Slate Money: "37.8% Scammier"

Release Date: May 7, 2022
Hosts: Felix Salmon (Axios), Emily Peck (Axios), Elizabeth Spires

Episode Overview

This week’s episode of Slate Money dives into three major topics:

• The Federal Reserve’s historic 50 basis point rate hike and its implications for markets, inflation, and VC/startup funding
• The leaked draft Supreme Court opinion aiming to overturn Roe v. Wade, focusing on how businesses are reacting and the potential labor and economic fallout
• The sudden repeal of New York’s transparency rules for art auctions, raising questions about the future “scamminess” of the art market

The hosts also share insights on how these stories illustrate uncertainties in business, economics, and society, and discuss a few lighter segments including their traditional “numbers round.”

Key Discussion Points & Insights

1. The Fed's 50 Basis Point Rate Hike: Are We in an Emergency?

Timestamps: 00:30–14:12

• Context: The Fed raised interest rates by 50 basis points—the largest such hike in over 20 years. This move follows persistent inflation and market volatility.
• Market Reactions:
  • Mixed reactions: The stock market rallied after the announcement but swung down after a poor jobs report and a surprise 100 basis point hike from the Bank of England.
  • Jay Powell’s relatively dovish tone in the press conference reassured markets that a larger hike (75 basis points) wasn’t likely soon ([03:45]).
• Uncertainty & Optimism:
  • Emily Peck: “We’re in a period of just extreme, I hate to say it, uncertainty.” ([04:01])
  • Felix Salmon: Despite headline volatility, the broader market is still trading at healthy levels, signaling “quite a lot of optimism” about a soft landing ([04:59]).
• Explaining Valuation and Tech Slump:
  • Felix & Elizabeth break down discounted cash flows for tech companies: higher interest rates make distant future earnings less valuable, collapsing valuations for growth stocks and hurting VC investments ([07:02–12:20]).
  • Emily: “Now that explanation explains why VCs are upset right now and startups are laying off workers and that’s all kind of looking bad.” ([10:52])
• Monetary Policy Limits:
  • Many inflationary drivers (war, supply chains) are “real things happening that that monetary policy really can't do anything about” ([12:20]).
  • Felix emphasizes the role of massive fiscal stimulus in stoking both recovery and inflation.

Notable Quote:

"It is pricing in basically a healthy economy with decent growth and not crazy inflation and good earnings and everything being relatively nice."
— Felix Salmon ([04:59])

2. Roe v. Wade Leak: Business Response & Broader Economic Consequences

Timestamps: 14:15–30:38

• The News: The leak of a Supreme Court draft opinion overturning Roe v. Wade—“the news of the week, if not the year, if not the past 50 years” (Emily, [14:29]).
• Corporate Reactions:
  • Emily covers how companies face conflicting pressures:
    • Russia-Ukraine: Easy moral clarity, quick response.
    • Abortion: A “50-50 issue.” Companies are advised to “say absolutely nothing” for now ([16:17]).
  • Only a few bold companies (e.g., Levi’s) support reproductive rights publicly.
  • Tension between “what companies say” (statements) and “what companies do” (employee benefits, business decisions).
• Legal Risks:
  • Elizabeth highlights possible complications for companies aiding employees seeking abortions, especially under Texas-style bounty laws ([17:46]).
• Impact on Business Operations and Recruiting:
  • Wall-to-wall silence is unlikely, says Elizabeth. Employee activism (as seen at Disney) may force company leaders to respond publicly ([21:10]).
  • Potential implications for recruiting and retaining talent, especially women, in states with strict abortion laws.
• Macro Effects:
  • Emily: The likely result would be lower female labor force participation, worsening wage gaps and poverty among single mothers ([26:15]).
• Long-Term Labor Impact:
  • Roe’s reversal could “reshape the labor market to the worse at a time when the labor market needs more people,” Emily observes ([28:08]).

Notable Quotes:

“One of the things I was thinking about ... with this is, even though these companies ... help people leave the state to have abortions. Do they incur some liabilities there?”
— Elizabeth Spires ([17:46])

“It’s a little frustrating to think that, like, women’s equal rights is something you don’t want to touch as a company. But, you know, you’re out there supporting Ukraine, you’re out there supporting LGBTQ rights also.”
— Emily Peck ([18:57])

"If abortion does become impossible in certain states, then that will affect how people think about long term planning and where they want to put their families."
— Elizabeth Spires ([25:35])

3. Opacity Returns: Art Auction Regulation Repeal

Timestamps: 30:46–40:48

• Background: New York repealed rules requiring transparency by auction houses; these had set a global industry standard.
• Potential Effects:
  • The art market could become “37.8% scammier,” as the episode title jokes ([32:56]).
  • Examples include rules around “guarantees” (minimum payments to sellers), accurate price estimates, and “chandelier bidding” (fake bids to drive prices up).
  • The hosts muse on whether auction houses will retain their transparency voluntarily or revert to more opaque practices now that the law is gone.
• Comparison to Crypto:
  • Felix notes a societal double standard: “If you guys are all grown adults and perfectly happy to throw away your money on crypto scams, then why are we trying to even regulate the auction houses?” ([39:58])

Notable Quotes:

“The auction houses have always positioned themselves and honestly have always been the least scammy and least opaque part of the art world. The currency of the art world is secrets.”
— Felix Salmon ([33:09])

“Why do you think they decided to do this? Like, what made New York City say, you know, you know, who really needs the financial help right now? Sotheby’s.”
— Elizabeth Spires ([38:11])

Numbers Round

Timestamps: 40:53–45:35

• Elizabeth: 1.5 – For every one male student, 1.5 female students enroll in college; “largest gender gap in history” for college ([41:47]).
• Emily: 45% – Percentage of new Fortune 500 board appointees in 2021 who are women, a record high. It was just 18% in 2009 ([42:36]).
• Felix: 107 – £107 per year to park a bicycle in an Islington bike hanger—over four times the cost of an electric vehicle permit (£25)—demonstrating odd supply/demand dynamics ([44:01]).

Memorable Moment:

Emily’s analysis: “That’s where all the equality is happening amongst these very high paid, very elite corporate board members. And I just...tick of that what you will.” ([43:42])

Notable Exchanges & Quotes

• On the Fed and Uncertainty:
  • “No one really knows if what the Fed is doing is going to work on inflation ... no one knows. No one’s lived through this before. The playbook is...being written.”
    — Emily Peck ([04:01])
• On VC repercussions:
  • “What’s happening in the VC world is, yeah, this is hurting early stage valuations a lot ... Now we’re in a positive interest rate environment. Those profits in five or ten years which are uncertain, are just worth much less to people than they used to be. And so valuations for early stage companies are coming down.”
    — Felix Salmon ([11:06])
• On Roe v. Wade & Business:
  • “Employers are putting the issue on the agenda of companies, and companies are kind of like scared of their workers now.”
    — Emily Peck ([22:11])
• On Art Auctions:
  • “No one’s doing any murder so let’s make murder legal.” [mocking the logic behind the auction rule repeal]
    — Emily Peck ([39:53])

Chapter Timestamps for Major Segments

• Fed Rate Hike Discussion: 00:30–14:12
• Roe v. Wade Leak & Business: 14:15–30:38
• Art Auction Transparency Rollback: 30:46–40:48
• Numbers Round & Closing: 40:53–45:35

Tone & Language

The episode is conversational, witty, and at times sardonic, with the hosts actively digesting complex stories by linking them to broader societal trends and sharing their own (often sharp) opinions. Felix acts as the explainer and provocateur; Emily brings economic rigor and a critical eye to gender and labor; Elizabeth provides historic context and policy nuance.

Final Thoughts

This episode of Slate Money expertly unpacks the week’s economic and business news, weaving together monetary policy, social change, and the peculiarities of the art world. It underscores the structural uncertainties facing markets and workers alike, and places the “scamminess” of art auctions into a broader frame of public trust, regulation, and risk.