Slate Money – “All Policies are Economic Policies”

Date: October 31, 2020
Host: Felix Salmon (Axios)
Guests: Emily Peck (HuffPost), Anna Szymanski (Breakingviews)

Episode Overview

This episode of Slate Money explores the intertwined nature of politics and economics, particularly in the context of the 2020 U.S. presidential election. The hosts discuss the implications of the latest GDP report, the actual influence presidents and Congress have on economic performance, the critical role of monetary policy and the Fed, and private equity's impact on real businesses, using the PetSmart/Chewy case as an example. The discussion threads through themes of fiscal versus monetary stimulus, the reality and perception of economic leadership, and the often-overlooked mechanisms driving economic well-being.

Main Discussion Segments & Timestamps

1. Presidents, Congress, and the Real Impact on the Economy

(00:30 – 14:35)

• GDP’s Astonishing Rebound:

  • Q3 2020 saw a “33.1% annualized growth rate,” but it's “a statistical artifact” after the Q2 plunge.
  • “It’s objectively a terrible economy… yet in the face of this, the population as a whole trusts Trump on the economy more than Biden.” — Felix (05:30)

• Do Presidents Really Matter for the Economy?

  • Influence depends on Congress control and timing (business cycle).
  • Major events like FDR's New Deal, Lyndon Johnson's Great Society, or foreign crises (e.g., the pandemic or end of the Cold War) have outsized effects.
  • “No one president’s gonna be able to change all those things... but at certain times they have a massive impact.” — Anna (03:20)

• Skill, Luck, and Economic Cycles:

  • Timing is everything—Bush Sr.’s stumble, Obama’s wind at his back, and “luck” in inheriting expansions or recessions.
  • Congressional opposition can stymie presidential plans (example: Obama and stimulus versus austerity).

• 2020’s Unique Overlay: The Pandemic

  • “The key to the economy right now is really getting the pandemic under control... we’ve seen how Trump does that, and we know he doesn’t.” — Emily (04:08)
  • U.S. abdicating global leadership worsened economic outcomes both domestically and internationally.

• Perception vs. Reality in Economic Stewardship

  • Why does Trump poll better on the economy?
    • “He shouts very loudly about the stock market... judge me by the stock market.” — Felix (13:51)
    • Benefit from continuation of a long recovery phase led to perceived economic strength pre-pandemic.
  • “Fundamentally, all policies are economic policies to a certain extent.” — Anna (11:30)

• Inequality and Growth

  • GDP can rise while many suffer—rising inequality means broad parts of society don’t benefit from growth.
  • “Once you start to have extraordinary wealth concentration... you want to be getting more money to the lower income deciles.” — Anna (13:12)

2. Monetary Policy's Limits and Potential “Bazookas”

(15:11 – 24:51)

• Is the Fed Out of Firepower?

  • The saying is, “the Fed is the only game in town,” but officials like Bill Dudley say they're out of tools: rates at zero, QE maxed, no more tricks.
  • Felix raises Megan Greene & Eric Lonergan’s “dual interest rates” proposal: central banks could give banks money at negative rates, yet keep deposit rates positive—forcing banks to lend.
  • “If you really enforce a rule... the money does wind up going into the economy and it is basically stimulus.” — Felix (17:33)

• Anna’s Critique: Demand, Not Supply, Is the Problem

  • Even negative interest rates or creative monetary operations don’t directly create demand; they mostly support banks and asset prices, not Main Street.
  • “You can throw all the money you want at banks... but the problem is, if no one really wants that money, the problem is not that they can’t access the capital, it’s that there’s no demand.” — Anna (18:36)
  • In the U.S., structural differences from Europe (less bank-driven lending) make such approaches less effective.

• Why Fiscal Stimulus Works Better

  • Direct transfers—as done during the CARES Act—rapidly boosted spending among those who needed it (and would spend it).
  • “It seems like giving free money to banks to make loans is so...many levels removed from what’s actually necessary... It just seems so removed from reality.” — Emily (24:07)
  • European wage supports kept money flowing directly to workers, showing efficacy of direct fiscal policy.
  • “It’s much more efficient to just give money to bartenders than it is to try and... lend money to banks and hope that eventually that money will find its way to bartenders.” — Felix (23:23)

3. Private Equity, PetSmart, and Chewy: A Case Study

(24:51 – 37:34)

• The Backstory

  • Private equity firm BC Partners buys PetSmart, then Chewy.com (2017). Chewy IPOs, now worth ~$30bn—massive paper value creation.
  • Despite this, PetSmart remains debt-laden, with a junk credit rating and little benefit from Chewy’s success.

• Disentangling Chewy and PetSmart

  • BC Partners separating Chewy from PetSmart, leaving the latter without e-commerce and not much better off.
  • “At this point, it doesn’t make any sense to keep those companies together because what Chewy.com is doing is basically cannibalizing business from PetSmart...” — Anna (26:43)

• Financial Engineering vs. Real-World Value

  • The integration opportunity—synergy between brick-and-mortar and online stay unrealized.
  • “If you look at PetSmart as a company rather than as like portfolio holding... none of this seems to have been good for them.” — Felix (30:46)
  • Financial maneuvers benefited shareholders, not employees or communities.
  • “Private equity is just not good at creating real value in the community as opposed to making money for billionaires.” — Felix (32:06)

• Alternative Visions (and Regret)

  • Hosts draw a contrast to Amazon/Whole Foods as a potential missed model for “omnichannel” integration.
  • “There was a lost opportunity here…I would think, to cross promote, cross brand, you know.” — Emily (35:24)

4. Numbers Round & Notable Tidbits

(37:53 – 42:32)

• Anna:

  • 142,000 Korean Won - The value of BTS management’s stock has plummeted from IPO heights, suggesting K-pop stardom is volatile. (37:58)

• Emily:

  • 2 documentary series - On the NXIVM cult, reflecting societal interest in cults, scams, and crime. Parallels drawn (tongue-in-cheek) to U.S. politics. (38:43)

• Felix:

  • 10 miles per gallon - UPS trucks’ fuel inefficiency; spends $1 billion/year on gas. Notes opportunity for green stimulus to update delivery vehicle fleets. (41:01)
  • “If I was say a president wanting to come in with a big green stimulus program... replacing all of the UPS trucks with electric trucks would be a bit of a no brainer.” — Felix (41:01)

Notable Quotes & Memorable Moments

• On the nature of policy:

  • “Fundamentally, all policies are economic policies.” — Anna (11:30)
  • “The economy is made up of everything everybody is doing.” — Anna (11:42)

• On COVID-19 and leadership:

  • “If we had at least had someone who took this seriously from the very beginning and put in policies to limit the spread… we…would not be in the place we are right now.” — Anna (07:24)

• On inequality and aggregate demand:

  • “A lot of the policies we’ve had over the past 15 years… have inflated asset prices, but they haven’t done a lot for underlying growth.” — Anna (13:12)

• On PetSmart/Chewy:

  • “Financial shenanigans. It seems like to me, like no one was thinking… about… puppies and selling pet food.” — Emily (29:23)

Tone & Style

• Conversational, sometimes irreverent (“chaos monkey in the White House,” “pet dumb now?”).
• Blends data/evidence with anecdote, humor, and context.
• Occasional self-aware meta-discussion of their own punditry and economic guessing.

Conclusion

This episode makes the case—sometimes with tongue in cheek, sometimes with urgency—that economics and politics are inseparable. Presidents matter most in moments of crisis or when large policy levers can be pulled, but often, economic fortunes are just as much about luck, timing, and underlying structural forces. Central banks have impressive tools but can't fix everything, and fiscal stimulus is crucial in times of crisis. Meanwhile, financialization and private equity reshape industries not always for the better, providing a lens into how real economic impact can diverge widely from financial windfalls. The hosts call, through both analysis and frustration, for more straightforward, direct connections between policy and people—and for voters to consider the real engines of prosperity.