← Bulwark Takes
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- [00:01]
Katherine Rampel
Yes you can. A five minute quick and easy calorie burning workout. Give it a try.
- [00:07]
TikTok Host
Come join our sweatsesh on TikTok.
- [00:13]
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- [00:42]
Katherine Rampel
Hello everyone. This is JVL here with my very close friend Katherine Rampel, author of the Receipts newsletter at the Bulwark. We're here for Receipts Live to talk about all the fantastic things happening in America's new golden age. For the audiophiles listening who complain about the lip smacking sounds. I am sorry. I still have a lingering cough and I am sucking on halls here so that I don't go hacking into the microphone. Pick your poison. I know people. There were people who complained on the Reddit and on the YouTube comments. I'm sorry, I am a professional. I know about these things. I know it's not ideal, but we're doing it live.
- [01:27]
JVL
You know, the show must go on. The show must.
- [01:30]
Katherine Rampel
The show must go on. The show must go flash. Well, I'll save that for the end, but I have a little, little, little Broadway talk for you.
- [01:39]
JVL
Oh, excited for that. Although I'm a little behind on my Broadway stuff lately. But that's okay. Looking forward to it.
- [01:45]
Katherine Rampel
That's okay. It's more theater kid stuff than Broadway stuff. All right, my friends, great news, great news this week. A lot of very strong things, beginning with the consumer confidence numbers which just came out, I think it was this morning. Chris, can we look at the. Look at consumer. No, that's not that. There it is. So, Catherine, I assume that this is like golf. Low score wins and so we are finally getting the consumer confidence numbers down to where we want them to be, Is that right?
- [02:22]
JVL
That is not traditionally how this works. No. You want that, it looks very low. You want the confidence numbers to express confidence. Right. You want Americans to be happy with the economy that they are engaging with and instead they look pretty depressed, pretty dyspeptic right here. Mine go down and it's like every month recently. Anyway, we seem to be hitting a new all time low now, as you and I have discussed many times over. Just because Americans say this is the suckiest economy on record, or at least their, their feelings suggest that they believe that does not mean it is actually true. In objective terms like this is we, we still have relatively low unemployment. It's been ticking up, but it's still relatively low. In historical terms. We do not have the worst inflation on record. It's irritatingly persistent, it's sticky, people are mad about it, but it's like, nowhere near as bad as it was in the late 70s, early 80s yet.
- [03:33]
Katherine Rampel
Sorry, Catherine, you forgot to say add yet, because we are still in the opening couple months of the oil crisis, so entirely possible that the entirely possible inflation upticks we're seeing are going to accelerate.
- [03:48]
JVL
Like, yes, so, but so things are kind of lousy and they feel lousy, and I think they felt lousy for a while. And I think that that frustration with persistently icky inflation and stagnation in the job market, all of those things I think are weighing on people, and maybe they've lost faith that things are going to turn around. I saw somebody post earlier today in response to this headline about the wor consumer sentiment on record, something like, donald Trump promised everyone a pony, and instead we got pony turds. Which is maybe partly what's going on here, that people are disillusioned with the promises that they've gotten from Trump, among others, about the ability of government to solve all of these economic issues that do still exist. Instead, this administration seems to be making many of them quite a bit worse, including on inflation. So there's some disillusionment with those promises not being delivered. Some of this, of course, is partisanship. It's been the case for a long time that Democrats are more likely to say the economy sucks when a Republican is in the White House and vice versa. So some of it is that partisanship, you know, mediating these trends. But that's been around for the while. For a while it seems to have gotten worse. And, you know, and I do wonder how much of this is also kind of like referred pain. People are upset about a lot of things in this country today. Plenty of other survey data we could look at about, you know, country on the right track, wrong track, those kinds of measures. People are really unhappy with the state of the country. And so maybe they're just going to say, like, whatever they're asked about, including questions about the job market, questions about their finances, questions about things that seem pretty far afield from that, like general disillusionment, they, it still may weigh on their, their answers to those kinds of questions. So, you know, I think it's a few different things going on. What do you, how do you interpret these data?
- [06:00]
Katherine Rampel
Well, I mean, far be it for me to ever question the wisdom of the great and good American people and their ability to make rational observations about the world around them.
- [06:12]
JVL
I have never heard you do such a thing.
- [06:14]
Katherine Rampel
People have spoken. I would say that there is one thing about this which, again, I largely agree with you. There's one very idiosyncratic aspect of this moment, though, which is the AI bubble. Sorry, the growth of the AI. The growth of the AI industry.
- [06:34]
JVL
The AI boom. Boom.
- [06:36]
Katherine Rampel
The AI boom. Right. This time it's different. And so you and I were looking at a couple of pieces from this week about just capital expenditures by AI companies in the extent to which AI Capex, which is like data center chips, stuff like that, is propping up a huge portion of the economy. But that AI Capex is really walled off from the broader economy. I mean, you're, you're building data centers by buying chips. The chips are largely made in Asia. They're not coming out of U.S. factories. You're building these big data centers often in the middle of nowhere. They, they're not really generating jobs. You don't need like a whole ton of people. Right. You need some construction, but yeah, they're cheap to build. Right. I mean, yeah, I mean,
- [07:35]
JVL
yeah, I was gonna say they generate job growth on the front end when the stuff gets built, but then a little bit of it. But less than just a bunch of computers beeping and booping.
- [07:43]
Katherine Rampel
Yeah, right. And I mean it is, it is less than like building infrastructure in terms, you know, and, and then once those things are there, they're not really contributing to the, certainly not to the local economy really. And it's not clear that they're even really contributing to the macro economy. It's not, not clear that the, the, the, the gains for AI are being spread around the macro economy in the same way that say, gains in, I don't know, the farming sector might be right. Or pick, pick another sector, the hospitality sector.
- [08:23]
JVL
To be fair, I think the jury is still out on some of this. We don't know to what extent and how AI is going to transform large portions of the economy. Probably a lot of people will get hurt. You know, it's, it's easy to. Some of the jobs that, that will be displaced, right?
- [08:38]
Katherine Rampel
Yes.
- [08:39]
JVL
By, you know, jobs getting automated away. But historically when we've had these big kinds of disruptive technological revolutions, technological change.
- [08:50]
Katherine Rampel
Right.
- [08:50]
JVL
It's easier to see what jobs get displaced than what jobs get newly created. And so, you know, I don't want to be too Pollyanna. Pollyanna ish about it, but I think we just don't know. And there will be, There will be new opportunities, right?
- [09:06]
Katherine Rampel
Sure. To be clear, I'm not gone the AI as an industry, I'm talking about like the capex. Right. And so when you spend money on that and you pump that money into the economy, if you're pumping that money into other types of capital expenditures in other sectors, they create a whole bunch of jobs, which then sort of flows out and creates other activity. The data center boom is really taking a bunch of dollars and like putting it into a safe, you know, and not even like safe that depreciates really fast. Because these data centers, I mean, you know, the processors and chips don't last for forever. They become obsolete. They get tired, they get worn out, they overheat. I'm just saying that in terms of the type of economic ability, type of economic activity that spurs additional activity. Capex on data centers seems idiosyncratically limiting in ways that, that are unlike other things like building railroads. Right. Or. Or building bridges or. Right. Creating transit hubs.
- [10:14]
JVL
Yeah.
- [10:15]
Katherine Rampel
You see what I'm saying?
- [10:15]
JVL
Certainly from infrastructure, it's certainly different from like transportation infrastructure. Totally agree with that. You know, I, I do think that we haven't necessarily thought through. Again, I don't want to be Pollyanna ish, but I do think that there are benefits to some of this construction that has not been fully captured yet. Including, for example, like, there's a huge hub of data centers in Virginia in sort of the D.C. suburbs. And those produce a lot of tax revenue, which defrays the tax bills of the people and the other businesses who live there. And so they set up that those projects smartly, you know, in a way that actually benefited the local community. That hasn't necessarily happened in a lot of other places around this country, but it doesn't mean it won't happen. And I think you're. I hope we will see some policymakers try to figure out how to ensure that these kinds of construction projects, these, these, you know, this new data infrastructure actually benefits both fiscally in terms of producing more revenue and, you know, maybe putting more of the burden of upgrading the grid and things like that on these construction projects. The thing that I'm more worried about than like, oh, is this just like a safe. Where all of the money is going is if this boom is in fact a bubble, and a lot of companies end up pulling out their investment sometime in the near future because you Know, somebody's going to win this, this arms race presumably, or a few somebody's will win, but there will probably be a lot of losers. And what happens to all of that kind of maybe abandoned architecture, maybe half built projects? That's what I'm a little more worried about than like the actual construction itself. Like are you going to end up with a bunch of zombie data center sites around the country or other projects like that? And suddenly that rush of capital investment that has been keeping the economy afloat gets, you know, peters out. It's no longer a rush, it's a trickle and maybe a drought. And you end up with a lot of knock on effects throughout the rest of the economy because we have been so reliant on this one industry. So it's less like, oh this industry, like the construction, its itself sucks and it's not helping us at all. It's more like, well what if it goes away? Are we getting a little too reliant on it also?
- [12:54]
Katherine Rampel
I mean the economy is clearly over reliant on it right now. You strip these numbers out and the growth looks much, much more anemic. All right, Other good things that are happening in the world. We should talk about oil, gas prices at 456 nationally. That, that's awesome. Look at that. I'd love to see it. This is Memorial Day weekend, a weekend in which one of the heaviest travel weekends of the year for Americans. I hope they enjoy seeing what they did when they go to fill up their cars. They chose this freely. No one made them do it.
- [13:37]
JVL
And hey, they voted for a guy who promised no more wars. It's not their fault that he lies about literally everything.
- [13:46]
Katherine Rampel
How could they possibly have known that he lies about everything, Catherine?
- [13:49]
JVL
Exactly.
- [13:51]
Katherine Rampel
And, and Chris, can I, can I have the Strategic Petroleum Reserve? It's a slightly out of order, but we, we also had this week, I think the single largest like one week or one day drawdown ever.
- [14:06]
JVL
One week?
- [14:07]
Katherine Rampel
Yeah, one week. That's a, Is that a new golden age thing? Is it, is it that we broke this long look, you know, this record on drawing down from the street stood for, for decades and decades and we showed that we could beat it. Is that what this means, Catherine?
- [14:26]
JVL
I don't think so. You may recall that when Biden was president, he also drew on the Strategic Petroleum Reserve back in, whatever it was, 2022, 2023, basically in the aftermath of Russia's invasion of Ukraine. And he took a lot of heat for it. From Republicans? No, no, of course from Republicans. They were There was legislation that was introduced. I don't remember what happened with it.
- [14:50]
Katherine Rampel
They said it was bad.
- [14:51]
JVL
They said it was very bad. They said that the Strategic Petroleum Reserve was only supposed to be used for strategic purposes, not for political purposes, such as shielding consumers from the politically painful blow of, or shielding, politicians guess, from the politically painful blow of high gas prices. That's not why you should draw on the Strategic Petroleum Reserve. So they tried to limit Biden's ability to do that. I guess they did not succeed. Biden did not ever replenish, or at least did not sufficiently replenish those reserves even as prices started to come down. Trump also did not sufficiently replenish those reserves as prices started to come down. And when I say replenish, what I mean is they drew out a bunch of oil when oil prices, prices were high, so that, that would depress prices in the, in, in the rest of the market. Then when prices started to normalize, they could have like, in, you know, could have refilled basically that reserve, and they did not.
- [15:52]
Katherine Rampel
So, and the reason they did not do that, to be clear, is because when you start refilling the reserve, you raise demand, which will drive up the price a little bit.
- [16:01]
JVL
Yeah, yeah.
- [16:02]
Katherine Rampel
So this is. It isn't just that they were lazy. It's that they didn't want to, I mean, maybe any pain.
- [16:08]
JVL
Yeah, I mean, it's, it's. It in. To me, it's like a. Similar to the arguments about fiscal responsibility and fiscal discipline in that we end up spending a lot of money when there's a crisis, an economic crisis or some other kind of crisis like the pandemic that forces an economic crisis. We spend a ton of money, we cut taxes. And the idea is that that's supposed to be, in a Keynesian sense, that's supposed to be something that's okay that you do it when the economy needs it, you know, when you want to get back in this cycle of like, you know, demand normalizing and pushing the rest of the economy along so you no longer need to rely on that government support. But then when the economy recovers, you're supposed to like, sock away more, fund, you know, sock away more.
- [17:01]
Katherine Rampel
Right.
- [17:01]
JVL
More tax resource, you know, raise taxes or cut social safety, you know, social services, things like that. The idea being that, like, it'll sort of equalize you, that you, the money is there when needs American democracy. You know, it's like you repair the roof when the sun is shining is the expression that I think I've heard people at the IMF use. And of course we don't do that anymore. A lot of countries don't do that. We are more able to do that
- [17:29]
Katherine Rampel
harder than anyone else.
- [17:30]
JVL
Exactly. Well, because we have the global reserve currency, so we don't really bear the full costs, I guess of not behaving particularly fiscally responsibly. And the same thing that, that, that same bad habit of like drawing down resources when you need them and then not replenishing them when you can greater afford to do so, we've transferred that to basically how we use the Strategic Petroleum Reserve. And it's not an inexhaustible resource. Right. It is a finite amount of oil that we have. So it's not like we can continue using this forever. Which is not really how Donald Trump seems to think about things because he never thinks about the day ahead or the, you know, that the half hour for that matter.
- [18:22]
Katherine Rampel
It's actually a little worse than you say because it is not the case that Trump was unwilling to rebalance the, you know, rebalance the government's role in the economy a little bit when times were good. Because he did get to come into office twice with times being good and things anyway. Instead he cut taxes both times. The, the only real legislative accomplishment of the first term was a tax cut in the midst of a recovery which had been ongoing for like six years at that point. And then he, he did a tax cut again, his only real legislative accomplishment of first termism. So he chose to run the, the already healthy economies hotter.
- [19:12]
JVL
Yep.
- [19:13]
Katherine Rampel
Like, so it's the opposite of what it isn't that he just didn't take the pain. Right. He actually made the problem worse both times.
- [19:20]
JVL
So absolutely fair.
- [19:22]
Katherine Rampel
That's great.
- [19:24]
JVL
I mean, again, this is not a, a sin that is unique to Donald Trump. He's just taken it to new, new levels. Like we have been a fiscally irres nation that has never socked away money when needed basically for the last whatever couple of decades at least. It's just Donald Trump has decided to completely ignore whatever, you know, the, the deficit. Schools have said and say like, no, let's just spend more money, let's cut taxes further.
- [19:52]
Katherine Rampel
And while running as the guy who's going to eliminate the deficit, I don't know if you remember that, but that was also a big first term promise that after 18 months there would be no deficit because he knew, oh, not
- [20:03]
JVL
just a first term thing. He said last year. He said it, you know, he said that that's what the tariffs were going to do. We were going to collect so much tariff money that it was going to be used to eliminate the income tax, pay down the deficit, send out stimulus checks. I forget what else it was supposed to pay. Like, you know, he had like quadruply accounted for how he was going to spend this tariff money, which now, of course, he no longer has. He's having to give back because of the Supreme Court. But nobody has updated any of their promises or forecasts as a result.
- [20:39]
Katherine Rampel
Yeah, that's great. And the, the other part of this then is the Fed, which is independent of the President. Kevin Morris was just sworn in. He chose to have Clarence Thomas, the most corrupt Supreme Court justice in living memory, administer his oath of office. Interesting choice. I'm sure. It doesn't really mean anything. And the markets are now expecting rate hikes, is that right?
- [21:11]
JVL
Yeah.
- [21:13]
Katherine Rampel
Tell me a little more.
- [21:15]
JVL
Yeah, well, last year, I'm trying to remember until about when, but last year markets were pricing in a couple more rate cuts. Now, if you look at sort of the implied probabilities of rate changes going forward, no rate cuts on the table at all, if anything, possibly rate hikes, certainly for the next few months, probably no changes at all, which in Donald Trump's book is just as bad. Right. He gave Kevin Warsh this job precisely because Kevin Wash had promised cutting rates. He cannot deliver on that. If anything, it's going to be much tighter financial conditions going forward. And you know, Kevin Warsh also, even if he wanted to deliver on that promise, which I don't think he really does, like he's known as an inflation hawk, he generally errs more on the side of higher rates and tighter financial conditions. But like, let's say he threw out that lifelong commitment to inflation hawkery and wanted to deliver on his promise to Donald Trump, he couldn't. He has 11 other members of the committee that sets interest rates to contend with, and they don't want to cut rates. So, you know, he can try to twist their arms, but ain't going to work. And so he really has a difficult job ahead of him. And markets are suggesting that they do not think he will succeed. Right. They think that because the inflation outlook has gotten a lot worse in recent months because of this war, the Fed will not be able to cut rates.
- [22:58]
Katherine Rampel
So I have this vision in my mind's eye and it just, it takes me to such a happy place. I want to, I want to, I want to just sort of build in theater of the mind here style for you, Catherine. It is the afternoon after the Fed has announced that there will be no rate cut, and sort of flirted a little bit with the idea of the possibility of rate hikes in the future. And I like to imagine Kevin Hassett walking into Donald Trump's office and saying,
- [23:39]
JVL
kevin Hassett, not Kevin Ward.
- [23:41]
Katherine Rampel
All right, sir, I told you so, sir. If only you had made me share the Fed. Does that give you any happy or. No,
- [23:57]
JVL
not really. Because you're such a good person. Well, I am concerned that, you know, everyone has coddled Donald Trump from really helping him understand the consequences of his actions. Right. And when bad things happen, he denies that they're happening, or he scapegoats someone else, and he never learns his lesson. And in one of the circumstances in which this is very true is his attempts to politicize the Federal Reserve. So I am very concerned that if you do have Kevin Hassett go into the Oval Office and say, hey, if you had put me in that job, I would have delivered rate cuts. Donald Trump will say, you know, you're right, I'm going to fire Kevin Warsh. And if he does that, mayhem would happen. I mean, we potentially would have a global financial crisis. If the president tried, actually did try to fire the chair of the Federal Reserve, which Trump obviously threatened to do multiple times over with his previous Federal Reserve chair pick, Jerome Powell, but was ultimately talked out of it in his first term by Steve Mnuchin, who was then the Treasury Secretary. In his second term, I think people told Donald Trump, look, we know you want to fire the guy, but don't worry, his term is going to end anyway. Just, just hold off a little bit longer and you'll get your guy in. And so rather than like, trying to explain to Donald Trump why it was, it was important for economic conditions and therefore political perceptions of his presidency to have an independent Federal Reserve, which is a, like a very abstract notion and not something he is constitutionally inclined to accept or understand, because he thinks things are better when he just has control over everything. And he can, like, you know, press a button or pull a lever and sure. And have a, have ownership of a company or change interest rates or whatever else, you know, command and control type authoritarian leader would do. He, you know, he, again, he's been coddled. And so the people who should be advising and people like Kevin Hassett should be telling him the best thing you can do for the economy is keep your hands off the Federal Reserve. You want the markets to believe that the Fed is politically independent, because if they don't believe the Fed is politically independent, they are more likely to Assume we will have inflation, higher inflation.
- [26:42]
Katherine Rampel
Does that sound to you like something Kevin Hassett would do?
- [26:46]
JVL
No, no. But that's why I'm saying. This is why I'm concerned. I am not rooting for the outcome where Kevin Hassett goes into the White House and says, see, you should have put me in the job, because Donald Trump will hear that and say, hu. Right.
- [27:01]
Katherine Rampel
I have. Good.
- [27:01]
JVL
Get out of there, Kevin Warsh. And. And all hell will break loose. What?
- [27:05]
Katherine Rampel
It doesn't matter what you root for or don't root for. Your rooting interest has no impact on how this will unfold. And so you could just sit back and say, well, you know, we could just enjoy it if it does happen.
- [27:19]
JVL
No, no.
- [27:20]
Katherine Rampel
That's all I'm saying.
- [27:21]
JVL
I'm not. I'm not rooting for a financial crisis.
- [27:25]
Katherine Rampel
Even if you, you. Even if you did root for that, which I know you wouldn't, because you're a good person and only a bad person would root for that. You're rooting would not make it more likely. It's. These events are independent.
- [27:39]
JVL
Okay, I would enjoy that outcome. And I'm saying I would not. How's that?
- [27:43]
Katherine Rampel
Look, you know what? I like to think that we should enjoy every outcome that life gives us. This is a very Zen thing.
- [27:52]
JVL
Find the silver lining in the financial crisis.
- [27:54]
Katherine Rampel
The Buddha says, life is suffering, and so one must find the joy even there. And. And that's. That's me. All. That's all I'm saying, Captain. You know, whatever outcome we're provided, I can't control it. And so I'm going to learn to enjoy it.
- [28:10]
JVL
Okay, that's it. That's one attitude.
- [28:13]
Katherine Rampel
Certainly, we are going to talk about the unbelievable scale of presidential economic corruption in a moment, because this was a week in which Donald Trump had like six, seven things, each of which would have probably ended a presidency. And it was just like four days. And we're going to talk about that, but first we just do a quick word from our sponsor. We'll be right back.
- [28:42]
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- [30:11]
Katherine Rampel
all right, Catherine, so you and I have our little econ nerd Slack channel that we, we subject other people to listening to us. We're the only ones who ever post on it. It's just like the two of us like sewing circle back and forth to each other because everybody else is normal. It doesn't care about this stuff. You, you, you just sent these things to, to me yesterday and I just stole them and threw them in my, my newsletter. This is Trump Scandals from the last week. He let himself out of a potential $100 million IRS fine. This is from a previous investigation. He gave himself immunity for future IRS investigations for his family and associated entities. We learned that he bought and sold millions of dollars of stock in companies whose profits were directly impacted by his administration. Someone with apparent advanced knowledge of a March 23rd Trump truth Social post about postponing a strike on Iran engaged in insider trading worth about $800 million. He accepted a $5 million donation from the tobacco industry just a few days before deregulating a tobacco product. And his son's venture capital firm went from 200 million under assets, assets under management to 3.5 billion under management. That's a 17x performance jump, which is really good. Good, really good. I mean, it's amazing Goldman doesn't just hire that guy.
- [31:49]
JVL
I mean, I'm sure people are only investing with Don Jr. Because of his financial acumen. No other reason.
- [31:58]
Katherine Rampel
So over at AXIOS they had a thing about this this morning and they, they just use the word unprecedented a bunch. And I feel like that is an, an unacceptable way to describe this. It's, it's like unprecedented is. Is too value neutral. Right. It's like saying that something is controversial. Well, many things are controversial. The Declaration of Independence was controversial. Right. It's good. This is, this is a way. This is like an old George Will complaint, you know, like, this is people who, who see something that they know is really bad, but they think they have to be value neutral. They say, well, they, the, the flamboyant and controversial speaker David Duke, you know, no, just say he's an. But he's terrible. Like, these things, if they aren't crimes, they, well, should be. And, and yet it's all just. Again, this is like four days in the life of Donald Trump.
- [32:59]
JVL
I know. I, I don't flood the zone. Right.
- [33:06]
Katherine Rampel
Other than, am I a crazy person for thinking that this is mindbogglingly bad? And do you think there is any way to ever have this stuff be on anything but the honor system? Because my sense is no, you're really never going to be able to legis. There is no way to. You could legislate closing these loopholes. There'll be more. Can you, can you legislate? You're not allowed to sue people when you're the president. Right. Or something. I mean, like, he'll find a way. Right. Anybody who wants to be corrupt, once you, once everybody understands, like, oh, you don't have to stay. Hold on to the honor system. You, you can't make enough laws.
- [33:53]
JVL
Yeah. Well, I think some of these things probably are illegal. I'm not a lawyer. I don't know. We'll let some other legal advice. Exactly. But my guess is that some of these things actually are illegal. So the problem is allegedly.
- [34:08]
Katherine Rampel
Well, sorry, Heather. Heather and Amy are slacking me as we're, as they're watching.
- [34:12]
JVL
Okay. Allegedly.
- [34:13]
Katherine Rampel
Some of these alleged things are allegedly illegal, maybe.
- [34:16]
JVL
Right, Exactly. Some of them probably are. And the question is not do we have a law that forbids it? It's more do we have a mechanism for enforcing the law? And when you have the executive branch run by the guy who is doing the alleged criming. Alleged. Alleged. Alleged. No, there's no way to actually enforce the law. And I think that is what I see as the bigger problem here right now, as opposed to can laws themselves be written in such a way as to prohibit things like this? I mean, if in fact there was Insider trading that enabled those $800 million worth of oil trades. That seems like something that the CFTC or the SEC could catch someone on it. In fact, the CFTC is reportedly investigating it. So the question is like, will they actually impose a fine if the people who are involved happen to be their bosses? And that's the bigger thing that I'm concerned about. I think more broadly to your question about like where do we go from here as a nation? What I wonder is, does this like overturn, flamboyant criming, alleged criming, does that motivate us as a nation to have a crackdown, like some sort of anti corruption crackdown and like a, a rule of law oriented cleansing or purge? I don't mean like a purging of political enemies. I mean like actually a, a doubling down of a desire to hold politicians accountable to the same laws, politicians and their friends by the way, to the same laws that the rest of us are held accountable to. Does it lead to sort of like a renewed devotion to rule of law in the years ahead or does it lead to more of like a breakdown of trust where look, those guys are doing these bad things, maybe I should cheat on my taxes, those guys are stealing, maybe I should steal too. And that's the, that's the path that I'm more worried that the country is going to go down on. You and I have talked before about the sort of breakdown of trust and how once you go down that path, it is very hard to reverse it. It's very hard to rebuild trust, which has dramatically destructive consequences for democracy, for the economy, for our social bonds, for pretty much everything you can imag. And that's what I'm more worried about. It's like how do we respond as a society and as a democracy to this very, very overt set of abuses of the system, whether they, you know, whether they cross the line into official law breaking or not. I want to make sure that the reaction that we all collectively have is to get rid of this bad behavior, not to justify it when we do it or when our friends do it or you know, our preferred political representatives do it. That's really what I'm worried about.
- [37:40]
Katherine Rampel
Well, I mean if there was a prediction market contract on this, I would not take the side of it'll all work better and we'll, we'll fix this in part because the Trump corruption stuff has not been, it's all been open air stuff. And that, that makes a difference, right? Because when you hide it, even if you get caught and you're not punished. There is a. That is a vice. Paying. Paying tribute to virtue. Right? I mean, this is a. Just a demolition of norms with people proclaiming, no, that stuff doesn't matter anymore because everybody does it anyway. And you're a sucker if you don't just get yours. That's harder to climb back from, I think. Okay, just a tidbit of breaking news. Tulsi Gabbard resigns from the Trump Cabinet. She notified President Trump she was resigning as dni, saying that her husband has been diagnosed with an extremely rare form of bone cancer. It doesn't really have any bearing on us right here, but I just thought I'd pass it along as a note. And you and I have a. As we. We tend to end these shows with more esoteric stuff. And so you. You again, slack me this morning with a little Graham Platner video where he was talking. I'll just let you set the table for this. Go ahead.
- [39:03]
JVL
Yeah. So Graham Platner had this video yesterday that kind of went viral where he talked about how the billionaires are conspiring to make sure that the rest of us don't ever own anything again. And we sort of live life on a subscription based model that we not only rent our homes, but our cars and everything else that we engage with in the economy. And this was pretty striking to me because I had moderated a panel a few days ago for the center of American Progress, where Maxwell Frost was one of the panelists. And he gave a very simp. He delivered a very similar monologue, which he proceeded by saying something about like, I don't mean to put on my tinfoil hat, but I think everybody's trying to like, make sure nobody can own anything. I think we can play a little compilation of those two things.
- [39:54]
Graham Platner
Those who are benefiting off of the system we have now, they know what the light at the end of their tunnel looks like. It looks like none of us owning anything. It looks like everything. Becoming a subscription service, having no right to fix anything that's yours. It looks like a world in which we all have nothing and they sit in paradise behind walls of concrete and guns.
- [40:21]
Maxwell Frost
Not to put my tinfoil hat on, but it's everything. It's. It's housing and we're moving. Current trends continue. Most people, the vast majority of people will not own their home. They'll rent forever. And the rents can continue to go up or down. We don't own the music we listen to anymore. We don't own the movies we watch anymore. If trends continue, most people won't own the car that they drive. And actually if trends continue, most people won't own the phone that they have in their pocket. You won't own a damn thing. And I think, think the home ownership crisis is indicative of something much bigger going on.
- [40:54]
JVL
So I thought this was kind of interesting in part because I've been covering economics for Economics Business Finance for a long time and I feel like I heard a version of this premonition ten plus years ago, except it was a positive version. The sharing economy. Do you remember all of the gushing pieces about the sharing economy? How it was great that we no longer.
- [41:19]
Katherine Rampel
Why does everybody in a cul de sac have to own their own ladder when really you only need one person to own a ladder? And whenever you need to use a ladder which is only like twice a year, you could just go over to that person and rent it for $2. Right. This is like the er, sharing economy example.
- [41:36]
JVL
Yeah, but there were a lot of businesses that, yes, built their business model based around them conception. Right. Uber.
- [41:44]
Ryan Reynolds
Uber.
- [41:44]
JVL
Right. Uber was described as a car sharing service. We still use this word, sharing, which I think is very weird. Sharing implies that it's, it's a gift, you know, it's, it's gratis. It's something that you, you know, you ask kindergarteners to share with each other. You know, they share their toys, not in exchange for, for some sort of like cash transaction. Sharing is supposed to be something you do out of kindness for free. So this was this weird euphemism that was used all the time still to some extent in, you know, home sharing
- [42:20]
Katherine Rampel
with peer to peer was the idea.
- [42:21]
JVL
Peer to peer?
- [42:22]
Katherine Rampel
Yeah, this was, this was back in the early days of the Internet, before it had really all been gobbled up into walled gardens. The, the idea was, oh, these are going to be peer to peer things and there isn't any big platform sitting on top of it, or if it is, that platform is open source, et cetera, et cetera. And anyway, all that, that's all like early Internet, it's all gone.
- [42:45]
JVL
Yeah, I mean, like I said, some of these businesses still exist and have done very well. Uber has done very well. Airbnb done very, very well. But yes, it was really more about peer to peer or like a two sided platform. There were, there are other ways that are probably more technically accurate to describe what these things look like, but sharing was the term of art and now it's like a more dystopian spin on that same conceit that the billionaires, it's no longer seen as a benefit that you don't have to buy a car in a city because you have the availability of Uber and Lyft and other car sharing services. Now it's a conspiracy to keep you from owning a car, to keep you, you know, it's not a benefit that you can stream music and listen to it once and that's it and not have to pay for the incremental, you know, that you have for that particular song. If you don't like it, you don't have to like buy it forever the way that you would buy a CD forever. You know, there are benefits of that for consumers. There are major costs, presumably for artists, among others. But that was seen as kind of a pro consumer development, I think. And now the way that these, these two politicians at least have spun it as like, no, this is a conspiracy to keep you from ever taking ownership of these things that used to be taken for granted as like, I don't know if, you know, homeownership is part of the American dream. I don't know that owning a Taylor Swift song necessarily crosses that threshold. But it was, it's like being described as, this is a thing that you used to be within reach and is now no longer in reach, and you shouldn't want that. Anyway, I just thought it was very interesting because I was wondering, like, were there, were there these talking points pushed out somewhere? Was this focus grouped that. And that's why I happened to hear two progressive politicians use kind of the same talking points in the course of a week. Maybe there was some like TikTok that went viral. If that's the case, please somebody mention it in the comments. If there's something I missed that seemed to have popularized this particular view of the world, but I'm curious to hear your thoughts on whether this is a constructive way to think about the development of the economy and how politicians, institutions talk about the economy.
- [45:16]
Katherine Rampel
So, so Platner spoke very specifically. He talked about the right to repair your phone. This is if, if you are at all into tech nerd circles. The right to repair movement is a big buckaboo because Apple for a long time was like, you know, if you crack the glass on your, on your iPhone and anybody but us pair repairs it, it then basically that's a violation of terms of service. And so you got to pay us the exorbitant, you know, bend you over price to repair your cracked iPhone glass and, and, and other. And otherwise, you know, you don't really Own it, right. The terms of service are such that you might kind of own the physical piece of the phone, but we can brick it anytime we want. Like we, you know, we really own it. The right to repair movement has been pretty successful in Europe, has less successful, but still has made a lot of progress in America. Right. You can now go to third party shops who will replace the glass on your phone for 20 bucks or something. And it doesn't void your terms of service with Apple. So I think that is possibly what Platinum was talking about. This isn't crazy though. There have been two developments, one in tech and one in finance over the last last 10 years or so. The one in tech really for longer than that. Software as a service, right. People, people talk about this all the time. It was the idea that when you bought Microsoft Word in the old days, you bought, you bought a physical, you went to Staples. God, people aren't going to believe this, but you went to Staples and there was a cardboard box and inside the box were a bunch of floppy disks. You brought the disc, you paid $50 for it, you brought them home, you put the in your computer and then you could have. You owned Microsoft Word and Microsoft and Adobe and a bunch of other people gradually changed so that you never own a copy of those things. What you do is you pay a monthly membership fee to, to rent a copy of Microsoft Word or rent a copy of Photoshop, etc. Over time, the idea of software as a service became incredibly attractive to lots of sectors. For instance, in the EV space there are a couple companies which have tried to make it so that there are features in your car which are there. They exist in your car, but in order to access them, you need to be paying a monthly fee to unlock the software. Your car could do it. If you could jailbreak your car the way people jailbreak their phones, then you could get access to those things. But then you're violating terms of services, etc. Etc. Etc. So do you own your car if there's a software lock on it that you got to pay a monthly fee for? So more and more companies in the real world have tried to say, oh, we would like to go with software as a service, because annual recurring revenue is a much, much stronger way to build a business. This is, this is the Costco model. You know, why is Costco so successful? It's because of their membership system. You, you pay your $90 a year for Costco or whatever it is, and that big nut of annual occurring revenue allows Costco to do all Sorts of interesting things as a, as a retailer. Okay, so that's the software as a service side, which is, is a lot of what Platter is talking about. The other side is tokenization. And this came along with the blockchain and the crypto world and the idea that really you should be able to create tokens which could be sold for everything because the financial world really wants everything to be able to be disambiguated and sold in the smallest fundamental particle possible. And so, for instance, you should be able to tokenize your house. So you own a house, okay. You own 100% of the tokens in your house. You should be able to sell those like they were an NFT. And then somebody who owns 10% of your house when you sell it gets 10% of the proceeds from it, et cetera, et cetera.
- [49:46]
JVL
Yeah, but there were, there were a few companies that tried this that as I cannot remember the names off the top of my head, but, but I, my recollection was that they failed. Or at least that you're thinking where
- [49:58]
Katherine Rampel
Zillow is trying to buy up houses and be the seller. Zillow is trying to flip houses, basically.
- [50:05]
JVL
Well, that was interesting.
- [50:05]
Katherine Rampel
The tokenization stuff hasn't happened yet. I don't think this is, again, this is theoretical.
- [50:11]
JVL
I think there have been a few companies that have tried to sell fractional shares of housing that have not done so well. But I'm far from an expert on this.
- [50:20]
Katherine Rampel
Yeah, I mean, famously in, in sports there are, there are contracts that, like baseball. I happen to know about this. Francesco Tatis have. When he was a young upcoming player, he sold a fractional share of his future earnings to a sports management company. And the idea was, and they, I forget what it was like they gave him $300,000 and the idea was that they would get 3% of all his future earnings. And there are a lot of people who work in the tokenization business who think that like everybody should be able to do that. You know, not just Francisco Lindor. Anybody coming out of SUNY purchase should be able to tokenize their, their lives. And so I, I'm just saying that it is not crazy that within both finance and tech there are real incentives and people thinking hard about ways to do what Platner and fraud cost. Talk about. And this isn't brand new, but, but the tech world and the, the finance world are using advances in technology to try to make these things possible. And here's another weird history level lesson. Do you remember DVDs when they first happened Yes.
- [51:37]
JVL
I mean, I don't. When they first happened, I had DVDs.
- [51:39]
Katherine Rampel
Yes, you had DVDs. Right? So, yes. So as we made the transition From VHS to DVD, we had two competing formats for the DVD. We had DVD and DivX. And the idea was the DVD was more expensive, but you owned it. The divx was the same thing as a disc, right? But the DivX disc was incredibly cheap. It was like $2 or something. But your DivX player had a phone line that ran into it, so it needed its own dedicated data line. And every time you played your disc desk, you paid to play it. So all it was, it was like having. Imagine, like video on demand streaming, but sort of in an analog form. And this was an attempt to keep you from owning the things that you bought, right? This is an early attempt. And Americans hated it. They hated DivX so much, and it lost that. That format battle over time, that idea of not really owning the intellectual property, but merely having the streaming rights to it. So you say you buy a Kindle book on Amazon, you don't really own it. If you look deep into your terms of service, you may have paid 17 for that book, but you don't own that book. Amazon owns that. You have the right to read the Kindle version of it according to the terms of service which Amazon sets for you. And this is why there are some people, like our colleague Sonny Bunch, who are absolute cultists about physical media. Because it's like the last thing that you can truly own, right? You buy a copy of a book or a copy of a Blu Ray disc or a vinyl album, you own that and nobody can stop you and take it away from you the way all of the digital media can. This is a very long answer by which you say, I don't think anybody is doing it tomorrow. But it is. It is also entirely like, it's not crazy to think that there are a bunch of billionaires out there working on platforms who would like to strip away ownership for people other than themselves.
- [53:46]
JVL
But I think it's wrong to think of that as not necessarily producing consumer surplus. Like, I benefit from the fact that we have lots of streaming platforms that allow me to watch a movie once or watch a TV series once and not sink a bunch of money into something that it turns out I watch and I hate and I never plan to watch again. So I guess my objection to all of this is about framing this as, like, a conspiracy for which there are no possible consumer benefits. Now, there may be some circumstances where it does suck. Your. Your car gets bricked, or when you were talking about, you know, cars losing some of their services. What's the, the bike, the. The ebike, you know, the, the home bicycle that like everybody bought during COVID Peloton and Peloton. Thank you. Sorry, I don't know where my brain is. Peloton. And it's like peloton bikes, I believe, get bricked up and you can't ride them if you don't continue paying for the service. Or at least this was the case. I don't know. I never had a peloton, clearly, so I'm not sure if this is still the case. But it was all about having that recurring revenue stream. And as long as there's a version of that where you don't get bricked out of the thing, you can buy the cheapo version at whatever, Best Buy or Dick's Sporting Goods or something, which is what I did during COVID I bought a not, you know, an analog version of the bike. I think it's not actually bad for consumers. And so I think the thing that gives me pause is sort of the conspiratorial framing and the idea that people are trying to take away options from you as opposed to give you new options. And I want to work toward an economy where we have. Have new options for things where it is, where the availability of Uber is in addition to the availability of purchasing a car or leasing a car or renting a car that you drive yourself, where if you're Sunny Bunch, you can still buy that DVD or whatever it is. You know, you can buy the, the physical book, or you can go to a library and get something for free. Free, for that matter. Or you can pay for a streaming service or whatever. And so I think it's sort of the nefarious undertones that give me some pause. But you know, you're right that like, maybe there's. There's a, an avenue for some consumer protections in there so that these developments do end up as, you know, more choices for consumers as opposed to fewer.
- [56:39]
Katherine Rampel
The world you're looking for only exists if there's government regulations, I think, because, you know, the markets all tend towards. All markets tend towards monopoly, the way all system tends toward. It tends toward entropy. Right. Over the long enough term. And so you do need protections enforcing some. Some basic rights and stuff. I would just say that the tenor of our times in America suggest that the conspiratorial mindset is absolutely a winning proposition. I know, in that the type of the type of discourse you and I would like to have about this will attract dozens of votes nationally.
- [57:24]
JVL
Dozens. Yes.
- [57:26]
Katherine Rampel
Yeah, this is, you know, that's where we are. All right, my friends, thank you for sitting through another episode of Receipts Live. We'll be back back next week with probably more good news about the economy. I, I am not rooting for a global financial crisis, but I will say to Kevin Hassett that you could still become Fed chair if only Donald Trump has the courage.
- [57:50]
JVL
Don't give him hope.
- [57:53]
Katherine Rampel
I Kevin, the brass ring is right there for you. All you do is reach out and get it. Everybody else, we will catch up with you soon. Hit like hit, subscribe, follow the channel and we'll be back there. Same. Kathryn. Thank you, my friend. Everybody else, good luck, America.
- [58:11]
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JVL
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