Tag Archives: economics

The Dead Man Fund

(Lambert/Archive Photos)

Jack El-Hai | Longreads | November 2017 | 7 minutes (1,672 words)

In 1989, Morningstar, Inc., an advisory service, issued a strongly worded and unusual recommendation to its clients who had placed money with a firm then called the Steadman Funds (later known as the Ameritor Funds). “We urge you to cut your losses and get out,” Morningstar counseled. Doubtless, some investors heeded this advice. Many couldn’t, though, because they were dead.

A few years ago, the fate of Ameritor— nicknamed “The Dead Man Fund” — and its unfortunate investors, became entangled with the history of my house. An envelope had landed in our mailbox containing a check in the amount of $10.32 made out to one Anna Mae Heilman. She was nobody we knew, but the name rang familiar to me for some reason. With the check was a letter explaining that the money was a final settlement of Heilman’s investment of 171 shares in the Ameritor Security Trust mutual fund, which had closed down.

It didn’t take long for me to remember how I knew Heilman’s name. When we bought the house, we acquired its abstract, a thick and crumbling packet of legal documents that chronicled more than a century of transactions involving the property. Heilman’s name was in there. She and her husband had owned our house for several years ending in 1971.

Heilman’s tiny payout at a rate of only six cents per share seemed strange, so I began looking into the history of Ameritor and the circumstances of the Heilmans’ sale of our house. I then learned of two terrible misfortunes that afflicted one family. Read more…

What We’re Not Talking About When We Talk About Tiny House Hunters

Image by JD Hancock via Flickr (CC BY 2.0)

In Curbed, the writer that we all love to love, Roxane Gay, turns her critical eye on the show we all love to hate, House Huntersspecifically, Tiny House Hunters.

The episode that really pushed me over the edge was one where a single father was looking to move into a tiny home with his tweenage daughter. Frankly, it was a bit repulsive and unseemly, but the father tried to make this bizarre choice palatable by sharing that he and his daughter wanted to use the money they would save traveling around the world. Having traveled a fair amount, I was, as I watched this episode unfold, quite certain there is no wonder, anywhere in the world, that would merit this kind of domestic sacrifice. Alas, the choice was not mine.

Tiny House Hunters isn’t just about judging strangers’ choices (although it is partly about that). It’s also a mechanism for papering over dismal American economic realities.

Often, though, couples and families want to downsize to save money. They say they need or want less space, but what goes unsaid is that they likely can no longer (if they ever could) afford the mortgage on their traditional home. Or they live in San Francisco or Los Angeles, cities where the median price of a home is more than a half-million dollars and well out of reach for a lot of folks.

There is no shame in any of this, none at all, but when we talk about the American dream, we never talk about what that dream costs. We never talk about how so many Americans are one financial crisis away from losing their savings or their homes. And we don’t talk about how the American dream should not be grounded in material things like large homes or fancy cars rather than, say, single-payer health care, subsidized child care, or a robust Social Security system.

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TFW You’re Training the Worker That Will Take Your Job Away

Getty Images

At The New York Times, Farah Stockman profiles manufacturing employee Shannon Mulcahy during her last year at Rexnord, a bearing plant in Indianapolis, Indiana that moved to Mexico for cheaper labor. As Mulcahy trains the Mexican men who will eventually take her job, Stockman posits that American workers are not only losing their livelihoods but also their identities — the pride and self-esteem accrued from the specialized manufacturing knowledge accumulated over decades at work.

Men had come and gone. Houses had been bought and lost. But the job had always been there. For 17 years. Until now.

Shannon and her co-workers had gotten the news back in October: The factory was closing. Ball bearings would move to a new plant in Monterrey, Mexico. Roller bearings would go to McAllen, Tex. About 300 workers would lose their jobs.

The bosses called it “a business decision.”

To Shannon, it felt like a backhand across the face.

For months, Shannon kept working as the factory shut down around her. She struggled with straightforward questions: Should she train workers from Mexico for extra pay or refuse? Should she go back to school or find a new job, no matter what it paid?

And she was forced to confront a more sweeping question that nags at many of the 67 percent of adults in this country who do not have a four-year college degree: What does my future look like in the new American economy?

She had always been proud of her job. When she ran into friends from high school, she told them she worked at Link-Belt, conscious of the envy it incited. Shannon was a legacy hire. Her uncle had worked at the factory since before she was born. Her sense of self-worth was tied to the brand. The bearings she built were top of the line.

She held onto that. “I still care,” she said last March. “I don’t know why. It becomes an identity. A part of you.”

For workers like Shannon, the factory’s final months were a time of reinvention and retribution. Of praying that Donald Trump would save them and arguing about why he didn’t. Of squabbling over whether to train their Mexican replacements or shun them. Of vowing that one day, the corporate bosses would realize that making bearings isn’t as easy as they thought.

Shannon could have given Tad the bare minimum of training, answering a few questions and collecting her pay. But just as Stan Settles had passed on his knowledge to Shannon, Shannon trained Tad as if he were one of her own.

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Multi-Level Marketing’s Feminine Mystique: A Reading List

Women attend a Tupperware party, 1955. (Archive Photos/Getty Images)

The commodification of female friendship began in the living room, often with a small party or a conversation between neighbors. Then the goods came out: cosmetics, vitamins, jewelry. The multi-level marketing scheme was a suburban phenomenon, a way for homemakers to earn some money among friends. In the 1960s and 70s, Mary Kay, the pink-hued cosmetics company, dominated the market; in the 1980s, it was the Pampered Chef, with its kitchen tools and cookbooks; in the 2010s it’s LuLaRoe, a clothing company with coveted patterned leggings that are sold primarily through social media.

Today, multi-level marketing is booming online, with entire transactions taking place in the comments sections of Facebook posts, and aspiring entrepreneurs dispensing tips on YouTube about unloading their inventory. The products may vary, but the tactics don’t. Products are displayed, promises made. And whether a woman calls herself a consultant, a retailer, a partner, or distributor, there’s always a thinly veiled sense of desperation beneath the pitch.

Women who participate in MLM companies make a hefty up-front investment. To profit, they’ll need to recruit others to invest, and once drawn in it can be difficult to get out. Take a look at any website for an MLM company, and you’ll see sparkling promises of wealth for women. They don’t just sell products; they sell fantasies of empowerment, control, and financial freedom. Thanks to the stories below, it’s easy to understand how and why these companies target women, and what happens when they do.

1. “How a Single Mom Created a Plastic Food-Storage Empire” (Jen Doll, Mental Floss, June 2017)

It’s easy to associate Tupperware with beehive hairdos and grimy leftovers, but the company—pushed to success by social networker Brownie Wise—set the stage for today’s MLM culture. Doll tells the story of how Wise grew the company from a food storage novelty to an unstoppable national phenomenon. Why did hosting home parties as a Tupperware consultant appeal to so many women? For many, it meant a chance to work again, after the loss of employment after World War II.

Most of Wise’s Tupperware recruits fit neatly into the stereotypical role of a proper housewife. But, in reality, they surreptitiously represented a new kind of female empowerment. During World War II, many women had no choice but to enter the workforce. At its end, many of them had no choice but to leave it. Suddenly, selling Tupperware at parties allowed women to straddle both worlds. They were employed, yet they didn’t appear to challenge their husbands’ authority or the status quo. This pioneering entrepreneurial model allowed them to inhabit a workforce outside of the one the hustling salesman inhabited, and, in many cases, to do even better than he did. And that power relied specifically on a network of female friends and neighbors.

The parties weren’t just a way for women to keep occupied—it was a way they could contribute to their family’s bottom line. Most women who worked outside the home had low-paying jobs in fields like light manufacturing, retail, clerical work, and health and education. The money—committed dealers could bring in $100 or more per week—was a revelation. The opportunity for success was so great that the husbands of some Tupperware ladies left their own jobs to work with their wives.

2. “The Pink Pyramid Scheme” (Virginia Sole-Smith, Harper’s, August 2012)

For decades, Mary Kay has sold a two-sided promise to women: You can buy cosmetics for youth, but for actual power, you should sell them. When Sole-Smith became a consultant for the cosmetic brand, then nearly fifty years in business, she witnessed the revival-style tactics used consultants to recruit women. She also saw a flip side of the brand for women who found both friendship and financial peril in their new roles.

Lynne resigned from her directorship soon after, but she stayed on as a consultant. She had over $15,000 in credit card debt and a basement full of unsold products inching closer to their expiration dates. It took three more years to fully extract herself, paint over the pink wall, and get rid of the products. In 2011, her husband filed for divorce, citing as one of the reasons their “different attitudes towards money.” “He meant the whole Mary Kay thing,” Lynne said. “We just never got past it.” But it wasn’t for lack of trying. When her husband first began to talk about leaving, Lynne cleared every last Mary Kay product out of the house, selling much of it at a loss and throwing the rest in the trash. “I didn’t want him to see so much as a bottle of lotion and be reminded,” she said. “I didn’t want to be reminded either.”

But she hasn’t left Mary Kay behind entirely. The consultant who debuted with only two guests at Lynne’s party remains one of her best friends and is her son’s godmother. Lynne’s new career in real estate allows her to apply her sales knowledge, and the commission checks are at least bigger.

“Oh gosh, we were all so happy,” Lynne said as we looked at a picture of women in sequined cocktail dresses and layers of Mary Kay makeup smiling into the camera, their arms slung around one another. “I guess I didn’t know who I would be without Mary Kay to define me.”

3. “How Essential Oils Became the Cure for Our Age of Anxiety,” (Rachel Monroe, The New Yorker, October 2017)

When Monroe embroiled herself in the wild world of MLMs that sell essential oils, she found that it meant more than money for its sellers. Part of the appeal of grassroots-style selling came from consultants’ belief in their products. And when it comes to essential oils, it could feel like a matter of life or death.

Lara distributed a handout that listed various ailments and their oil treatments: eucalyptus for bronchitis, lavender for third-degree burns, cypress for mononucleosis, rosemary for respiratory syncytial virus. Diffusion “kills microorganisms in the air which helps stop the spread of sickness,” the pamphlet read. Oils “repair our bodies at a cellular level so when you are not sure which oils to use, don’t be afraid to use several oils and the body will gain a myriad of benefits.” Lara told the people in the room that doTerra had oils that were “very antiviral” and could knock out bronchitis in twenty-four hours. She shared essential-oil success stories—her migraines gone, her friend’s rheumatoid arthritis reversing, a colleague’s mother’s cancer in remission. A blond woman at the back of the room raised her hand. “Cancer?” she said, sounding both skeptical and hopeful. She explained that her sister-in-law had recently been treated for breast cancer, and was taking a pill to prevent its recurrence, but the side effects were terrible. The blond woman was hoping for a more natural solution.

“There is an oil for that,” Lara said cautiously. “There is some research. It is an option. It would not have those side effects.”

4. “The Truth Behind Rodan + Fields (And Its Takeover of Your Facebook Feed),” (Lauren Lipton, Allure, September 2015)

Women can become involved in MLMs for both friendship and financial gain. But what happens when everyone you know is involved in a sales scheme? After all, there are only so many showcases and special sales a person can attend, and for some, it might feel like an entire friend group has morphed into eager saleswomen. As Lipton learned, not everyone is thrilled about those endless invitations and events.

There’s a fine line between inspiring and annoying, and not all Rodan + Fields consultants tread it well. In fact, if you sell Rodan + Fields and think your friends might be dodging you, they probably are. “This is the suburban scourge,” says Rachael Pavlik, a Houston mother and the blogger behind rachriot.com, who says she goes out of her way to avoid anyone trying to sell her anything. “At first I would buy all of their stuff because I was kind of guilted into it….What is that? That’s not friendship.”

Pavlik is more outspoken than most. Most women we spoke to can’t bring themselves to hurt their friends’ feelings, so they roll their eyes privately, secretly blocking Rodan + Fields consultants who clutter their Facebook feeds and deftly fending off clumsy come-ons. One East Coast mother says she’s been approached multiple times by everyone from the woman who does her brows to childhood acquaintances she hasn’t seen for decades. Last year, an old high-school friend asked her to lunch — for reasons that soon became all too clear: “It wasn’t long into the conversation before I realized that this was a thinly veiled attempt to make me join her team,” she says. “She’s not trying to be friends with me; she’s trying to build her empire.”

5. “Multilevel-Marketing Companies Like LuLaRoe Are Forcing People Into Debt and Psychological Crisis” (Alden Wicker, Quartz, August 2017)

Wicker’s deep dive into the business practices of retailer LuLaRoe finds women grappling with everything from disappointment to financial disaster. On its website, LuLaRoe hypes not a company, but a movement—one that offers retailers a happy ending complete with balance, flexibility, and personal fulfillment. However, Wicker finds that the ending can happen quite differently for most consultants.

When consultants wake up to the fact they’ve been hoodwinked, many don’t warn their friends to stay away. That’s because if you speak out against any of LuLaRoe’s rules or mishaps, the community could publicly shame and harass you for being negative. “I can’t believe you call yourself a Christian,” one retailer wrote to someone trying to sound the alarm. “Where is the Jesus in you? I have to block you due to your constant-gross-delusional-uneducated opinions of LLR.” If you reveal you are struggling to make sales, you might be told to stop playing the victim, that you’re not putting in enough effort, to be more enthusiastic, and, of course, to buy more inventory.

“Success as a retailer results only from successful sales efforts, which require hard work, dedication, diligence, leadership, and perseverance,” says a LuLaRoe spokesperson. “Success will depend upon how effectively these qualities are exercised. As with any business, results will vary. In addition to the factors above, retailer success is influenced by the individual capacity, business experience, expertise, and motivation of the retailer.”

In other words, it’s not the system that’s broken — you’re just not trying hard enough.

The Arsonist Was Like a Ghost

An abandoned house in Accomack County, Virginia. Beginning in 2012, dozens of fires were set in the area, where the poverty rate is around 20 percent. (Bonnie Jo Mount/The Washington Post via Getty Images)

Monica Hesse | American Fire: Love, Arson, and Life in a Vanishing Land | LiverightAugust 2017 | 17 minutes (4,100 words) 

In the middle of the night on December 15, 2012, Lois Gomez sat up in bed. She thought she heard something. She listened. Nothing. Maybe she was wrong, maybe she hadn’t heard anything. She went to the kitchen for a drink of water. It was two or three in the morning, only a few hours before her shift at Perdue and her husband’s shift at Tyson. Now she definitely heard something. A banging on her front door — which in itself was odd; friends and family knew they always used the side entrance — and someone yelling: “Your garage is on fire! I’ve already called 911!”

She stood frozen in the kitchen trying to process the information. Christmas lights, she thought. Her outdoor Christmas lights were halfway up, but she and her husband had recently decided to visit his family in Texas for the holiday and she’d been trying to figure out whether to bother with the rest of the decorations, which were meanwhile stored in the family’s detached garage, which was now on fire. Christmas lights, along with the expensive music equipment for her son’s rock band.

It had been a rough couple of months. For one thing, she wasn’t getting along with her next-door neighbors. She’d been close with the woman who’d owned that house before, Susan Bundick. They brought each other dinner sometimes, or stood and chatted in their backyards. But one Sunday afternoon, Lois was outside emptying the aboveground backyard pool to close out the summer season, and she saw the police were at Susan’s house. They told Lois her neighbor had died. Now, Susan’s daughter lived in her mother’s old house and things weren’t as pleasant. Tonya was fine, kept to herself, but Lois had a few run-ins with Tonya’s new boyfriend, a squirrelly redheaded guy whose name she didn’t know. He’d done a few little things, like dumping a bunch of branches on their lawn instead of disposing of them like he was supposed to. Once he’d accused her of making racial slurs against Tonya’s kids. The accusation was ridiculous. Lois’s husband was from Mexico, and her four grandchildren were partly black.

She’d also been having nightmares about the arsonist. In one dream, she went into her kitchen late at night and saw someone racing through the yard, an intruder wearing dark-colored sweat pants and a hoodie. “What are you doing?” she called. The figure turned and looked at her but she still couldn’t see his face, and he eventually disappeared behind her detached garage. She woke up and realized it wasn’t real.

This night wasn’t a dream, though.

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Percy Ross Wants to Give You Money!

Illustration by Matt Lubchansky

Jacqui Shine | Longreads | July 201723 minutes (5,700 words) 

Percy Ross was a trash-bag tycoon, a serial entrepreneur who had made millions in plastics in the 1960s and relished spending it. But in 1977 he staged an astonishing reinvention. Ross would become a philanthropist — and not just any philanthropist, but one for people like him: a “blue-collar millionaire,” as he put it. He’d give money away the way he’d gotten it, in bills small and large, and always when it was needed the most. He’d portion out his millions in cash, in checks, accompanied by the satisfying clink of a silver dollar. Percy Ross would become, as the newspapers called him, “America’s Rich Uncle.”

Ross always said — boasted, really — that he’d made and lost two fortunes. It was his third business that stuck, the one in plastics. Ross had been a fur auctioneer in the 1930s — he met the woman who eventually became his wife at a craps table in Las Vegas while in the company of Clark Gable — and an organizer of farm-equipment auctions. In 1958, the story went, Ross borrowed $30,000 to invest in a failing plastics company. He knew nothing about the industry, and within five years he’d filed for bankruptcy — but with hard work, the help of his family, and a little innovation, he eventually turned the company around. Poly-Tech, as he renamed it, made plastic garbage bags. He liked to tell people he sold Poly-Tech for $8 million on the same day Neil Armstrong walked on the moon: July 20, 1969.

The story of the trash-bag turnaround was part of Percy Ross’s pitch-perfect rags-to-riches tale. Born in 1916 in Laurium, Michigan, a small town on the state’s copper-rich Upper Peninsula, Ross was the son of immigrants, desperately poor Jews from Russia and present-day Latvia. His father was a junk dealer who worked constantly, and so did his three sons. By the age of 6, Percy had begun making weekly rounds through the neighborhood with a wagon of farm eggs his father had bought for 12 cents a dozen, which he then sold to neighbors at a 3-cent markup. He sold magazines. He started his own business rebuilding car batteries. He would have shined shoes at the country club if they hadn’t rejected him for being too poor and too Jewish.

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Tell Me What Donut You Prefer, and I’ll Tell You Who You Are

freshly glazed donuts on a conveyer belt
Photo by Scott Ableman via Flickr (CC BY-NC-ND 2.0)

Have you ever thought really hard about donuts? Like, 7,000 words hard? Keaton Lamle did, The Bitter Southerner published it, and it’s very much worth the reading — an extended meditation on food, America, capitalism, regional identity, and the future. Turns out we have a lot to learn from donuts.

Lamle, who can be forgiven for reserving his most effusive gushing for Krispy Kreme rather than Dunkin’ by the accident of his Southern birth, gets a bit more personal when reminiscing about the famous Krispy Kreme “Hot Now” sign. And I’ll give him that; a freshly-fried donut is a thing of beauty and joy forever.

They are very much not all over Atlanta, or Birmingham, or Charlotte. Despite expansion around the turn of the 21st century, you’ve still got to go out of your way to find Krispy Kreme stores. In fact, it’s almost like they find you. You’re driving down Atlanta’s magnolia-draped Ponce De Leon Avenue, and red, cursive neon, evocative of a ’50s downtown movie marquee, unexpectedly beckons. Majestic Ks that trail to the end of each word — somehow without connoting the South’s tortured history with such plosive consonants and alliterative acronyms — calling you to come.

The inevitable dilemma comes when you spot that anachronistic “Hot Now” neon sign ablaze. The promise you’ve made to yourself or spouse or kids: that if it’s hot, we stop. But shit, that’ll mean pulling a U-turn across three lanes of traffic. That’ll mean turning around and fighting to get in the parking lot. Is anybody in this car even hungry? Can’t we let it slide this one time? What inviolable principle are we even abiding by with this “it’s hot, we must stop” directive, anyway?

For me, the prospect of wearing the paper sailor’s hats on Instagram usually ends the argument.

You’ll still pry my Dunkin’ Donuts medium iced latte and Bavarian cream donut out of my cold, powdered-sugar-covered, New Jersey-born hands, but Lamle’s piece is piped full of food for thought. (Zing!)

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You Just Can’t Find a Good Deal in Kreuzlingen These Days

Photo by Glen Scott (CC BY-NC 2.0)

In Roads & Kingdoms, Milan Gagnon tells the stories of Kreuzlingen, Switzerland, and Konstanz, Germany — each weekend the residents of the Swiss city pour into the German one in search of good deals and good exchange rates, leaving one city full of empty storefronts and the other full of empty souls.

When Switzerland’s Saturday rush comes, Grübel will often head in the other direction. To save cash, she’ll pack a lunch and a thermos full of tea, and take the train right through Kreuzlingen, to the nature that is Switzerland’s most affordable draw. She cross-country skis the forests surrounding Kreuzlingen when there’s snow and hikes them when there’s not. Occasionally, she’ll splurge on a coffee in town and find someone from Konstanz doing the pouring, earning entry-level francs to spend like the Swiss back home. “The servers are German, and the cafés are empty,” Grübel says, “because everyone Swiss is in Konstanz.”

In addition to the opportunities for bucolic jaunts and barista jobs, there may be more and more reasons for Germans to spend time in Kreuzlingen again. “Money wins in Konstanz,” says Benni Kreiblich, a 33-year-old native of the city. “Unfortunately,” he adds, “there’s no value placed on quality and culture.”

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I’d Gladly Pay You Tomorrow For a Hamburger Today, If Only My Debit Card Weren’t Frozen

US dollars and euros, paper bills
Photo by Mark Hodson via Flickr (CC BY 2.0)

Brett Scott explores the emerging cashless economy in Aeon magazine. Is ubiquitous digital payment the harbinger of a glorious future, or a smokescreen for powerful interests that want to control (and undermine) choice and capitalism?

This is no longer a deal between me and the seller. I am now dealing with a complex of unknown third parties, profit-seeking money-passers who stand between us to act as facilitators of the money flow, but also as potential gatekeepers. If a gatekeeper doesn’t want to do business with me, I can’t do business with the seller. They have the ability to jam, monitor or place conditions upon that glorious core ritual of capitalism – the transfer of money for the transfer of goods. This innocuous device exudes mechanical indifference, reporting only to invisible bosses far away, running invisible algorithms in invisible black boxes that don’t like me.

If we are going to refer to bank payments as ‘cashless’, we should then refer to cash payments as ‘bankless’. Because that’s what cash is, and right now it is the only thing standing between us and a completely privatised money system.

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Mill? We Don’t Need No Stinking Mill. We’ve Got a Marathon!

Photo by Michelle Weber (CC BY 2.0)

In Down East magazine, Kathryn Miles profiles marathon runner Gary Allen, founder of the Millinocket Marathon in Millinocket, Maine. The marathon has been an engine of revitalization in a downtrodden town where the local mill, once the town’s focal point and economic driver, closed almost ten years ago.

Like most of Allen’s schemes, this one started on a whim. Around Thanksgiving last year, he read yet another newspaper article characterizing Millinocket’s economic woes. “I couldn’t unread it,” he explains. “It’s not like I set out to find a little town to help. It’s more like a little town found me.”

There’ve been a lot of those articles since the Great Northern paper mill closed here in 2008. In the years since, Millinocket has become a symbol for the failure of America’s manufacturing monotowns.

That doesn’t sit well with locals here. And it rubbed Allen the wrong way last fall too. Millinocket needed a boost, sure. But not a handout. And definitely not more maudlin press. So Gary Allen decided to do what Gary Allen does best: he organized an impromptu marathon.

In the spirit of Burning Man, this race was open to all and charged no entry fee. Instead, Allen suggested that participants take the money they would have spent on registration and spend it in Millinocket. He didn’t advertise any of this except to post it to his Facebook page. Nonetheless, about 50 of his friends agreed to show up for what may well have been America’s first flash-mob marathon.

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