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A programming note for Slate Money. You're going to get a little bit more Slate Money than usual for the next few weeks because there's a mini season of Slate Money swag coming up. Swag is a term which stands for silver, wine, art, gold. Basically, things that people invest in that don't have any cash flows. Are they asset classes? Should you invest in them? I'm going to be exploring that in a whole bunch of different things, including art and bitcoin. All coming up midweek on Slate Money. Hello. Welcome to the Don't Be Evil edition of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. I'm joined by Emily Peck of HuffPost.
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B
Hello.
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I'm joined by Anna Shymansky of Rakingviews.
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C
Hello.
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And in the studio with a book out this week is Rana Farooha of the Financial Times.
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D
Hello. Thanks for having me.
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A
Welcome.
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And what is your book, Don't Be Evil.
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A
Wait, that's the name of the show?
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D
It is.
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A
What a coincidence.
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D
Thank you so much, Felix. I can't wait to tweet this.
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So your book is coming out this week?
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D
It is.
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It's basically the Tech Clash book. It's all about Google and Facebook and all of these other evil things.
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D
Tech clash. It's 20 years how silicon Valley went from Utopia to Dystopia and what we can do about it.
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And we are going to talk all about the latest this week in Dystopia. This week in tech Dystopia, we're going to talk about Facebook's puzzling refusal to police false political ads on their platform and the trials of Mark Zuckerberg in Washington. We are also going to talk about Google and Fitbit in the Slate plus segment and about whether that is also just in a way of trying to monetize people's data in the way that the big tech companies have proved themselves so adept. We are going to talk about the ncaa. I am going to learn what NCAA stands for from Anna Shymansky, and she's going to explain the economics of. Of collegiate sports. And not only all that, we are gonna talk about wind and power, specifically as regards the economics of California. It's going to be a meaty and awesome episode with Rana Farooha coming up on Slate Money. Rana, let's start with big evil Tech, since that's the subject of your book. And we were like, is there going to be big evil tech news on the week that Rana comes in on the week of her book launch? And it's such a stup question. There is never a week that there isn't big evil.
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Why do you think I took this topic on? I knew there'd be a news peg.
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A
There's always a newspaper. So, Emily, what's the newspaper this week?
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Well, most recently, Twitter. Twitter CEO Jack Dorsey did kind of a mega subtweet to his rival, Mark Zuckerberg, and said that Twitter would no longer sell political ads and at all. Facebook, famously, right now, is for some reason clinging to the practice of running political ads and has also said it's not really gonna fact check them.
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A
It's not going to fact check them. It will fact check all other ads, but it won't fact check political ads. And there was that wonderful bit when Mark Zuckerberg was up in front of Congress and Alexandria Ocasio Cortez was like, so, Mr. Zuckerberg, I can run ads on Facebook saying that my Republican opponent supports the Green New Deal and that's okay. And he just kind of sat there and goes, well, you shouldn't do that. That would be wrong. And he's like, but would you take that ad down? He's like, well, we believe in freedom of speech. You're like, what?
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D
Yeah, yeah.
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They're confusing freedom of speech with freedom to sell ads. It's not the same. The freedom to buy ads. It's absolutely not the same thing, in my opinion.
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The only thing I'll say is the opinion of others. And I'm not trying to defend the practice, just that.
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Oh, please, please, Anna, defend the brag.
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No, no. I'm just saying that, like, this is where I think we're getting to a place where one industry just. We don't have updated regulations because currently broadcasters are not allowed to discriminate against ads. So even if they know something's wrong, they cannot take it down. And so that's kind of what Facebook is saying. However, you could, of course, make the argument that Facebook is a different type of platform, thus different regulations should apply.
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Wait, so let me. Let me ask that question to Rana, because you've looked into this. We actually have an expert, an actual question for you. If Alexandria Ocasio Cortez put that question to, say, Jeff Zucker, as CNN or a broadcaster at ABC or CBS and said, can she run an ad on their broadcast network, TV network saying her Republican opponent supports the Green New Deal, is that. Would they be forced to run that ad?
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They would not be forced to run that ad. In fact, he would likely not let her run that ad. And that's the point of a letter that Senator Mark Warner, the senior Democratic senator, who's been a big tech crit and is pushing hard both in public and behind the scenes for Facebook to start policing ads. That's what he wants them to do. He wants them to behave like cable companies. And in fact, he said that in a letter. But there's a deeper issue here, and this is why Facebook in particular, but all the big tech platforms have always fought so hard against having to be liable for anything. They have this massive carve out that was created in 1996 as part of the Communications Decency Act.
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Is that called section 230 or something?
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Yeah. I can't believe you know that, Felix, but yeah, yes, CDA.230 to be geekily exact. And this is their golden goose. I mean, this is their get out of jail free clause. They can't have their business models if they have to be liable for anything. And they are desperately trying to protect this. And if Zuck says, okay, you know what, you're right, we should probably not take false political ads. And in fact, we're going to create transparency so that you can see what is being advertised, how we're going to open up our black box. That could lead to all of different kinds of carve outs and it could really destroy their business model, which is why it's like so hard to avoid it.
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A
This is like a slippery slope thing. That's why. Okay.
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D
And it's the same reason. Do you remember a couple of years ago when there was a big push to force platforms to police child pornography and that, you know, there was eventually legislation pushed through that does make them liable for, say something like backpage.com, you know, trafficking in young girls. They pushed behind the scenes against that for a long time, you know, horrible as it is, because they didn't want this box to be opened up. Because once it is, then it's, I think, very quickly going to lead to regulation that makes them look a lot more like traditional media companies.
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And they do look a lot more like traditional media companies.
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They're advertising, as you and I both know, they just ate our lunch over the last 20 years. I mean, they've got 90% of the advertising pie from print and they're about to eat TV's lunch as soon as our president's out of office.
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One thing I think about a lot is how these tech companies want to be treated like platforms. You know, they just put it. They just put the information out there and they have no discretion over it. But when it comes to copyright, they'll take that stuff down like lickety split. Like they have no problem enforcing copyright.
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D
What's theirs is theirs and what's yours is theirs. And this is actually I have a big section on the battle around copyright in my book. Because what I'm trying to do in this book is sketch the 20 year arc. How do we go from Silicon Valley Utopia to Dystopia? And if you remember way back when, when Google said we're going to put all the world's books online, but we're actually not going to ask any of the publishing houses or the authors whether they mind us doing that, move fast and break things, you know. And that's what they've been trying to do since is build through huge political lobbying and they are now the largest lobbying entity in Washington, build this sort of fortress around copyright data, you know, allowing them to do anything they want with content online without any of the restrictions that other people would have to follow.
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A
So let me ask you about this that Jack Dorsey said, because I've never seen a tech CEO, or at least a media tech CEO say this before, and I thought this was super fascinating, which is that he came out against, quote, machine learning based optimization of messaging and micro targeting, which is basically the entire business model of, of Facebook and Google and everyone else, which is that in the old, bad old days of media, if you wanted to buy an ad in the Financial Times, you were just buy an ad in Financial Times, it would appear on page 14 and then everyone who bought the Financial Times would see that ad on page 14. Now there is no page 14 of the financial Times. Everyone gets served up an individualized page and on that page they get individualized ads. And if the ads are individualized, obviously the, the CPMs, the amount that you can charge for them goes up. And Facebook, you know, famously allows you to target, you know, one legged women in Iowa or whatever. And that kind of micro targeting has upended the advertising industry. It's made it very, very difficult to sell old fashioned ads where just everyone sees the same ad. And it has made Jack Dorsey a billionaire along with everyone at Twitter and Facebook. Is this the beginning of the admission that maybe it's not such a good thing after all?
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I think it is. In fact, I'm writing a column right now for the FT saying this very thing. Advertising funded platforms were, the industry knew from the beginning that they were going to be dicey. And it's funny, I go back in my book to the 1998 paper that Larry page and Sergey Brin did on search and at the very end of that paper, if you read through, which I guess nobody did because it's not been reported, they have a section called Advertising and its Discontents and they talk about how targeted a search engine funded by targeted advertising is very likely not going to be in user interest. Now think about that. These folks when they're in Washington on the Hill say everything we do is for users. They say very clearly in this paper this business model can be manipulated by, by companies, by potentially by public entities. And they actually recommend that because of that, that it might be better to have some kind of open academic source search engine which is, it's really quite fascinating because it just belies everything that we hear when these folks end up on the Hill giving us.
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A
So explain, explain their logic. Like when they wrote that in 1998, what was the reason they gave for targeted advertising not being in users interest?
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Because it just creates potential disinformation. If you think about the amount of traffic, the amount of eyeballs, the amount of users and the amount of content on these platforms and if you're not going to have liability for it and if you're going to allow surveillance capitalism, you know, this kind of tracking of our data through usage and then hyper targeting of ads, of course that's going to be potentially misused to say sell Australian teenagers antidepressant drugs or you know, swing elections or do whatever.
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And they saw that in 98.
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This paper explains very clearly that they saw that in 1998. And I will add that Sheryl Sandberg, now the COO of Facebook was the person at Google that perfected the monetization of that model. And they didn't actually adopt that, that model, the hyper targeted advertising model as a business model. They were doing subscription for a long time but when they got close to IPO always happens. The VCs like, you know what we kind of want to, you know, know what your, your financials are going to be. That's when they switched and that's when I think they should have dumped the whole don't be evil slogan.
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C
Well, I guess I, and I think we can probably all agree that you know, we're at a moment where the, you know, the kind of bloom is off the rose. Everyone kind of thinks that we have some serious problems with tech, with their power, with how they're structured, with how they're regulated. But I guess the question then is okay then like what is the next step? What are, you know.
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D
Well, I have a couple of Thoughts on that one? I think you need, and this is a no brainer, you need a basic paradigm which is already, already exists say in the financial industry where platforms and commerce cannot be completely owned by the same entity. So let's just talk about Amazon for example. Amazon is very much like a gilded area era railroad. So they own what is now the place that we all shop, but they also do their own commerce on that and compete against their customers, which I put in quotation marks. And yet they have access to this black box of information. So they are simply. It's as though Goldman Sachs could both own all the trading platforms and then own everything traded on them, which you know, they tried to do in that aluminum scandal, trading scandal a few years ago and got caught out. So there's already a paradigm for shifting those two things. And that I think is coming down the pike very, very quickly because it's something that the left and the right, I think actually funding, although I feel.
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A
Like that doesn't solve the advertising micro targeting problem doesn't.
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And then so my second point is that I think we're gonna start seeing a real debate around whether we need a European model where data lives in some kind of a public data bank and that users themselves have more control, government has more control. If you just look actually interesting ruling just on Thursday in Toronto, you know the Google Sidewalks project up there, which is about creating a smart city in which people can be monitored via sensors that are placed around this 12 acre. It's very, I find it very creepy but you know, you can argue, hey, this is going to create energy efficiency, better traffic patterns, whatever. The city of Toronto finally and rightfully pushed back and said, you know what Google, you cannot own every bit of that data. That data is going in a public data bank where it will be totally transparent, it can be used and seen by anybody and we're going to decide as citizens and taxpayers what happens to it. That's happening in Europe too. And so I think slowly we don't know exactly what the model is going to be, but I think slowly you're going to start seeing more transparency which, you know, same again with financial regulation is always the way to a good thing. You don't want an opaque transaction no matter what. That's just not fair.
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C
And I think that that's, you know, what you're saying there I think is really important because I think that too often when people talk about tech, it's all this kind of like we'll just break it up.
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D
Yeah, that's a slogan.
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Exactly, exactly. Because what is so different about tech, obviously, is this just monopoly of data. As you start to move forward into AI and machine learning and that data becomes even more and more valuable, it becomes more and more important that this isn't just held within three companies.
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D
Well, right. And the other thing that, well, breaking.
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Up would solve that. It would then be held within like 30 companies, right?
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Yeah, but then, but then it's even harder to regulate.
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Deal with the disinformation problems or the kind of fundamental asymmetry between capital and labor in that model. If, you know, if we think most corporate value is going to live in data and IP, which 80% of it already does, that's a McKinsey Global Institute figure, then you need to find a way to share that pie. But what I would like to see, actually, and this is a challenge, I'm going to issue this challenge here on your podcast. I would like to see folks like Hal Varian, who is the chief economist of Google and basically invented the field of data econometrics and saw that we were going to be. I mean, you go back and read his books. He saw exactly. There was going to be a winner take all phenomenon. A handful of companies were going to dominate this space. All right, well, now that we're here and we have all these negative externalities, tell us how to fix it. Help us out. These guys don't communicate and help in this public policy process that's going on right now. They just come and tell us, oh, we couldn't have predicted this. We didn't know. Time's up on that.
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I remember a conversation I had a few months ago. I can't remember who it was with, trying to work out like, who is the richest economist in the world.
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Definitely Hal Variant.
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Definitely Hal Varian.
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100%.
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Yeah. So, like, it's weird that like Hal Varian, who's become like dynastically wealthy through like monopolizing data is not going to.
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Be the person who's is Larry Summers number two.
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No, not even close. I mean, Andre Schleife is worth way more than Larry.
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Okay.
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But that's mostly because of his wife.
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Here's a question. So sideline, if we're thinking that, what did Felix say earlier? Tech is evil, Facebook is evil. Do you think that Facebook would try maybe in some way to. They don't want Elizabeth Warren, right. To become president. And yeah, Zuckerberg mess with them.
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Said she was an existential threat to the company.
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So how would it not be tempting for a Facebook to give you know, to push the election in another way. Like, they have immense control over their platform, they have immense control over the algorithm and what people see, there's all kinds of ways they can tweak it that aren't illegal, are they? That could give her, you know, they're.
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Not illegal because they can't be seen. I mean, it's, it's the, it's the.
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Even if they could be seen, they still wouldn't be illegal.
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D
That's right. That's right. So they really could handicap her 100%. And in fact, that's one of the reasons why she came out the other day and was slamming that. You know, they recently hired as a head of policy, a former George W. Bush aide and they've ramped up their lobbying in a massive way, which not.
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To mention Nick Clegg.
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Nick, bless him. Exactly. Boy, he, Yeah, I mean, the fact that he let Zuck give that speech in Georgetown where he stumbled into comparing himself to mlk, Frederick Douglass, Facebook, First Amendment, Vietnam. I'm like, what? Why Nick?
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A
I mean, so Nick Leg, just for the background, for the people, state money listeners who don't know who Nick Legg is. Nick Legg was this kind of fresh faced, weird leader of the Liberal Democrat Party in the United Kingdom and found himself going into a coalition government with the Tories with David Cameron, which proved absolutely disastrous on a bunch of different levels. And he wound up having to leave politics. And one of the reasons that, that it was completely disastrous was that he basically took David Cameron at his word on a bunch of things and entrusted David Cameron to do a bunch of things, which David Cameron then never did. And now it looks like he's coming out and just blindly trusting Mark Zuckerberg, who's clearly on his face even less trustworthy than David Cameron.
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D
Well, 100%. He's also one of a number, as you know, British politicos that have gone over to the dark side and Rachel Whetstone becoming flax for Big Tech. What's interesting to me is I think that there's actually deeper challenge here. I think that Mark Zuckerberg and Elizabeth Warren, the square off between them, isn't just about breaking up Big Tech. It's about two economic systems. If you think about neoliberalism, globalization as we've known it for the last 40 years, Facebook is like the apex of that. If you think about a company that can fly over the problems of any individual country, it is Facebook. And the people that run these companies were born and raised in an era in which government wasn't good for anything but cutting taxes. So they have no concept that things should be any different. Elizabeth Warren does. She is about to. I mean, she had her way. I think we'd go back to having an economy that was a little bit Eisenhower era, but without the racism. You know, I mean, she would like to see much kind of, you know, broader, more insource supply chains, local economic ecosystem. It's the exact opposite. And that's the big conflict here. It's this kind of 40 years of corporations prospering, labor, not so much. And are we now going to see a pendulum shift back to more public regulation?
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A
Okay, next up, Anna, let's talk about the ncaa. And first of all, because I am famously a complete. I know nothing about sportsball, you're going to have to tell me what NCAA even stands for.
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C
The National Collegiate Athletic Association.
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Okay, so what does it do?
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C
So basically, the NCAA oversees Division 1, Division 2 and Division 3 college sports. Now, any team you've probably essentially ever heard of is a Division 1 team. That's. Those are the teams that are giving out all of the athletic scholarships. Those are the teams that are winning all of the championships that you're seeing. Okay, and what happened this past week is that the NCAA came out and said that we maybe might in the future at some point allow student athletes to make money off of their name, likeness and image.
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A
Didn't they actually have a deadline, though, in like 2021 or something?
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C
Yeah, but the reason I'm saying this is because this statement was written in such typical NCAA fashion, which is like what any part of it actually means is so up for debate. What, what this was. And I think this was a very good thing that happened. However, this was simply a reaction to clearly what happened in California.
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A
So what happened in California where Governor.
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C
Gavin Newsom came out and said that they passed a bill saying that athletes in California would be allowed to make money off of their name, image and likeness. So this is like, if you're in a.
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A
So this is like, this is like auto emissions. If you're gonna, if you're gonna have to do something in California, you may as well nationwide.
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C
Well, and also because this has been something that, you know, has been kind of percolating for a while, and in college sports, you've been kind of increasingly seeing little changes here and there that are giving players a bit. And so this was essentially something that was going to happen eventually. And so they basically said, okay, we're not going to fight this. We're kind of giving in to the inevitable. However, they did come out with a very vague statement. And so there is still a lot of questions about moving forward. What is actually going to happen now.
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A
I think, and just to be clear, when, when they're talking about licensing name and likeness and yeah, so that, that basically means that. But what you can't have is everyone on the team being paid the same amount. They all have to like license their own names.
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C
Well, no, no. So this is more like. So if you have, if you have a video game, if you have like Madden College Football and you have a player from, you know, the University of Michigan and he can see himself in that game, his name is in that game and he doesn't get a cent from that. That's the kind of thing that raises.
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D
Actually an interesting tech, you know, just to kind of connect the dots here, interesting tech angle on this, because in California is also behind California's push to create a digital dividend system. And that goes to this idea of you've got this huge amount of wealth living in brand, intellectual property, data, personal information, and so if that's where all value's gonna live, you've gotta split the pie more equally. And I think that there's an interesting corollary here. I mean, this is a very high profile kind of case. Everybody can kind of agree. You know, our buddy Joe Nacera did this book Indentured a couple of years ago, looking at how ridiculous it is that these athletes come in and are completely explo. And I think that this is the tip of what is you're going to see a trickle down effect where there may be other ways in which, you know, high level folks in media entertainment get more rights over the use of their daylight.
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A
Yeah. Okay, so I want to ask my first question here, which is if this is about the staff University of Michigan football player getting paid for being in the Madden video game, on the one hand, and yes, he should just like all professional players get paid for that. I don't have a problem with that at all. But on the other hand, doesn't that create an insane amount of inequality within football teams on campus where like the stars get the video game contracts and everyone else gets nothing?
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C
100%. And this is actually why when you look into paying college athletes, it's way more complicated than I think a lot of people think, because the way the system currently works, basically most of the players are kind of riding on the coattails of a very small number of players who would ever be able to make it to the NFL or the NBA. I know more about college football, so I'm going to talk more about football than basketball, even though the NCAA actually makes most of its money off of basketball. So. Because currently, right now, if you're at like, you know, top 20 program, the package that a student athlete will get, especially if they stay four years, is easily upwards of a million dollars. If you kind of factor in everything that get.
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A
Wait, wait, so explain that when you say that's the scholarship package.
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C
It's a combination of the scholarships they get, the housing they get, the kind of nutritionists and food that they get, all of the facilities they get, all of the trips that they get, all of. There are a lot of things. And then that's not even factoring in the, like, present value of a college education. If you actually stay four years and get it so they're the current athletes. And again, this is only if you're at the top programs. This is not necessarily, if you're in a, you know, very low program, you are getting a lot of, of value being there. And if you compare that to what players get paid in, like, minor leagues, which is nothing, it's not necessarily the worst deal, and especially it's not a bad deal for the many, many, many players on these rosters, because you have can have like 125 players on a Division 1 roster. Most of those guys would never be able to make anything close to this. Right. So that's why when you talk about paying players, it's the numbers start to get really complicated. What we're seeing here with what happened now with this ncaa, this I do think is fair for those small number of players. However, it most certainly will just continue to kind of create, you know, a bigger divide between the star players and everybody else.
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B
And why should colleges have what are essentially quasi professional sports teams? It just seems like it goes against what academics is supposed to be and the values that they're supposed to get us all hooked into. And it skews admissions. If you, like, pull back a little.
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D
Bit, like, I completely agree.
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A
University of Michigan Mana, I can tell you, like, the closest thing, like, there's no such thing as college sports in the uk. I mean, except for like the annual Oxford Cambridge Boat Race, which is like, I mean, literally, that's about.
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D
And you're not risking head injury there.
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A
Exactly.
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C
So I'll, I'll say this in two ways. One, I'll say in the way that I can't justify with any logic whatsoever, but I'm just going to say it anyway, is that if you are A college sports fan. And you grew up with college sports. It is like a religion. And if you've never been in it, I think it is very hard to understand. And I'm not saying that that justifies anything. I'm just saying that I think when people outside sometimes look and they're like, But I don't understand. You're like, like, because the fan bases and the alumni and like, what this means to a lot of these universities is so huge. And I do think that, you know, it is a, it is weird granted though, the way that college sports work. And again, it's a very small percentage of college sports. Right. Though it is weird and it's not like anything you see anywhere else.
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A
And the other thing, if these are private, I mean, the other thing which I come back to is, is the big difference between US tertiary education and UK tertiary education is that the us, the top universities in the US are private and the top universities in the UK are public. And if you're private, you have these incentives to want to maximize your revenues. And it's obvious that having a successful sports program is great for bringing in money from alumni and from ticket sales and mostly from TV rights. So the people running these universities have every incentive to do that.
- [27:48]
D
They do, but you know, it also creates a buildup in debt sometimes. There's been a number of studies done recently that some of the second tier universities that are trying to create these programs, they build these really expensive stadiums, they go into debt. You know, that bubble is popping.
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A
It's like German banks trying to make it in the U.S. that's exactly right.
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C
And that, and that I do agree with you. I mean, I do, because I think that's the other thing when people think about college sports, they think that every college sport makes so much money. It's like, no, most of the programs do not make any money on the.
- [28:16]
D
There's an arms race, it's what you're saying. And there's a real superstar affair, not only on the teams but amongst the schools themselves. So there's a handful of winners and then there's a lot of people that are probably just breaking even. Or maybe it's a financial, A bad financial.
- [28:28]
C
Yeah. And I honestly think that this is going to get. Because of a number of other changes that have been made recently, I think that this is actually going to get worse. And I wouldn't be surprised if in 10, 20 years a lot of those lower tier programs end up going away because they've changed. I won't go into all of this, but because I could go on forever. They've changed some rules about how players can transfer. And what that is doing is it's allowing the best players on some of these lower tier teams to get picked off by the better schools. And that's just going to make it so that there's no depth at the skill positions in all of these kind of lower tier schools. And so they're not going to be able to compete. So.
- [29:00]
B
And also there's this kind of like affirmative action for athletes in the Ivy League where, I mean, we saw that statistic recently. I think it was at Harvard. 40% of admissions, white admissions at Harvard involve like athletic scholarship athletics or legacy. Or legacy. And I feel like at schools like that, which aren't even in the top tier, that they're. And they're already. There's this big, you know, they can't let in everybody kind of mentality. And people are complaining about who does and doesn't get into Harvard or Yale or whatever. And they're letting in these athletes who wouldn't get in otherwise. It just seems like a skewed system that could go by the wayside and we'd all be a lot happier.
- [29:40]
A
I want to talk about wind and wind power, but, yeah, wind lack of power, because I've been spending a bunch of time at Axios, for random reasons, looking into, like, the economics of wind power. But what we have seen right now is that wind doesn't just cause electricity, it also causes blackouts. And Emily knows this because, well, I.
- [30:02]
B
Woke up this morning in Upper Westchester to no, no electricity because it was windy.
- [30:08]
D
Wow.
- [30:08]
B
And we lost power.
- [30:09]
D
Amaz. And basically she should have been harnessing that.
- [30:12]
A
And basically the way that this works is that America has not buried its power lines almost anywhere. And so every time it gets windy, the power lines blow over and then there's no power. This is particularly bad in the hot dry season of California because if it gets wind windy and the power lines blow over, not only do you lose power, but you also spark fires. And so PG&E, the big utility in California, in a sort of prophylactic attempt to prevent this, has decided it's just going to cut power to a couple million people. Because that way, at least when the power lines blow over, they won't have any electricity running through them and they won't cause any fires. And again, this is something where Europeans just look at America and go, what on earth are you doing? Why can't you just, like, bury your power lines?
- [31:09]
D
Like we've been Doing in years, massive national infrastructure program. Felix, I don't know why you would think that, but, you know, there's, this is interesting. I think that this is not just about wind and it's not just about PG&E. This is about corporate America and short termism. PGE knew for years that they had problems with those power lines and they needed to be upgraded and they made financial decisions because they didn't want to put that investment on their balance, balance sheet and upset the street. And it is now coming back to bite them. And I see a lot of overlap between what's happening there and say, what's happened at Boeing or what's happened at ge. I mean, there's, I think we're seeing a whole raft of, you know, to use my wonky word, problems with financialization. The topic of my last book, I Got a Plug in, you can cut that if you want.
- [31:55]
A
No more random books, more better.
- [31:59]
D
But I think that this stuff is coming home to roost now and I think we're gonna see more of it.
- [32:03]
C
No, I think that's a really good point. And I think especially in the. When you're talking about PG and E because, like, when you're talking about the difference between, you know, public and private utilities, like, yeah, of course, like, in theory you're like, well, private companies should always be run better. And sometimes they are. But I think you're right that they're not always run better.
- [32:18]
D
Well, and they can't be because when they make the long term investments, their shares go down. And if, if we continue with the current system, I mean, we're all talking about moving to a stakeholder system, but frankly, these companies still have a fiduciary duty under the system we have now to please the street. And so unless you change that, they don't have the incentive to make those investment.
- [32:38]
C
And I mean, like, and obviously on the public side too, you sometimes do have the issue of getting people, like getting taxpayers to also pay to do the maintenance stuff, which nobody wants to do. So there's no perfect situation.
- [32:47]
A
Yeah, I mean, it's not like the mta. And.
- [32:51]
C
I guess that's one more. I'm just saying is that, like, I think that it's easy for people on the right to always say that everything private's always better. It's easier sometimes on the left to say everything public is always better. And I think it's really, the reality is that they both can have issues where they can run things really quickly.
- [33:04]
D
It's a great point. And I think Actually, it brings up something else which is that when do markets work and when don't they? Markets work a lot of the time. And the right is is correct about that. But there are certain areas in which they don't work very well. I would say health care is one. I would say things like investments in public infrastructure, issues that only pay off 2 or 3% is 1. I mean, if I'm a developer, do I want to fix power lines or do I want to build, you know, high rise condos?
- [33:29]
A
And the one place where everybody knows that markets don't work work is when you have monopolies.
- [33:36]
D
Indeed.
- [33:37]
A
And utilities are. I mean, certainly PG and E is a monopoly. And there's no particular reason to believe that market forces can help in that sense because they're not competing against anyone.
- [33:47]
C
And granted, they are obviously regulated utilities. So that's partly the idea that they're given a monopoly. And so thus the government is able to say, like, basically they have to set a certain profit rate and all of that. So yes, they are in a very, like, they're a unique type of monopoly. But then I also think you're right that the government is doing some things right, but then they can't force them to do other things because there's not competition.
- [34:09]
B
So now I feel like there are a few things left to talk about. First is PGE is in bankruptcy and no one seems to know what the hell to do with it. Newsome was out there asking Warren Buffett and Berkshire Hathaway to like take a stake.
- [34:21]
D
And Berkshire Hathaway's like, we don't really.
- [34:24]
B
Do rescue like that. And then, you know, I think San Jose said, let us own it. Let the people take it back.
- [34:32]
A
Us as in the Californians or just the people of San Jose.
- [34:34]
B
People of San Jose, if I read the article correctly. And then I thought Farhad Mandu had a really interesting op ed in the Times where he said it was the end of California as we know it, which maybe is a little overblown, but maybe not. And he really pointed to just the lack of sustainability in the way people live in California and really all over the United States where, you know, because it's so expensive to live in the urban core, this is kind of his mantra. The past few months, it seems like, so people have spread out more and they have to drive more and electricity has to go out to more people. And just the way the whole system is set up and public transportation is so weak, we have created a state where it's now on fire in part because of infrastructure issues and the way we've kind of let people sprawl out. And it was kind of a pessimistic piece because he was like, no one's gonna.
- [35:27]
D
Optimistic answer. I've got the optimistic answer. That two words, industrial policy. Like, we actually need some planning at both the state level.
- [35:35]
A
And it's not just industrial policy. It's very simple urban policy. Like, the reason why California is sprawling is because there's no density in the place where everyone wants to work, which is the Bay Area.
- [35:47]
B
Exactly.
- [35:48]
A
And the reason there's no density is because there's this incredibly strong NIMBY lobby, basically saying, you can't. Can't have more people in. And this. The Bay Area is enormous just in terms of, like, square kilometers. It's absolutely huge. You could fit eight times as many people in there as currently live there, no problem. But everyone worries about their property values and wants to keep it looking like a strip mall, and therefore it never changes. I mean, this is the thing which drives me, like, it just baffles me if you drive around Palo Alto or, like, you know, that bit neck of the woods. And it's not like this is some beautiful bucolic place which needs to retain its natural beauty.
- [36:28]
D
Bed, Bath and Beyondville. Why do they want to live like this? And also why do they build their buildings like circles?
- [36:37]
A
Are you talking about the Apple hq?
- [36:38]
C
Yes. My theory behind that is that it looks like what somebody in the 80s thought the future would look like. That's my theory about that building.
- [36:46]
D
Okay. Very, very good.
- [36:47]
A
I mean, honestly, I think it's quite hard to spend that much money on a building without doing something completely crazy, like making it a tourist. If you're going to try and spend, like $5 billion on a building, like, it's hard, you need to make a.
- [37:01]
D
Trojan horse one of them.
- [37:02]
A
And, like, you know, let's have a numbers round. I feel like this is. This is an opportune time to come up with a number. Did you bring a number, Anna?
- [37:11]
D
I did.
- [37:12]
A
What's your number?
- [37:13]
D
22%. That is the number of tweens in this country that read for pleasure more than once a month, according to a census done by Common Sense Media, which is Jim Steyer's operation. Tom's brother, who is trying to get tougher rules around online media for kids because basically, not only are they addicted to Fortnite, but they're not cracking open any books, ebooks, or regular books. What?
- [37:38]
B
My kids are voracious readers.
- [37:40]
D
You know, my daughter is but my 13 year old is not for these very reasons. And it does tend to skew a little bit more problematically towards boys, apparently. Yeah, I've been doing some research on this and I, you know, one of the reasons I actually did my big tech book was that my kid became addicted to an online soccer game. It's like he fell into the game and spent over $900 on, you know, in small, small increments. And boys tend to be very vulnerable to, to that kind of online media.
- [38:09]
C
Yeah. And there's actually really some interesting stuff about some of those games about whether or not they're betting because of the money element they have in those and especially because they do target kids. It's. Yeah, it's an issue.
- [38:19]
A
My number is $1 billion, which is the amount that our good friend Joe Low, friend of the podcast, friend of.
- [38:29]
D
The podcast.
- [38:33]
A
You have to refer to him in all news reports as the fugitive Malaysian financier.
- [38:39]
C
It's a good epithet. I mean if you're going to have an epithet.
- [38:42]
A
I remember it's a bit like, you know, when Domingo Conversion was the finance minister, he was always mercurial. You were never allowed to refer to him without the word mercurial. And you can never refer to Jho Lowe without calling him a fugitive financier. But he is. No one knows where he is, except apparently the Department of Justice in the US maybe knows where he is because they've managed to extract a billion dollars from him. They've seized all of his assets and they're going to sell off all of his assets and they're going to give the pro proceeds almost certainly back to Malaysia whence they were stolen, with the exception of $15 million because his assets were all frozen so he couldn't pay his lawyers, poor guy. And so $15 million is now going to get sliced off that billion, not given to Malaysia after all, but rather given to Jho Low's lawyers. And you know who the number one lead lawyer is?
- [39:34]
B
Is it David boy?
- [39:36]
A
No.
- [39:36]
D
Who is it? Good guess.
- [39:38]
A
It's Chris Christie.
- [39:45]
B
Come on. Are you serious?
- [39:47]
A
I'm serious.
- [39:50]
C
Jholo's first mistake right there. So my number is $913 million. That is the interest and principal payment that. Perfect missed this week. Oh, so Pettifesa, which is the state run oil company of Venezuela, basically is Venezuela. So basically one of the only parts of the Venezuelan debt that was not in default was this per 2020 bond and it missed its payment this week. And I won't go into the whole story. Even though it's amazing because technically the person who missed the payment is Juan Guaido, the Venezuelan leader not recognized in Venezuela because he controls Sika, which is in the US which technically could pay the payment and it's the collateral of the bond. So it's mercurial. He's. I don't know if he's so mercurial, but he's, he's flailing. That's. That's his adjective.
- [40:41]
D
Yeah.
- [40:42]
C
So anyway, it's a fascinating story and.
- [40:45]
A
We will, yeah, definitely talk more about Venezuela and Argentina in. Oh yes, oh yes, Slate Money because of course the. There's a default minded president just got elected in Argentina. Now, in case you haven't had enough sovereign debt default wonkery on Slate Money, there will be more to come. Emily, what's your number?
- [41:05]
B
I'm really torn right now because I wanted to talk about Fitbit, Google, but I'm going with my plan, which was 59.3 is my number. That is the current average critic score on Rotten Tomatoes, which is the site that aggregates information about movies and tells you if they're good or bad.
- [41:21]
A
4. Oh, for all movies.
- [41:23]
B
All movies, this number has been so 60 is when something is fresh, which is good. Fresh tomato.
- [41:31]
A
Okay.
- [41:31]
B
And this number, so it's 59.3 now has been creeping up. There is grade inflation on Rotten Tomatoes, according to this piece in morningconsult.com and I hope I'm explaining it correctly. And no one quite knows why the inflation is going on. People who make movies say it's because movies are getting better, but we can all know that that's untrue.
- [41:52]
A
I'm William.
- [41:52]
B
They change that. There is some tinkering. No, no one exactly knows what goes into making the critics score like it's critics. They gather ratings from critics, but they don't say exactly which ones. There were some complaints a few years ago that there wasn't enough diversity. But the bottom line is the number is creeping up.
- [42:09]
A
How much is it creeping?
- [42:11]
B
Let's see, it was in the 40s, like back in the day, like when this started in the 90s. But it's creeped up, I think from like 57 or something like that. For some reason I didn't write it down, you guys.
- [42:22]
A
I do have a like in. There is an intuitive explanation that.
- [42:28]
B
Oh, and Fandango bought them in 2016.
- [42:31]
A
Yeah. So there are two, two obvious explanations for this one. One of them is just that, you know, if it's owned by Fandango, which makes all of its money selling tickets to movies. And they have every incentive to try and increase the, the propensity of people to want to go to movies by giving them fresh ratings. The second one is that as people consume more and more movies at home on Netflix and Amazon prime and place the amount of effort and quality that you need in order to drag people out of their homes and into the movie theater goes up and you just can't get away with crappy movies right now in the way that you used to be able to.
- [43:07]
C
I also wonder if partly it's. Well, because I'm thinking, like, if you have movies also that people are watching at home and it's taking less of an effort to see this movie, right. Whereas, like, if you're like, gonna get your butt out to actually go to the theater and the movie's not good. I don't know. Like, I wonder if there's something about people reviewing them.
- [43:26]
A
Yeah. The other, if that includes, if that 59.3 includes all of those made for Netflix Adam Sandler movies that never make it into theaters, then that would make no sense.
- [43:36]
D
Yeah.
- [43:37]
B
Are movies getting better? Write to us.
- [43:38]
C
Tell us.
- [43:39]
A
Yes, let us know. SlateMoneyLate.com is the email address. We love your emails. Keep them coming. Stay tuned for a Slate plus segment on Google and Fitbit, which is the latest, latest merger, well acquisition and otherwise. Many thanks for listening. Many thanks to Jessamine Molly for producing. Many thanks to Rana Faruha for coming in and joining us. And we will talk to you next week on Sleek Money.