By Peter Ward August 5, 2016
Olympic Billions Fails to Reach Athletes
Australian Olympic team uniforms for 2016. © Creative Commons Attribution-Share Alike 4.0
The 2016 Olympic Games begin in Rio this week, where athletes and sportspeople will compete for glory and medals – but none of them will earn anywhere near the amount of money the executives behind the games enjoy.
An article published this week by The Washington Post details the ‘Olympic Movement’, which is what its members call the entire organization of the games almost religiously.
The Olympic Movement is topped by the International Olympic Committee. The IOC is a non-profit organization, run by a volunteer president who gets an annual allowance of $251,000 and lives rent-free in a five-star hotel in Switzerland. IOC members travel first class and are paid thousands to attend the games.
Broadcast and sponsorship deals for the Winter and Summer Olympic games generate billions for the Olympic Movement every year, but by the time IOC executives, organizers, sports federations and national Olympic committees have taken their share, only a few thousand dollars of that money trickles down to the athletes.
“For members of Team USA — many of whom live meagerly off the largesse of friends and family, charity, and public assistance — the biggest tangible reward they’ll receive for making it to Rio will be two suitcases full of free Nike and Ralph Lauren clothing they are required to wear at all team events,” Post reporter Will Hobson writes.
Private Equity-Run Lives
Firefighters. ©Pixabay
How does private equity affect the average person’s life? The New York Times published an interactive article on Monday, explaining all the ways private equity firms influence everyday life.
The animated feature takes readers through an average day, pointing out all the new places private equity firms have invested their money since the 2008 recession. Private equity companies, which face fewer regulations than banks, make money by buying up businesses they consider to be underperforming, attempting to improve profits, and then eventually selling them off. The influence of private equity in the public sector has grown as a result of the financial crisis. Cities and towns struggled to pay for their basic services, and the private equity firms, sensing a bargain, stepped in.
The story starts with water. While tap water used to be exclusively provided by the government, increasingly private equity firms are investing in water supply, meaning users may have seen their bills rise.
The article highlights other services historically provided by the government, which are now managed or owned by Wall Street firms. One example is roads, which private equity firms are either buying or being paid to manage on the government’s behalf.
Other forms of transport have been affected, as well. Fortress Investment Group, a large private equity firm, is building a railway line in Florida that promises to get people from Miami to Orlando faster. The line will run 32 trains a day and make four stops between the two cities. But some towns where the train doesn’t stop have complained that they will suffer from the noise of the trains without receiving any benefits.
Emergency services are also falling into the hands of Wall Street private equity firms. Fire departments and paramedics around the country are run by private equity-owned companies. Response times for ambulance companies under private-equity control have worsened, according to the article.
Regulating Pay-Day Loans
Payday loans. © Jason Comely
The pay-day loans market, where people are able to borrow small amounts of money at sometimes exorbitantly high interest rates, is now worth nearly $40 billion annually and serves more than 19 million households per year – but it is very difficult to regulate.
Astra Taylor asks why in a piece in The New Yorker this week that addresses new rules drafted by the Consumer Financial Protection Bureau in June. The rules aim to put an end to lending practices that target low-income individuals and have been described by the CFPB as a “debt trap.”
The vast majority of payday loan customers have to take out new loans to pay for old ones, which means they quickly rack up fees and more debt. Annual interest rates can amount to between 300-2,000%, according to the article.
The new rules aim to make it more difficult for borrowers to roll over their loans, and attempt to decrease the number of times lenders can take money out of borrowers’ bank accounts without additional authorization. The rule would also require some lenders to verify that borrowers have the means to repay a loan while still providing for their own living expenses.
As new rules have been introduced in the past, payday loan companies have tweaked their offerings to exploit loopholes. Two new types of offerings: auto-title and installment loans. Auto-title loans allow people to borrow using their vehicles as collateral, while installment loans allow people to pledge their possessions as security.
One of the more popular solutions to the problem is to use post office infrastructure to provide a public banking alternative, including low-interest short-term loans. The idea was proposed by Mehrsa Baradaran, a law professor at the University of Georgia, in her book “How the Other Half Banks.” Baradaran argues that because exploitative financial services tend to respond to regulation by simply creating even more toxic services, her idea offers a more systematic way of beating payday lenders at their own game.
Technology Sector’s Mapping Battle
Volvo driverless car. © Creative Commons Attribution-Share Alike 4.0
The latest frontier for a multi-billion-dollar battle in the technology industry is a very old concept – maps. This week the Financial Times reported that Uber is preparing to pour $500 million into a mapping project that will cut its dependence on Google, and pave the way for driverless cars.
Google Maps is the dominant mapping technology currently on the market, and is used by apps such as Uber for its ride-hailing services. But Uber and others are attempting to develop their own maps as they seek to get ahead in a potentially lucrative industry of the future.
Google was an early investor in Uber, but the two companies have stopped working together closely since Uber began developing technologies for driverless cars, in direct competition with Google’s efforts in this field. Google has been developing maps for driverless cars since 2009. Autonomous vehicles require minutely detailed street imagery in order to operate safely.
Dutch company TomTom is also developing mapping for the driverless age, as are Tesla, Apple and various automakers. Modern day mapping began as a function of empire-building, and some of technology’s biggest names now have similar motivations to build global empires.
The Week’s Top Headlines
Goldman Sachs Fined $36 Million by Fed Over Leaked Documents – Jesse Hamilton, Bloomberg News
Time Inc’s revenue misses estimates as print ads dry up – Aishwarya Venugopal, Reuters
UK interest rates cut to 0.25% – BBC
India Tax-Overhaul Bill Moves Forward – Raymond Zhong, The Wall Street Journal
Atlantic City’s Trump Taj Mahal to close amid month-long strike – Jackie Wattles, CNN Money
MetLife to Reduce Costs 11%, Cut Jobs as Rates Hurt Returns – Katherine Chiglinsky, Bloomberg News
Wal-Mart in Talks to Buy Web Retailer Jet.com – Greg Bensinger, Sarah Nassauer, The Wall Street Journal
Largest US gunmaker: Hillary Clinton ‘campaigning against lawful commerce’ – Jana Kasperkevic, The Guardian
Factory orders fall less than expected – Akin Oyedele, Business Insider
