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- [00:10]
A
Hello. Welcome to the Burning Platform episode of Sleep Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios, here with my colleague Emily Peck.
- [00:25]
B
Hello. Hello.
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A
And Elizabeth Spires.
- [00:27]
C
Hello.
- [00:28]
A
And we are going to talk about Southwest Airlines booking platform and how it blew up over the holidays. We are going to talk about non competes and whether the entire country can or should move to become basically California where non competes have been outlawed for as long as I can remember. We have a Slate plus about E bikes and of course, because this is late money and we can't go three weeks without talking about crypto, we're going to talk about Silvergate, which was a big bank which suffered bank run and it's crypto related. And we're going to talk about regulation of crypto and finance more generally and where it's working and how it should work. It's all coming up on Slate Money. Emily, this is a big day for workers. You called it in. Axios. What was it like the biggest thing that the Biden administration has ever done for workers?
- [01:26]
C
Yes.
- [01:27]
A
What is it?
- [01:29]
B
So earlier this week on Thursday, the Federal Trade Commission proposed a rule that would ban employers from requiring their workers to sign non compete agreements. These are contracts where you say, after I leave this company, I won't work for a competitor for one, two, three years. And non competes used to be a thing that like executives had to sign because, you know, they didn't want to run off with the secrets of the company and take them to a competitor. But in more recent years, everyone has been made to sign these things. Sandwich makers, famously Jimmy John sandwich makers, hairdressers, security guards, baristas, you know, people where it's just like these people need jobs. They need to be able to go and make more money somewhere else and they are bound by these non competes. So the FTC is proposing essentially like a blanket ban on companies doing them. So I said this was really like we talk about the Biden administration being pro labor and doing a lot of things for unions and whatnot. But this is more, if this rule were enacted, would affect a broad range of workers across a wide variety of industries at all different kinds of levels. It would be really far reaching.
- [02:45]
A
So the first question and most obvious question is is it going to become law? Like the FTC has a democratic majority. Can the FTC just with three commissioners wave their magic wand and make.
- [03:00]
B
Yeah, I mean that is the question. And so the FTC has made a lot of rules on one side of its mandate, on the Consumer protection side, like when you go to get a prescription, when you go to get your eyeglasses from the eye doctor, they have to give you a prescription that you could take wherever when you get your.
- [03:18]
A
Ah. So they don't, they don't keep hold of it. So you need to go back there because they're the only people who know what your prescription is.
- [03:24]
B
Yeah, the ftc. Yeah, the FTC made a rule like that. And like they make all kinds of rules to protect consumers, but this is a rule rule on the other side on their anti competition mandate. And from what I understand from the lawyers I spoke to, they're not usually in the business of making rules like that on that side. So this is just unprecedented.
- [03:45]
A
So it is certain that a bunch of businesses would sue to say that they didn't have the authority. And if it goes all the way up to the Republican dominated Supreme Court, then it's a very good chance that the Republican dominated Supreme Court would say, no, you can't do this.
- [03:59]
B
Yes, exactly. And right now the vibe is very anti regulation, anti rules. This is the other case, the epa, West Virginia case where they said the EPA can't make a rule because it's not explicitly mandated by Congress. Please don't yell at me about how I just sum that up.
- [04:16]
A
But the TLDR here is that really if we want to ban, to make sure that we're banning non competes, that needs to get done in Congress rather than by fiat from the ftc, which kind of makes sense. It does feel like a law. And that's the kind of thing that lawmakers are there to do.
- [04:35]
B
Yeah, I think so. And there is a bill floating around and Marco Rubio supports it.
- [04:39]
A
Marco Rubio supports it?
- [04:41]
B
Yeah. Surprising. I know. You know, the Chamber of Commerce yesterday, like you would think all the Republicans would be against it, but the chamber came out and said it was awful and unlawful and all this. Yeah, the Congress should probably pass a.
- [04:53]
A
Law, but if there's some Republicans and nearly all Democrats, then there's some kind of visibility as to how this might become law.
- [05:04]
B
I mean, maybe, I don't know. I mean, I mean, it does cost.
- [05:08]
C
You know, businesses more money to actually try to recruit when they have to figure out whether they're violating non competes and potentially incur some liabilities.
- [05:18]
B
Yeah.
- [05:19]
A
How much does it cost?
- [05:20]
C
There was a number in this Time story this morning and I don't have it in front of me. But the logic behind non competes in the first place is that it sort of allows businesses to be able to invest training into employees and expose them to sensitive information. And that logic by itself I think is transparently not very good when you consider that a lot of people in these positions go into jobs where they don't really have very much training to begin with and they're not in positions where you get exposed to sensitive information. And also the companies have an, instead of to train their own employees and where necessary, expose them to those things. So the corporate argument for non competes is pretty weak.
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A
Well, the corporate argument for non competes, as I see it, relatively simple, which is this is a bargain that we're making and we will maybe pay you a bit more or whatever. Like we are entering at arm's length into an employment agreement. And there's an obvious reason why I as an employer would want you to sign a non compete. Because it makes it harder for you to leave me and go find.
- [06:29]
C
Yeah, that's true. I'm just saying that the facially stated reasons for having them.
- [06:35]
A
But you know, even the real reason, right. Like if we say that the real reason is that it makes it harder for employees to leave and that makes it easier for you to, you know, it's a way of reducing turnover. Like it seems like on a, you know, on a corporate level you can see why the Chamber of Commerce would come out against this. Right. It makes sense. So there is a logic there. It's not logic, it's not illogical that these things.
- [07:00]
C
I wouldn't say that. I would say that there are downsides even for companies.
- [07:04]
B
And the logic, I think, that progressives openly talk about and companies aren't going to talk about is that it keeps wages low, it lets employers pay less money to their employees, bottom line. And it reduces competition.
- [07:18]
A
Right. And so if it keeps, in terms of the grand sort of tension between labor and capital, non competes are bad for labor and therefore at the margin good for capital. They're good for the employers.
- [07:31]
B
Yeah. And because they're so widely used, I would say it's not just at the margin.
- [07:34]
A
But the point is that's why the Chamber of Commerce came out against the ftc. That's why it's a democratic FTC that's doing this. It does sort of fall relatively natural into those camps. Right. It's not, you can, you can make an argument that corporations in California are more successful than corporations in the rest of the country on average. And California doesn't have non competes. And there's, you know, and these things are related and that the sort of corporate vibrancy that you get from having the sort of competition that you see in California is ultimately good for robust capitalism. And I would, I would actually make that argument, I believe that. But by the same token, you can see how if you're in a certain situation, you don't want to get thrust into the sort of higher competition, more red blooded capitalism when you can just collect your rents from non computes instead.
- [08:31]
B
Yeah, and I think not all companies like them. I got a note this morning from Yelp, which got embroiled in a whole thing with Groupon, which had a non compete for one of its employees and they wound up in court. You know, I think some companies would like to just be able to hire people without worrying, like Elizabeth was saying, without worrying if they're.
- [08:51]
A
Well, I mean specifically California companies like Yelp that don't have non competes anyway would not work. Whereas Groupon was in Chicago and.
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B
Right.
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A
You know, so like, and in the.
- [09:01]
B
Remote world though, it's a little more, I think, confusing about.
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A
Yeah, now, now we're like, basically now we're all remote. We should all consider ourselves to be working in California. Right?
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B
Yes, yes, I will argue that.
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A
And just you know, on which note, I'm down to the beach. I'm gonna take an hour off to go surfing. But thanks to the magic of podcast editing, I'm now back from my hours surfing. I got some great.
- [09:26]
C
I'm surfing.
- [09:26]
A
As we're recording back from this question of non competes, we can move on to Silvergate, which is a bank, a real honest to goodness federally regulated bank which takes deposits and had, it turns out, one of the biggest bank runs that I think America has ever seen. An absolutely astonishing statement came out this week from Silvergate, basically saying that it lost $8 billion of deposits in the space of three months and that took it from, what was it, 13 billion to 5 billion, something like that. It was just, yeah, it was basically a 70% drop in deposits in the space of three months. And there were reasons for this which we can get into, but amazingly it seems to have survived and it doesn't seem to have run into massive liquidity problems. And maybe the first thing to say here, which is worth saying, we can talk a lot about crypto and the crypto winter and ftx because it was a very sort of crypto heavy bank. Still is. But it seems to me that obviously FTX being part of the Bahamas didn't help it at all and it wound up imploding. Ftx, US being a US regulated institution, still imploded. But the one form of Regulation that really seems to have ensured genuine safety is bank regulation. And Silvergate is alive.
- [11:00]
B
Who regulates Silvergate?
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A
The Fed.
- [11:03]
B
Well, there you go. And can you talk more about, actually, Felix, what a crypto bank even is? I don't think I understand.
- [11:10]
A
So the crypto world and the fiat world, you know, DEFI and Tradfi, if you will, are largely parallel and incommensurate. We have seen very, very little contagion from the crypto winter into the broader market and into the real economy precisely because. Because the crypto world is so cordoned off from the rest of the economy. And yet obviously you do need some kind of way to connect the two. You need a bridge from one to the other. You need to be able to convert dollars into Bitcoin, bitcoin into dollars. You need like cryptocurrencies to be able to bank with a banking institution and so on and so forth. You need basic financial architecture so that, you know, let' Sequoia and I want to invest a bunch of dollars into FTX and I need a bank account that I can wire those dollars to. And Silvergate is and always has for many years been the foremost bank in that sector. And it had a lot of deposits mostly from crypto companies who just needed to be able to interact with the real world from time to time.
- [12:29]
B
They were very exposed to ftx.
- [12:31]
A
Now, it's not clear whether Silvergate was exposed to ftx, but what we do know is that Silvergate was exposed to crypto generally. Crypto generally needed liquidity and so probably pulled a bunch of money out of Silvergate because they needed it. But also just there was this very broad feeling of I don't want to be a depositor anywhere. Deposits are unsafe in crypto and these deposits, it turns out, were actually perfectly safe. But people didn't necessarily know that or didn't trust the Fed or the FDIC or whoever to insure those deposits. And so people were like, I am going to do that thing that crypto people do, which is take money out of all of the institutions where I'm storing money and just hold it in my, in like in cold storage on my own private keys and keep it to myself. So maybe that's what happened. But certainly what happened is you had this massive 70% drop in, in deposits, but Silvergate was able to go out and borrow $5.4 billion, which was impressive. And they gave that all out to depositors who are withdrawing their money and their share price is down 90% from where it was at the top. Of the market. But that's the way it should work. Right, Is that the first thing that gets hurt is your share price and your income, but the depositors are safe.
- [13:49]
C
So what's the path forward for them? Do they just wait until people are more comfortable with crypto again, or do you think that changes their business model at all?
- [13:59]
A
So, yeah, I think the path forward for Silvergate is really the same as the path forward for Coinbase or for any other surviving crypto company, which is to desperately hope and pray that crypto comes back. Right. Because if crypto doesn't come back, if people don't want to be in crypto anymore and people aren't interested in crypto anymore, then all of these other companies that sit on top of crypto and provide services to the crypto world, they have no one to provide services to anymore, and so they have no raise on debt.
- [14:34]
C
Yeah. We should also mention that in order to handle the withdrawals, Silvergate had to sell off assets, and they lost around 718 million doing that, which is more than the entirety of profits that they've made over the last decade.
- [14:50]
A
Oof. Yeah, they were definitely in growth mode. So on the one hand, that's true and it's not a good look, but again, like, that's kind of how it should work, I think, you know, Silvergate over the past decade was not in maximizing profits mode. It was definitely in trying to grow and, you know, attract as many customers as possible mode. Obviously, that is over now. Like, it's losing customers rather than gaining them, and it's losing money because it did wind up having this. This bank run. And bank runs are normally fatal for banks. Right. Most. I'm going to just come out and say that most banks in America, if they lost 70% of their deposits in the space of three months, would be taken over by the FDIC and sold off in pieces to some other bank. But that didn't need to happen in this case. Yeah, I'm broadly skeptical that crypto will bounce back. And if it doesn't bounce back, then Silvergate will ultimately sort of fade into nothingness. But with any luck, it will fade into nothingness in a way that doesn't harm depositors, which is the thing that, you know, you need to really worry about in the rest of the crypto world.
- [16:00]
B
So the thing that they did that is distinctive and unusual in the crypto world is that they took their deposits and they put them in safe places. Like I read, they put them in, you know, treasuries and Things like that.
- [16:12]
A
Yeah, well, their deposits were dollars. Right.
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B
They weren't, you know, stealing them, say, for their own investment arm, like some companies might have been doing, like they were doing reasonable things with the money. And I guess that's because they were regulated or because they're not crooks or I don't know.
- [16:27]
A
Yeah. And they weren't in the business of net interest margin in the way that most banks are. Right. Their business wasn't like take in deposits at 1%, lend them out at 5% and make that 4% margin. They had to do something with the money that they were given in deposits and they put them into bonds and other fixed income instruments. And then when interest rates rose, those fixed income instruments fell in value. And so when they needed to sell those fixed income instruments because people were withdrawing their cash, they had to take that $700 million loss because the bonds that they had bought had declined in value. But that wasn't a crypto related decline. That was just a natural decline that happens when interest rates go up.
- [17:10]
B
Is there anything else going on in crypto you need to update us about, Felix?
- [17:15]
A
I mean, I was reading your newsletter earlier this week, Emily, and there was something about the CEO of Celsius getting sued by Tish James, the New York Attorney General, for basically lying about how safe Celsius was. One of the interesting things there is that it came from Estate AG rather than from the SEC or any federal.
- [17:38]
C
Regulator, although the New York State AG has played that role a lot historically.
- [17:43]
A
Yeah, the New York State AG is definitely, you know, does institutionally consider itself to be like one of the foremost regulators of the financial industry. Celsius was not really a New York company and was not really a, you know, financial company in, in terms of tradfi. But yeah, she saw this behavior and she said, this is not good. And one of the things that makes it a lot easier for her to do this than the SEC is that she doesn't need to prov. Securities fraud. They don't need to be securities here. She can just say, this is fraud. You were making these statements. These statements were false. People trusted you because you were making the statements and they gave you money and they lost their money. And that's all she needs to prove. If it was the sec, they would also need to prove that, you know, the things that people were buying were securities. And that would be a harder hurdle to clear.
- [18:31]
B
How hard would it be? I mean, I think the product at issue in Celsius, correct me if I'm wrong, and I know in, in Genesis, the Winklevi company.
- [18:40]
A
No, no, no, that's Gemini.
- [18:43]
B
Gemini. I cannot.
- [18:44]
A
Genesis is digital currency group. Barry Silver.
- [18:48]
B
All right, fine. So back to Celsius. I believe the product at issue was basically, they marketed it to look like a savings account, but it was very high interest. Like you could deposit your crypto or your dollars, I think even, and get.
- [19:01]
A
You could deposit stable coins, not dollars. You could deposit coins which are always worth $1 and you could get 8% interest on them. Yeah.
- [19:09]
B
And people, I think, viewed them as a relatively safe bet, akin to an FDIC insured bank account. And the SEC went after a few of these, but not all of them. And now there are people that do have money kind of trapped in the Gemini. Do I have that right? Yeah, Gemini. Because it's twins. It's Winklevi. Their account was Gemini. And yeah, I've been messaging with someone who, you know, has like thousands of dollars trapped in these accounts. That, and I feel like that is pretty clearly, isn't it securities. I mean, you can't go around saying, I mean, like you're like a bank when you're not a bank.
- [19:49]
A
No, okay, that's the two, two different statements there, one of which is true and one of which is false. The one which is true is that you can't go around saying that you're like a bank when you're not a bank. 100% agreed on that. If you go around saying the FDIC insured, the FDIC will crack down on you. You can't do that. There are very, very strict regulations about calling yourself a bank or implying that you're as safe as a bank or that you have the government insurance that is inherent to being in a bank, all of that. So insofar as Celsius was doing that, and this is what the Tish James lawsuit is basically doing, is that this guy was implying that he was a safe investment when he wasn't. That's fraud. That's illegal. 100%. The thing that's not true is that bearing savings account is pretty clearly a security because it's not. An interest bearing savings account is not a security. If I have an interest bearing savings account at bank of America, that is not a security. So it's not clear how the SEC has jurisdiction over that. It is confusing this web of regulators in the United States. You have individual states attorneys general, you have the federal attorneys, you have, have the sec, the cftc, the ftc, the Federal Reserve, the cfpb, the occ. There's no end of regulators. Right. And you need to, as a regulated company, be sort of on good terms with all of them and then one of them can come out of the woodwork you barely even knew existed and start cracking down on you. It's not easy being a financial company in America in terms of clear visibility into who your regulators are.
- [21:26]
B
But that's what they. That's what. Not to sound conspiracy theoristy, but that is what they want.
- [21:32]
A
Is what who wants?
- [21:33]
B
The financial institutions. They don't want to be heavily regulated. Typically we can, we can say. That's what I see.
- [21:40]
A
I'm not sure, I'm not sure about that.
- [21:44]
B
Come on.
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C
They don't want it. But they do want clear guidance, especially in crypto about what constitutes a security and what doesn't.
- [21:51]
A
Well, the crypto. Well, no, the crypto people just want everything to be clearly not a security.
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C
Oh, of course. They want the SEC to come out and say explicitly, here are the lines.
- [22:01]
A
Right. Well they, which they have actually done. The SEC has actually come out and said that the two main ones, Bitcoin and Ethereum and not securities.
- [22:08]
B
I think it's pretty clear that the bank lobby, for example, has been fighting the CFPB since it was even before it was created because they don't want to be strictly regulated. They don't want that kind of supervision. They don't want to be restrained in what they can do.
- [22:25]
A
I think, I think that's half true. Like banks in general prefer less regulation to more regulation. But at the same time, when there is, when they're worried about upstart competitors, when they're worried about fintechs, one of their big comparative advantages is the fact that they have massive compliance departments who can make sure that they get everything right and who are in touch with 87 different regulators in 50 different states. Right. And they, they have the wherewithal to be able to do that. They spend billions of dollars a year on compliance. And if you are some fintech startup trying to compete with them, you cannot spend billions of dollars a year on compliance. And that makes it very hard for you to get off the ground. And they kind of like that. They like that kind of oligopolistic status that they have of you can't break into this big boys club because you don't have deep enough pockets to be able to deal with that massive Alphabet soup of regulators.
- [23:24]
B
So, so there you go. That's. That actually proves what I was saying initially, which is the banks want there to be a big Alphabet soup of regulators because it makes the Landscape really hard to navigate. I think it's bad for regulation, bigger picture. To have so many different players with so many different ways of working and various degrees of revolving door stuff going on. You know, there's people who say the CFTC is lax or the CT SEC is this or blah, blah, blah.
- [23:52]
A
There is no good reason why the SEC and the CFTC should be two different organizations. It makes no sense at all. The only reason for that is politics in the Senate. You know, one of them is governed by the Finance Committee and the other one is governed by the Agriculture Committee. And that's the dumbest possible reason to keep them separate. But it is the reason that has kept them separate. The one good thing that came out of the financial crisis in 2008 was at least we got rid of the ludicrous system that we had before then. That there were two different bank regulators. There was the OCC and the ots. And everyone's like, why are there two different bank regulators? That makes no sense. So the OTS got effectively abolished. Now everyone is just the occ. That's good. But we should do the same thing with the cftc. We should just abolish it and move all of that under the sec.
- [24:41]
B
Yeah, there should be some consolidation amongst the regulators, but towards the stricter end of the regulation.
- [24:47]
A
Exactly. Always on the side of stricter. Right.
- [24:50]
B
That's what the libs want.
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A
That's what we like bleeding heart liberals at Slate Money want. Elizabeth Spires.
- [24:59]
C
Yes.
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A
As the expert on all things plane travel, and I say that you're an expert on all things plane travel just because you wrote a column about it in the New York Times, what can you tell me about the Southwest Airlines fiasco that happened over Christmas was precipitated by weather. It was exacerbated by the fact that they don't have a hub and spoke system. But ultimately it was a software problem.
- [25:24]
C
Yes. So Southwest has a fairly antiquated system for rescheduling where flights and crews are when they have problems like this. So what happened was kind of a cascading crisis that started out with bad weather and delays all over the place and cancellations that affected basically every airline. But most airlines do have systems that allow them to reschedule where crews are on the fly. Southwest forces crew members to actually call into headquarters and kind of manually tell them what's going on and then get hotel rooms or whatever logistical things they need rescheduled that way. And so you had a lot of Southwest crew members on hold with Southwest for hours at A time and then going out of the zone where they're allowed to continue to fly because for safety reasons you have to give crew breaks between flights and they need to sleep.
- [26:19]
A
And sitting on hold with headquarters counts as working.
- [26:22]
C
Yes, and that's insane. So the whole reason this is happening is because their software system is hugely antiquated. The last CEO made excuses for it and said they had wonderful technology and this, to be clear, happened under the new CEO's watch. But this is a problem that it hasn't been fixed. And this is a problem in a lot of especially more mature industries where you have what's called technical debt, where your system is outdated or there are problems with it. This also happens in startups because you ship software very quickly and it's not really ready for primetime. And then you just incur all these problems that pile up and the situation gets worse and you have a situation like what Southwest had, where everything kind of implodes at once and the weaknesses of the technology become apparent. And I learned today that that kind of technical debt is specifically referred to as a burning platform, which if you needed an urgent way to kind of frame what's happening, I think suggesting that the thing is on fire is a pretty good way to do it.
- [27:22]
A
I feel like there was a famous speech that someone made about Nokia calling it a burning platform, but I would need to look that up. The question I have here is, is the institutional reason why it's so difficult to fix this problem. Many, many years ago I did some work for a consulting company who did one of their jobs was to work out the software that would do the scheduling for NetJets and just basically look at who wants a private jet going from here to there and work out what makes sense and says, let's send this jet over here and that jet over there and then that one can fly this place empty and then all of this kind of stuff. And it's a big sort of computational problem, but it's one that in principle can be solved with a relatively big computer. It doesn't seem to be a problem of they didn't have enough compute. The problem seems to be we can't get there from here.
- [28:21]
C
No, I think it's more about short term disincentives because it's expensive to do.
- [28:28]
A
Which bit of it is expensive? Is it like hiring the consultancy company to write you new software? Is that.
- [28:35]
C
Well, it's not just writing new software, it's the cost of integration into legacy systems and national systems. It's not a standalone piece of software. It has to work with everything else, and it's going to be custom. And it's one of those things where the benefits of it are not incremental. They're immediate, but they don't immediately accrue to the bottom line. So if you're looking at short term profitability, the question isn't, do we replace the software? Because obviously you have to do that at some point. Can we hold off on doing it till next quarter when we can afford it better, when we're not coming off a pandemic and having other problems? So it's procrastinating on the problem.
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A
The pandemic was a prime opportunity to do this. When all of the planes are on the ground and all of your employees are furloughed, that's the best time to just rip everything down and rebuild it all.
- [29:27]
C
Yeah, if you have money. But they're worried about already laying people off because they're concerned that they're not going to have the money. So.
- [29:34]
A
No, the problem with the pandemic was that they did have that opportunity. You're right. They probably. They might have been a bit more money conscious. But also, Southwest has a 100% 737 fleet. And there was all manner of questions over the 737 Max at the time, as we remember.
- [29:54]
C
I mean, it is terrible managerial judgment on their part because that's such an obvious thing that would need to be automated. And it's automated other areas, airlines.
- [30:02]
A
You know, there was a wonderful column from Zainab Tufeki about this in the New York Times, and she was saying that even the union was saying, like, as top of the list of union demands was, please, can you fix your fucking software? Like, even above.
- [30:17]
C
Even above wages.
- [30:18]
A
Even above wages. They're like, we just need you to fix the software. This is making our life a living hell. And when the union is like, begging for sort of software capex, you're like, okay, that's the time that you just need to do it.
- [30:30]
C
I've been in that situation before. At the observer, we had a system that would send the paper to the physical printing press. And our system was left over from the early 90s. And it would break down, particularly when we needed to ship. And then I would get a $5,000 an hour overage fee for any late shipping. And I kept arguing with Jared Kushner to upgrade it, and it was like a $30,000 cost. And his logic was, we'll do it when everything really falls apart. And we probably lost so much money. Just not upgrading the system. I absolutely know how this happens. But it does seem kind of insane for a company the size of Southwest Airlines to be able to get away with not doing it for this long because they've had incidences before where they saw these systems break down. I think this is just the first time it's happened on a really dramatic national scale.
- [31:24]
B
It sort of reminds me of something we've talked about before on the podcast, which is the disincentive for governments to update infrastructure. It's just like not the sexy. You know, maybe you build a new bridge, but you don't like fixing the old bridge.
- [31:39]
A
Blah.
- [31:40]
B
Like updating the electrical wires. It's fine. Like, people lose power every six months. Speaking from a little recent experience, but no one really wants to do it because the effort, it's one of those things that doesn't really pay off until there's some kind of crisis. And you kind of just gamble that there's not gonna be one.
- [31:57]
A
Yeah. So it's a lot easier and sexier to build a new building or build a new subway line or build a new train station than it is to just maintain the stuff you already have and keep it.
- [32:06]
B
Right. Right. And I guess for Southwest, it's like more sexy to do like a stock buyback or something, or pay your CEO, more stuff like that.
- [32:16]
A
Let's have a numbers round. Elizabeth, do you have a number?
- [32:19]
C
Yeah. $19 million. And that's how much a peloton had to pay in a settlement because they failed to alert regulators about safety problems with their Peloton treadmills, which killed a six year old and injured a bunch of people.
- [32:36]
A
Did that number seems weirdly low to you?
- [32:39]
C
Well, it seems it would be low, I think, for a consumer lawsuit, but it's actually one of the highest settlements for. It's a fine, really, for failing to alert the appropriate regulators about the safety regulations.
- [32:55]
A
But is. Is that something. Is it. Is that a fine big enough that other companies will be like scared into changing their ways? I don't know. I feel like it's not in the grand scheme of things. Peloton has lord knows enough issues going on right now. But maybe that was part of it. In the back of my head, people levy fines according to on some level to ability to pay. They don't want this fine to just drive Peloton into bankruptcy. And Peloton just doesn't have any money right now and it's losing money hand over fist. Maybe they're like, this is just the most you can afford.
- [33:30]
C
I mean, the thing is, it's one of the largest civil penalties in the history of the Consumer Product Safety Act. So that's why it's making news, because it's big in that context, but it's pretty small in the context of overall civil lawsuits for stuff like this.
- [33:48]
B
Is the family gonna get some money, too?
- [33:50]
C
I think that would be a separate lawsuit. I think this is just them paying for not alerting the regulators to the problems.
- [33:57]
A
Right. My number is 0, which is the number of bank robberies in Denmark in 2022, which includes people robbing cash machines. There were no robberies of cash machines either in Denmark.
- [34:13]
C
Is this a function of Danish values or Danish law enforcement or what?
- [34:17]
A
This is a function. Scandi. Move away from cash. The reason there aren't any bank robberies in Denmark is basically because banks don't have cash anymore. And this has been happening in Sweden for a while as well. The many, many bank branches in Scandinavia are cashless branches that everything is done with swipey things and nfc, phone things and apps. And if you don't need cash, then there's nothing to steal, so you don't rob anything anymore. It's hard to rob someone's app. I mean, it's a different skill. And it doesn't involve putting a balaclava on your head and saying, this is a sticker, Felix.
- [35:03]
B
This is devastating because I had zero bank robberies in Denmark as number options. Oh, no, but you should. But fine. It's fine. You should mention that.
- [35:13]
A
I should mention that I got the number from you because you put it in the. In the Axio sled.
- [35:17]
B
I did, but I wasn't gonna. That's fine. I don't need the credit for finding the story on the Internet. But I'm saying you also then looked up the US and the US you found had 1724 bank robberies in 2021, which is. It's been declining as well, but we still have some, so that's good to know.
- [35:35]
A
Yeah. The Americans are not gonna give up cash anytime soon.
- [35:39]
B
Or their Bonnie and Clyde dreams.
- [35:41]
A
Do you have a backup number, Emily?
- [35:44]
C
Yeah.
- [35:45]
B
Yeah, thank goodness. They usually bring two, but this one isn't as fun, but fine. $15.74. Do you want.
- [35:54]
A
Is that an hourly wage?
- [35:56]
B
Yes, sir. The state with the highest minimum wage in the country has this. Just raised their wage to 1574.
- [36:04]
A
Is it like Washington, Oregon, somewhere like that?
- [36:07]
B
Yes, Very good. Washington state. Their new minimum wage is $15.74, up from $14.49 last year. 2022. And it affects 356,000 people will get a raise or just got a raise, which it's really not that much money, but it's cool. And if you'll remember, like 10 years ago, everyone was fighting for 15. While many states now have $15 an hour minimum wage, unfortunately inflation, it's a relatively big.
- [36:38]
A
I mean, it's like a 10% range. It went up from.
- [36:40]
B
Are you doing the math? He's doing the MA.
- [36:42]
A
1548, you said it was.
- [36:44]
B
It's now 1574.
- [36:46]
A
1574. And it's up.
- [36:47]
B
And it's up from 1449. So what's that?
- [36:50]
A
So that is. Yeah, an 8.6% raise.
- [36:53]
B
Oh, yeah. That's awesome.
- [36:55]
A
Yeah.
- [36:56]
B
I don't have it off the top of my head, but some states. So 23 states basically raised their minimum wage this year and about 13 of them had to do it because they tie their minimum wage to the Consumer Price Index to inflation. But I, I failed to make sure if Washington did it that way or not. But everyone's wages should be indexed to the cpi. Just saying.
- [37:23]
A
I would like that. I would like that.
- [37:25]
B
Everyone would like that.
- [37:26]
C
Yes.
- [37:26]
A
Jim Vanderhay, if you're listening, I think that's it for us this week. We are going to have a Slate Plus. What's the Slate plus on?
- [37:35]
B
I don't.
- [37:36]
C
Either Walgreens or Micro Mobile.
- [37:38]
A
Oh, yeah.
- [37:39]
B
So let Felix just talk about E Bikes for the pledge.
- [37:41]
A
I could talk about E Bike. Maybe I'll go off on ebikes in the slate bluffs. Otherwise. Thanks so much for listening. It's been great getting your emails. Keep them coming. Slatemoneylate.com and many thanks to Jesmin Molly for producing, to Ben Richmond for manning the desk, and to everyone else who's part of the great Slate family in 2023. We'll see you next week with more Slate money.