through northern California last year (caused in part by PG&E’s faulty equipment) has departed with a cash severance package of $2.5m. The PG&E executive in charge of gas operations when records were allegedly falsified left in 2017 with $6.9m.

Under socialism for the rich, you can screw up big time and still reap big rewards. Equifax’s Richard Smith retired in 2017 with an $18m pension in the wake of a security breach that exposed the personal information of 145 million consumers to hackers.

Wells Fargo’s Carrie Tolstedt departed with a $125m exit package after being in charge of the unit that opened more than 2 million unauthorized customer accounts.

Around 60% of America’s wealth is now inherited. Many of today’s super-rich have never done a day’s work in their lives.

Trump’s response has been to cut the estate tax to apply only to estates valued at over $22m per couple. Mitch McConnell is now proposing that the estate tax be repealed altogether.

What about the capitalist principles that people earn what they’re worth in the market, and that economic gains should go to those who deserve them?

America is on the cusp of the largest inter-generational wealth transfer in history. As rich boomers expire over the next three decades, an estimated $30tn will go to their children.

Those children will be able to live off of the income these assets generate, and then leave the bulk of them to their own heirs, tax-free. (Capital gains taxes don’t apply to the soaring values of stocks, bonds, mansions and other assets of wealthy people who die before they’re sold.)

After a few generations of this, almost all of the nation’s wealth will be in the hands of a few thousand non-working families. . .

Continue reading.

And in the Washington Post, Heather Long has a report “A record 7 million Americans are 3 months behind on their car payments, a red flag for the economy”:

A record 7 million Americans are 90 days or more behind on their auto loan payments, the Federal Reserve Bank of New York reported Tuesday, even more than during the wake of the financial crisis.

Economists warn that this is a red flag. Despite the strong economy and low unemployment rate, many Americans are struggling to pay their bills.

“The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market,” economists at the New York Fed wrote in a blog post.

A car loan is typically the first payment people make because a vehicle is critical to getting to work, and someone can live in a car if all else fails. When car loan delinquencies rise, it is usually a sign of significant duress among low-income and working-class Americans.

“Your car loan is your No. 1 priority in terms of payment,” said Michael Taiano, a senior director at Fitch Ratings. “If you don’t have a car, you can’t get back and forth to work in a lot of areas of the country. A car is usually a higher-priority payment than a home mortgage or rent.”

People who are three months or more behind on their car payments often lose their vehicle, making it even more difficult to get to work, the doctor’s office or other critical places.

The New York Fed said that there were over a million more “troubled borrowers” at the end of 2018 than there were in 2010, when unemployment hit 10 percent and the auto loan delinquency rate peaked. Today, unemployment is 4 percentand job openings are at an all-time high, yet a significant number of people cannot pay their car loan.

Most of the people who are behind on their bills have low credit scores and are under age 30, suggesting young people are having a difficult time paying for their cars and their student loans at the same time.

Auto loans surged in the past several years as car sales skyrocketed, hitting a record high in 2016 of 17.5 million vehicles sold in the United States. Overall, many borrowers have strong credit scores and repay their loans on time, but defaults have been high among “subprime” borrowers with credit scores under 620 on an 800-point scale.

The share of auto loan borrowers who were three months behind on their payments peaked at 5.3 percent in late 2010. The share is slightly lower now — 4.5 percent — because the total number of borrowers has risen so much in the past several years. Still, economists are concerned because the number of people impacted is far greater now and the rate has been climbing steadily since 2016 even as more people found employment. . .

Continue reading.

Written by LeisureGuy

12 February 2019 at 1:44 pm

Why Mayors Keep Trying to Woo Business With Tax Breaks

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And with the previous post in mind and the disaster it is for Wisconsin’s economy, let’s look at another government giveaway initiative. Richard Florida writes in

We at CityLab have written quite a lot about Amazon’s HQ2 and the use (or abuse) of taxpayer-funded incentives to lure large corporations. The reality is that corporations make location decisions based on factors like the availability of talent, and then game the process to extract maximum incentives. Despite that, the ultimate HQ2 winners—New York and Virginia—offered more than $2 billion combined in various tax credits and incentives to attract Amazon.

So how do America’s mayors really feel about the HQ2 bidding war and the use of business incentives generally?

The most recent edition of the Menino Survey of Mayors, conducted annually by Boston University’s Initiative on Cities, takes a nitty-gritty look at what U.S. mayors think about HQ2 and economic-development incentives. The survey covers 110 mayors from cities across the United States, and was designed to be broadly representative of mayors of cities with more than 75,000 people.

Despite the huge volume of research on the misuse and ineffectiveness of incentives, still more than eight in 10 mayors (84 percent) believe that business incentives are “good policy” for recruiting companies and jobs to their communities.

Nathan Jensen, a political-science professor at the University of Texas, argues that mayors engage in such bidding wars because they think they’re good politics (even if they are bad economics), signaling to constituents that the mayor is “in it to win it.” In fact,  mayors are split on whether incentives are good or bad politics.

Less than half of mayors (42 percent) say the incentives are popular with constituents, while more than half (58 percent) say they are unpopular. Forty-four percent think incentives are bad politics but good for the city, and 40 percent say incentives are good politics andgood for the city. Just 14 percent of mayors believe incentives are bad politics and bad policy. Only 2 percent say the incentives are popular with constituents, but bad for the city.

That said, more than half of mayors (55 percent) believe that cities gain long-term benefits from winning such competitions, and less than a quarter disagree.

Not surprisingly, mayors are wont to blame the proverbial “other guy” when it comes to incentives. More than 60 percent (61 percent) say that other cities offer too much in the way of incentives, while just 15 percent disagree with that statement.

Last fall, I urged the largely progressive mayors of HQ2 finalist cities to take a stand against such taxpayer fleecing by Amazon, and organized a petition to create a mutual non-aggression pact to avoid wasteful incentives and compete on the merits. Many of my colleagues who signed the petition told me I was naive ever to believe that mayors could organize themselves to do this. . .

Continue reading. There’s much more, including more charts.

Written by LeisureGuy

12 February 2019 at 1:12 pm

Inside Wisconsin’s Disastrous $4.5 Billion Deal With Foxconn

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Austin Carr writes in Bloomberg Businessweek:

“This is the Eighth Wonder of the World.”

So declared President Donald Trump onstage last June at a press event at Foxconn’s new factory in Mount Pleasant, Wis. He was there to herald the potential of the Taiwanese manufacturing giant’s expansion into cheesehead country. He’d joined Foxconn Chairman Terry Gou and then-Wisconsin Governor Scott Walker to celebrate a partnership he’d helped broker—“one of the great deals ever,” Trump said. In exchange for more than $4.5 billion in government incentives, Foxconn had agreed to build a high-tech manufacturing hub on 3,000 acres of farmland south of Milwaukee and create as many as 13,000 good-paying jobs for “amazing Wisconsin workers” as early as 2022.

In front of national media and an audience of several hundred, Trump talked up the larger meaning. For too long, he said, bad trade deals sent factory jobs to places like China, and that era was over. Yes, this Foxconn deal represented the largest public subsidy package to a foreign company in U.S. history, but it also marked a turning point for “restoring America’s industrial might.” Blue-collar jobs were coming home, starting with the Mount Pleasant facility and its LCD TV production. And what better bellwether for the success of his trade war than Foxconn Technology Group, a leading iPhone maker in China long synonymous with overseas manufacturing? “As Foxconn has discovered, there is no better place to build, hire, and grow than right here in the U.S.,” Trump said. “Made in the USA. It’s all happening.”

For some Foxconn workers watching who’d labored at the LCD TV factory for months, the president’s rhetoric didn’t match reality. The LCD components weren’t made in the USA, according to sources familiar with the operation. They were shipped from a Foxconn factory in Tijuana. The Wisconsin plant was only handling the last steps of assembly, and some TV displays were still labeled “Made in Mexico.” Pay at the factory started at about $14 an hour with no benefits, much less than the $23 average Foxconn promised. Many people weren’t hired full time—the company filled positions with temps and interns from a local technical college. And five workers present for Trump’s speech say some colleagues from Asia were conspicuously absent from the press event. (Foxconn says it encouraged all employees to attend, and the Mexican TV parts were for testing, not indicative of future production.)

Shortly after Trump’s visit, things got worse. A Foxconn manager at the factory, which then had only about 60 people working there, abruptly called about 15 of them—all interns —into a room to say they should seek other jobs because there wasn’t enough work to hire them full time, according to multiple people present. Two sources recall the manager telling the group, cryptically, that there were forces outside the company’s control affecting the Wisconsin project. A number of the interns, who’d received praise from Trump and shaken Gou’s hand just weeks earlier, were stunned. “It was upsetting for people,” says James Pitman, one of the former interns. “They had hyped a lot of shit up. We were used as a publicity stunt.” Foxconn says that’s insulting and that the internships ended as scheduled.

Time seems to be bearing out the doubters. In a Jan. 30 interview with Reuters, Gou’s special assistant, Louis Woo, said the company was reconsidering its plans for an LCD factory in Mount Pleasant. It will use its campus in Wisconsin to house research and development teams, he suggested, with a much smaller emphasis on manufacturing.

Interviews with 49 people familiar with Foxconn’s Wisconsin project, including more than a dozen current and former employees close to its efforts there, show how hollow the boosters’ assurances have been all along. While Foxconn for months declined requests to interview executives, insiders describe a chaotic environment with ever-changing goals far different from what Trump and others promised. Walker and the White House declined to comment for this story, although a Trump administration official says the White House would be “disappointed” by any reduced investment. The only consistency, many of these people say, lay in how obvious it was that Wisconsin struck a weak deal. Under the terms Walker negotiated, each job at the Mount Pleasant factory is projected to cost the state at least $219,000 in tax breaks and other incentives. The good or extra-bad news, depending on your perspective, is that there probably won’t be 13,000 of them.

From the outset, Foxconn’s plans for U.S. expansion have been nakedly political. The first call to the Wisconsin Economic Development Corp., the state jobs agency that oversaw the deal, came in April 2017 from Jared Kushner’s Office of American Innovation at the White House. “It was from a blocked caller, and the lady on the other end mentioned a $10 billion investment,” says Coleman Peiffer, former WEDC director of business attraction. “It sounded like a wild goose chase.”

Still, when the White House dangles $10 billion, you take the meeting. Days later, Walker talked with Gou in the office of Reince Priebus, then Trump’s chief of staff. Foxconn had told the White House it wanted to create thousands of jobs somewhere in North America, and based on a recent trip he’d taken with Priebus, who’d grown up in the state, Trump suggested Wisconsin.

Gou’s interests are self-evident. “The biggest challenge facing Foxconn is a U.S.-China trade war,” he later said at an annual shareholders’ meeting. Although Foxconn is based in Taiwan, the bulk of its factory operations are in mainland China, and the company remains a powerful symbol of China’s manufacturing might. (Critics say the infamous suicide-prevention nets strung around some Foxconn facilities are a powerful symbol of its labor standards.) Generating goodwill with Trump and top Republican leaders such as Priebus and then-Speaker of the House Paul Ryan, whose district included Mount Pleasant, seemed like a hedge that might insulate Foxconn from tariffs or other unpleasantness between Trump and Beijing.

A hasty courtship followed. Along with the LCD plant, Foxconn pitched Walker’s team on a Bay Area-style tech campus that it later tried to brand “Wisconn Valley.” (The company isn’t known for its consumer marketing.) Walker, who was heading into a tough reelection year, flew to Japan to present Gou with a Milwaukee Bucks jersey and to take a factory tour. Likewise, Gou made a trip to Wisconsin, visiting rural factory sites and joining Walker at the governor’s mansion for a barbecue.

Gou, a demanding leader notorious for punishing underperforming managers by making them stand for long periods during meetings, is an aggressive negotiator who in an interview once described Genghis Khan as a personal hero. Over four decades, he transformed Foxconn into the world’s largest contract manufacturer of electronics partly by scrupulously securing tax breaks and subsidies. “In meetings, it’s Terry’s way or no way,” says a former company executive who, like many sources for this story, spoke on condition of anonymity out of fear of retribution from Foxconn. “If you get local officials in a room with him, I can tell you Terry is going to win.”

Foxconn has a history of overpromising and underdelivering on major deals. In Brazil in 2011 and India in 2015, it pledged to invest billions of dollars and create tens of thousands of jobs after Gou courted each country’s leaders, but each project fell far short. In 2013, Foxconn said it would invest $30 million and employ as many as 500 people at a Pennsylvania factory that also never fully materialized. Multiple former executives say Gou makes big promises to secure favorable terms and is unsentimental about reneging on or abandoning them as costs dictate.

Wisconsin officials apparently didn’t consider Gou’s track record problematic. Instead, they describe the billionaire, who charmed them with stories of his early days selling TV parts in the Midwest, as almost philanthropic. “My impression of him was, what a nice person,” says Scott Neitzel, who led negotiations for the Walker administration. “An extremely genuine, down-to-earth tycoon.” When asked if the state looked at Foxconn’s history, WEDC Chief Executive Officer Mark Hogan says, “We didn’t spend a lot of time on that because, in the end, we got to know these people so well.”

Gou deputized his special assistant, Woo, and another lieutenant, Alan Yeung, Foxconn’s director of U.S. strategic initiatives, to handle the details. They aggressively pursued cash subsidies, calling and texting at all hours. At one point, according to state records released to the public, Woo texted Neitzel at 1:17 a.m., “Give us 200m upfront then it is a done deal.” (Neitzel declined.)

As a bidding war heated up among a handful of states, including Michigan and Ohio, Wisconsin upped its offer. Foxconn demanded subsidies that would make U.S. operations as cheap as in China, and Hogan says Foxconn estimated a 30 percent cost difference. He acknowledges the subsidy numbers grew “staggering” but says Foxconn won’t get those incentives without delivering the promised numbers of jobs.

Wisconsin’s final bid, written on a single piece of paper, offered as much as $150 million in sales tax exemptions and $2.9 billion in refundable tax credits on the condition that Foxconn meet certain hiring and capital investment thresholds. Other public costs, including $764 million in local incentives from Mount Pleasant and its home county of Racine, made up the other third of the package. When the team slid the paper to Woo in July, Hogan recalls, he folded it up and said, “Terry wants to do business with Governor Walker.”

Even before Foxconn signed the contract in November 2017, Walker’s win began to morph into a political liability. As details of the mostly closed-door negotiations came to light, the narrative soured. At a time when Trump was stoking economic nationalism and ripping on companies that shipped jobs to China, many saw the subsidies as a desperate giveaway to a foreign company with close ties to Beijing.

A report from the Wisconsin Legislative Fiscal Bureau, a nonpartisan government agency, estimated the state would be in the red on the deal until at least 2042, and even that projection didn’t account for the kinds of increased public-services costs associated with population growth. It also based income tax revenue projections on the implausible assumption that every employee would live in Wisconsin, whereas some would almost certainly commute from nearby Illinois. “There’s no way this will ever pay itself off,” says Tim Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research. He says Foxconn’s incentives are more than 10 times greater than typical government aid packages of its stripe. . .

Continue reading. There’s much more, and at this point there’s an interesting if depressing chart showing the break-even analysis.

Written by LeisureGuy

12 February 2019 at 12:59 pm

Fendrihan’s Mk II stainless-steel razor—and lavender all the way

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The razor shown is Fendrihan’s Mk II stainless steel razor with a bronze coating, which was a limited edition. The razor is now available in plain stainless steel (US$45 — Marketing speak: “No coating to wear off!!”) or with a black PVD coating (US$65 — Batman-style), or you can buy the head by itself ($30) and use your own handle, though I must say that I like the regular Mk II handle a lot: very grippy, very comfortable and works well in the ATG pass.

But before I picked up the razor, I prepped the stubble: MR GLO, of course, and then a great lather from Meißner Tremonia’s Lavender de Luxe shaving soap: fragrant and rich. This morning I particularly enjoyed my (pre-Vullfix) Simpson Emperor 2 Super, perhaps because the size works better for me than yesterday’s dense 24mm silvertip: the Emperor 2 has a 21mm knot.

Meißner Tremonia soaps are IMO first-rate, and all those that I have contain clay, though the variety of clay varies from soap to soap.

Three passes with the really excellent Mk II left a totally smooth (and undamaged) face, and I do like D.R. Harris Old English Lavender Water: great stuff, very adult.

Snowbound today, I expect, but with lots of beef-shank stew to tide us over.

Written by LeisureGuy

12 February 2019 at 7:43 am

Posted in Shaving

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