Some Week – Updated June 28, 2013 Monday was the re-opening of Buyer and Cellar at the Barrow Street Theater — “utterly charming,” said the Associated Press. “Delicious,” says Variety. “A hilarious delight,” says the New York Observer. We even got to meet Jane Lynch, one of several stars in the audience. (It was also the day of the terrible Supreme Court ruling that eviscerated the Voting Rights Act — another Republican victory for voter suppression.) Tuesday was the unveiling of Barney Frank’s portrait in the Capitol. (Scroll down for some nice shots.) Funny and touching, with everyone there from Fed Chair Ben Bernanke to former Bush Treasury Secretary Hank Paulson to Barney’s husband Jim and his family to Robert Kaiser, whose Act of Congress tells the story of Dodd-Frank. (It was also Wendy Davis’s epic filibuster to prevent a ban of safe, legal abortion in much of Texas.) (And Ed Markey’s win in the race to fill John Kerry’s Senate seat.) (And what Al Gore called “the best address on climate by any president ever.”) Wednesday we saw The Assembled Parties. Judith Light is amazing. We even got to say hello to Norman Lear at intermission. (And the Supreme Court overturned DOMA and allowed marriage to resume in California. Had not elected Barack Obama, the vote would have been 6-3 against. We know this because in 2008 John McCain said, “I’ve said a thousand times on this campaign trail, I’ve said as often as I can, that I want to find clones of Alito and Roberts. . . . I flat-out tell you I will have people as close to Roberts and Alito [as possible].” Roberts and Alito, as you know, this week voted against equality. Justices Sotomayor and Kagan voted for.) The end of DOMA means, perhaps most poignantly, that thousands of “bi-national couples” will no longer have to choose whether to leave their loved one or their country. Foreign same-sex spouses will now be able to apply for Green Cards, just like the spouses of any other Americans. Thursday saw Senate passage of Comprehensive Immigration Reform, 68-32. (And the President and First Lady standing in the same doorway tens of thousands of Africans passed centuries ago as they were loaded onto slave ships bound for America.) Of all these, the marriage decisions had the most immediacy. (Michael S., who used to run a large national ad agency: “I am still trying to absorb the news from the Court. When I came out, being gay was still a disease, against the law, and of course sinful.” Marriage? Edgar Bronfman reflects on the matter, here. ) But the rest was big, too. If Earth is a planet you would like your descendants to enjoy, take the time to read or watch the President’s climate speech. Have a great weekend.
Some Week June 27, 2013 Monday was the re-opening of Buyer and Cellar at the Barrow Street Theater — “utterly charming,” said the Associated Press. “Delicious,” says Variety. “A hilarious delight,” says the New York Observer. We even got to meet Jane Lynch, one of several stars in the audience. (It was also the day of the terrible Supreme Court ruling that eviscerated the Voting Rights Act — another Republican victory for voter suppression.) Tuesday was the unveiling of former House Financial Services Committee chairman Barney Frank’s portrait in the Capitol. (Scroll down for some nice shots.) Funny and touching, with everyone there from Fed Chair Ben Bernanke to former Bush Treasury Secretary Hank Paulson to Barney’s husband and family, to Robert Kaiser, whose Act of Congress tells the story of Dodd-Frank. (It was also Wendy Davis’s epic filibuster to prevent a ban of safe, legal abortion in much of Texas.) (And Ed Markey’s win in the race to fill John Kerry’s Senate seat.) (And what Al Gore called “the best address on climate by any president ever.”) Yesterday was a performance of The Assembled Parties. Judith Light is amazing. We even got to say hello to Norman Lear at intermission. (And the Supreme Court overturned DOMA and allowed marriage to resume in California. Note that if we had not elected Barack Obama, the vote would not have been 5-4 for equality, but 6-3 against. We know this because in 2008 John McCain said, “I’ve said a thousand times on this campaign trail, I’ve said as often as I can, that I want to find clones of Alito and Roberts. I worked as hard as anybody to get them confirmed. I look you in the eye and tell you I’ve said a thousand times that I wanted Alito and Roberts. I have told anybody who will listen. I flat-out tell you I will have people as close to Roberts and Alito [as possible].” Roberts and Alito, as you know, voted against equality. Justices Sotomayor and Kagan voted for.) The end of DOMA means, perhaps most poignantly, that thousands of “bi-national couples” will no longer have to choose whether to leave their loved one or their country. Foreign same-sex spouses will now be able to apply for Green Cards, just like the spouses of any other Americans. But the climate change address was the really big story. If Earth is a planet you enjoy, and would like your descendants to enjoy, take the time to read or watch. And it’s only Thursday!
And Miami Was Such a NICE City June 26, 2013July 1, 2013 Uh, oh. When the water receded after hurricane Milo of 2030, there was a foot of sand covering the famous bow-tie floor in the lobby of the Fontainebleau hotel in Miami Beach. . . . And it just gets worse from there. Read it in the Rolling Stone. $15 MINIMUM WAGE I’m not ignoring your good comments on Nick Hanauer’s argument for a $15 minimum wage. Stay tuned. In the meantime: MORE FREE MUSIC Ken Doran: “[Building on yesterday’s post], there is another good choice for free online music, on the open Internet with no registration needed: YouTube. There are thousands of new and old full length albums available, plus almost every individual song you have ever heard of, and thousands of full length concerts and long excerpts. Copyright owners can police what is available, but apparently most don’t these days. Some sorting for quality is needed, but still a remarkable resource.” Peter: “You may want to add mog.com to the list of music streaming services mentioned. it is similar to Spotify, in that you can select the specific songs you want to listen to, as opposed to the ‘radio-like” services. they also have a free option available. One of Mog’s claims to fame is that they have the best audio quality of any of the services (320kbs for everything). Not sure if anyone else has caught up yet. I’ve been using their paid (ad-free) service without any problem for some time now.” BOREALIS Here’s the link to the full AirInsight analysis I referenced a few days ago. It suggests that WheelTug’s competition may not be ready for prime time. Which could help explain why WT has eleven airlines signed with slot-reservations and H/S, thus far, none.
Free Music June 25, 2013July 1, 2013 FREE MUSIC I suppose my fear of a Cloudburst is irrational. You know — where the thunderstorm becomes a derecho that amps up to a perfect storm and then up one more notch to actually burst the Cloud, erasing all my iTunes and eBooks and cookies and bank balances and anything else not stored on an actual piece of paper or some other physical medium? It’s irrational not so much because I’m certain it could never happen (what do I know from electromagnetic pulsation or black-hole computing?*), but because if it does happen, being able to prove my bank balance may not help much, and I may not be in the mood to read a book or listen to music, what with the ensuing chaos. Irrational or not, I retain a preference for physical brokerage statements, actual books and . . . well, I continue to imagine that someday I will have a room filled with nothing but a record player and my hundreds of vinyl LPs. I dream of having the time to sit listening to the albums of my youth, sipping Spicebox whiskey and ginger. This is never going to happen, except possibly for the spiced whiskey and ginger, but the dream lives on. And you? You, who are too young ever to have owned an LP? Or a tape cassette? You, whose home may not have shelves filled with CDs? For you it’s now plausible to imagine a life with no physical music media whatsoever, just your Internet connection to Pandora, Spotify, iHeart, or, coming soon, iTunes Radio — all free. Click here for a helpful overview. [And here for “More Free Music.”] NICK HANAUER AND WILLIAM JENNINGS BRYAN – PART II Tony Spina: “Regarding this quote from your recent post . . . There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them. ~William Jennings Bryan, 1896 . . . do you think that one proper role of government should be legislating to make one group of Americans prosperous?” ☞ No! But note that both ideas of government — the “trickle down” idea and the “middle-out” idea, to put them in modern parlance — aim, or claim to aim, to make everyone better off. The question is – which actually works? I think if you contrast Clinton’s eight years with his successor’s eight, it’s hard to argue that slashing taxes for the rich helps the masses. But leaving aside the the real-world proof we’ve lived through (and leaving aside the inherent condescension in the phrase, “the masses”**), there’s even just the theory of it. In theory which should work better? As argued by Nick Hanauer in his famous clip, and his argument for a $15 minimum wage, government should lean on the side of empowering the 99%. When not taken to impractical excess, it just works better. Even for the rich. *I would trademark Black-Hole Computing™ — but: (a) I’m only fairly certain it’s original with me; (b) I have no idea what it means, as black holes are, apparently, unlike anything else in the universe, not computers; (c) who would really want to cop to owning it? **Right? I mean, who are “the masses?” A great mass of people who can be lumped together and “dealt with”? Or individuals, however modest of means, each potentially as worthy of respect as any heir or heiress, time-share king or Queen of Versailles.
The Capitalist’s Case for a $15 Minimum Wage June 24, 2013June 23, 2013 Serial entrepreneur and billionaire Nick Hanauer — whose 5-minute “job creator” TED Talk I keep linking to — lays out a compelling case over at Bloomberg.com: The Capitalist’s Case for a $15 Minimum Wage By Nick Hanauer Jun 19, 2013 6:50 PM ET The fundamental law of capitalism is that if workers have no money, businesses have no customers. That’s why the extreme, and widening, wealth gap in our economy presents not just a moral challenge, but an economic one, too. In a capitalist system, rising inequality creates a death spiral of falling demand that ultimately takes everyone down. Low-wage jobs are fast replacing middle-class ones in the U.S. economy. Sixty percent of the jobs lost in the last recession were middle-income, while 59 percent of the new positions during the past two years of recovery were in low-wage industries that continue to expand such as retail, food services, cleaning and health-care support. By 2020, 48 percent of jobs will be in those service sectors. Policy makers debate incremental changes for arresting this vicious cycle. But perhaps the most powerful and elegant antidote is sitting right before us: a spike in the federal minimum wage to $15 an hour. True, that sounds like a lot. When President Barack Obama called in February for an increase to $9 an hour from $7.25, he was accused of being a dangerous redistributionist. Yet consider this: If the minimum wage had simply tracked U.S. productivity gains since 1968, it would be $21.72 an hour — three times what it is now. Cultivating Consumers Traditionally, arguments for big minimum-wage increases come from labor unions and advocates for the poor. I make the case as a businessman and entrepreneur who sees our millions of low-paid workers as customers to be cultivated and not as costs to be cut. Here’s a bottom-line example: My investment portfolio includes Pacific Coast Feather Co., one of the largest U.S. manufacturers of bed pillows. Like many other manufacturers, pillow-makers are struggling because of weak demand. The problem comes down to this: My annual earnings equal about 1,000 times the U.S. median wage, but I don’t consume 1,000 times more pillows than the average American. Even the richest among us only need one or two to rest their heads at night. An economy such as ours that increasingly concentrates wealth in the top 1 percent, and where most workers must rely on stagnant or falling wages, isn’t a place to build much of a pillow business, or any other business for that matter. Raising the minimum wage to $15 an hour would inject about $450 billion into the economy each year. That would give more purchasing power to millions of poor and lower-middle-class Americans, and would stimulate buying, production and hiring. Studies by the Economic Policy Institute show that a $15 minimum wage would directly affect 51 million workers and indirectly benefit an additional 30 million. That’s 81 million people, or about 64 percent of the workforce, and their families who would be more able to buy cars, clothing and food from our nation’s businesses. This virtuous cycle effect is described in the research of economists David Card and Alan Krueger (the current chairman of the White House Council of Economic Advisers) showing that, contrary to conventional economic orthodoxy, increases in the minimum wage increase employment. In 60 percent of the states that raised the minimum wage during periods of high unemployment, job growth was faster than the national average. Some business people oppose an increase in the minimum wage as needless government interference in the workings of the market. In fact, a big increase would substantially reduce government intervention and dependency on public assistance programs. Federal Benefits No one earning the current minimum wage of about $15,000 per year can aspire to live decently, much less raise a family. As a result, almost all workers subsisting on those low earnings need panoply of taxpayer-supported benefits, including the earned income tax credit, food stamps, Medicaid or housing subsidies. According to the Congressional Budget Office, the federal government spent $316 billion on programs designed to help the poor in 2012. That means the current $7.25 minimum wage forces taxpayers to subsidize Wal-Mart Stores Inc. (WMT) and other large employers, effectively socializing their labor costs. This is great for Wal-Mart and its shareholders, but terrible for America. It is both unjust and inefficient. A higher minimum wage would also make low-income families less dependent on government programs: The CBO report shows that the federal government gives about $8,800 in annual assistance to the lowest-income households but only $4,000 to households earning $35,500, which would be about the level of earnings of a worker making $15 an hour. An objection to a significant wage increase is that it would force employers to shed workers. Yet the evidence points the other way: Workers earn more and spend more, increasing demand and helping businesses grow. Critics of raising the minimum wage also say it will lead to more outsourcing and job loss. Yet virtually all of these low-wage jobs are service jobs that can neither be outsourced nor automated. Raising the earnings of all American workers would provide all businesses with more customers with more to spend. Seeing the economy as Henry Ford did would redirect our country toward a high-growth future that works for all. (Nick Hanauer is a founder of Second Avenue Partners, a venture capital company in Seattle specializing in early-stage startups and emerging technology. He has founded or financed dozens of companies, including aQuantive Inc. and Amazon.com, and is the co-author of two books, “The True Patriot” and “The Gardens of Democracy.”) To contact the writer of this article: Nick Hanauer at Nick@secondave.com. To contact the editor responsible for this article: Max Berley at mberley@bloomberg.net. BUYER AND CELLAR Opens at the Barrow Street Theater tonight. As previously noted, “A fantasy so delightful you wish it were true. — The New Yorker” and my ticket to retirement, if you buy enough tickets.
Hot Brakes June 21, 2013 You mean markets can’t just go straight up and real interest rates won’t be zero forever? I didn’t see that coming. Still, there are signs the economy is building some traction, despite Republicans blocking investments that scream to be made. Maybe that dysfunction won’t go on forever, either. It had better change at some point, or the U.S. has a far less bright future than it should. Are you registered to vote? BOREF We stood out a bit at the Paris air show show. I’m told our booth (pictured here) was the only double-decker in the hall (i.e., with an upstairs). Watch this brief video to see the CEO we’re betting on. Bob Fyfe: “Honeywell/Safran has signed at least two potential customers: EasyJet and Air France. The big problem is that even if WheelTug wins all of the business from every airline, they won’t have the pricing power that they had when they were the only game in town. I believe it also puts at risk the leasing model, assuming that Honeywell/Safran is planning to sell the system outright rather than lease it. That would drastically change the present value calculation of WheelTug. They may still have a very good business, but I believe that *billions* is now out of the question. I was worried about this for you all the way back in 2006. I’m still rooting for you.” ☞ The rooting is appreciated. I hadn’t seen that EasyJet story. Has there been anything on it in the 15 months since? I’d like to think EasyJet will take a look at WheelTug’s offering, too — which is exactly what you’re saying about competition potentially driving out some or much of the profit. Then again, Honeywell and Safran are two big companies. They will probably want to price their system in a way that makes them a meaningful profit. And it may take more profit to be meaningful to two large companies than to one small one. Monday’s Air France announcement is good news for Honeywell/Safran, though seems to stop short of a commitment to buy or lease the systems. (Here is one explanation of the difference between an MOU and an LOI. WheelTug has LOI’s with 11 carriers.) As AirInsight describes the playing field . . . EGTS team [Honeywell/Safran] are industry Goliaths compared to WheelTug – however WheelTug, which demonstrated its competing nose-wheel system more than a year earlier, already has commitments from 11 airlines for nearly 600 aircraft for its nose-gear system, and several additional customers pending announcements. EGTS now has an agreement with Air France for tests. Of course, WheelTug’s 11 customers could likely find a way to bolt for the Honeywell/Safran system if it proves to be better. But will it prove better? Or even as good? One issue is that their system may be hundreds of pounds heavier. If so, that’s a lot of extra weight to carry on every flight every day all the time if you don’t need to. Another issue is that Honeywell/Safran put their motors in the main landing gear, where the brakes are. The brakes get very hot, as I understand it — so hot, in fact that, quick turnarounds may sometimes be extended because of the need to wait for the brakes to cool. Add motors inside those same wheels and you may add a bit of heat — even as you may block some of the airflow that helps cool the brakes. All this is speculation . . . but so, after all, is Borealis. Have a great weekend. Next week should be a busy one down at the Supreme Court.
The Dog That Didn’t Bark June 20, 2013June 20, 2013 You may recall I have a small interest in a company called Borealis that owns most of a subsidiary called Chorus Motors that owns most of a subsidiary called WheelTug that hopes to be leasing systems that will allow airlines to drive their planes around the tarmac like golf carts, saving upwards of $700,000 a year per plane on fuel, engine wear, damage, and turn-around time . . . but that WheelTug has a competitor in Honeywell/Safran. According to that little Wall Street Journal story from last Friday that I lined to Monday, “Over the weekend [which is to say last weekend], Honeywell and its partner are expected to announce some customers for their proposed technology, dubbed the ‘electric green taxiing’ system, according to people familiar with the matter.” Not to make too much of this, but — as an indirect stakeholder in WheelTug, which has announced 11 airline customers so far — I note that last weekend came and went, as did Monday, Tuesday, and Wednesday, with no Honeywell/Safran customers announced. For all I know, of course, by the time you read this they will have announced deals with everybody. But so far, they have exactly zero customers to our 11 . . . which, being a congenital optimist, I take as a good sign. I would have written more today but got caught up in an episode of VEEP and it’s really hard to do anything after that but kick back and smile.
Our Booth June 19, 2013 A picture being worth 1,000 words — and my being even lazier than usual in the summer — here‘s today’s column. Five thousand words! It’s the WheelTug booth at the Paris Airshow. OH! AND DON’T FORGET TO STOP AT THE CLEANERS ON YOUR WAY HOME John Carroll: “I completely (TOTALLY) forgot my 2nd quarter estimated tax filing until your blog Monday reminded me. Thank you for thinking of me. I have an appointment with Dr. Marcovici on Monday the 24th, could you please put a note in your blog?”
Non-Invasive Surgery June 18, 2013June 17, 2013 It’s likely the Supreme Court will rule on marriage equality next week. I assume they will strike down DOMA — how can the Federal government grant Social Security benefits (for example) to some of a state’s legally married citizens and not others? — and, on narrow grounds, allow same-sex marriages to resume in California while not forcing Mississippi (say) to embrace them. This uplifting 5-minute video chronicles the progress. In a polarized, partisan world, what could be more uplifting than to have the progressive lawyer for Al Gore and the conservative lawyer for George W. Bush back at the Supreme Court — only this time united for love, equality, and the pursuit of happiness. BRAVE NEW WORLD Thanks to the estimable Fred Stanback for this awesome video: The operating room of the near future . . . no cutting you open! (Or, to be honest about the wellspring of my enthusiasm: no cutting me open.) I’m telling you, kids, if we can just make it through the next couple of decades, investing in the future and learning better how to share our collective blessings, there are going to be enormous collective blessings to share. Floss.
Competition on the Tarmac June 17, 2013June 17, 2013 Your second estimated quarterly estimated tax is due today . . . click here for forms and instructions. And thanks, thereby, for helping to lower our deficit by $700 billion since George W. Bush handed it off to Barack Obama! It’s now approaching manageable levels again. Our S&P bond rating outlook has been upgraded from negative to stable. And if we would only do a few common-sense things blocked in Congress for so long now — mainly, investing in the infrastructure we so badly need, which would employ people who so badly want to work — we’d get the economy booming and the deficit lower still. (And when better than now, when the real cost of long-term borrowing is near zero?) But all the Republicans can do is vote over and over to end Obamacare (37 votes and counting); vote to prevent universal background checks 90% of the country favors; block scores of appointments; and pass laws at the state level to force women to undergo government-mandated invasive procedures that neither they nor their doctors want. (Well, and pass laws to restrict voting rights — “The Voter Suppression Project,” as Chapter 6 of Jonathan Alter’s The Center Holds is titled.) All this to thwart a Marxist fascist Kenyan-born President who hates America and Big Business . . . yet has somehow managed to have averted depression and allowed corporate profits and the Dow Jones Industrial Average to hit record levels. Imagine how far along we’d have been with a loyal opposition. But I digress. SODA I have no idea how much credence to give this — “Three Stocks to Buy for the Next 20 Years.” But I don’t mind that as his third pick, alongside Berkshire Hathaway and Google, the author has chosen SODA. Not the worst company to be in. Pun intended. BOREF The Paris Air Show is underway. It is the debut for WheelTug’s main (only?) competitor, Honeywell/Safron. Here is Aviation Week on that debut. And here is the Wall Street Journal’s Friday post, also focusing mainly on the demonstration that H/S is about to do. The Journal chose not to mention this video of WheelTug’s doing the same thing a year ago. Or WheelTug partners like $12 billion Parker Hannifin. Or the names of specific WheelTug airlines like KLM, Alitalia, and El Al. But it did report that WheelTug now has letters of intent from 11 airline partners and referenced some possible advantages to a system like ours that is located in the nose wheel instead of the main wheels and . . . well, read it (sorry; seems to require a WSJ subscription), or just trust me when I say I sure would have hoped for more. Then again, it’s now pretty clear that e-Taxi is coming, most likely from WheelTug or H/S or both. That will be good for travelers and the environment and for the profits of the early airline adopters. (Eventually, when most airlines are realizing these savings, competition will cause those savings to be passed through to passengers in the form of lower fares.) And I did love the Journal‘s line that “. . . the [H/S] joint venture’s contingent of roughly 200 engineers is scrambling to keep up with rival WheelTug . . .” That suggests some pretty remarkable innovation on the part of our much smaller, much less well funded team. Maybe we’re struggling Apple, decades ago, to Honeywell/Safron’s IBM or Microsoft? (Okay: now even I will admit I’m getting carried away.) How the competition between WheelTug and Honeywell/Safron will drive down potential profits remains to be seen, both in terms of their competing for airlines by offering the sweetest deals and also in terms of their competing for cooperation from Boeing and Airbus by perhaps cutting them in for a share. There is also the very real risk, that as with the Betamax, the inferior “VHS” format will prevail.* Then again, (a) it may not (would you want to carry an extra 400 pounds on every flight if you didn’t have to?); (b) WheelTug has a slew of patents that could require some sort of settlement from Honeywell/Safron; (c) however it plays out — with WheelTug winning the spoils, sharing the spoils, or getting Betamaxed — there remains the possible application of our electric motor technology beyond airplanes (to cars, perhaps?) and the possibility that some of the other technologies Borealis has been working on (and its possible mineral wealth) have value as well. So even if H/S were to win a monopoly with its inferior technology (and why would it?), Borealis could still have value. All speculative, but at its current $60 million market cap . . . less than half the price of a nice Picasso . . . an irresistible lottery ticket for money you can truly afford to lose. *Complicating this analogy is the dispute over whether VHS really was inferior. For the purposes on the analogy, I’m just accepting the common wisdom that it was. Although the analogy may be better because of that dispute — because some will surely dispute that WheelTug’s approach system is superior. They will agree that it’s smarter to use the main landing gear — though according to this article, Lufthansa once believed the same thing and, after tests, concluded otherwise. Or they will note the H/S claim of “440 pounds,” not much more than the 300 pounds I;ve seen estimated for WheelTug’s system. But I;m not sure that 440 pounds includes the whole system — it may be just the motors — which is how their previous mention of numbers more like 800 pounds lead me to think their system may weigh 400 pounds more than ours. But, truly and for sure, I do not know.