Category Archives: business

Introducing the Worst Airline in America

A business professor examines how bad the worst (and most profitable) airline in America really is.

Criticism of his company’s predacious practices doesn’t faze Baldanza. “Predatory means selling at below your cost,” the Spirit CEO told a skeptical questioner in a Reddit AMA talk last July. This is not only a novel definition, it is one that Spirit doesn’t risk illustrating. In October of last year, analysts at Morgan Stanley declared the carrier the “Most Profitable Airline in the World.” It is also among the fastest growing. Spirit launched 24 new nonstop routes in 2014 and plans another 26 for this year.

Success breeds admirers. In December, Delta announced that it was introducing five categories of service, including its answer to Spirit’s Bare Fare: Basic Economy. In addition to its precarious grammar, Basic Economy does not allow passengers to pick their seats, change their itineraries, or fly standby. The move is merely the most recent evidence that Spirit has become a trendsetter—arguably, the trendsetter—in the American airlines industry. But what trend is it exactly? Baldanza has repeatedly affirmed that Spirit is refining the art of offering affordable airfare, an effort which he qualifies as nothing less than an essentially democratic endeavor. He has a point, insofar that we live in a world where social mobility and simple mobility increasingly go hand-in-hand. Yet other low-cost carriers have long provided models of budget air travel without engendering nearly the angst of Spirit. Two of them, Jet Blue and Southwest, were even ranked number one and number two, respectively, in the 2014 American Customer Satisfaction Index survey of U.S. airlines.

No, rather than being a trailblazer in economy pricing, Spirit’s real significance is that it has come to embody one of the two guiding principles of customer service that, in capitalism, have always been contending centers of moral gravity. The first principle, embodied by Braniff, is: The Customer is Always Right. This approach assumes that commercial success depends on building strong bonds of customer loyalty. The second principle is: Caveat Emptor, or more familiarly, Buyer Beware. It assumes that, when it comes to turning a profit, preying on the ignorance and necessity of customers is not simply acceptable for private enterprise, it’s standard operating procedure.

It is a commercial truism that nothing succeeds like success, but might makes right is its cultural corollary. In the airlines industry, the success of Spirit has helped to legitimize practices that treat passengers, in the words of one consumer watchdog, like “meat in a seat.” When a carrier assumes the moral status of its customers to be different from an ATM only in respect to daily limits, monetizing the mistakes of first-time flyers can be a lucrative business. And for those passengers who return to Spirit a second, or even a third time, to say nothing of 13, they do so with a fatal sense of capitalism’s capacity to justify cruel choices, as well as with a growing cynicism of dealing with a company that regards common decency as a convenience fee. 

The contempt is mutual. A significant flight delay prevented a customer named James and his wife from attending a concert in Atlanta, the sole purpose of their trip. James emailed several of Spirit’s top executives to air his complaint. Baldanza made the mistake of hitting reply all, which is how the exchange became public: “We owe him nothing as far as I’m concerned,” Baldanza wrote in response. “Let him tell the world how bad we are,” Baldanza offered. “He’s never flown before with us anyway and will be back when we save him a penny.”

Shamelessness has certain advantages. A more succinct expression of Spirit’s credo is truly hard to imagine.

I have flown great airlines and have flown horrible ones I kind of defend Spirit Air.  It exists to get you from a to b as cheaply as possible.  For some people at some points in their life, that matters a lot. You may not like it but in the end, you chose to fly the cheapest airline in North America.  You get what you pay for.

There is no such thing as a skyscraper curse

But just in case, Saskatoon leaves Parcel Y undeveloped

Until recently, however, there had been no formal analysis of the skyscraper curse. A new paper by Mr Barr, Bruce Mizrach and Kusum Mundra (all of Rutgers) investigates Mr Lawrence’s musings in detail. They look at the building of 14 world-record-breaking skyscrapers, from New York’s Pulitzer (which opened in 1890) to the Burj Khalifa, and compare them to American GDP growth (which they see as a decent proxy for the world economy).

If, as the skyscraper curse suggests, the decision to build the biggest towers happens near the peak of the business cycle, then you could use record-breaking projects to predict the future path of GDP. However, the range of months between the announcement of the towers and the business-cycle peak is large, varying from zero to 45 months. And only seven of the 14 opened during a downward phase of the business cycle (see chart). In other words, you cannot accurately forecast a recession or financial panic by looking at either the announcement or the completion of the world’s tallest building.

With such a small sample, it is tricky to draw firm conclusions. But the paper expands the sample to 311 by looking at the tallest building completed each year in four countries (America, Canada, China and Hong Kong). The authors then compare building height to GDP per person. They find that in all countries GDP per person and skyscraper height are “cointegrated”, a fancy way of saying that the two things track each other. In other words, developers tend to be profit-maximisers, responding rationally to rising incomes (and thus increased demand for office space) by making buildings bigger. While ego and hubris afflict the skyscraper market, the authors argue, its foundations appear sound.

Westgate Books

I’ve been having some fun at Westgate Books lately.  A couple of weeks ago I wandered into the store looking for Saskatoon: A History in Photographs by Jeff O’Brien, Ruth Miller and William P. Delainey.

They didn’t have it but the staff that was helping me went to look in the warehouse.  Instead of the book I was looking for, he came up with two books, Saskatoon, the First Half Century by Don Kerr and Saskatoon, Hub City of the West: an Illustrated History by Gail McConnell.

I looked at them and took them both.  I also put my name down on a list if Saskatoon: A History in Photographs came in.  A couple of days later I got a phone call that told me that my book was in and come to pick it up.  Last Friday I went back to get it and it was the wrong book.  It was Saskatoon: A Century in Pictures by William Duerkop, John Sarjeant and William Delainey.  In hindsight I kind of wondered if there was a bit of miscommunication when I ordered Saskatoon: A Century in Pictures but I looked at this book and I realized I wanted to read it as well.  I had a blast all week looking at it.  So has Mark.

Since I am talking about books, it looks like Gail McConnell was doing Kickstarter long before Kickstarter was a thing.  The last 20 or so pages of her book is dedicated to patrons who helped pay to publish her book.  Local Saskatoon businesses sponsored the project and she does a one page profile on each company.  Who knew a history book could be so cutting edge.

While I was getting that book, another staff at Westgate Books went looking for the book in case they missed it and found me another book on the history of electric transit in Saskatoon.  I didn’t have the money on me to get it so they put that away for me.  I’ll wander by this week and get it.  Now I am curious as to what other books I will find in my brief stop at the store.

I know being in the used book business is a hard business to be in but I haven’t had as much fun shopping as I have had in Westgate Books in a very long time.  I hope that still counts for something.

Rust Belt revival: Lessons for southwest Ontario from America’s industrial heartland

What can Ontario learn from the rival happening in America’s rust belt

There has been less longing, in recent years, to be part of our own country’s version of a rust belt – the one that comprises such Southwestern Ontario cities as Windsor, London and St. Catharines, and patches of Eastern Ontario. Young people have fled in droves as the region’s employment numbers have tanked, seeing the loss of more than a quarter of manufacturing jobs in the last decade.

The plight of the region has been a driving force behind a provincial deficit that remains at over $10-billion, as well as a net loss for Ontario in the migration of people within Canada, and an alarmingly aging population.

Even with Alberta driving the national economy, the country could ill afford Ontario’s struggles; it’s hardly healthy for the largest province’s per-capita GDP to be lower than the rest of Canada’s, and it helps explain why the federal government has remained in the red.

With oil’s current slide, Canada really can’t afford for it to remain a drag – and in fact there is some expectation that Ontario will instead reclaim its old role as the leader of Canada’s economic growth. Its premier, Kathleen Wynne, recently expressed optimism that plummeting oil prices and a sinking dollar will prove a boon to manufacturing. “I don’t wish for low oil prices and a low dollar for Alberta,” she said earlier this month. “But at the same time, we want our manufacturing sector to rebound. So if that [low oil price] helps, then that’s a good thing.”

While they could indeed help in the short term, it’s difficult to imagine those volatile factors leading to the lasting revival of traditional sectors competing with consistently low-cost jurisdictions such as Mexico, China and even the American South.

For sustainable renewal, Ontario’s old industrial towns will have to work harder at reinvention – and they should be looking to some of their counterparts in the U.S. A two-week road trip through Pennsylvania, Ohio and Michigan revealed in often surprising ways how our neighbours are much further along in reinventing their most hard-hit cities, and how much we have to learn.

“The wind is at the back of these cities in a way that it wasn’t before,” says Jennifer Vey, a fellow at the Brookings Institute who studies the revitalization of old industrial centres. And although many of them will remain smaller than in their industrial heyday, the numbers bear that sentiment out. When the Manhattan Institute ranked America’s 100 biggest U.S. metropolitan areas for their economic performance in the wake of the Great Recession, mid-size Northeastern and Midwestern cities accounted for nine of the top 20.

As Mr. Piiparinen and others are quick to stress, jobs will always be the cornerstone of any regeneration. But employers themselves can be drawn to a city by affordability and infrastructure, and like to set up shop where highly skilled people want to put down roots. The renaissance of former industrial powerhouses is fuelled by attracting and keeping well-educated, entrepreneurial citizens committed to community-building and capable of creating wealth and quality of life around them.

Of course, direct comparisons between the U.S. and Canadian experience is never exact: The places I visited tended to be larger than their Canadian counterparts; and although they may have such superior amenities as major-league sports teams and world-class museums, they also suffer from some entrenched disadvantages – notably an appalling history of race relations that has left a legacy of poverty, crime and troubled public schools.

So why is it that a younger generation is finding opportunity in these Rust Belt cities (or some of them, at least; nobody sees Flint, Mich., or Gary, Ind., as models) more than in places like London or Windsor, which have some decent bones themselves? As Ontario attempts to take back Canada’s economic reins, it would do well to learn from what’s worked, and know what it’s up against.

Mayor of Glendale, host of the Super Bowl, doesn’t get a ticket to attend Super Bowl

From the New York Times

Jerry Weiers lives less than two miles from University of Phoenix Stadium, where the New England Patriots will play the Seattle Seahawks in the Super Bowl on Sunday. Weiers also happens to be the mayor of Glendale.

Yet as politicians, chief executives and tens of thousands of well-heeled fans rub shoulders that day in the stadium in Glendale, a western suburb of Phoenix, he plans to watch the game on television in his living room, because he has not been offered a ticket.

“It was on my bucket list, but it’s not going to happen,” Weiers said. “If I had my druthers, I’d rather be in the stadium. I’ve had people say that if I was a team player, I might have gone to the game. But I’m a team player for my city.”

Weiers is not shy about making that point, so he is not surprised that he was snubbed. Critics have called Weiers ungrateful because the Pro Bowl and the Super Bowl will draw thousands of visitors to his city, and some of them will visit restaurants and hotels there. Glendale will also receive lots of free advertising during game broadcasts, though a vast majority of people visiting Arizona for the Super Bowl will visit the city only on game day.

James Cassella, the mayor of East Rutherford, N.J., was also criticized after he complained last year that his borough had been overlooked even as the Super Bowl was played at MetLife Stadium there.

But the friction in Glendale is acute because the city has a reputation for betting big on sports — and paying a price for it. In the last decade, the city spent hundreds of millions of dollars to build a hockey arena for the Coyotes and a spring training complex for the Chicago White Sox and the Los Angeles Dodgers.

The hope was that the facilities would prompt residential and commercial development. But when the recession hit in 2008, the Coyotes went bankrupt, the mall next to the arena foundered, and the city was overwhelmed by its debt payments and was forced to slash public services.

“The city of Glendale is the poster child for what can go wrong” when a city invests heavily in sports, said Kevin McCarthy, the president of the Arizona Tax Research Association. “You don’t want to be building stadiums and not be able to hire police officers.”

Glendale is by no means the first city to have sports facilities turn into albatrosses. Cincinnati and Miami, to name just two, built stadiums for wealthy owners in deals that backfired.

But the scale of spending in the city of 230,000 residents is unique. According to Moody’s Investors Service, Glendale’s debt is equal to 4.9 percent of its tax base, nearly four times the national median and twice the average rate for cities in Arizona. More than 40 percent of the city’s debt is dedicated to paying off sports complexes.

What the NFL does to Super Bowl host cities is a crime.  NFL owners want to host a big party and the taxpayers pay for it.  It is insane.

As for his Super Bowl ticket?

Whether that attitude gets Weiers invited is another question. Cassella, the East Rutherford mayor, said that after stories surfaced that he, too, had been unable to get a Super Bowl ticket, Jim Irsay, the owner of the Indianapolis Colts, invited him as his guest. John Mara, an owner of the Giants, sent him a parking pass.

Introducing the 33rd Street Business Improvement District

Some really good news for Mayfair and Caswell.  From the City of Saskatoon news release.

Saskatoon City Council has recently made possible the final step in creating Saskatoon’s newest Business Improvement District (BID), which includes both sides of 33rd Street from Alberta Avenue to Avenue G.

“We are tremendously excited about establishing a BID for 33rd Street.  The business owners in this area have worked very hard to achieve this goal, and it has now become a reality.  We couldn’t be more pleased with Council’s decision,” says Nicola Tabb, representing the 33rd Street BID Organizing Committee.

At its November 24, 2014 meeting, City Council approved Bylaw No. 9235 – The 33rd Street Business Improvement District Bylaw, 2014.  A BID is an area of commercial and industrial property owners and tenants who work in partnership to create a thriving and competitive business area.

Over the past two years, a group of dedicated business owners on 33rd Street have worked toward organizing a BID, which is made up of a variety of unique businesses such as restaurants, shops, services, and a major grocery store.  The business group saw the potential in forming a BID to improve and enhance the appeal and viability of the district now and into the future.

“The creation of a BID benefits not only the 33rd Street commercial district, but the city overall,” says Alan Wallace, Director of the City of Saskatoon Planning and Development Division.  “The success of other BIDs in Saskatoon has directly resulted in thriving, attractive areas where residents and visitors alike can come to work, shop, and play.  The 33rd Street BID will certainly create the same positive impact for their commercial area.”

The 33rd Street BID will begin operations in 2015.

Great job by the businesses that reside on 33rd Street.  If they can accomplish a fraction of what has been done by the Riversdale BID; Mayfair, Caswell, and of course some businesses in the area are going to benefit greatly.

The Twilight of the Indoor Mall

The Awl looks at the death of the mall

In the nineteen fifties, people with money began leaving the cities in unprecedented numbers. They were getting married, getting jobs, starting families, and buying houses—they were moving to the suburbs. A Time Magazine article in 1954 observed: “…since 1940, almost half of the 28 million national population increase has taken place in residential suburban areas, anywhere from ten to 40 miles away from traditional big-city shopping centers. Thus, to win the new customers’ dollars, merchants will have to follow the flight to the suburbs.”

They did, and the suburban shopping mall was born.

But the original idea for the mall was not just about retail. Victor Gruen, the father of the suburban shopping mall, envisioned something much bigger. He wanted outdoor areas, banks, post offices, and supermarkets; he wanted to give the suburbs a soul, one inspired by the public squares of European cities. But that never happened. Instead malls were faceless, sprawling. Gruen was so disappointed with what malls became, he gave a speech in 1978 in which he said, “I refuse to pay alimony for those bastard developments.” Malls turned out to be the very monoliths of soullessness that Gruen had tried to overcome.

It’s not just that there are better malls than Collin Creek in the Dallas area. It’s that there are so many malls; Dallas has more shopping centers per capita than any other city in the United States. And according to some estimates, fifty percent of indoor malls nationwide will die over the next two decades—partly because some shoppers are opting for newer, better malls, but also because, as a recent Guardian article put it, “the middle class that once supported” mid-market malls is dwindling. Or, put yet another way, by retail consultant Howard Davidowitz: “What’s going on is the customers don’t have the fucking money.” Which, of course, wasn’t always the case.

As these old malls die off, they’re being replaced more and more by upscale, outdoor shopping centers—with lofts, grocery stores, offices, public meeting areas, and day cares. At least four have popped up in Dallas within the past ten years, and they’re always packed. Sixty years after Gruen’s ideas were bastardized by short-sighted developers, they are finally seeing their day. Inklings, maybe, of the suburbs finding their soul.

To counter this, maybe there is some life for malls in winter cities.

You can hardly blame the Finns for wanting to shop in giant, self-contained malls. After all, winter tends to start early in Finland (like, November) and end late (say, in April). Temperatures in Helsinki, which is at the nation’s extreme south, with a relatively mild maritime climate, rarely get above freezing in the coldest months, and have been known to go as low as -30 degrees Fahrenheit. In late December, the sun in Helsinki doesn’t rise until well after 9 a.m., sets soon after 3 p.m., and stays low in the sky — only getting to about 6.6 degrees above the horizon on December 27, for instance (compare that to New York, where it reaches an altitude of 26 degrees on the same day).

So it’s no surprise that the idea of walkable urban centers are a hard sell in Finland. Still, some in the nation are calling for Finland to rethink its love affair with the shopping mall.

Yet recently I have been shocked at how quiet Confederation Mall is (a ghost town), Lawson Heights Mall, and Midtown Plaza is when I am in there.  Then you look at how busy at the same time other places are.  Maybe we are growing tired of malls as well. 

The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare

This is an extremely depressing read in Rolling Stone about how incredibly corrupt the U.S. banks and are how comfortable the Obama administration has been in letting in continue

In September, at a speech at NYU, Holder defended the lack of prosecutions of top executives on the grounds that, in the corporate context, sometimes bad things just happen without actual people being responsible. “Responsibility remains so diffuse, and top executives so insulated,” Holder said, “that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.”

In other words, people don’t commit crimes, corporate culture commits crimes! It’s probably fortunate that Holder is quitting before he has time to apply the same logic to Mafia or terrorism cases.

Fleischmann, for her part, had begun to find the whole situation almost funny.

“I thought, ‘I swear, Eric Holder is gas-lighting me,’ ” she says.

Ask her where the crime was, and Fleischmann will point out exactly how her bosses at JPMorgan Chase committed criminal fraud: It’s right there in the documents; just hand her a highlighter and some Post-it notes – “We lawyers love flags” – and you will not find a more enthusiastic tour guide through a gazillion-page prospectus than Alayne Fleischmann.

She believes the proof is easily there for all the elements of the crime as defined by federal law – the bank made material misrepresentations, it made material omissions, and it did so willfully and with specific intent, consciously ignoring warnings from inside the firm and out.

She’d like to see something done about it, emphasizing that there still is time. The statute of limitations for wire fraud, for instance, has not run out, and she strongly believes there’s a case there, against the bank’s executives. She has no financial interest in any of this, no motive other than wanting the truth out. But more than anything, she wants it to be over.

In today’s America, someone like Fleischmann – an honest person caught for a little while in the wrong place at the wrong time – has to be willing to live through an epic ordeal just to get to the point of being able to open her mouth and tell a truth or two. And when she finally gets there, she still has to risk everything to take that last step. “The assumption they make is that I won’t blow up my life to do it,” Fleischmann says. “But they’re wrong about that.”

Good for her, and great for her that it’s finally out. But the big-picture ending still stings. She hopes otherwise, but the likely final verdict is a Pyrrhic victory.

Because after all this activity, all these court actions, all these penalties (both real and abortive), even after a fair amount of noise in the press, the target companies remain more ascendant than ever. The people who stole all those billions are still in place. And the bank is more untouchable than ever – former Debevoise & Plimpton hotshots Mary Jo White and Andrew Ceresny, who represented Chase for some of this case, have since been named to the two top jobs at the SEC. As for the bank itself, its stock price has gone up since the settlement and flirts weekly with five-year highs. They may lose the odd battle, but the markets clearly believe the banks won the war. Truth is one thing, and if the right people fight hard enough, you might get to hear it from time to time. But justice is different, and still far enough away.

 

Detroit with a Boardwalk

A great piece on Atlantic City in Politico

Four of its 12 casinos have closed in the last year, including the Revel, the newest and glitziest, despite a $260 million, taxpayer-funded gift courtesy of Gov. Chris Christie. A fifth, the Trump Taj Mahal, is on the brink. The gaming industry—proponents never call it gambling—has lost nearly 8,000 jobs since the beginning of the year and its revenue, which hit a high of $5.2 billion in 2006, is down nearly 50 percent. Add to that the city’s $65 million budget shortfall, pending layoffs of as many as 300 city workers and a tax base in free fall.

Sure, the still-sluggish U.S. economy is a factor. The loss of the East Coast gambling monopoly that Atlantic City enjoyed for nearly 20 years is another. Poor planning, lack of foresight and the failure to expand the city’s attractions beyond casinos are part of the mix. Even acts of God played a role: Though the city wasn’t devastated in 2012 by Hurricane Sandy the way other Jersey Shore towns were, tourism plunged in the immediate aftermath at a time when the city could least afford it.

But there is something else at play, something in the city’s DNA that is painfully obvious to anyone who’s lived or worked there.

Even during its halcyon days, Atlantic City was an enterprise built around blue smoke and mirrors. Think, Nucky Johnson, the inspiration for HBO’s Boardwalk Empire, and the wide-open rackets of gambling, booze and prostitution during Prohibition.

It was all about grabbing whatever you could, whenever you could from whomever you could. The city worked on a 12-week economy, Memorial Day to Labor Day. Get the tourists and vacationers into town. Sell them the beach and the Boardwalk and then send them home broke. The Miss America Pageant, held in Atlantic City for most of its years, was part of that con. It was the 1920s brainchild of a city huckster looking for a way to extend the summer season for another week. The city was born as a come-on, a fugazy.

Wonder why Atlantic City is failing? The better question, the one asked by people who know the town: Why did anyone think it would ever succeed?

How our shopping habits cause asthma in California children

Here is the story of how globalization is ruining the health of California children

The community that epitomizes the pollution warehouses can bring is Mira Loma.“Our quality of life is in the tubes,” said Gene Proctor, 73, who has lived in Mira Loma Village for 43 years. “I wish people shopping in Tucson, Arizona, in other places, I wish they could see the little kids around here, their respiratory problems.” His great-granddaughter has asthma, and his 3-year-old great-grandson, he said, “coughs like a smoker.”

Population 21,000, Mira Loma is so small and poor it doesn’t have a movie theater, a community center, or even a moderately upscale restaurant. What it does have are 90 warehouses and a whole lot of big rigs: Trucks rumble through 15,000 times every day. In just half an hour on a recent afternoon, 269 trucks passed by the big plate glass window in the front of the Farmer Boys truck stop on Etiwanda Avenue.

That is more than one every seven seconds.

Avol, the professor at the USC Keck School of Medicine, began visiting the town in the early 1990s as part of a study of air pollution and children’s health across Southern California. Back then, he said, researchers chose Mira Loma because it sits at the “end of the tailpipe” of the Los Angeles basin, meaning the prevailing winds off the Pacific Ocean blow L.A.’s infamous smog east until much of it arrives in Mira Loma. So it was rural yet had a lot of ozone and smog. Other places in the study, such as Santa Barbara and Long Beach, were picked because they were thought to boast clean air or because they were in industrial areas.

When the study began, Mira Loma residents complained to researchers about the smell of dairy cows, herds of which clustered on vast pastures and cow yards. But in 1987, Riverside county supervisors revamped the general plan for Mira Loma, clearing the way for massive warehouse development.
“In the course of a few years, the dairies disappeared,” and what had been “open pasture became streets and warehouses, lined with trucks,” Avol said. “Mira Loma turned out to be a very interesting place to study.”

The trucks made the already bad air worse, bringing in diesel particulates, very small particles that can enter the lungs and travel to tissues throughout the body. They are associated with asthma, heart disease, neurological problems, and cancer.

In Mira Loma, children were found to be growing up with stunted lungs compared with children living in places with better air. Their lungs were growing at a rate that was 1 to 1.5% slower, Avol said, so that “after their teen years, they were about 10 to 12% lower in lung function than children who had grown up in cleaner places.”

He added: “We have no information at this point that supports the idea that they ever catch up.”

Studies from other Inland Empire communities are also dire. In a neighborhood near the BNSF rail yard in the city of San Bernardino, Loma Linda University researchers found that adults have more respiratory problems, and children alarmingly high rates of asthma, even when compared with other polluted communities.

America’s underground Chinese restaurant workers.

From the New Yorker

There are more than forty thousand Chinese restaurants across the country—nearly three times the number of McDonald’s outlets. There is one in Pinedale, Wyoming (population 2,043), and one in Old Forge, New York (population 756); Belle Vernon, Pennsylvania (population 1,085), has three. Most are family operations, staffed by immigrants who pass through for a few months at a time, living in houses and apartments that have been converted into makeshift dormitories. The restaurants, connected by Chinese-run bus companies to New York, Chicago, and San Francisco, make up an underground network—supported by employment agencies, immigrant hostels, and expensive asylum lawyers—that reaches back to villages and cities in China, which are being abandoned for an ideal of American life that is not quite real.

Rain, who asked that I use his adopted English name to protect his identity, is reedy and slight, with a wide face and sloping cheekbones. He is observant, in no hurry to speak, but he is more cagey than timid. Like his boss, and like everyone else who works at the restaurant, he is primarily concerned with saving as much money as possible. He needs to pay the snakehead that got him to the U.S. and send money to his family in China. He harbors the vague suspicion that everyone around him is angling for more money, less work, or some other benefit at his expense. So, instead of conversation, Rain occupies himself with the math of a transient cook: the time it takes to clean the shrimp, the days before he can visit his girlfriend in New York, and the balance of his debts. At night, he lies on a cot in his boss’s otherwise empty living room, mulling the slow processing of his green card. During the day, if he’s feeling bold, he walks across the strip-mall parking lot to order lunch at Subway, pointing at the menu when he doesn’t know the English word for something.

“I understand why he acts like this,” Rain told me, about his boss. “He’s been working in that restaurant for almost twenty years. He goes back and forth between the restaurant and the dorm where we live. Back and forth, back and forth, every day for years.” The boss’s wife and kids are in China. “You do this kind of work for that long, and you start to lose perspective.” Rain pinched his fingers together. “Your world is this small.”

It can get kind of better

Six mornings a week, the boss picks up Rain and the other workers from their dorm and takes them to the restaurant. Their preparations have a catechistic order: first the rice cooker, then dishes for the buffet, then those for the lunch rush. Twice a week, a Chinese-run company brings supplies, and everyone gathers to butcher meat, hacking it into small pieces for quick cooking. They put on rubber gloves and pour salt and cornstarch over the meat, mix it by hand, then seal it and put it into the freezer. Chinese kitchens in the U.S. have none of the badinage that makes for good reality TV. In Rain’s kitchen, the only person who talks is the boss, complaining. When a buffet tray gets low, a waiter calls through an intercom, set at a startling volume: “We need more pineapple chicken up front!”

When Rain arrived in the U.S., he assumed that he had a fair proficiency with Chinese food. His father had prided himself on his culinary skill, and his mother was a capable cook, too. She taught him when to add spice to a dish, when to temper it with Chinese celery. Rain worked briefly as a fry cook in his village, and found that he had absorbed some of his parents’ knowledge. “Even if I’ve never cooked a dish before, I can think about it and draw from my experience,” he said. Having grown up on his father’s subtly flavored fish soups, he was surprised by American Chinese food. Americans seemed to eat like kids: they love starches and sweet things, and are frightened of meat and fish with bones in it. “Americans eat all that fried stuff,” he told me. “It’s not healthy.” Real Chinese food is more refined: “You have to spend a lot of time studying and really understanding it.”

In Maryland, most of the patrons seem to come for the buffet and eat as much as they can. Still, Rain loves watching people in the dining room. “I like seeing a clean plate,” he said. “I like it when people take the first bite of my food and they start nodding their head.” He spends hours trying to create a perfectly round Chinese omelette. “There’s a lot of kung fu in making egg foo young,” he told me. “If you have time, you’ll make it really perfect. You’ll make it bigger, better-looking, rounder. They’ll think, I spent so little money and I got such good food, and on top of that it’s good-looking. And then maybe they’ll come back.”

Rain viewed the job in Maryland as an opportunity to expand his repertoire. “In a takeout restaurant, people order the same dishes over and over,” he said. At a bigger restaurant, he could learn new dishes. And his salary—twenty-eight hundred dollars a month—was good, but not good enough to arouse concern. “If you come across a job paying three thousand, you think there must be something wrong with that restaurant,” he told me.

Rain lives with five co-workers in a red brick town house that his boss owns, part of a woodsy development near the restaurant. The house is tidy; there are three floors covered with white carpeting, and each worker has been supplied with an identical cot, a desk, a chair, and a lamp. “Some bosses don’t take care of the houses,” Rain said. “If they’re renting the house, especially, they don’t care. The rooms will actually smell.” Every restaurant worker has a story of sleeping in a dank basement or being packed in a room with five other people. Many complain of living in a house that has no washing machine, and being forced to spend their day off scrubbing their grease-spattered T-shirts in a sink.

So this is why he stays

For many restaurant workers, the decision to come to the U.S. is irrevocable. But, as the disappointments of immigrant life accrue, it can be hard not to imagine that things might be better elsewhere. Chinese-Americans, despite a good public image, suffer higher rates of poverty than the general public. Mental-health problems are an increasing concern in New York’s immigrant communities. In parts of China where the growing economy has given people more options, the allure of working in the U.S. has faded. This February, in a hostel in Queens, I met a woman who had just returned from a difficult day of job hunting. “I thought America would be heaven, and all it is is cold!” she complained. She returned to Beijing after four months. In Fuzhou, a taxi-driver told me that he was glad his attempts to emigrate had failed. “My father says that having a son in the United States is like having no son at all,” he said.

Rain tried not to dwell on returning to Maryland, where he was due in a few days. Everyone else who had worked at the restaurant when he started had been driven off by the boss’s temper. “And it’s so far away,” Rain said. If he could find a job somewhere closer, he could see Annie every weekend. As his family’s only son, Rain feels increasing pressure to send money home to his mother. But, he reasoned, everyone who comes to the U.S. should be prepared for hardship. “Everything we do, we do for the next generation,” he said, and added, “No matter what, it beats sitting around in the village.”

What happened to Motorola

Interesting article on what happens when your corporate culture goes bad.

Meanwhile, in arguably one of the worst decisions ever made by a major corporate CEO, Zander struck a deal with his Silicon Valley friend Steve Jobs, the CEO of Apple. Together their companies created a Motorola iTunes phone, the first phone connected to Apple’s music store. “We can’t think of a more natural partnership than this one with Apple,” Zander said at the time. Named the Rokr, the phone launched in the fall of 2005. Jobs, who introduced it, called it “an iPod Shuffle right on your phone.”

Zander says he believed that by working with Apple, Motorola could become cool again. But much as it had taught the Chinese to compete with it years before, Motorola was teaching one of the most creative, competitive, and consumer-savvy companies of all time how to make a phone.

Two years later, when Jobs introduced the first iPhone, Zander’s Motorola was still pushing Razrs, pumping up sales by taking new variations further and further downmarket. The result: ever-lower profit margins. One analyst calculated that the company made, on average, only about $5 per device.

Partly because of the huge layoffs of recent years, Motorola’s innovation machine was stalling. The company had long numbered among the top 10 American firms registering U.S. patents, notes analyst Joan Lappin; by 2006 it dropped to No. 34.

Zander insists that he saw the smartphone onslaught coming but that Motorola “didn’t have the DNA or the people” to understand the software involved. He also blames a less-than-speedy Motorola supplier that, he says, caused the company to miss nearly a year in the product cycle. “We should have just broken the contract” with the supplier, he says now. “The one regret I have is that I should have taken myself out of the CEO job and run the [phone] division [myself].”

Another mistake: Zander never engaged in China the way the Galvins had, leaving the details to his division heads and country managers. When China upped its networks to 3G, his managers pushed what they had—older 2G phones—at steep discounts in order to preserve market share, unbeknownst to the CEO. The collapse of the China business in 2007 left Zander dumbstruck. That year the South Korean company Samsung topped Motorola in phone sales for the first time, and it never looked back.

Here is how AOL makes money

It’s bad news for content providers because AOL makes no money from them at all.  Instead they make all of their money from old AOL dial-up subscribers who haven’t looked at their credit card statement in a very long time.

AOL beat Wall Street’s Q2 revenue and profit numbers. And, like the last few quarters, the company says that its content business — sites like Huffington Post and TechCrunch — was profitable, if you’re willing to accept a fuzzy definition of profit.

But as always, the most amazing thing about AOL’s business is the thing that drives AOL’s business: Millions of people, who started paying the company a monthly fee for Internet access more than a decade ago, who continue to pay the company a monthly fee for Internet access, even though they likely aren’t getting Internet access from AOL anymore.

AOL doesn’t break out precise earnings numbers for this business, but it gives you enough hints to understand that it’s enormously profitable. As it should be!

Tim Armstrong’s company says its subscription business generated $143 million in “Adjusted OIBDA” – its proxy for operating income — last quarter. That’s more than the $121 million in Adjusted OIBDA that the entire company generated.

Here’s how it makes that money: Getting a shrinking number of subscribers — 2.34 million this quarter, down from 3.62 million at the beginning of 2011 — to pay an increasing amount — the average AOL subscriber now pays $20.86 per month, up from around $18 a few years ago.