TIME

China’s Culture of Compliance Is Crippling the Country

Demonstration at Tiananmen Square in Beijing, China on June 01st, 1989.
Standing tall A Chinese youth at a demonstration in Beijing’s Tiananmen Square on June 1, 1989 Eric Bouvet—Gamma-Rapho/Getty Images

Next week will be the 25th anniversary of Tiananmen Square. It was a turning point not only for China, but also for the world, in the sense that it heralded a new era in which growing wealth and growing political freedom in emerging markets didn’t necessary go hand in hand. This year, China will very likely overtake the U.S. as the world’s largest economy. It has certainly become wealthy. But it has also become less free–as have so many of the world’s largest developing nations–think Russia, Turkey, many parts of Africa and Latin America, etc.

The question is, that can juxtaposition last another 25 years—or even another five? It’s something I’ve been thinking about a lot lately, particularly as I delve into New Yorker writer Evan Osnos’ very interesting new book on China, “Age of Ambition: Chasing Fortune, Truth and Faith in the New China” (FSG). The core premise of the book is that individual ambition and authoritarianism in countries like China will inevitably come into conflict with one another. As people get richer, they want more freedom, and they put pressure on their governments to deliver it. The problem is that these governments are often much better at delivering wealth than they are at delivering anything close to liberal democracy.

I think we may be reaching a tipping point in the next few years around that juxtaposition between growth and choice in the emerging world. China is, as always, the most dramatic example of this. The recent cyber-hacking scandal, for example, was portrayed by many pundits as yet another example of how the Middle Kingdom is leaping ahead of U.S. government and business interests, stealing American intellectual property and using it to gain a competitive edge. But as I argued, China’s IP theft actually underscores what a “me too” economy the Middle Kingdom still is. China is good, very good, at copycatting other people’s ideas (Osnos’ stories of various Chinese entrepreneurs, like the village woman behind the Chinese version of match.com, are fascinating on this score), but it has yet to create many global brands–aside from Lenovo’s computers and the college mini-fridges made by the low-end white goods producer Haier.

I think the lack of a top-shelf innovation culture has a lot to do with the lack of choice in Chinese society. I once spoke to a Wal-Mart executive in China who told me that he had trouble getting employees in one department to address basic problems in another–picking up boxes that had fallen off a shelf, or order new supplies, for example–because they were afraid of stepping out of their silos. That’s not about work ethic–the Chinese have that in spades–but a culture of compliance. In China, it’s important, sometimes deadly important, to swim in your own lane.

Another issue with the growth of higher end Chinese business is that entrepreneurs don’t trust the stability of the government. I’ve heard time and time again from wealthy people in China (many of whom are looking to get their money out – witness the percentage of high end property purchases in luxury real estate markets worldwide that are made by the Chinese) is that it doesn’t pay to develop businesses for the long haul here, because uncertainly and political risk is so high. People tend to get in, get out, and become serial entrepreneurs, rather than spending decades working on innovation, a la developed countries like the U.S., Japan, or Germany.

How will all this affect China? If the Middle Kingdom can’t make the leap to the “middle income” stage of development, which history shows is the trickiest one (only a handful of developing countries globally have made it), then unemployment will rise and social stability will fall. How will that affect Americans? In a sense, it already is. Trade tensions mean many U.S. companies are rethinking how, or if, they’ll do business in China, with myriad ramifications for us all. For more on all of that, as well as the economic legacy of the Tiananmen event, listen to my radio show, Money Talking, on WNYC this week.

TIME Retirement

Workers to Bosses: Take Twice as Much of My Pay

Here's the savings crisis in a nutshell: workers want to save twice as much but won't do it for themselves.

The retirement savings crisis in America can be reduced to one statistic: workers say they would like the default contribution rate in 401(k) plans with automatic enrollment to be doubled.

That is telling new research from the nonprofit Transamerica Center for Retirement Studies and global asset manager Aegon. It suggests the typical worker wants someone else to make the tough decisions for them. After all, these workers could double their contribution rate quite on their own by filling out a little paperwork at the office.

What stops them? Inertia plays a big role. The easiest thing to do is nothing. But too many workers also do not appreciate the extent of their personal savings crisis and that, through compound growth, a little more saved today would make a big difference tomorrow. They also may suffer from a chilling lack of confidence in their ability to make the right financial choices.

This isn’t just a U.S. phenomenon. Globally, workers say the appropriate default rate for contributions to a 401(k) plan with automatic enrollment should be 6% of pay. The desired figure is 7% in the U.S., where the typical default rate is 3%, Transamerica found. Perhaps the biggest problem with that low default rate is that workers may assume it is sufficient, when it clearly is not.

Most financial planners advise setting aside 10% to 15% of pay for retirement. A worker who believes their employer has set the right savings rate for them, and then does nothing more, will be sorely disappointed. Unfortunately, such workers are legion. The average 50-year-old American has saved just $44,000.

Some workers are taking action. Since 2009, seven in 10 401(k) plan participants have increased their contributions by an average of 14%, reports Principal Financial Group. With the help of a bull market account balances have roughly doubled in that span. But that just gets savers back to where they were before the recession. It’s not nearly enough to close the savings gap.

Most workers seem to understand the need to save more. Yet they continue to do little or nothing about it, which is why automatic enrollment and higher default contribution rates are so important. Globally, 63% of workers favor automatic enrollment, Transamerica found. The share is 69% in the U.S. So automatic features, which have been found to be highly effective in boosting participation rates, have broad appeal.

Retirement experts look at auto enrollment and escalating contribution rates like motherhood and apple pie. Who can argue against it? But we need to expand the features to ensure that more employees defer more of their pay—which they would do on their own if not for inertia and failing confidence.

The Principal recommends auto enrollment with a 6% employee deferral rate, and raising the deferral one percentage point each year until it reaches 10% of income. It further recommends that companies sweep all existing employees into the automatic plan—not just new hires. They could opt out, but most wouldn’t. That’s inertia working for them, not against them.

This is the approach we are left with, and there is nothing wrong with it. Given our low levels of financial understanding and the lackluster national effort to raise our financial I.Q., it is unlikely that most workers will choose to save a great deal more. That’s a shame because even a 6% deferral rate gets you only about halfway home to retirement security. At some point individuals must step up to the retirement savings challenge on their own.

 

TIME technology

The Days of the Chief Executive Bro Are Numbered

Evan Spiegel
Snapchat CEO Evan Spiegel poses for photos, in Los Angeles, Oct. 24, 2013. Jae C. Hong—AP

Skipper: Now, aren’t you all ashamed of yourselves?
Thurston Howell III: I’m ashamed we got caught.
-Gilligan’s Island

It’s not a bad gig, being a CEO. Not only is the mean compensation 257 times that of the average worker, you often get a carte-blanche license to be a jerk. Jeff Bezos can verbally abuse workers with an inane insult like, “I’m sorry, did I take my stupid pills today?” and be hailed as the best CEO in tech. Because the CEO he stole that mantle from, Steve Jobs, took executive assholery to a whole new level.

Still, there are exceptions to that carte-blanche rule. Jerk behavior takes on a toxic quality when the insults involve pernicious social problems, like sexism in the tech industry which has been there all along, yet is growing more visible—and therefore more opprobrious—by the week.

And the past week has been a banner one for what we have come to call brogrammers. A co-founder of RapGenius resigned after being blasted for exceptionally tasteless comments on his own site. Uber’s CEO saying that his luck with the “ladies” was pretty great now that his company was successful. The latest example is Snapchat CEO Evan Spiegel, whom TechCrunch declared in a headline was “kind of an ass.” Spiegel’s leaked Stanford emails said over and over again things that, when the rest of us rewind to our college days, recall people we met and never wanted to deal with again. Now here they’ve gone and created the apps we’re stuck with using.

Spiegel sent out an attorney-masticated apology saying he’s “embarrassed that my idiotic emails during my fraternity days were made public.” Like Thurston Howell, he’s sorry he got caught. It’s not really an apology, but at least there’s a modicum of honesty in it.

Mark Zuckerberg’s undergrad IM’s, scorning the “dumb” users of Facebook’s prototype, presaged the privacy policies of his $164 billion company today. Similarly, Spiegel’s company Snapchat seems to realize an adult fantasy of erasing for good all the stupid things he ever said in his emails five years ago.

Nevermind for a minute all the talk about brogramming, this is what’s important here–trying to erase what can’t be erased. Reed Hastings founded Netflix (apocryphally) after returning a late DVD. Zuckerberg wants (spuriously) to connect the world. Spiegel, it seems, wanted to let people erase the present because it can bite your future in the butt once it becomes the past.

That makes Snapchat an app tailor-made for CEOs, not just in tech but in most other industries. The abhorrent comments leaking out are things that have been said among men in business–and frats, the preschools of business-for decades. His emails are written in the argot of the old-boys club. Except that men on Wall Street are better at keeping it, and men in the chemical or automative industries don’t have to worry about their stupid comments leaking out to the media, because nobody pays attention to the chemical or automotive industries.

In the Internet industry, they have to worry. Because Internet startups like Snapchat and Uber are attracting the spotlight of not just the tech media, but of the mainstream media. And because, as much as companies like Google try to position themselves as companies of the future, they are very much backward looking when it comes to parity. Google said this week only 17% of its technical employees are women.

That’s the thing about brogrammers. The Spiegels et al are just the uglier edge of a broader, shrewder and much quieter culture of sexism in Silicon Valley. Forget the rhetoric about how tech is forward-thinking. It’s no different from any older industry where bias has been there all along. What matters is this: The Internet apps and technologies these educated dolts are helping to create are not only exposing their secret thoughts, they are also creating a platform for others to criticize them en masse.

CEO’s will always be jerks, maybe well paid for their peculiar dysfunctions. And we’re not even close to seeing the end of executives, tech or otherwise, saying sexist stupidities and being publicly shamed for them. It’s not that there are suddenly more sexist CEOs, it’s that they’re being hoisted more often by their own petards. That will make for headlines of CEO’s being caught saying stupid things, but the more it happens, the better it is in the long run. Because it means the days of the Chief Executive Bro are numbered.

TIME

Sick of the People on Dating Apps? Now There’s a Tinder for Dogs

BarkBuddy

We'd be ok with these bathroom mirror selfies

The person-to-pet trickle down effect has provided dogs with everything from facials to Halloween costumes. It was only a matter of time until dogs got a dating app, too.

Bark & Co.—the company behind monthly dog-treat bundle service BarkBox and on-demand, in-home veterinarian service BarkCare—recently launched BarkBuddy. Which, as co-founder Henrik Werdelin says, “in short is like Tinder for dogs.” Because, let’s face it, you swipe right for guys with puppies in their photos anyway.

But don’t worry, BarkBuddy isn’t for creepy breeding purposes. (There was actually a Kickstarter for a dog-breeds-with-dog matchmaking app that only raised $187 out of a $50,0000 goal). Rather, BarkBuddy is to match lonely humans with single dogs who are up for adoption at nearby shelters.

“There are 250,000 dogs in the database, and we are open to talking to any shelter about joining us,” Werdelin says.

Here’s how it works: The first step is downloading the app, currently only available on iPhone, and listing your preferences of dog size, age, and gender. Then location-based tracking finds dogs in your area, and a bunch of different dogs, looking for love, come on screen.

BarkBuddy

You can click on their picture to get contact information for the relevant shelter. (Yes, you have to call them. You can’t just order a puppy via the app.)

BarkBuddy

Swipe right to add the dog to your list of favorites (the dog automatically swipes right for you, too, because they’re equal opportunity lovers), and left to pass.

Based on what dogs users swipe right on, a BarkBuddy algorithm narrows down dog preferences and specializes what dogs get shown.

BarkBuddy

But you don’t need to have a type. “Sometimes people might not even know what they’re looking for, but they get that instant emotional reaction when they see it,” Werdelin said.

And just like some people play Tinder for fun and not to date, Werdelin expects that there will be some casual browsers: “A lot of us just love dogs a lot, so the thought of sitting and swiping through pictures of dogs is very appealing.”

Unlike Tinder, Werdelin isn’t expecting a lot of the dogs to show off bathroom mirror selfies in their profiles. “I guess puppy eyes is going to be their cliche thing,” he says.

Bark & Co. isn’t the first company to try to meld the weird world of dating sites with pet adoption. The ASPCA placed targeted ads on OKCupid in February as part of a pro-bono campaign, making them look like dating profiles, to help homeless pets find true love.

“In the four days following the launch of the campaign, 6 dogs and 35 cats were adopted, with an impressive 28 cats finding homes on that Saturday and Sunday!” the ASPCA tells TIME.

BarkBuddy also hopes that it can streamline the adoption process by creating a quick pre-approval process. “We’re going to try to make it easier for you to be approved to get a dog,” Werdelin says. “It can be complicated with required home visits and letters from landlords, which is a process you often have to go through before you even meet a dog and know its a match.”

Considering how many positive responses a guy who posed as a dog on Tinder got, the real thing will probably grow pretty popular. After all, who wouldn’t want to swipe through cute dogs instead of people?

TIME technology

Jimmy Iovine Joining Apple After Years of Boardroom Flirtations

Apple Computer And U2 Celebrate New iPod Release
Steve Jobs (2nd-R) of Apple Computer poses with Interscope Geffen A&M Records Chairman Jimmy Iovine (L) Bono (2nd-L) and The Edge (R) of U2 at a celebration of the release of a new Apple iPod family of products at the California Theatre on Oct. 26, 2004 in San Jose, Calif. Tim Mosenfelder—Getty Images

Apple's acquisition of Beats Music will bring a brash and flashy record mogul, Jimmy Iovine, into the boardroom, and it could portend an industry-wide shift toward streaming music

When brash and flashy record mogul Jimmy Iovine first met former Apple chief Steve Jobs back in 2002, he could barely suppress his excitement. “This guy is unique,” Iovine reportedly gushed to a colleague. Jobs had just shown Iovine a beta version of Apple’s iTunes, and Iovine was effusive — in his own, brash-talking way. “How Sony missed this is completely mind boggling to me, a historic f***up,” he said, according to Walter Isaacson’s Jobs biography.

So began Iovine’s decade-long flirtation with Apple, the company he courted, championed and is now finally set to join as Apple announced Wednesday that it would acquire Beats Electronics, a company Iovine founded along with rapping legend Dr. Dre.

The $3 billion deal, Apple’s biggest acquisition ever, will make Iovine and Dre senior advisors to Apple’s content division. It also marks a decisive turning point in Iovine’s career — after nearly 25 years at the helm of Interscope Records, where he locked in deals with Dr. Dre, Eminem and Gwen Stefani, among others, Iovine will leave the company for good, bringing with him an invaluable rolodex of music legends.

In many ways, the move also mirrors a wider shift of talent in the music industry away from discs and downloads and toward subscription-based services. Iovine has a long record of embracing changes in the music business while other execs were digging in their heels. When Jobs was struggling to persuade music executives to sell their content through iTunes, Iovine was raving about its user-friendly design. “[Iovine] can see around corners,” Sony Music chairman Doug Morris told the New York Times.

Not that he and Jobs always saw eye to eye — Iovine said in an interview with AllThingsD last year that he was pressing Steve Jobs to charge a subscription fee rather than a flat rate per song as early as 2003. “I was always trying to push Steve into subscription,” he said, “and he wasn’t keen on it right away.”

They never did quite come to an agreement, but that didn’t prevent them from signing a number of lucrative cross-promotional deals. Jobs brought the customers, while Iovine brought the artists, most notably U2. That band’s record sales skyrocketed in 2004 after it appeared in Apple commercials touting a limited edition U2-branded iPod.

Now that Iovine has made a grand entrance into Apple’s headquarters, wearing no less than a gleaming blue blazer and suede sneakers, as the New York Times observed, analysts wonder if his subscription-based gospel will prevail. The market is certainly moving in that direction, as streaming services like Pandora, Spotify and YouTube have already begun chipping away at Apple’s sales. Track sales in the iTunes Music Store fell in 2013 from 1.3 billion to 1.2 billion units, the first drop since iTunes opened for business more than a decade ago. Whether Iovine can engineer a rebound will depend on his ability to see around a corner that eluded even Apple’s visionary founder.

TIME housing

Tiny Houses With Big Ambitions

Is the tiny-houses movement a viable solution for American homeowners?

Anyone who’s been to the suburbs in the past half-century knows that American homes have been getting larger and more elaborate year after year. The average size of new homes has swelled by 50 percent since 1970, despite that the average family size decreased during the same period. And it’s not just here; similar trends have held sway in other prosperous, mostly Western countries.

As with most things, a countertrend, focused on homes that are smaller and simpler than the norm, emerged in recent decades. Sometimes referred to as the “tiny house movement,” the concept describes efforts by architects, activists and frugal home owners to craft beautiful, highly functional houses of 1,000 square feet or less (some as small as 80 square feet). It’s both a practical response to soaring housing costs and shrinking incomes, and an idealistic expression of good design and sensible resource use.

The most ardent advocates and early adopters of the concept were often looking to downsize and simplify their lives, create an affordable second home or find innovative ways to live outside the mainstream. Some small homes are on wheels and therefore resemble RVs, but they are built to last as long as traditional homes. Others represent clever architectural solutions to odd building lots or special design challenges. Aging baby-boomers see them as an efficient way to adapt to their changing needs. Most tiny houses are tailored for middle-class and wealthy families who made a conscious decision to “build better, not bigger.”

But natural disasters like Hurricane Katrina in 2005 and economic catastrophes like the Great Recession inspired many people to wonder if the movement might offer solutions to pressing housing crises, whether temporary or long-term. Cheaper to build and maintain, built mostly of ecologically friendly materials, requiring no building permits and taking up far less real estate than traditional houses, the appeal of “living small” is obvious to many people. Some imagine entire villages built of tiny homes as solutions to homelessness.

The movement itself remains small, however promising. Only about one percent of home buyers today go for houses of 1,000 square feet or less. That may be changing as more people become familiar with the ideas that animate the movement and as middle-class finances remain precarious.

Watch the video above and make up your own mind: Would you opt to live small if you could?

TIME Companies

Influx of City Dwellers Pushes Big Chain Grocers to Go Small

Chains Walmart, Target and Hy-Vee are all shrinking their store's floor space to cram themselves into urban locations

Big-box supermarkets from Walmart to Target to Hy-Vee are taking up the practice of fitting themselves into ever-smaller stores, because they say that’s what their consumers want, especially as more young people gravitate toward cities over the suburbs.

As Target’s Executive VP for Property Development put it, the move to smaller spaces with a narrower selection is about “remaining convenient,” at least geographically.

Walmart ramped up its expansion of smaller store locations in February and hopes to have up to 300 newer, more compact locations in place by the end of the year.

Of course, everything is relative. The average Hy-Vee store is 85,000 square feet, but the new outlets will still contain a deli, pharmacy and a cafe, in a 14,00 square foot space.

TIME

Lawmakers Drop Bill Declaring Sriracha Maker a Public Nuisance

Lawmakers unanimously dismissed a bill that would have declared Huy Fong Foods a public nuisance

Lawmakers in Irwindale, California dismissed on Wednesday a bill that would have deemed the company behind Sriracha hot sauce a public nuisance. Three Irwindale City Council members and Mayor Mark Breceda unanimously voted to drop the legislation targeting Huy Fong Foods, Reuters reports.

“We have to keep employment in Irwindale. We have to expand. It’s good for Irwindale. It’s good for California,” Breceda said. The factory employs 70 full-time workers, 200 seasonal workers, and pumps out over 20 million bottles of the popular hot sauce every year. Sriracha is made from ground fresh chilis; the factory then uses exhaust fans to suck out the spicy air, filter it through pipes, and expel it through the roof.

Residents of the Los Angeles suburb have long complained about the pungent fumes emerging from the factory, citing headaches and irritated eyes, throats and noses. One resident likened the odor to “pepper spray.” Had the bill passed, Irwindale could have acted on its own to dispel the fumes, with Huy Fong Foods taking on the costs.

“If it doesn’t smell, it doesn’t sell,” said David Tran, founder and CEO of Huy Fong Foods, in October.

[Reuters]

TIME

8 Things You Might Not Know About Jimmy Iovine

Moet & Chandon At The Weinstein Company's 2014 Golden Globe Awards After Party
Producer Jimmy Iovine attends Moet & Chandon at The Weinstein Company's 2014 Golden Globe Awards after party Michael Kovac—Getty Images

Apple officially bought Beats Electronics for $3 billion Wednesday. Meet its co-founder, Jimmy Iovine.

After weeks of rumors, Apple finally announced its plans to buy Beats Electronic for $3 billion Wednesday—making co-founders Dr. Dre and Jimmy Iovine a pretty penny. While Dr. Dre is a household name, soon-to-be billion Iovine, 61, is less known to those outside of the music world.

Here’s what you need to know about Apple’s latest music mogul:

  • First off: his last name is pronounced “eye-oh-veen.”
  • Iovine didn’t start at the top. Born to a longshoreman in Brooklyn, N.Y., the music mogul got his start cleaning a record studio as a teenager.
  • But today, Iovine is best known for co-founding Interscope Records in 1990 and acting as CEO of Interscope Geffen A&M (now to be succeeded by John Janick). He founded Beats Electronics with Dr. Dre in 2008.
  • In 2013, Iovine and Dr. Dre donated $70 million to the University of California to create the USC Jimmy Iovine and Andre Young Academy for Arts, Technology, and the Business of Innovation.
  • The record exec and producer has worked with artists ranging from Eminem to Bruce Springsteen.
  • In 2010, he became an in-house mentor for contestants on American Idol.
  • His relationship with Apple started years before Beats. Eddy Cue, Apple’s content chief, told the New York Times that Iovine was a friend to Jobs and tried to convince other record producers to sell individual songs on iTunes. “Jimmy was one of the first people we showed iTunes to,” Cue said.
  • Iovine will now become a senior exec at Apple and will report to Cue, counseling on how people will listen to music in the future.

Looking for more? Check out TIME’s story on Iovine and Dre from January.

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