Each month, the editors of The Atlantic’s Business Channel put together a list of the most insightful and interesting pieces of journalism about money and economics from around the web.
This month’s picks include the practical and the absurd: stories about curious pet financing schemes, the relentless gig economy, and the disconnect between the way companies interact with their customers versus their employees.
Patrick Clark | Bloomberg
The Sabins had bought their new dog, Tucker, with financing offered at the pet store through a company called Wags Lending, which assigned the contract to an Oceanside, California-based firm that collects on consumer debt. But when Dawn tracked down a customer service rep at that firm, Monterey Financial Services Inc., she learned she didn’t own the dog after all.
“I asked them: ‘How in the heck can I owe $5,800 when I bought the dog for $2,400?’ They told me, ‘You’re not financing the dog, you’re leasing.’ ‘You mean to tell me I’m renting a dog?’ And they were like, ‘Yeah.’ ”
Without quite realizing it, the Sabins had agreed to make 34 monthly lease payments of $165.06, after which they had the right to buy the dog for about two months’ rent. Miss a payment, and the lender could take back the dog. If Tucker ran away or chased the proverbial fire truck all the way to doggy heaven, the Sabins would be on the hook for an early repayment charge. If they saw the lease through to the end, they would have paid the equivalent of more than 70 percent in annualized interest—nearly twice what most credit card lenders charge.
Nicholas Bloom | Harvard Business Review
What is clear is that over the past 35 years, firms have divided between winners and losers, and between those that rely heavily on knowledge workers and those that don’t. Employees inside winning companies enjoy rising incomes and interesting cognitive challenges. Workers outside this charmed circle experience something quite different. For example, contract janitors no longer receive the benefits or pay premium tied to a job at a big company. Their wages have been squeezed as their employers routinely bid to retain outsourcing contracts, a process ensuring that labor costs remain low or go ever lower. Their earnings have also come under pressure as the pool of less-skilled job seekers has expanded, due to automation, trade, and the Great Recession. In the process, work has begun to mirror neighborhoods — sharply segregated along economic and educational lines.
Timothy B. Lee | Vox
Even the three best-known “sharing economy” companies have found there are limits to peer-to-peer sharing. Asking early adopters to share is a great way to bootstrap a new online business. But beyond a certain point, continued growth often requires professionalization.
Serving a big, mainstream market requires people to invest in new capacity, not simply rent out whatever spare capacity they happen to have on hand. Sharing isn’t going to go away — there will always be people who want to make a little extra money on the side with a car or a spare room. But the past few years has made it clear that Lyft and Airbnb have not invented a new economic model that’s going to transform capitalism.
Hilary George-Parkin | Racked
Behind the scenes, many current and former employees paint a picture of dysfunction and hypocrisy, with clashes between Agrawal and key members of her team, employment policies that seem to fly in the face of the company’s women-first messaging, and an increasingly volatile work environment that’s led many of those who were instrumental in creating the brand to tender their resignations. According to several sources, ten people have left the 35-person company since January, and last Thursday, Agrawal announced to the staff that she is stepping down from her role as CEO of Thinx and Icon, the “pee-proof underwear” company she also co-founded — though, she clarified in the all-hands meeting, she will still be the “SHE-E-O” (the irreverent title she employs in most external communication) and face of the brands. Meanwhile, the board of directors is actively looking for a “professional CEO” to fill the role.
For some, though, it’s too little, too late.
Ben Goldfarb | Mother Jones
"The Codfather" is the local media's nickname for Carlos Rafael, a stocky mogul with drooping jowls, a smooth pate, and a backstory co-scripted by Horatio Alger and Machiavelli. He was born in the Azores, a chain of Portuguese islands scattered in the Atlantic. As a teenager in 1968, he emigrated to New Bedford, where he later took a job in a fish-processing plant. (More than a third of New Bedford's residents have Portuguese ancestors; many can trace their heritage back to the days when Yankee whalers picked up crew members from the Azores during trans-Atlantic voyages.) Rafael rose to foreman at a seafood distribution facility and later founded his own company. He bought his first boat in 1981, and then another and another, until he owned more than 40 vessels, many christened with Hellenic names—the Athena, the Poseidon, the Hera. Local newspapers hung on his pronouncements, dubbing him the "Waterfront Wizard" and the "Oracle of the Ocean."
The Codfather also ran afoul of the law. In the 1980s he was sentenced to six months in prison for tax evasion, and in 1994 he was indicted—and acquitted—for price-fixing. In 2011, federal agents confiscated an 881-pound tuna that had been illegally netted aboard his Apollo. "I am a pirate," he once told regulators. "It's your job to catch me." Law-abiding rivals resented him and grudgingly admired him. "He has no compunction about telling you how he's screwing you," says one ex-fisherman.
Amanda Hess | The New York Times
Companies have long marketed their wares around causes; by raising awareness about some issue, they lift their brand names, too. Those campaigns have typically focused on safely nonpartisan matters, like curing cancer or “empowering women.” But lately the forces of national politics and online media have conspired to polarize the marketing landscape.
Stories about President Trump so dominate the news that brands in search of a traffic bump need to find their place in that narrative. Some corporate leaders — like the Yuengling owner, Dick Yuengling Jr., and the Under Armour chief executive, Kevin Plank — have expressed support for the president’s business policies in interviews. But when it comes to viral marketing, the resistance is hot right now.
The trend can draw attention to activist messaging, but it can also dilute, deflect and distract from the cause, leading audiences away from the hard work of political action and civic organization and toward the easy comfort of a consumer choice.
Ben Cohen | Wall Street Journal
The potato arrived when the Mavericks were on a road trip. It still reached him after a team employee passed along a picture that Mr. Nowitzki wasn’t expecting. “I tweeted it within 10 seconds,” he said. “You don’t get a potato every day.”
He may have been the first NBA player to be sent a potato. He was not the last.
Jia Tolentino | The New Yorker
At the root of this is the American obsession with self-reliance, which makes it more acceptable to applaud an individual for working himself to death than to argue that an individual working himself to death is evidence of a flawed economic system. The contrast between the gig economy’s rhetoric (everyone is always connecting, having fun, and killing it!) and the conditions that allow it to exist (a lack of dependable employment that pays a living wage) makes this kink in our thinking especially clear. Human-interest stories about the beauty of some person standing up to the punishments of late capitalism are regular features in the news, too. I’ve come to detest the local-news set piece about the man who walks ten or eleven or twelve miles to work—a story that’s been filed from Oxford, Alabama; from Detroit, Michigan; from Plano, Texas. The story is always written as a tearjerker, with praise for the person’s uncomplaining attitude; a car is usually donated to the subject in the end. Never mentioned or even implied is the shamefulness of a job that doesn’t permit a worker to afford his own commute.
“Dole Case Illustrates Problems in Shareholder System”
Steven Davidoff Solomon | The New York Times
The share ownership system in the United States is fraying. And while its shortcomings have been largely behind the scenes, now they are going to cost some innocent shareholders money.
The problems have become apparent as a result of a Delaware court case over the $1.2 billion buyout of Dole Food in 2013. A $115.7 million settlement was reached after a lawsuit that accused David H. Murdock — Dole’s controlling shareholder and chief executive — and his lieutenants of conflicts of interest in taking the company private.
Former Dole shareholders will receive $2.74 a share — a nice chunk of change in addition to the $13.50 a share originally paid in the deal. Still, because of the shareholder ownership system, some of those Dole shareholders may not get that money.
The reason is that while shareholders think they own the shares they buy, they don’t in a sense.