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Episcopal Ministries to the Aging Inc. to Pay $1.3 Million for Allegedly Causing Submission of Claims for Unreasonable or Unnecessary Rehabilitation Therapy at Skilled Nursing Facility

Episcopal Ministries to the Aging Inc., a Maryland not-for-profit corporation that owns skilled nursing facilities, has agreed to pay $1.3 million to the government for submitting false claims to Medicare for unreasonable or unnecessary rehabilitation therapy purportedly provided by RehabCare Group East Inc., a subsidiary of Kindred Healthcare Inc.



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Ambulance Company Manager Pleads Guilty to $5.5 Million Medicare Fraud Conspiracy

The general manager of a Southern California ambulance company pleaded guilty yesterday in Los Angeles to conspiracy to commit Medicare fraud, conspiracy to obstruct a Medicare audit, and making materially false statements to law enforcement officers.



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Florida Home Health Care Company and Its Owners Agree to Resolve False Claims Act Allegations for $1.65 Million

A Plus Home Health Care Inc. and its owners, Tracy Nemerofsky and her father, Stephen Nemerofsky, have agreed to pay $1.65 million to the United States to settle allegations that A Plus paid spouses of referring physicians for sham marketing positions in order to induce patient referrals.



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Justice Department and State Partners Secure $1.375 Billion Settlement with S&P for Defrauding Investors in the Lead Up to the Financial Crisis

Attorney General Eric Holder announced today that the Department of Justice and 19 states and the District of Columbia have entered into a $1.375 billion settlement agreement with the rating agency Standard &s Financial Services LLC, along with its parent corporation McGraw Hill Financial Inc., to resolve allegations that S&s 2013 lawsuit against S& true credit risks. Other allegations assert that S&s business relationships with the investment banks that issued the securities.



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Service Members to Receive Over $123 Million for Unlawful Foreclosures Under the Servicemembers Civil Relief Act

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Former Owner of Empire Towers Pleads Guilty for Fraudulent $7 Million Bond Scheme and Filing False Tax Return

Misled More Than 50 Individual Investors Who Bought Bonds

A former Queenstown, Maryland, resident pleaded guilty today to securities fraud and filing a false tax return



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Justice Department Reaches $470 Million Joint State-Federal Settlement with HSBC to Address Mortgage Loan Origination, Servicing and Foreclosure Abuses

The Justice Department, the Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau, along with 49 state attorneys general and the District of Columbia’s attorney general, have reached a $470 million agreement with HSBC Bank USA NA and its affiliates (collectively, HSBC) to address mortgage origination, servicing and foreclosure abuses



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Morgan Stanley Agrees to Pay $2.6 Billion Penalty in Connection with Its Sale of Residential Mortgage Backed Securities

The Justice Department today announced that Morgan Stanley will pay a $2



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APEC Faces USD 2.1 Trillion in Output Loss to COVID-19

Regional cooperation key to containment and rebound




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Lonza and Moderna shoot for billion COVID-19 vaccine doses

Moderna announces it has partnered with Lonza with the aim of producing one billion doses annually.




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The TSA Hoarded 1.3 Million N95 Masks Even Though Airports Are Empty and It Doesn’t Need Them

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

The Transportation Security Administration ignored guidance from the Department of Homeland Security and internal pushback from two agency officials when it stockpiled more than 1.3 million N95 respirator masks instead of donating them to hospitals, internal records and interviews show.

Internal concerns were raised in early April, when COVID-19 cases were growing by the thousands and hospitals in some parts of the country were overrun and desperate for supplies. The agency held on to the cache of life-saving masks even as the number of people coming through U.S. airports dropped by 95% and the TSA instructed many employees to stay home to avoid being infected. Meanwhile, other federal agencies, including the Department of Veterans Affairs’ vast network of hospitals, scrounged for the personal protective equipment that doctors and nurses are dying without.

“We don’t need them. People who are in an infectious environment need them. Nobody is flying,” Charles Kielkopf, a TSA attorney based in Columbus, Ohio, told ProPublica. “You don’t take things for yourself. It’s the wrong thing to do.”

Kielkopf shared a copy of an official whistleblower complaint he filed Monday. In it, he alleges the agency had engaged in gross mismanagement that represented a “substantial and specific danger to public health.”

TSA has not required its screeners to wear N95s, which require fitting and training to use properly, and internal memos show most are using surgical masks, which are more widely available but are less effective and lack the same filtering ability.

Kielkopf raised a red flag last month about the TSA’s plan to store N95 respirators it had been given by Customs and Border Protection, which found more than a million old but usable masks in an Indiana warehouse. Both agencies are overseen by DHS. That shipment added to 116,000 N95s the TSA had left over from the swine flu pandemic of 2009, a TSA memo shows. While both stockpiles were older than the manufacturer’s recommended shelf life, the Centers for Disease Control and Prevention said that expired masks remain effective against spreading the virus.

Kielkopf and another TSA official in Minnesota suggested that the agency send its N95 masks to hospitals in early April, records show. Instead, TSA quietly stored many of them in its warehouse near the Dallas-Fort Worth airport and dispersed the rest to empty airports across the nation.

“We need to reserve medical masks for health care workers,” Kielkopf said, “not TSA workers who are behind an X-ray machine.”

The Number of Travelers Passing TSA Checkpoints Has Dropped to Historic Lows

Source: Transportation Security Administration

The TSA didn’t provide answers to several detailed questions sent by ProPublica, but spokesman Mark Howell said in an email that the agency’s “highest priority is to ensure the health, safety and security of our workforce and the American people.”

“With the support of CBP and DHS, in April, TSA was able to ensure a sufficient supply of N95 masks would be available for any officer who chose to wear one and completed the requisite training,” the statement read.

“We are continuing to acquire additional personal protective equipment for our employees to ensure both their and the traveling public’s health and safety based on our current staffing needs, and as supplies become available,” TSA said.

A review of federal contracting data shows the agency has mostly made modest purchases such as a $231,000 purchase for gallons of disinfectant, but has not reported any new purchases of N95s.

An internal TSA memo last month said the surplus of N95s was expected to last the agency about 30 days, but the same memo noted that estimate did not account for the drastic decline in security officers working at airports. ProPublica asked how long the masks were actually going to last, accounting for the decreased staffing levels.

“While we cannot provide details on staffing, passenger throughput and corresponding operations have certainly decreased,” the TSA statement said.

The trade journal Government Executive reported this week that internal TSA records showed most employee schedules have been “sharply abbreviated,” while an additional 8,000 security screeners are on paid leave over concerns that they could be exposed to the virus.

More than 500 TSA employees have tested positive for COVID-19, the agency reported, and five have died.

The CDC has not recommended the use of N95s by TSA staff, records show, but that doesn’t mean workers who have or want to wear them can’t.

In one April 7 email, DHS Deputy Under Secretary for Management Randolph D. Alles sent guidance to TSA officials, urging them to wear homemade cloth face coverings and maintain social distancing. But the N95s, which block 95% of particles that can transmit the virus, were in notoriously short supply and should be “reserved” for health care workers.

“The CDC has given us very good information about how to make masks that are suitable, so that we can continue to reserve medical masks and PPE for healthcare workers battling the COVID-19 pandemic,” Alles wrote.

But two days later, on April 9, Cliff Van Leuven, TSA’s federal security director in Minnesota, followed up and asked why he had been sent thousands of masks despite that guidance.

“I just received 9,000 N-95 masks that I have very little to no need for,” he said in the email, which was first reported by Government Executive. “We’ve made N95s available to our staff and, of the officers who wear masks, they overwhelmingly prefer the surgical masks we just received after a couple months on back order.”

Minnesota Gov. Tim Walz had publicly asked that anyone who had PPE donate their surplus to the state’s Department of Health, Van Leuven said in the email to senior TSA staff.

“I’d like to donate the bulk of our current stock of N-95s in support of that need and keep a small supply on hand,” he wrote, adding the Minneapolis-St. Paul International Airport had screened fewer than 1,500 people the previous day, about a third of which were airport staff.

Van Leuven declined to comment, referring questions to a TSA spokesperson.

Later that day, Kielkopf forwarded the concerns to TSA attorneys in other field offices, trying to get some attention to the stockpile he felt would be better used at hospitals.

“I am sharing with you some issues we are having with n95 masks in Minnesota,” he wrote. “And the tension between our increasing supply of n95 masks at our TSA airport locations and the dire need for them in the medical community.”

Weeks went by, and finally, on May 1, Kielkopf wrote: “I have been very disappointed in our position to keep tens of thousands of n95 masks while healthcare workers who have a medical requirement for the masks — because of their contact with infected people — still go without.”

DHS did not respond to ProPublica’s questions about why it transferred N95 masks to TSA despite a top official saying they should be reserved for healthcare workers.

“So now the TSA position is that we desperately need these masks for the protection of our people,” Kielkopf said. “At the same time, most of our people aren’t even working. It’s a complete 180 that doesn’t make any sense.”

Do you have access to information about federal contracts that should be public? Email david.mcswane@propublica.org. Here’s how to send tips and documents to ProPublica securely.





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After Alexion buyout, ex-Achillion nephrology lead jumps ship to Gemini Therapeutics

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U.N. nearly triples its coronavirus fundraising goal to $6.7 billion

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Unemployment hits 14.7% in April. How long before 20.5 million lost jobs come back?

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A politically connected firm gets an $800-million mask contract with California. Then it falls apart

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Supply chain headache? Hundreds of millions of syringes will be needed to vaccinate U.S.

The world's largest manufacturer says there's not enough capacity to quickly ramp up production to those levels.




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Apple to produce millions of AirPods in Vietnam amid pandemic




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Daily briefing: More than 1 billion people face unbearable temperatures within 50 years




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70 million people can’t afford to wait for their stimulus funds to come in a paper check

April 1 is no joke for the millions of Americans who are economically suffering in this recession and waiting for their promised stimulus payment from the recently enacted CARES Act. The Treasury Secretary optimistically projects that payments could start in 3 weeks for select families. Yet, by my calculations, roughly 70 million American families are…

       




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The global poverty gap is falling. Billionaires could help close it.


This week, the richest business leaders and investors from around the world will gather in Davos, Switzerland, for the annual meeting of the World Economic Forum. In keeping with tradition, a small portion of the agenda will be devoted to global development and the plight of people living at the other end of the global income distribution.

Philanthropy is one way of linking the fortunes of these disparate communities. What if some of the mega-rich could be persuaded to redistribute their wealth to the extreme poor?

This question may feel hackneyed, but it deserves a fresh hearing in light of a dramatic reduction in the global poverty gap over the past several years (Figure 1). The theoretical cost of transfers required to lift all poor people’s income up to the global poverty line of $1.90 a day stood at approximately $80 billion [1] in 2015, down from over $300 billion in 1980. (Values expressed here are in 2015 market dollars.)

Figure 1. Official foreign aid now exceeds the annual cost of closing the poverty gap

Source: Authors’ calculations based on OECD, World Bank

This reduction can be unpacked into two parts. The first is a steep decline in the number of people living below the global poverty line. This is increasingly recognized as one of the defining features of the era. A U.N. goal to halve the poverty rate in the developing world between 1990 and 2015 was nearly achieved twice over. The second and lesser-known factor is the shrinking average distance of the world’s poor from the poverty line. In 1980, the mean daily income of those living below $1.90 was $1.09. In 2012 it was 25 cents higher at $1.34. (Values expressed here in 2011 purchasing power parity dollars.)   

Despite this good news, global poverty still demands attention. Hundreds of millions of people continue to suffer this most acute form of deprivation. In several countries, the prospects for ending poverty over the next generation, in line with a recently endorsed successor U.N. goal, appear challenging at best.

Figure 1 illustrates that in 2006, global aid flows exceeded the cost of the global poverty gap for the first time. This suggests that the elimination of extreme poverty should be possible simply through a more efficient allocation of aid. However, this confuses foreign aid’s goals and functions. The bulk of official foreign aid is used in the provision of public goods, such as physical infrastructure and strengthening institutions. Only 2 percent is directed to social payments and their administration. If the elimination of extreme poverty is to be achieved through targeted transfers, it depends on sources other than foreign aid.

The main source of transfers to the poor is welfare programs run and financed by developing countries themselves. These social safety nets have emerged as an increasingly prominent instrument in the toolkit of developing economy governments. Eighty-three percent of developing economies employ unconditional cash transfer programs, although many are small in scale. Several countries are in the process of building the apparatus for more accurate targeting and authentication through the assembly of beneficiary registries and the rolling out of identity programs. In at least 10 developing countries, social safety nets have succeeded in establishing a social floor by lifting all those people under the poverty line up above the threshold. In the vast majority, however, safety nets are insufficiently targeted or generous for that purpose, reflecting not only resource constraints, but also political choices that can be resistant to change.

A complementary approach is to consider the role of private mechanisms and wealth. NGOs were among the original pioneers of cash transfers in the developing world. More recently, the NGO GiveDirectly has designed a compelling new method of charitable giving that sends money directly to the poor using digital monitoring and payment technology. Its approach has received strong endorsements from independent charity assessors and has been validated by impact evaluations. Yet the scale of its existing donations remains tiny relative to the global poverty gap.

This is where Davos’s global elite could come into play: What difference could a philanthropic donation from the world’s richest people make?

Comparing billionaire wealth with the global poverty gap

To explore this question, we begin by identifying those developing countries that are home to a least one billionaire. (Our analysis is restricted to billionaires by data, not by the potential largesse of the world’s multi-millionaires. We focus our attention on billionaires in the developing world given the traditional focus of philanthropy on domestic causes.) Let’s assume that the richest billionaire in each country agrees to give away half of his or her current wealth among his or her fellow citizens, disbursed evenly over the next 15 years, roughly in accordance with the Giving Pledge promoted by Bill Gates. That money would be used exclusively to finance transfers to poor people based on their current distance from the poverty line. Transfers would be sustained at the same level for the full 15-year period with the aim of providing a modicum of income security that might allow beneficiaries to sustainably escape from poverty by 2030.

Table 1 summarizes the key results. In each of three countries—Colombia, Georgia, and Swaziland—a single individual's act of philanthropy could be sufficient to end extreme poverty with immediate effect. Swaziland is an especially striking case as it is among the world’s poorest countries with 41 percent of its population living under the poverty line. In Brazil, Peru, and the Philippines, poverty could be more than halved, or eliminated altogether if the billionaires could be convinced to match Mark Zuckerberg’s example and increase their donation to 99 percent of their wealth.

Table 1. The potential impact on poverty of individual billionaire giving pledges

Country Cost per year to close the poverty gap Wealthiest billionaire Net worth Poverty rate pre-transfer Poverty rate post-transfer
Nigeria $12,070 m A. Dangote $14,700 m 45% 43%
Swaziland $85 m N. Kirsh $3,900 m 41% 0%
Tanzania $1,645 m M. Dewji $1,250 m 40% 39%
Uganda $1,035 m S. Ruparelia $1,100 m 33% 32%
Angola $1,277 m I. dos Santos $3,300 m 28% 25%
S. Africa $1,068 m J. Rupert $7,400 m 18% 14%
Philippines $648 m H. Sy $14,200 m 12% 3%
Nepal $144 m B. Chaudhary $1,300 m 12% 8%
India $5,839 m M. Ambani $21,000 m 12% 10%
Guatemala $215 m M. Lopez Estrada $1,000 m 12% 10%
Venezuela $870 m G. Cisneros $3,600 m 11% 9%
Georgia $40 m B. Ivanishvili $5,200 m 10% 0%
Indonesia $845 m R. Budi Hartono $9,000 m 9% 6%
Colombia $444 m L. C. Sarmiento $13,400 m 7% 0%
Brazil $1,223 m J. P. Lemann $25,000 m 4% 1%
Peru $95 m C. Rodriguez-Pastor $2,100 m 3% 1%
China $3,072 m W. Jianlin $24,200 m 3% 2%

Source: Authors’ calculations based on Forbes, International Monetary Fund, PovcalNet, and the World Bank. Poverty rates post-transfer calculated based on average distance of the poor from the poverty line.  

In other countries—Nigeria, Tanzania, Uganda, and Angola—the potential impact on poverty is only modest. A number of factors account for differences between countries, but two factors that penalize African countries are especially noteworthy. First, the depth of poverty in Africa remains high, with 15 percent of the population living on less than $1.00 a day; and second, Africa has relatively high prices compared to other poor regions, which means more dollars are required to deliver the same amount of welfare.  

For those nations that have more than one billionaire, an alternative scenario is that the country’s club of billionaires makes the pledge together and combines resources to tackle domestic poverty. This would end poverty in China, India, and Indonesia—countries that rank first, second, and fifth globally in terms of the absolute size of their poor populations. The last two columns of Table 2 describe the results.

Table 2. The potential impact on poverty of collective billionaire giving pledges

Country Cost per year of closing the poverty gap No. of Billionnaires Net Worth Poverty rate pre-transfer Poverty rate post-transfer
Nigeria $12,070 m 5 $22,900 m 45% 42%
Swaziland $85 m 1 $3,900 m 41% 0%
Tanzania $1,645 m 2 $2,250 m 40% 38%
Uganda $1,035 m 1 $1,100 m 33% 32%
Angola $1,277 m 1 $3,300 m 28% 25%
S. Africa $1,068 m 7 $28,550 m 18% 2%
Philippines $648 m 11 $51,300 m 12% 0%
Nepal $144 m 1 $1,300 m 12% 8%
India $5,839 m 90 $294,250 m 12% 0%
Guatemala $215 m 1 $1,000 m 12% 10%
Venezuela $870 m 3 $9,600 m 11% 7%
Georgia $40 m 1 $5,200 m 10% 0%
Indonesia $845 m 23 $56,150 m 9% 0%
Colombia $444 m 3 $18,500 m 7% 0%
Brazil $1,223 m 54 $181,050 m 4% 0%
Peru $95 m 6 $8,750 m 3% 0%
China $3,072 m 213 $564,700 m 3% 0%

Source: Authors’ calculations based on Forbes, IMF, PovcalNet, and the World Bank. Poverty rates post-transfer calculated based on average distance of the poor from the poverty line.

This exercise is of course laden with simplifying assumptions. [2] It is intended to provoke discussion, not to provide definitive figures. Moreover, it is open to debate whether transfers represent the most cost-effective way of sustainably ending poverty, the extent to which transfers ought to be targeted, the efficacy of building private transfer programs alongside public safety nets, and whether cash transfers represent the most appropriate use of billionaires’ philanthropy.  

What is less contestable is that a falling global poverty gap presents an opportunity for more systematic efforts for poverty reduction. This raises the question: How low does the poverty gap have to fall before we explicitly design programs to bring the remaining poor above the poverty line? We would argue that we are already beyond this point, not least in countries that remain a long way from ending poverty. Were a billionaire at Davos to commit to using his or her wealth in this fashion, it could trigger a powerful demonstration effect of innovative solutions—not just for other billionaires, but for countries that are currently at risk of being left behind.


[1] The cost of the global poverty gap in 2015 is an overestimate compared with the World Bank’s tentative poverty estimate for the same year. This is due to a different treatment of Nigeria. For this exercise, we rely on data from the 2009/10 Harmonized Nigeria Living Standards Survey reported in PovcalNet, despite its well-documented problems, whereas the Bank draws on the 2010/11 General Household Survey.

[2] Simplifying assumptions include: zero administrative costs in identifying the poor, assessing their income, and administering payments with no leakages, or no portion of those costs being borne by billionaires; the efficacy of administering miniscule transfers to those who stand on the margin of the poverty line; and no change in the cost of closing the poverty gap in a country over time, whether due to population growth, an increase or decrease in poverty, or a change in prices relative to the dollar.   

Authors

     
 
 




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The organized millions online


Editor’s note: In this post, the third in a series drawing from Fergus Hanson's new book, "Internet Wars: The Struggle for Power in the 21st Century," Hanson analyzes the growing trend of online petitioning influencing policymaking, but argues the caveat that the nature of online campaigning is not always conducive to good policy.

Last federal election, the Obama campaign spent nearly $1 billion to get 66 million voters out to support the president’s victory.

So as the 2016 election approaches, large lists of politically-minded individuals have special value. And it just so happens in the last five years some very large lists have emerged.

These lists are controlled by online citizen-aggregation sites. The largest, Change.org, now reports more than 100 million users, but others are also huge: Avaaz reports 42 million and Care2 32 million.

So far, the operators of these sites have not directed their members in the same way as some of their overseas counterparts.

Two of the largest U.S. organizations—Change and Care2—are for-profit B-corporations and sell access to their membership, often for a hefty fee. They rely almost exclusively on petitions. This is probably driven by commercial motivations to grow membership with a view to selling access to it. But petitions are limited in their ability to effect change, especially as politicians become desensitized to them.

In other parts of the world, the model has evolved to become much more overtly political. A good example is one of the first movers in the space, GetUp!, an Australian-based group. It uses crowd sourcing to fund its secretariat, raising over $5.7 million from tens of thousands of micro donations averaging $11.50 each. It uses these funds to run successful high court challenges and other publicity (and pressure) generating stunts. It stations members at polling booths during elections and uses its members’ shareholder rights to hijack corporate meetings.

This trend is one of the radical new ways the Internet has allowed the masses to aggregate their voice in order to exert influence on decision makers. Suddenly, people are able to do this on a regular basis, outside formal structures like trade unions and political parties.

It also provides great influence to the individuals leading the campaigning sites. They can exercise this by shaping which campaigns have most prominence on a site and allocating in-house resources to help the campaigns they like with editing of material, generating media, and behind the scenes lobbying.

There is a now a long list of examples where these organizations have exerted significant influence on corporations and politicians, but in many ways they are still undergoing significant evolution.

The shift to a broader repertoire than simple petitions and more hands-on political engagement seems likely.

There is also a potential evolution underway in their politics. Most campaigning sites are openly progressive in orientation, but this is changing. In late 2012, Change.org controversially shifted its policy to allow advertising from non-progressively aligned groups. Conservative groups have also started to mobilize online, a prominent example being the Heritage Foundation in the United States, which now has a significant online presence.

Whatever their political leanings, the policy reality of this new force is messy.

The nature of online campaigning is not always conducive to good policy because the groups lack institutional policymaking expertise and often launch campaigns off the backs of crises, allowing little time to think through consequences.

Ironically, these people-power sites also face a question of legitimacy. Three hundred very vocal people with a clever campaign can sometimes drive change that the majority wouldn’t necessarily support. The nature of the Internet can also occasionally make it hard to distinguish between the views of local nationals and foreign citizens voicing their concerns from abroad. Finally, there is the question of the legitimacy of the heads of these organizations who can be unelected business people with out-sized influence.

This is not the only way the Internet is empowering citizens and disrupting global power dynamics. Internet Wars looks at three messy, but intriguing ways citizen power is reshaping the world.

Read the first part in the series, “Big issues facing the Internet: Economic espionage,” and the second, "Waging (cyber)war in peacetime."

Authors

Image Source: © STRINGER Belgium / Reuters
       




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Can Billionaires Buy Elections?


The news that Charles and David Koch and their network of conservative activists plan to spend $889 million on the 2016 elections has sent shockwaves throughout the political landscape. Publicized this week at a California gathering hosted by the business group Freedom Partners, this declaration of financial war raises the question of whether billionaires and their allies can buy elections.

As I note in my Brookings Institution Press book Billionaires: Reflections on the Upper Crust, the answer in 2012 clearly was no. A few billionaires devoted several hundred million dollars seeking to defeat President Barack Obama yet lost. Republicans nominated a candidate who was easy to caricature as an out-of-touch plutocrat who did not share the values of ordinary Americans. The President was successful in using that stereotype to mobilize voters, expand the electorate, and appeal to basic fairness on the part of the general public.

Yet 2014 was a different story. Conservative billionaires were far more successful in helping Republicans regain control of the Senate, boost their House numbers, and increase their domination over governorships and state legislatures.  The country now has GOP control of the House and Senate, and 31 governorships across the country.

In analyzing why they lost the 2012 presidential campaign, conservative billionaires decided they needed to recalibrate their message and strategy for the midterms. For example, Americans for Prosperity (AFP) focused on ads that employed moving personal stories to deliver policy messages and a robust field operation. Central to their approach was the idea that Obamacare was a failure and hurting ordinary people.

Explaining this communications shift, AFP President Tim Phillips told a reporter that “too often, we did kind of broader statistical ads or messages, and we decided that we needed to start telling the story of how the liberals’ policies, whether it’s the administration or Congress, are practically impacting the lives of Americans every day.” Media expert Elizabeth Wilner of Kantar Media/CMAG correctly anticipated that those kinds of ads would have a greater likelihood of electoral success. “Ads that tell stories are more compelling than ads that don’t,” she said. “And ads that use sympathetic figures are more compelling, generally, than those that don’t.”

In looking ahead to 2016, there are ominous signs that big money may distort the election outcome. Wealthy interests were far more likely in 2012 to contribute to Republicans than Democrats. Even if Democrats mobilize liberal billionaires, the GOP nominee is going to have a substantial fundraising advantage.

Money alone, of course, does not dictate elections. Research shows clearly that public opinion, media coverage, campaign strategies, policy positions, and the nature of the times matter as well. However, during a time of rising campaign costs and limited public engagement in the political process, big money sets the agenda, affects how the campaign develops, and shapes how particular people and policy problems get defined. It takes skilled candidates, favorable media coverage, and strong organizational efforts to offset the power of great wealth.

There are no guarantees that the future Democratic nominee will replicate Obama’s 2012 success. If Republicans nominate someone who relates well to ordinary voters and they tone down policies that disproportionately benefit the wealthy, the money story in 2016 likely will turn out very different from the last time. Billionaire activism very well could tilt a close election in favor of conservative interests.

Authors

Image Source: © Carlo Allegri / Reuters
     
 
 




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African Lions: A ‘new elite’ in the South African labor market?


While the South African labor market faces many large challenges, some more subtle trends might also be developing that undermine the country’s growth. Yes, the current level of unemployment stands at 24 percent. True, school dropout rates remain high: Only 50 percent of students will make it to the last year of high school, which means that the number of skilled workers in the country remains low. In addition, income inequality in South Africa is an overwhelming obstacle—with the country having one of the highest Gini coefficients (a statistical tool commonly used to measure inequality) in the world—and has been slowing its fight against poverty.

In their recent paper, Demographic, employment, and wage trends in South Africa, Haroon Bhorat, Karmen Naidoo, Morné Oosthuizen, and Kavisha Pillay examine important, perhaps precarious, trends in South African employment, such as the combination of South Africa’s weak educational system and labor demand biased toward skilled workers and the significant rise in temporary employment over full-time positions. However, the authors argue that perhaps the most interesting is the spike in public sector employment and the subsequent development of a new segment of the labor market, what they call a “new elite”: the unionized public sector employee.

The shift to services and the public sector

Like so many of sub-Saharan African countries, South Africa’s labor makeup (as well as contributions to GDP) has swiftly been shifting towards the services sector, especially since 2001. Table 1 clearly shows the dramatic shift in labor towards community, social, and personal (CSP) services and financial services: These two areas accounted for 73 percent of the shift in employment between 2001 and 2012 (Column 3). 

                                                            Employment Shares            Share of Change (ΔEi/ΔE) (a)   
   2001          2012   (2001-2012) 
Primary   0.15  0.07  -0.28
Agriculture   0.1  0.04  -0.2
Mining   0.05  0.02
 -0.08
Secondary   0.2  0.21
 0.21
Manufacturing   0.14  0.12
 0.04
Utilities   0.008  0.008
 0.004
Construction   0.05  0.07
 0.16
Tertiary   0.63  0.71
 1.08
Trade   0.21  0.21
 0.2
Transport   0.04  0.6  0.11
Financial  0.09  0.13  0.31
CSPS   0.17  0.22 0.42 
Private households   0.09  0.08  0.04
Total   1  1  1

Note: 1. CSPS stands for community, social, and personal services, which is predominantly made up of public sector employment.)

2.(a) The ratio of the percentage change in the share of employment to the overall change in employment over the period (share of change in employment). This measure shows, within each broad sector, where the sources of employment growth are. For example, employment in the tertiary sector is 1.08 times (or 108 percent of) the level of employment in 2001, which is the sum of the changes for all the industries within this sub-sector. CSPS then is the greatest contributor to employment growth in the tertiary sector.

Source: Bhorat et al. (2014) using PALMS dataset (2012).

Importantly, the authors emphasize, the CSP sector, which accounted for 42 percent of this shift, is mostly made up of public sector jobs—hinting that expansion of the public sector has contributed to this trend. The share of public sector employment rose to 17.5 percent by the end of 2014 from 14.2 percent in 2004. In addition, they note that the largest expansion of the public sector came in 2009, just after the global financial crisis, showing that the public sector was more capable of absorbing” excess unskilled and medium-skilled labor at times of economic and labor market distress.”

Another important trend the authors point to within the shift to the public sector between 2008 and 2014 is that a great number of jobs in which employment grew quickly involve unskilled workers (such as sweepers, farmhands and laborers, helpers and cleaners, construction and maintenance laborers, and garbage collectors) and medium-skilled workers (such as police and traffic officers, institution and home-based care workers, prison guards, cooks, and childcare workers) (Figure 1). For a deeper analysis of South African labor market’s skill needs, see the full paper.

Figure 1: Share of change in public sector jobs by detailed occupation (2008 Q1-2014 Q4)


Notes: These occupations are the largest 42 public sector occupations, making up 80 percent of total employment in the public sector in 2014, and 97 percent of the change in the number of public sector jobs over the 2008-14 period.

Source: StatsSA QLFS 2008Q1; StatsSA QLFS 2014Q4; own calculations.

From these trends, the authors infer that the South African government’s Expanded Public Works Program (EPWP)—which “creates jobs through government-funded infrastructure projects, through its non-profit organization and community work program, as well as through its public environment and culture programs”—has played a major part in the expansion of the public sector.

Interestingly, though, the authors also find that overall the public sector has a bigger proportion of high-skilled employees than the private sector), though, between 2008 and 2013 the public sector barely saw a change in its proportion of high-skilled workers. Rather, it experienced its largest growth in the medium- and low-skilled jobs, as noted in Figure 1. They note that this phenomenon suggests that “the state [is] able to absorb excess unskilled and medium-skilled labor at times of economic and labor market distress.” The private sector’s proportion of high-skilled workers, on the other hand, grew by 25 percent. There is then, they say, a “mismatch” between the supply and demand of South Africa’s labor market when it comes to high-skilled workers.

After exploring this trend, the authors also delve into the demographic differences between public and private sector workers. For example, they find that the average public sector worker is older (41 versus 38) and likely to have a higher educational level on average. There are more women in the public sector—52 percent compared to 44 percent. There are also more Africans—77 percent in the public sector (up from 72 percent in 2008) and 66 percent in the private sector (unchanged). The authors argue that these two statistics demonstrate that public sector has “transformed” its labor force at a faster pace since both are groups that historically have been marginalized in the South African labor market.

The impact of unions in the South African labor market

The public sector in South Africa also has a higher unionization rate: 69.2 percent compared to the private sector’s 24.4 percent rate in 2013). As public sector employment has grown, the authors say, so has its proportion of workers in unions. Unions in South Africa are influential, as the authors note, “Powerful labor unions are often associated with creating a wage premium for their members, given their ability to mobilize industrial action and negotiate in favor of their members during times of wage negotiations.”

Indeed, this seems to be the case. Past studies have found that bargaining power—as part of a bargaining council or a union—presents a wage premium.  The authors have similar results: The average public sector worker makes 11,668 rand ($1,209) per month compared to an average private sector employee (7,822 rand per month). Most importantly, though, when the authors disaggregate based on participation in a union, they actually find that, among non-unionized workers, the private sector employee actually receives a higher wage than the public sector worker, by about 952 rand per month. This finding, they say, suggests that the public sector premium might be tied to public sector union membership.

The authors admit a caveat: Public sector union workers tend to be white, older, and better educated than their non-unionized public sector counterparts. In fact, non-union public sector workers are 80 percent African and 10 percent colored[1] (two groups more likely to be under the EPWP). In addition, non-union occupations are usually less skilled (elementary occupations, service and sales occupations, and technical and associate professional occupations). However, they emphasize, “Ultimately though, the wage distributions above suggest that, at least in terms of earnings, a dual labor market may indeed be prevalent in the South African labor market.”  (For the authors’ full quantitative analysis, including an examination of how this trend interacts with state-owned enterprises and temporary workers, see the full paper.)

Thus, they argue, a “new labor elite” is forming.

Note: The African Lions project is a collaboration among United Nations University-World Institute for Development Economics Research (UNU-WIDER), the University of Cape Town’s Development Policy Research Unit (DPRU), and the Brookings Africa Growth Initiative, that provides an analytical basis for policy recommendations and value-added guidance to domestic policymakers in the fast-growing economies of Africa, as well as for the broader global community interested in the development of the region. The six papers, covering Mozambique, Kenya, Ghana, South Africa, Ethiopia, and Nigeria, explore the key constraints facing African economies as they attempt to maintain a long-run economic growth and development trajectory.


[1] In this paper, “African” is used to refer to people classified by the apartheid state as “native,” “Bantu,” or “black.” “Colored” refers mainly to people in the Western Cape province, and is an ethnic label for people of mixed ethnic origin who possess ancestry from Europe, Asia, and various Khoisan and Bantu tribes of Southern Africa.

Authors

  • Christina Golubski
      
 
 




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Millions Learning Case Studies


      
 
 




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African Lions: Ghana’s job creation successes and obstacles


Over the past two decades, Ghana’s economy experienced an average annual growth rate of 5.8 percent, and became a low-middle income country in 2007. Though Ghana’s average annual employment growth between 1993 and 2013 has been higher than sub-Saharan Africa’s—3.7 percent versus 3.0 percent—its overall employment growth has not kept up with its economic growth. Notably, Ghana’s impressive economic growth has largely stemmed from crude oil exports, mining, and financial intermediation—all sectors and subsectors in which labor absorption is low. Given these trends, Ghana’s ability to transform its growth gains into better livelihoods for its citizens is being challenged.

In their paper, Understanding Ghana’s growth success story and job creation challenges, Ernest Aryeetey and William Baah-Boateng examine the sustainability of the high growth Ghana has experienced over the last two decades and advise Ghanaian policymakers to rethink their growth strategy.

For a more in-depth look at these and related topics, such as labor productivity, you can read the full paper here.

Ghana’s labor trends

Like in many other sub-Saharan African countries, the agriculture sector is the largest employer in Ghana, though its employment share is decreasing from 61.1 percent in 1984 to 44.7 percent in 2013. In addition, while industry’s employment share has slightly grown from 13.7 percent to 14.6 percent over the same period (and the manufacturing subsector has decreased from 10.9 percent to 9.1 percent), services has grown from 25 percent to 40.9 percent—leading to what the authors refer as a “missing middle.”

As noted above, the authors emphasize that the sectors that have been driving Ghana’s growth are not labor-intensive, namely mining, oil extraction, and finance. While labor has been moving from agriculture to services, the authors note that the trend “may not reflect a structural and productive transformation,” largely because the jobs created in the services sector are mostly informal and have low productivity. Indeed, services sector maintained the lowest annual average growth of labor productivity between 1992 and 2013. As part of these shifts, informal employment—which represented 88 percent of Ghanaian employment in 2013—grew by 3.7 percent on average while formal employment grew by only 2.6 percent during this period.

Unemployment in Ghana remains low, at 5.2 percent, though has experienced significant swings from 2.8 percent in 1984 to 10.4 percent in 2000 to 3.1 percent in 2006. The authors note, though, that these numbers might be deceptive due to the high numbers of informal, vulnerable, and “discouraged workers” (those who are jobless and available for work but fail to make the effort to seek work for various reasons) in Ghana. In fact, they state that, in 2006, after accounting for discouraged workers the unemployment rate more than doubled from 3.1 percent to 6.5 percent.

Vulnerable employment and the working poor

Despite Ghana’s relatively low unemployment rate, many laborers still live in poverty: According to the authors, 22 percent of working people are poor. Many others work in “vulnerable employment”—which the authors define as “a measure of people employed under relatively precarious circumstances indicated by their status in employment. It consists of own account and contributing family work that are less likely to have formal work arrangements, access to benefit or social protection programs, and are more ‘at risk’ to economic cycles (ILO 2009).” This definition is opposed to “productive employment,” or “paid employment and self-employed with employees.” Vulnerable workers are usually found in the informal sector and tend to have lower earnings—a situation exacerbating the ever-widening earnings gap and growing income inequality.

According to the authors, working poverty is closely linked with vulnerable employment, for which seven of 10 jobs in Ghana qualify (Table 1).  Some policies, which could combat working poverty, have been somewhat ineffective in reducing poverty: For example, Ghana has been consistent in raising its minimum wage, keeping it largely above the rate of inflation, but this policy tends to only affect those in the formal sector, leaving out workers in the informal sector. This trend has also increased Ghana’s inequality: The Gini coefficient increased from 35.4 percent in 1987/88 to 42.3 percent in 2013.

Table 1: Quantity and quality of employment (percent of employed)

Economic sector

 1984  1992  1999 2000   2006 2010  2013 
Employment-to-population (ratio, SSA)  —  64.3  64.1  64.1  64.9  65.2  65.5
Employment-to-population (ratio, Ghana)  80.2  72.9  73.9  66.9  67.7  67.4  75.4
               
Economic sector              
Agriculture  61.1  62.2  55.0  53.1  54.9  41.6  44.7
Industry  13.7  10.0  14.0  15.5  14.2  15.4  14.6
Manufacturing (part of industry)  10.9  8.2  11.7  10.7  11.4  10.7  9.1
Service   25.2  27.8  31.0  31.5  30.9  43.0  40.9
               
Institutional sector              
Public   10.2  8.4  6.2  7.2  5.7  6.4  5.9
Private   6.0  6.1  7.5  8.9  7.0  7.4  6.1
Informal   83.8  85.5  86.1  83.9  87.3  86.2 88.0 
               
Type of employment               
Paid employees   16.2  16.8  13.8  16.0  17.5  18.2  22.5
Self-employment   69.6  81.3  68.7  73.4  59.5  60.8  52.6
Contributing family worker   12.5  1.9  17.2  6.8  20.4  11.6  22.3
Other   1.7   —  0.3  3.8  2.6  9.4  2.6
               
Quality of employment               
Gainful/productive employment*   20.9   —   —  21.2  22.0  23.1  28.7
Vulnerable employment**   77.4  82.5  80.8  74.9  75.4  67.5  68.7
Working poverty    —  48.7  35.4   —  25.6   —  22.3

Notes: * Gainful/productive employment comprises paid employment and self-employed with employees.

** Vulnerable employment comprises own account and contribution family work.

Source: Computed from Ghana Living Standards Survey (GLSS) 3, 4, 5, and 6; Population Census 1984, 2000, and 2010.

Overall, though, Ghana has made great strides. Vulnerable employment has been declining, and productive employment has risen, gains the author attributes to the drop in working poverty—down from 48.7 percent in 1992 to 22.3 percent two decades later (Table 1). However, they also hint that these improvements could have been even larger had job growth been concentrated in paid employment and self-employed with employees.

The skills gap

In their paper, the authors posit that job creation has occurred in less productive sectors due to a lack of skills and education in the workforce—and skill-intensive jobs/vacancies are instead getting filled by foreign laborers. While the proportion of the labor force with no formal education has significantly fallen from 44.1 percent in 1992 to 25.6 percent in 2013, post-primary education rates have barely risen—from 5.7 percent to 12.1 percent during that same period for secondary, vocational, and technical education. Tertiary is even less—from 2 percent to 5.4 percent. Ghanaian universities have not been training engineers, scientists, and technical workers that could increase the productivity and grow the industrial sector. A shortage of technical and vocational skills also limits this sector. Thus, the authors note, employers are forced to look outside of the country to find the workers with the skills required to do the job. The authors emphasize:

[P]roductive structural economic transformation hinges on the level and quality of education and labour skills. A highly skilled, innovative, and knowledgeable workforce constitutes a key ingredient in the process of structural economic transformation, and as productive sectors apply more complex production technologies and research and development activities increase the demand for education and skills. However, the observed weak human capital base does not provide a strong foundation for structural economic transformation of Ghana.

At the same time, the more educated in Ghana also tend to be more likely to be unemployed due to limited job creation for them in the formal sector. In 2013, the unemployment rates for those with secondary education and above (including tertiary) was over 6 percent. The unemployment rate for those with basic education or less was under 3.3 percent. The authors suggest that this trend is due to the fact that those with less education are more likely to take an informal job, while more educated laborers struggle to find jobs in the small formal sector.

Recommendations

Though Ghana has outperformed many of its sub-Saharan neighbors in terms of job creation and growth, its challenges with declining manufacturing, high informal employment, and low education attainment endanger its momentum. To tackle these obstacles, the authors recommend:

  1. Adjust the priorities of the growth strategy to promote manufacturing, and reconsider the goal of economic growth for growth’s sake by acknowledging that sustainable growth must be coupled with generation of productive and high-earning jobs for all.
  2. Create a manufacturing and business-friendly environment by addressing the country’s high interest rates, high taxes, and chronic energy problems, among others.
  3. Enact policies to enhance the high-productivity, high-labor-absorbing agricultural sector, such as improving agricultural extension, develop irrigation plans, among others.
  4. Develop policies to increase the number of secondary school graduates as well as students studying science, technology, engineering, and math.

For further discussion and recommendations, read the full paper here.

Note: The African Lions project is a collaboration among United Nations University-World Institute for Development Economics Research (UNU-WIDER), the University of Cape Town’s Development Policy Research Unit (DPRU), and the Brookings Africa Growth Initiative, that provides an analytical basis for policy recommendations and value-added guidance to domestic policymakers in the fast-growing economies of Africa, as well as for the broader global community interested in the development of the region. The six papers, covering Mozambique, Kenya, Ghana, South Africa, Ethiopia, and Nigeria, explore the key constraints facing African economies as they attempt to maintain a long-run economic growth and development trajectory.

Authors

  • Christina Golubski
     
 
 




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Where the Next $30 Trillion Will Be Invested in the Built Environment Between Now and 2025

During his presentation at the University of Michigan/Urban Land Institute Real Estate Forum, Christopher B. Leinberger discusses the impact walkable urbane places has and will have on metropolitan development patterns, the market reasons for this change and how to strategically manage it.

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Publication: University of Michigan/Urban Land Institute Real Estate Forum
     
 
 




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Getting to Scale : How to Bring Development Solutions to Millions of Poor People


Brookings Institution Press 2013 240pp.

Winner of Choice Magazine's Outstanding Academic Title of 2014!

The global development community is teeming with different ideas and interventions to improve the lives of the world’s poorest people. Whether these succeed in having a transformative impact depends not just on their individual brilliance but on whether they can be brought to a scale where they reach millions of poor people.

Getting to Scale explores what it takes to expand the reach of development solutions beyond an individual village or pilot program, but to poor people everywhere. Each of the essays in this book documents one or more contemporary case studies, which together provide a body of evidence on how scale can be pursued. It suggests that the challenge of scaling up can be divided into two: financing interventions at scale, and managing delivery to large numbers of beneficiaries. Neither governments, donors, charities, nor corporations are usually capable of overcoming these twin challenges alone, indicating that partnerships are key to success.

Scaling up is mission critical if extreme poverty is to be vanquished in our lifetime. Getting to Scale provides an invaluable resource for development practitioners, analysts, and students on a topic that remains largely unexplored and poorly understood.

ABOUT THE EDITORS

Laurence Chandy
Akio Hosono
Akio Hosono is the director of the Research Institute of the Japanese International Cooperation Agency.
Homi Kharas
Johannes F. Linn

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Getting millions to learn: What will it take to accelerate progress on meeting the Sustainable Development Goals?


Event Information

April 18-19, 2016

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

Register for the Event


In 2015, 193 countries adopted the Sustainable Development Goals (SDGs), a new global agenda that is more ambitious than the preceding Millennium Development Goals and aims to make progress on some of the most pressing issues of our time. Goal 4, "To ensure inclusive and quality education for all, with relevant and effective learning outcomes," challenges the international education community to meet universal access plus learning by 2030. We know that access to primary schooling has scaled up rapidly over previous decades, but what can be learned from places where transformational changes in learning have occurred? What can governments, civil society, and the private sector do to more actively scale up quality learning?

On April 18-19, the Center for Universal Education (CUE) at Brookings launched "Millions Learning: Scaling Up Quality Education in Developing Countries," a comprehensive study that examines where learning has improved around the world and what factors have contributed to that process. This two-day event included two sessions. Monday, April 18 focused on the role of global actors in accelerating progress to meeting the SDGs. The second session on Tuesday, April 19 included a presentation of the Millions Learning report followed by panel discussions on the role of financing and technology in scaling education in developing countries.

 Join the conversation on Twitter #MillionsLearning

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