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China GDP growth slips to lowest level in 18 months

Wed, 2014-04-16 00:23

China’s first quarter Gross Domestic Product (GDP) growth in 2014 was 7.4 percent, the slowest China’s economy has grown in a year and a half.  Markets in Asia rose because of China’s GDP news.

“Markets are going to say: ‘oh, they hit their target, they exceeded their target, whew,’” said Patrick Chovanec, chief strategist at Silvercrest Assett Management. “Actually, I breathe a sigh of relief when their GDP number goes down," said Chovanec. "Because it makes me think: ‘maybe they’re serious.’ Maybe the declarations that quality matters more than quantity, that they can’t add to the bad debt.”

Chovanec echoes many China economists when he says sustained high GDP figures usually reflect unhealthy growth – In China’s case, that means building more infrastructure - which carries the burden of more debt.

Slower growth, however, could be an indication that China’s leadership is serious about making tough changes to its economic model. China's GDP number is currently somewhere in between – it was pulled down by housing sector problems, yet retail sales in China were up.

 

 

How marriage contributes to inequality

Tue, 2014-04-15 15:06
Thursday, May 29, 2014 - 04:00 Ralph Orlowski/Getty Images

Prior to the 1960's, it wasn't unusual for a college-educated man to marry a woman with earnings that were significantly less than his -- or a woman who earned nothing at all.

Over time, as more women entered college, a pattern of "assortative mating" began to emerge. Research shows that, beginning in the 1960s, college-educated men became more likely to marry women who were also college-educated. Income is highly correlated to education, leading to the growth of double-income households that earn more then their less-well-educated peers. Some researchers though, warn that structural factors like taxation and the shrinkage of labor unions are far more pertinent when discussing the rise of inequality in 21st century America. 

Marketplace Morning Report for Thursday May 29, 2014by Noel KingPodcast Title How marriage contributes to inequality Story Type FeatureSyndication SlackerSoundcloudStitcherSwellPMPApp Respond No

New SAT spells bonanza for test prep business

Tue, 2014-04-15 13:54

It’s going to be a late night for folks in the multi-billion dollar tutoring and test prep industry. Details of the newly revamped SAT are expected to hit the web just after midnight eastern time.

“I’m somewhat of a night owl,” says Christine Brown, executive director of K-12 and college prep products at Kaplan Test Prep. “I’ll probably be online this evening keeping an eye on things.”

From the big players like Kaplan to small mom-and-pops, test prep companies will be scrambling to overhaul their offerings in time for the new test’s debut in the spring of 2016—and hoping to capitalize on an expected surge in demand.

“When the new SAT comes up, business just goes through the roof,” says David Benjamin Gruenbaum of Ahead of the Class, a California-based tutoring company.

He expects another bump in business this time around, even though the College Board is teaming up with the nonprofit Khan Academy to offer free help.

As Marketplace has reported before, the college application process is a huge -- read: expensive -- endeavor. Standardized tests cost from registration to score reports:

Just taking the SAT costs upward of $51.00. Tack on individual subject tests required by some colleges, and you're adding another $24.50 in initial registration fees, plus $13-24 for every individual subject.

The ACT  costs $36.50. The ACT Plus Writing Test, required by some colleges, costs $52.50.

A new official test prep book is $31.99. A subscription to the full online suite runs $69.95 per year.

SAT and ACT tutoring costs an average of $125 per session. Private tutoring for the tests will range in costs by tutor. Princeton Review's 24-hour private tutoring program will set a family back $3000. One independent tutor we spoke with charges almost $550 an hour for his services. 

What's pulling up the Consumer Price Index

Tue, 2014-04-15 13:51

The Consumer Price Index (both the overall rate, and the ‘core’ rate excluding food and energy) rose 0.2 percent in March 2014, according to the Bureau of Labor Statistics. CPI is up 1.5 percent for the past 12 months. Big drivers of price rises in March were food (up 0.4 percent m/m and 1.7 percent y/y) and shelter costs, especially rent (up 0.3 percent m/m, 2.9 percent y/y). Economists were predicting a smaller rise in inflation at the consumer level.

Food prices, both at home and in restaurants, are facing multiple inflationary pressures, including a spate of bad weather—severe drought in California, deep freezes in the South—as well as higher-priced food imports. Leading the surge were meat and eggs (up 1.2 percent in March), dairy (up 1 percent) and fruits and vegetables (up 0.9 percent).

Shelter costs have been rising steadily for renters and owners. The latter face higher home prices and mortgage rates; the former face a shortage of rental units, which drives up rents. Homebuilding (especially of multifamily apartment buildings and condos) has started to pick up after coming to a virtual halt through the Recession. But it will take many years for inventory to catch up with demand, says Ethan Handelman, VP for Policy and Advocacy at the National Housing Conference. 

“The pain [of rising rents] really goes pretty broadly," says Handelman. Handelman says low-income people usually can’t afford a rent hike—they’ve got no cushion and may be thrown into homelessness. He says middle-class people aren’t seeing their paychecks rise much. “Many of them are paying more than a third—and some are paying more than half—of their income for housing."

Among major product categories, only gasoline and airfare prices have fallen in the past twelve months (Gasoline is down 4.7 percent, and airfares have fallen 4.1 percent). 

The uptick in inflation so far is not alarming most economists. Inflation rates are still well below the Federal Reserve’s target of 2 percent. 

But economist Sarah Watt House at Wells Fargo Securities says average Americans might have a different experience of inflation going forward. 

“Even if you have a moderate rate of inflation,” says Watt House, “if you’re still not getting commensurate pickup in wage growth, and that starts to eat away at real income gains, I think it could be a little bit concerning to folks.”

By Shea Huffman/Marketplace

Why farmers can't wait to pick Vidalia onions

Tue, 2014-04-15 13:03

Even if you’ve never been to south Georgia, you’ve probably tasted the region’s most famous vegetable. It’s almost time for this year’s Vidalia onions to start showing up in the produce aisle.

Some Georgia farmers are beginning to harvest the $120 million crop this week. But that's not going over well with some other growers -- or Georgia's agriculture commissioner, who wants farmers to wait to pack and ship onions until next Monday, April 21.

The dispute centers around what's best for the Vidalia brand.  To be labelled a Vidalia, onions must be certain approved varieties, and must be grown in a 20-county region in southeast Georgia. They're know for their sweetness, a product of the soil and water conditions in the region.

"Matter of fact, they only make you cry when they’re gone," says Delbert Bland, by all accounts the biggest grower of sweet onions in the nation.

Standing in a field of onions, with narrow green shoots sticking out of the ground, Bland says Vidalias grow rapidly during the final two or three weeks before harvest.

Close-up of the onion shoots. (Sarah McCammon/Marketplace)

"If you come out here tomorrow, you’ll see cracks all over this dirt," Bland says. "That’s just how fast they grow at the very end."

His company, Bland Farms, raises close to 3,000 acres of onions. He says a lot of them are ready to harvest and sell.

But the leader of Georgia’s agriculture department, Commissioner Gary Black, says farmers have been rushing onions to market to take advantage of higher prices early in the season. He says some grocers are complaining to him about quality.

"Quality," Black says, "meaning taste, shelf life, appearance."

As guardian of the Vidalia trademark, Black says he wants to make sure onions aren’t in stores before they’re ready. So he set April 21 as the official packing date. That means farmers who harvest and pack early could be fined as much as $1,000 per illicit onion bag.

"In most growers’ minds, that’s been the earliest date that a real, true reliable Vidalia onion could be put into the marketplace," Black says.

But harvesting too late carries its own risks, says George Boyhan, a vegetable specialist with the University of Georgia Extension. 

"In my professional opinion, that’s insane," he says.

Boyhan started working with Vidalia farmers in the late 1990s. He says harvesting too late can expose the crop to diseases.

"Onions we’d harvest in the second or third week in May, we always had problems with those bacterial diseases," Boyhan says.

But many farmers support a later start to the season. Bo Herndon is chairman of a growers’ advisory panel that helped choose the April 21 pack date. Herndon says he won’t harvest until early May - even though some of his competitors are starting earlier.

"I think it’s all about the dollar," Herndon says. "And if they pick right now they’re not gonna be ready. They’re gonna be green and whoever gets them isn’t gonna be happy with them."

Bland, meanwhile, has pushed back, taking the agricultural commissioner to court. He says it's not good business to wait to harvest - even if other farmers would like him to.

A road sign for Bland's farm. (Sarah McCammon/Marketplace)

"They don't want someone to go to market before they do," Bland says. "We're all onion growers, and yet we all compete with each other or market share."

 This year, that competition isn’t just playing out in the grocery aisle, but also in Georgia courtrooms.

What's left of Yahoo without Alibaba

Tue, 2014-04-15 13:00

Everyone who knows anything about Yahoo knows the company is doing well mainly because it owns a big chunk of another company, Alibaba. The Chinese internet giant is expected to go public by the end of the year. The word is, it'll be valued anywhere between $100 billion and $150 billion dollars. And Yahoo owns 24 percent of Alibaba.  

Yahoo! released earnings Tuesday. Sameet Sinha, an analyst at B. Riley, says Alibaba is the reason Yahoo’s stock has doubled since CEO Marrissa Mayer took over two years ago. 

"Investors obviously clamour for the stock of hot private companies before they go public. So right now, Yahoo is a way for them to own Alibaba stock," Sinha said.  

Brett Harris, an analyst at Gabelli and company, says:  "So let’s just start with what we know, we know they have $4 billion dollars in cash, so we can take that out of the $34 billion we’re starting with," Harris said. 

The $34 billion is what Yahoo is worth. After the cash, subtract another $9 billion for Yahoo’s stake in Yahoo Japan. That brings us to $21 billion, which is the value of Yahoo’s share in Alibaba. That's assuming its values at $150 billion dollars when it goes public.

 

Shea Huffman/Marketplace

 

"So, we’re getting the U.S. business for free. Essentially,  the stock is giving no valuation to the U.S. business," he said. 

Harris says while Yahoo’s core business is in decline, the company still generates about $1.5 billion in cash a year.

Colin Gillis is an analyst at BGC and he says, when Alibaba goes public, Yahoo will have to sell 10 percent of its share.

"So this is the question you have this tremendous chunk of cash. This is your chance to fix the business if you can use it effectively and wisely," Gillis said. 

He said the pressure for Marissa Mayer to fix Yahoo will be greater than ever. The company has barely moved the needle on revenues. Gillis said once Alibaba goes public, pressure on Meyer to manage a turnaround will be even greater than ever.

Beer: Saving a town from drought

Tue, 2014-04-15 12:36

There's been a bit of rain, but the West Coast is still recovering from a drought of historic proportions. It's been so bad, in fact, that the state of California came out with a list not too long ago of cities that are just flat out going to run out of water. The town of Cloverdale just north of San Francisco in Sonoma County got that diagnosis back in January. State officials said it had just 100 days left, but the Bear Republic Brewing Company, which calls Cloverdale home, stepped up with a plan. It would loan the city $466,133,000 to dig two new wells.

Bear Republic owner Ricardo Norgrove says the future of the city's water supply is not just good for his business, it's critical to the town he calls home: "I'm fifth generation Sonoma County. I want to be here. So for this to last and to be a generational brewery, meaning I can pass it onto my kids and my kids' kids, we need to be setting the foundation for today. That's what we're trying to do."

Norgrove isn't just helping find more water, he's cutting back in his business. He says Bear Republic accounts for 1.5 percent of the city's water use, but that's much less than other microbreweries, which soak up between 6 and 8 million gallons a year.

"The industry average today is somewhere between 6.5 and 7 gallons of water utilized to make one gallon of beer. We're running about 3.5 gallons of beer to one gallon of beer produced, so we're really conserving water in all types of operations in the brewery. It's just a culture now within the brewery."

Norgrove says his company has considered moving somewhere without the water woes, but he believes the problem will eventually be one his business would have to grapple with anywhere. 

"This is not just a local problem, this is a global problem. We do see other folks moving to communities and other states that have less regulations, but eventually it's going to catch up to everybody."

If the drought has you thirsty, Ricardo Norgrove recommended his ten favorite beers to wet your whistle:

1) Beer Republic Brewing Co.'s Racer 5 IPA (of course)

2) Anchor Brewing Liberty Ale

3) Sierra Nevada Celebration Ale

4) Hoegaarden Wit

5) Firestone Walker Wookey Jack

6) Pabst Blue Ribbon (The ol' classic)

7) Old Style

8) Negra Modelo

9) Ballast Point Sculpin IPA

10) Anderson Valley Brewing Company High Rollers Wheat

We're paying more to pay taxes

Tue, 2014-04-15 11:37

Courtesy of the Wall Street Journal:

Inflation is riding at just about 1.5 percent, at an annualized rate, as Marketplace's Mitchell Hartman reported.

Buried just slightly deeper in the data, though was this: Inflation in the tax preparation and accounting fees category is up 5.1 percent.

So not only are we paying taxes this April 15, we're paying more to pay them.  

Ukraine's economy, as felt on the street

Tue, 2014-04-15 11:08

Ukraine launched a "special operation" on Tuesday to push pro-Russian militants out of an airbase they had occuppied in the eastern part of that country. In Kiev, the interim government declared a victory over rebels by saying the air base had been "liberated". But there was no sign of militants.

"You drive along normal roads, the traffic police keep an eye on everybody's speed, you get to town squares [and] you see people playing in playgrounds, buses running on time, so that's all on one side," said the BBC's James Reynolds in Donetsk. "But then when you see some of the occupations, you see men walking around with sticks, balaclavas, ski masks. You see protesters inside Ukrainian government buildings, taken over by Russian protesters, stocking up on food, on macaroni."

In Washington, the administration said it was not considering sending arms to Ukraine but that it was "seriously considering" additional sanctions. 

"Ukraine needs help from abroad, that's what the interim government knows, and indeed, where Ukraine should get that economic help from abroad is what precipitated this crisis back in November," Reynolds says. "Essentially the problem from Ukraine is that its got to choose help and it has to either choose, 'do you get the bulk of that help from Russia ... or do you go to the EU and the United States?'"

Russian stock market shares fell about three percent.

Born to fly

Tue, 2014-04-15 10:51

From the Marketplace Datebook, here's a look at what's coming up April 16, 2014:

  • In Washington, the Commerce Department reports on construction of new homes for March.
  • The Federal Reserve releases its latest Beige Book summary of commentary on current economic conditions.
  • "Protecting Your Personal Data: How Law Enforcement Works With the Private Sector to Prevent Cybercrime": The name of a House field hearing being held in Philadelphia.
  • Actor Charlie Chaplin was born on April 16, 1889.
  • And aviation pioneer Wilbur Wright was born on April 16, 1867. He and his younger brother, Orville, took flight 36 years later. 

The next time you 'Google' it may be via drone

Tue, 2014-04-15 07:34

Millions of people in developing countries still don’t have access to the Internet. Google would like to change that, which is why it’s acquired Titan Aerospace, manufacturer of solar-powered drones. 

The world's most famous search engine plans to send the drones up to hover high in the atmosphere, beaming the internet down to earth. More people could 'google', but will these people like having drones peering down at them? 

We asked Patrick Egan, editor of the drone-focused sUAS News website, about privacy concerns: 

“I don’t think in this case it’s going to be a privacy issue. They’re going to fly at really high altitudes.  They probably won’t even have cameras on them.”

Google’s already experimented with aerial hot spots, using balloons, but drones are expected to be more reliable. 

“The winds at altitude can be pretty strong. So, the more controllability you have the better,” says Kurt Barnhart, director of the Applied Aviation Research Center at Kansas State University.

Plus, Titan says its drones can stay aloft for years, without refueling.

Ever find it difficult to talk to your boss - or your boss's boss?

Tue, 2014-04-15 07:07

Talking to your boss, or even worse –your boss’s boss, can be one of the most awkward parts of office life. Chris Colin and Rob Baedeker are here to help with this excerpt from their new book, “What to Talk About: On a Plane, at a Cocktail Party, in a Tiny Elevator with your Boss’s Boss”. 

The doom of the unknown co-worker:
You should know this guy’s name by now -- he’s in sales and you’re in marketing.  You run into him every two weeks. He looks like a Scott, but he’s not a Scott.

What to do?

Visit the Social Security Administration web site -- they have a list of the most popular birth names by year. Guess the unknown co-worker’s age, study the top names for those years, and be ready to play the odds during your next encounter.

The Interview:
Most of us try to be too original during job interviews. Behold:

BOSS: We’re looking for a manager who can build our core competencies.

PROSPECTIVE NEW HIRE: I’m a Trebuchet m’lady, a War Wolf. I will hurl flaming orbs of competency at your charge d’affairs.

BOSS: …We'll be in touch.

To succeed in an interview, you’ve got to use the gift that’s given you -- listen to what the interviewer is saying and repeat her language.

BOSS: We’re looking for a manager who can build our core competencies.

PROSPECTIVE NEW HIRE: I hear you saying you want someone who can really build on your core competencies.

BOSS: You’re hired!

It's that easy – you're now on your way to a brown-belt in the talking arts. With your new mastery of conversation, you'll cruise through the next office holiday party, conference call, and trip to the water cooler!

PODCAST: Google's drones

Tue, 2014-04-15 06:35

Millions of people in developing countries still don’t have access to the Internet. Google would like to change that, which is why it’s acquired Titan Aerospace, manufacturer of solar-powered drones. The world's most famous search engine plans to send the drones up to hover high in the atmosphere, beaming the internet down to earth.

Heartbleed continues to dominate the news and scare the daylights out of all of us. The massive data flaw has thrown a huge curveball to millions of companies and the collective fix is a big, expensive deal.

The deadline to file income taxes is April 15. For many businesses, deductions on things like labor and rent help to keep tax bills low. But that's not the case for marijuana dispensaries in states that have legalized medical or recreational use. Many licensed marijuana business owners file taxes. But because of an Internal Revenue Service code known as 280E—originally written for illegal drug traffickers—they can't write off retail expenses associated with the business.

IRS budget problems help tax evaders

Tue, 2014-04-15 02:22

The IRS says it will audit fewer people this year than it has in many years. And, in telling us that, it's walking a fine line.

It wants you to know it's tough on tax cheats. It also wants you to know that it doesn't have enough money to be as tough on tax cheats.

"We hear a lot about people going to prison for tax fraud, but at the same time, the IRS needs budgetary resources," says Joshua Blank, faculty director of the Graduate Tax Program at New York University School of Law.

With a smaller budget and staff, the agency says fewer than one percent of returns will be audited this year. The IRS hopes that number will get a hostile Congress to increase its budget.

"A less enforced tax system rewards tax evaders, which in turn hurts everyone else," says Joel Slemrod, a professor at the University of Michigan's Ross School of Business.

Fewer audits means the IRS is also losing the deterrent effects of what happens when someone tells all his friends about his experience, saying something like, "And, here's what they caught me on. They caught me on home office deduction, or they caught me on something else, and I had to write a big check. Geeze, I hope you don't have to go through that," says former IRS acting commissioner Kevin Brown, now with PriceWaterhouseCoopers.

The IRS hopes it can simultaneously scare you, and scare Congress into giving it more money.

It's Tax Day! Now for pot dealers, too

Tue, 2014-04-15 02:16

The deadline to file income taxes is April 15. For many businesses, deductions on things like labor and rent help to keep tax bills low. But that's not the case for marijuana dispensaries in states that have legalized medical or recreational use.

It's frustrating for business owners like Erica Freeman, who runs Choice Organics near Fort Collins, Colo. She's marking a big milestone this month. After voters legalized recreational pot in the state, Freeman spent thousands opening a new shop right next to her medical dispensary.

"...a whole separate video surveillance and security systems—and all of those kinds of things," she says.

Freeman and many other licensed marijuana business owners file taxes. But because of an Internal Revenue Service code known as 280E—originally written for illegal drug traffickers—they can't write off retail expenses associated with the business.

"I mean, all of these things are necessary for the front of the house, and therefore it's really not eligible to be written off," she says.

Recent rulings from tax court have allowed businesses to write off costs associated with growing marijuana. But the income tax rate for pot shops in Colorado can be as high as 70 percent. That's according to Jim Marty, a tax accountant who works with dozens of dispensaries across the state.

"Depending on where they're at it can be catastrophic," says Marty, who adds that the situation is particularly onerous for dispensaries just starting out.

"If they have losses—real, cash-basis losses—it can be a shock to them to find out that they owe taxes in years when they haven't made any money."

In California, 280E is even a problem for nonprofit dispensaries. Aaron Smith with the National Cannabis Industry Association says stores that sell medical marijuana can't get tax-exempt status from the IRS. That means they're filing taxes as for-profit businesses.

"The cruel irony behind this is that illegal drug dealers almost never even file income taxes," he says. "So this provision really only affects the legitimate state-licensed marijuana providers."

The Association recently hired a full-time lobbyist to push reform in Congress. In Colorado, a solution could come from the courts. Arguments on one dispensary's tax case are expected to be heard later this year.

The GM hearings could be just for show

Tue, 2014-04-15 01:06

General Motors CEO Mary Barra has been getting a lot of heat from Congress for the troubles at GM. In a blog post yesterday, Barra promised "accountability" from senior leadership when it comes to dealing with future safety problems at the company.

We ask: just who is accountable? Marketplace regular Alan Sloan, senior editor-at-large at Fortune magazine has been watching Barra, who's only been in the job since January 15th,  try to weather the storm which originated years ago. Sloan says Congress is villanizing the wrong person.

Click on the audio player above to hear more. 

Bleeding out

Tue, 2014-04-15 01:00

Heartbleed continues to dominate the news and scare the daylights out of all of us. The massive data flaw has thrown a huge curveball to millions of companies and the collective fix is a big, expensive deal. 

"When you add up all these IT hours as well as physical costs, you know, buying additional software for security reasons for these companies. I have to believe that the cost will probably be in the billions," says tech consultant Tim Bajarin.

Another blow that's a bit harder to calculate: the PR cost

"You first need to fix the issue. Plug the hole and then secondly, you need to re-instill confidence in your user base so that Heartbleed doesn’t continue to drain you, even after the fact," says data consultant Will Riegel. He says many consumers have scaled back online shopping and other transactions and coaxing them back will require outreach.

Riegel says it will take months before we can start to assess the full economic impact of Heartbleed.

Neel Mehta, Bug Bounty Hunter

Heartbleed is going to cost a lot of people a lot of money. But even before IT departments everywhere kicked into overdrive to install patches, there were already big bucks at play courtesy of a bug bounty paid to the man who discovered Heartbleed, Google security researcher Neel Mehta. For his discovery, he received $15,000, which he charitably donated to the Freedom of the Press Foundation, a group that was in the midst of crowd-funding for new encryption tools designed specifically for journalists. Though, some estimate that with the scope of security flaws like Heartbleed, future bounties could yield prizes closer to $100,000 - $500,000.

In the meantime, if you know an IT guy/gal burning the midnight oil, go ahead and buy them this shirt.

Survey results: What's your type?

Mon, 2014-04-14 13:55

The break-up of a graphic design duo has resulted in a lawsuit of $20 million – over fonts. Tobias Frere-Jones and Jonathan Hoefler worked together for 15 years to create some of the most famous and ubiquitous fonts around– used by GQ, Martha Stewart, the New York Jets and Saturday Night Live. They won awards for their typefaces - before the relationship turned sour.

When this story broke, we found out one thing for sure: Wow, Marketplace fans care about fonts. Here are the results of our font survey:

You like...

Sally Herships/Marketplace

And you really, really don't like...

Sally Herships/Marketplace

Kraft hits refresh button on vintage brands

Mon, 2014-04-14 13:41

Maxwell House coffee gets a makeover today. The Kraft brand is unveiling a new logo, new packaging, and, bringing back its “good to the last drop” tagline – to remind consumers how good it is, it says. But is it a good idea to tinker with a classic brand’s identity?

An idea that might have seemed great a few decades ago-- we're talking about Quaker Oats’ old version of Aunt Jemima--might not seem so hot just a little bit later. But even when brands need to make big changes, they need to step carefully, says Dave Reibstein, a professor of marketing at the Wharton School of Business.

“In general, what it is you want to do is to be very, very, very consistent with your brand,” Reibstein says, especially to avoid the worst case scenario. “I walk down the aisle and I don’t even see it."

Tom Meyvis, a professor of marketing at the Stern School of Business at New York University, cites Brawny paper towel's sucessful handling of an image problem the brand had with its illustrated spokeman.

“The Wall Street Journal described him as a 70s porn star," Meyvis says.

But, Meyvis notes, that brand handled its image right–by taking baby steps. It slowly shrank the problem mustache, and character, until they were replaced by one a little more up to date. But Matt Egan, senior director of strategy for Siegel+Gale, a brand consultancy based in New York, says even though Kraft says its coffee has a brand new campaign, relying on its old slogan, "Good to the last drop," may not do the trick.

"When a food company resorts to talking about goodness," he says, "that’s always a sign they don’t have much of a real story to tell."

Global warming: 15 years to change things...

Mon, 2014-04-14 13:38

The latest U.N. climate change report says that if the world doesn't do some really tough, expensive things over the next 15 years, the costs of climate change may spiral out of control. Some of those things involve technology that isn't available yet, such as removing carbon dioxide from the atmosphere.

Others involve things countries have done a terrible job of so far— like burning less coal, oil and gas. Scientists have been saying carbon-dioxide emissions have to be reduced for decades, but emissions actually went up in the early twenty-first century. Some people deny global warming is caused by human activitity, but what holds the rest of the world back? A lot. 

Robert Gifford, a psychologist at the University of Victoria, studies what he calls the “dragons of inaction” on climate change. So far, he says he’s counted more than 30. 

"Certainly one that would be in the top ten is 'lack of perceived behavioral control,'" he says. "Which in plain English is: What can I do about it? I’m only one person out of 7 and a half billion people?”

Another one is fatalism. "If people think the game is already over, then why should I do anything?" Gifford says. He thinks "apocalyptic" predictions by scientists can actually make that problem worse. 

"I’ve called this the policy problem from hell," says Anthony Leiserowitz, who runs the Yale Project on Climate Change Communication.  "You almost couldn’t design a problem that in some ways is a worse fit for our psychology as well as our institutional decision making."

Psychologically, he says, it doesn’t help that carbon dioxide itself is invisible. It's hard to fight what you can’t see.

Climate change also seems too far away to focus on. "Even if they accept that climate change is real," he says, "many people still think it’s distant in time—that the impacts won’t be felt for a generation or more. Or distant in space -- that this is about polar bears."

Institutionally, he thinks politicians have more practical reasons for thinking short-term: The next election cycle. "Many of them aren't going to be around to see the ultimate effect of the decisions they make today," he says.  

"What makes this even harder is that countries need to coordinate," says David Victor, the author of Global Warming Gridlock, who helped put together the U.N. report's introductory chapter. "No big emitter is going to control its emissions aggressively and bear that cost unless it sees other major emitters in the world doing something similar."

The U.N. climate report outlines steps to hold global warming to 2 degrees Celsius. Victor says he expects the world to “blow past” that target.

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