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- [00:00]
A
Foreign. Welcome to the Finance Blogger reunion episode of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios, formerly of the Economonitor blog at Roubini Global Economics, formerly of the Market Movers blog at Portfolio Folio, formerly of the, I guess, eponymous Felix Salmon blog. It didn't really have a name at Reuters. And I'm joined here by two of the most awesome OG financial bloggers, both from FT Alphaville, Stacey Marie Ishmael, FT Tilt and FT Tilt, which was itself probably the greatest financial blog of all time. And Cardiff Garcia, welcome.
- [00:58]
B
Hey, Felix. You were quite the promiscuous blogger back in the day, I gotta say.
- [01:02]
C
I mean, he set the bar. How many blog by life, how many.
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A
Different places did you blog Cardiff?
- [01:11]
B
I think it was just ftalphaville with the occasional contribution to Tilt.
- [01:16]
C
I feel like I had an RGE Monitor guest post, like one time.
- [01:21]
B
I mean, I was discovered partly by felix@cardiffgarcia.com Way back in the day. But that wasn't a paid blogging.
- [01:28]
A
No, no, no. The best hanging out are the unpaid blogs. That was my job in the blogosphere. I remember discovering Rolf Winkler and bringing him into.
- [01:38]
C
We did. I think Rolf would 100% agree because I found Ralph through you and so did many of us. And now he has this incredible career. So shout out to Finance Blogging Cardiff.
- [01:49]
A
You are not blogging anymore. What are you doing now?
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B
That's right. I'm the host of a new podcast that launches on August 12th called the New Bizarre. And that's bizarre, like the Marketplace Bazaar. I have to explain this to everybody. We hadn't anticipated that.
- [02:04]
A
If only you'd realize that this was an audio thing and people, like, get confused by homonyms.
- [02:11]
B
Exactly. But no, it's called the New Bazaar. It launches on August 12th and it's about the economy and the way we live.
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A
I can't believe we're plugging our competition here, but go check out the New Bazaar.
- [02:22]
B
It just like bloggers didn't compete with each other, they iterated on each other. They fed off each other, you know? Yeah, exactly. There will be a reverse plug. Don't you worry. The plug will be reciprocated.
- [02:34]
A
This is a show where we are going to go full, like, blog wonkish, do the thing that bloggers do best, which is dive into random bits of the economy that aren't necessarily hitting the big headlines. And the first place we're going to start is Cuba, which is a place where Cardiff is genuinely an expert on what's going on. We're going to get up to speed on the Cuba situation. We are going to talk about investment banking bonuses and.
- [03:00]
C
And salaries.
- [03:00]
A
Salaries and how they skew incentives for the bright young things who work in investment banks. We are going to talk about books, or rather bookstores. And Stacey and Cardiff are going to have a fight over the relative merits of independent bookstores versus Barnes & Noble. And if you have a view on this, do let us know on.
- [03:21]
C
Sleepmoneylate.Com only if your view is.
- [03:24]
A
Correct. Only if your view is correct and you agree with Stacey. We have a whole Slate plus segment, Fed policy and whether there should be a new Fed chair. It's all coming up on Slate Money Cardiff. There is all manner of awesome stuff happening in Cuba or terrible stuff, and there's a huge amount of incredibly uninformed opinion and commentary out there, second only to the amount of uninformed opinion and commentary about Hungary. For some reason that seems to be like everyone seems to be an expert on Hungary right now, but you are actually an expert on Cuba. And so we particularly excited because you can give us the TLDR on what do we need to know about what's going on in Cuba and whether it.
- [04:09]
B
Matters. I would say expert ish, but I have spent some time reporting from the island and I've certainly kept up with the events of the last couple of months. But the short version of this is that on July 11, a very large series of protests that started as a very small series of protests in a municipality outside of Havana called San Antonio de los Banos started to spread all across the island. And it was the scale of the protest that was something that we really hadn't seen in Cuba for at least two and a half decades and maybe even longer than that. The protests were about a number of things. They were somewhat diffuse. They started on social media, and so there wasn't like one coordinated call for something. But it takes place in the context of a really extraordinary economic calamity that's hit the island for a number of reasons. One is that Covid, of course, has directly hit the tourism sector, which in Cuba is especially important because it's a big source of foreign currency. And in Cuba, the economy is so dysfunctional that the island actually still imports the vast majority of its food. So a stock of foreign currency is really important. And so what's happened is in the wake of COVID is that there are tremendous shortages of basic goods like food, medicines and other sort of basic household goods. The other Thing that's happened is that Cuba has a huge inflationary problem this year. And that's the result of having ended what existed as a dual currency system which also had been in place for a few decades. And that's kind of.
- [05:48]
A
Complicated. But let's come to the dual currency system in a moment because we have enough to be getting on with just with this. Yeah, the big picture thing, which is basically foreign tourists stopped going to Cuba for obvious pandemic related reasons. Foreign tourists were the main source of foreign currency for Cuba. Venezuela collapsed and so Cuba lost its main source of oil. And without any foreign currency and without any oil, this was terrible for the economy. There's now food shortages, there's demonstrations on the streets. One thing you said did intrigue me. You said it started on social media. What is the social media network of choice in Cuba and how are.
- [06:27]
C
People accessing it, given the Internet.
- [06:28]
B
Restrictions? So Cubans first got the ability to have mobile online plans in 2018. Right. So they were using things like Facebook and some other social media platforms as well. This specific series of protests started on Facebook. A Facebook group called La Via de l', Amor, which roughly translates to Humorville. And the specific administrators of this Facebook group in San Antonio de los Banos are still anonymous. And what they were calling for was essentially for the government to suffer in the same way that the Cuban people were suffering. So if they have a shortage of food, then they wanted the president, Miguel Diaz Canel, to also suffer from a shortage of food, electricity blackouts and all these things. So it started on Facebook. And of course, immediately after the protest started, the Cuban state run company called Etexa shut down access to the Internet and to Facebook. And Cubans ever since have been using workarounds from VPNs and other things that are available. The Cuban people have gotten better at these kinds of workarounds. But the Internet is still run by a state monopoly company and it has shut down ever since the protest started. But before that, they did have access to Facebook and some other.
- [07:44]
A
Groups. Let's just rewind a little bit here, a little bit further. Who is the president of Cuba and how long has he been president of.
- [07:51]
B
Cuba? So Miguel Diaz Canel is the president of Cuba. He's been the president for a couple of years, but he became first secretary of the Communist Party this year, taking over over from Raul Castro. Those two positions are sort of like the equivalent of chairman and CEO. So he's now Miguel d' Escanel is now both. Raul Castro finally stepped down earlier this Year. And this, by the way, is a big deal too, because it was thought that the new sort of generation of leaders in Cuba, who are a little bit younger, I mean, relatively speaking he's 61, would be more modernizing and that kind of thing. But also I think this might be a source of hope, a source of courage for Cubans, that the Castros are finally stepping away just from old age. But it turns out that so far the crackdowns under Canel have also been quite aggressive, especially after the protests. I mean, they've sort of arbitrarily detained some 700 people. But yeah, it's. Miguel Diazcanel is the president of.
- [08:50]
C
Cuba.
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A
Wow. So is it fair to blame him for. I mean, you're obviously blaming him for the crackdown. He's the chairman and CEO at this point. Is it also his fault that he managed to fuck up this currency thing, which we can now get to? What exactly did he do with the currency? And is that his.
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B
Fault? I would say that part of it is not his fault. So the background to this is that Cuba has two domestic currencies circulating on the island, One which is convertible to US dollars, one which is not. So the national peso, the one that is not convertible, is the one that most Cubans are paid their wages in. So the two thirds of Cubans that work directly for the government, for companies run by the government, get paid in the national currency. People who work in the touristic sector, who interact with foreigners, they get paid in the convertible currency, which is pegged at one to one to the dollar. And that's what's crucial to know about this. Everybody would rather get paid in the convertible currency, but most Cubans are not paid in that currency. And it introduces all these tremendous distortions on the island. Especially because Cuban state run companies, they do get to exchange the national peso. When they sell their products to Cubans and they get paid in the non convertible peso, they have a special privilege, a subsidy where they can convert it into hard currency, into dollars. Which means that essentially Cuban run companies have a massive subsidy, implicit subsidy from the government. And all the distortions that this system causes were really becoming. Well, they had been problematic for a while. And so ending the dual currency system is a good idea for the long term health of the Cuban economy. But the timing was absolutely terrible. It happened at a time when there are terrible shortages of goods. And now because they're phasing out the convertible currency, everybody wants dollars, US dollars. So a big part of the Cuban economy has effectively become Dollarized. And that means that the national currency, the one everybody gets paid in, is increasingly becoming worthless. I mean, inflation now is estimated to be at roughly 500 to 1000%. When you're getting into estimates like.
- [10:59]
C
That, it's like, I'm sorry, 500 to.
- [11:02]
B
1,000%.
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C
Yes. That is genuinely actual hyperinflation, and not in the way that people in the US are like, oh, my gosh.
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A
Inflation. Yeah, that's like Lebanon levels right.
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C
There.
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B
Wow. Yeah, it.
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C
Is. One of my questions for you, given the kind of the complexity and the nuance of what you're describing, is what is the most annoying, frustrating misinterpretation of what's happening in Cuba that you're seeing right.
- [11:22]
B
Now? Probably that what's happening now has a lot to do with the US Embargo. It really doesn't. The US Embargo is something that actual Cubans on the ground are definitely against. And in the US it becomes kind of part of this political football where every time something happens inside of Cuba, American politicians start debating the embargo. But what the actual Cubans are protesting here is the basic and kind of longstanding incompetence of the Cuban government itself. And they'll tell you that all of the protests have been about the Cuban government. And in the US there's been a kind of. There's been a kind of back and forth between the usual politicians about whether we should continue with the embargo, end the embargo, make the restrictions tighter. I think there's been a sort of absence of just. Just basic listening from US politicians, and this becomes a part of political football in the us And I think that's just been incredibly annoying to somebody who follows.
- [12:21]
A
Cuba. If the politicians were listening to the Cubans rather than wanting to just score domestic political points, what would they do? Obviously, Cuba is 90 miles from the United States. It's well within the American sphere of influence. America could presumably do quite a lot.
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B
Here. Yeah. So there's, I think, an obvious answer, and then there's one that I'm not too sure of. I think the obvious answer is that you have a sort of a health care and a humanitarian catastrophe in Cuba. So one thing the US could do would just be to allow private aid channels to reach the island. Foodstuffs, basic household goods to alleviate some of the shortages. Right now, those things are restricted by the embargo. It'd be quite simple for the Biden administration to allow some of those goods to reach Cuba. That's one. The second thing, and this One I'm less sure of. There have been a lot of calls for the US to provide Internet access somehow to Cuba, to the island. So the Internet is shut off in Cuba right now. There are some workarounds that Cubans have used and I'm sort of out of my depth on the tech side of this. Should the US make it easier for Cubans to access the Internet? This might have some weird like sovereignty trampling effects that I'm not really sure of. So this sort of gets into the realm of geopolitics. I'm not certain. But those two things and maybe in the long run allowing more travel to the island, making it easier to travel there as Obama did, and which was overturned by Trump, and which would provide Cubans with more direct access to US dollars and which would also help alleviate the hyperinflation problem there and also be a source of commerce and.
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C
Activity. A thousand. I can't get over it, Felix. Where else is there inflation in the actual US.
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A
Economy? Is this our segue to Goldman Sachs.
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C
Bonuses? These things are obviously comparable.
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A
Felix. I feel like, yeah, there's a thousand percent inflation in Cuba and there's $100,000 a year for first year Goldman Sachs associates, like six or one half of them, 10,000. One of the fascinating parts of this story is that if you work as an investment banking analyst, as a first year investment banking analyst, you get 150,000, is that right? If you're just. There were two different scales. One was 110 and the other was 150 and I couldn't work out which was which or why they were.
- [14:50]
B
Different. Yeah. So the analysts are making. First year analysts are making 110. Second year analysts are making 125 first year associates, which is what you do after you're an analyst. They're.
- [15:01]
A
Making. Oh, so a first year associate is not a first.
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C
Year. They're like a third year analyst, Is that.
- [15:06]
B
It? Okay, yeah, you get promoted basically or you get hired out of.
- [15:10]
C
Business. Okay. But did investment banking suddenly become harder? What is driving the salary increase? Is this part of the, you know, the great's.
- [15:18]
A
Resignation? And just to be clear about this, like Goldman is a laggard here. Right? There are other banks which are playing significantly more than.
- [15:25]
B
This. I think Goldman is doing this in part to catch up. Right. That they had been a laggard, but they were also the ones getting the high profile complaints from the junior analysts who were saying, oh my God, we're working 95 hours a week. We feel like we're being, I Don't know what words exactly they use, but they felt like they were being exploited by their managers or whatever and they put together this PowerPoint, which they somehow found time to do and said, hey, we've got, we've got to do something about this. This isn't sustainable. Help us out. And amusingly, the response has been to throw more money at them instead of to like actually do something about the lifestyle issues. I think part of it though has got to be a labor shortage story, right? They're afraid that these guys are going to go work somewhere else and so, and so they're raising salaries. That's what's happened. That's what happens when people get other.
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A
Options. But there's also this idea, which is a very Wall street idea, but that doesn't make it obviously false. The way you make it up to someone for making their life absolutely miserable and working them too hard is by paying them lots of.
- [16:30]
B
Money. Yeah, that's right. I mean, that is the sort of implicit arrangement. I don't think it's a surprise to any of these young analysts that they go in there and they're working a lot. I think though, experiencing it and knowing that it's coming are probably two different things. What's interesting to me about this is that if you actually take these analysts at their word, okay, and they are working 90 something hours a week and they're getting paid even at $110,000, that's actually in hourly terms, it's a little bit below average. This is, by the way, I'm front running my numbers around here. I'll give you the exact number, but it's like below the average wage in the US economy according to the Bureau of Labor Statistics. So you are trading something quite valuable, which is your time for the money you're getting. I would also say this. I think a lot of people who go into investment banking for the salary and it affords them the chance to live in an expensive city like New York have a sense that they'll do this for a few years and if they don't like it, they'll go do something else. But I had one of these jobs a long time ago. And all I can say is that the majority of the people who entered into my class putting this in air quotes into my class at JP Morgan are actually still in finance. It gets really hard to get off that ladder once you're on it because of course, the pay keeps going up and up. And spending all that time doing investment banking work doesn't leave you with any time to develop any other skills. And so you end up staying in finance, I think, longer than you might expect. So taking one of these jobs, no problem, if that's what you definitely want to do. But you should know that you might be sealing your professional fate more than you.
- [18:11]
A
Realize. Yeah, there's definitely this idea that people have in the back of their head that, like, oh, yeah, I'll just do this for a couple years and save up some money and then do something else. And it's possible to do that, but it's much less common than you might think. What's more common is doing that for a few years and then the big dream. And this is what Sudip Injat wrote in the ft. When he looked back at his class, I think was he. I can't remember Merrill lynch, that's where he was. Was like a huge number of his class had done that. Leap to the buy side. And the buy side is the promised land, because the buy side, which is not the. The banks are the sell side. They're the people who sell all of the securities. The buy side is the investors, the hedge funds, the private equity companies, the mutual funds. And they're considered to be like the promised land because they pay just as well, if not more. But the pressures and the hours don't seem to be nearly as.
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C
Great. I'm sure that that is not necessarily a spiel for being like pro buy side working hours, because they might be doing 60 or 80 hours a week.
- [19:17]
A
Unclear. Just don't work for Tiger Global. Those guys work like crazy.
- [19:21]
C
Hours. I mean, I remember, I think it was back in March of this year when one of the internal Goldman petitions went kind of relatively viral, at least on finance Twitter. And the bank came back at the time and said, okay, we'll give you your Saturdays back, and was like, okay, great. Concessions weekends. But if I remember correctly, one of the things that the investment bankers involved were saying was that there had been so much deal flow from SPACs. That was one of the reasons that they were having to work so much. And I'm just obsessed with the fact that SPACs are stalking every single element of the financial system, including how many hours. Junior investment.
- [19:59]
A
Bankers. And it's not just junior investment bankers, it's actually senior investment bankers and senior lawyers. And the entire ecosystem, like you have. You have like, senior partners at law firms who used to do nothing but just take people out for lunch and bringing business, are now actually having to, like, get their pens out and start marking up redlines because everyone is working because there's just so much work right.
- [20:23]
B
Now. Yeah. The other thing to, to think about here every time these first year analyst salaries go up is whether or not we really want a lot of really smart young people who could be otherwise doing different things to do this. This is a tougher question. You guys might have some thoughts on this. I have a feeling that finance heavily self selects for people who tend to be fairly risk averse when they're young anyways. This is a huge salary. It's a guaranteed path to remaining respectable in the eyes of your family. When you tell people oh, I have an investment banking job and it sounds good, great. A lot of these people graduated from the kind of schools that perpetuate that kind of thinking. Could they be doing like something else with their time and applying themselves to a different industry? I don't know the answer to that question. I'm not sort of instinctively too anti finance, but I think that's something that we always have to think of when these salaries spike up like.
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A
That. There's the opportunity cost of a bunch of smart people entering what Adair Turner calls socially useless activities, which definitely includes investment.
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B
Banking. And oh, the emails are going to be.
- [21:32]
A
Delightful. And the idea is that these are the best and the brightest and that human potential could and should be put to better use elsewhere. I think what we've seen is a couple of things. Number one is that there's much less movement into Wall street than there used to be in the hotel. Jobs are all in Silicon Valley now and a little bit more, maybe just a tiny bit more entrepreneurial. Like I think to your point, Cardiff, like those risk averse people, they're going to be trying to get jobs like Google or Facebook, they're not necessarily going to be like trying to start something up at Y Combinator. But yeah, we're seeing a move to actual businesses rather than just intermediaries and banks. So that's one thing. But the other thing is that financial journalism is one of those places where burned out investment banker types do tend to wind up, especially the opinion side. And I'm sure we can all think of a lot of our colleagues and people that we know in the industry who are like, oh yeah, I used to work at Lehman Brothers, I used to work at Merrill Lynch, Goldman Sachs, Morgan Stanley. And, and we also, because we're financial journalists, we deal with bankers all the time and we deal with journalists all the time. And I'm just going to come out and say that while there are definitely recondite bits of financial knowledge that you pick up as a banker that are very useful as a journalist in terms of just sheer raw abilities, skill and intelligence. I'm not going to say that the ex bankers are like better than the people who just came in through any other route. I mean, Stacey, you are the best journalist in the world, but you were never an investment banking.
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C
Intern. I was absolutely not an investment banking intern, even though I did go to one of the schools that Cardiff described where those folks were constantly recruiting. But I had a realization that was very helpful, which is I don't love spreadsheets enough to have that be my life.
- [23:40]
B
Forever. I just think there's a trade off here that people don't recognize, which is that if you spend two or three years working 95 hours a week, you're not developing any other skill sets on the side that could make a transition into some other line of work a lot easier. And so you kind of end up in a situation where you really are about to have to start over in some much lower paying profession. Except now you're doing it later on in your 20s and the comparison point is no longer the entry level salary at Goldman Sachs of 110,000 versus some new profession. It's what you would still be making at Goldman Sachs a few years in, which is considerably more than that. And it just, it makes it hard just from a strictly financial incentive point of view. But Felix, I agree with.
- [24:27]
A
You. It's the hedonic treadmill, right? Like once you get used to that like quarter million dollar salary, it's really hard to go back to, to something.
- [24:34]
C
Normal. I remember after the financial crisis there are all these stories about investment bankers whose banks and jobs didn't exist anymore. They're like, I'm going to become a juice entrepreneur. They were like, there was like a lot of smoothie carts that got started in whatever your last golden handcuff payment was before your company filed for.
- [24:51]
A
Bankruptcy. The one thing that does happen, like if you're a senior banker who retires and at that point you have like a nice 10 or 11 digit fortune or whatever and then you become an investor and then you're like, oh yeah, I've invested in this and I've invested in that and like, and then you never actually need to work for someone again. But if you haven't got so much money that you never need to work for someone again, then you are going to have to take a big pay cut and it is going to feel like a step down in terms of your freedom. Even if like on one level, you're like, well, I get to spend my money now as great. But on the other hand, like, what money am I spending? Because I don't actually want to move into a smaller.
- [25:31]
B
Apartment. Yeah, yeah. Also, even if you get to the point where you are. Where you are so rich that you basically never have to work for anybody, you can become an investor and that's great, that's a great lifestyle. I'm not knocking that at all, I swear. But if you had dreams one day of doing something totally different, if you had dreams of being a scientist, if you had dreams of being an actor or whatever, those jobs aren't jobs that you just slide into. And now you've been in finance for 10 to 15 years and you'd need to spend another, I don't know, 10 to 15 years becoming an expert at those other professions before you're going to be at the place where you have the career that you want. I mean, I spent after I left J.P. morgan, it took me, I think, five or six years before I was making again what I was making as a first year analyst. And the salaries were lower back then, even adjusted for inflation. It took me more than a decade in journalism before I was making what I was making as a third year analyst. So it's a different kind of proposition to leave a job like that later on than it is to just start down the path that you hope to be starting down initially. And that's the only point that I like to make about this, that there are trade offs and they're significantly starker than you might realize before you take a job like.
- [26:46]
A
That. Yeah. The opportunity cost of leaving your investment banking job just gets bigger and bigger. The longer you stay there, you're holding onto that balloon, and. And the longer you stay there, the further the drop when you let.
- [26:58]
C
Go. Cardiff, we've talked about this, right? If I were to ever have the irresponsible fantasy of starting over in something that would probably ruin me financially, it would be a bookstore. And my whole thing is like, long live independent bookstores. They're so charming. They're fiscally ruinous a lot of the time because of the expense associated with actually running one of these things relative to the average person's book buying habitat. The two of us accept it. I think we both prop up various.
- [27:27]
B
Entire. We are already fiscally ruined by our book buying habit.
- [27:30]
C
Yes. But one of the stories that I have been following that I find so interesting is kind of the comeback of Barnes and Noble and your proposition especially that they're actually the good guy in the book markets, which I have thoughts about. But I want to know why you think that that's.
- [27:44]
A
True. I love this story so much because Barnes and Noble, for those listeners who haven't been following the financial press, used to be the big bad, like dominant chain store in the United States. It then was eaten alive by Amazon. It used to be owned and run basically by this larger than life character named Len Riggio. But at some point he just gave up on it and sold it to Slate. Money's favorite hedge fund, Elliot Associates, which is famous for being like the vulture fund that like brought Argentina to its knees and Peru to its knees and generally being sort of completely heartless and ruthless. So now that it is owned by a heartless and ruthless hedge fund, what the heartless and ruthless hedge fund goes and does is they install like the friendly face of bookselling from the UK as the new head of Barnes and Noble and Cardiff. Who is this and how is it.
- [28:41]
B
Going? Yeah, so his name is James Daunt and I love the specific decisions he's made with Barnes and Noble. But, but it's important to note that like he took over and then a pandemic hit. So I wouldn't say it's going.
- [28:55]
A
Great. Right, but pandemics were good for bookstores, right, in.
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B
General? Well, I think though Barnes and Noble specific strategy of trying to make the retail experience a lot more beautiful, a lot more pleasant, I think was at least delayed because the bookstores themselves, the physical locations, were closed for so long. I think a lot of them have reopened. Now the one in my neighborhood certainly has reopened. But it does signal a big change of strategy. You know, in the 2000s, Barnes and Noble went through something like five CEOs in like six years. Right? And now what he's done is he said, okay, we're not going to try to compete on Amazon's turf anymore. We're not going to try to compete with Amazon on selling books online. That's obviously still a part of what they do. But it's not what his strategy is all about. His strategy is all about making the in person shopping experience much more pleasant than it used to be. So there's design tricks that he's using, but what he's done that's most interesting to me is that he has devolved power to the local managers who run Barnes and Noble outlets. So essentially trying to mimic the independent bookstore approach, but with these really large retail outlets which have the enormous selections and the really kind of quiet, huge aisles that are Just lovely to browse at, and which I enjoy doing quite a bit, which is why I think Stacey and I are at odds about this. She loves independent bookstores and I got no shade for them, right? Like they should be part of the independent landscape. Listen, some people, okay, prefer limited selections and crowded aisles. And you know, listen, MFA grads need a place to work. I get it, all right? They need a place to yell at you because you're not reading the right philosopher. Don't send me hate mail, it's fine. But they're.
- [30:43]
A
Different. Before we adjudicate this like independence versus chains debate, which is interesting, we should note that this chap comes from Daunt Books, which was like, he started with one beautiful bookstore in North London, which is literally the most Instagram friendly bookstore in the world. Everyone loves the, you know, the two tier bookstore with this great sort of atrium situation, Edwardian space. I mean, he then expanded that to I think like seven or something like that. And then he took over Waterstones, which is like basically the English equivalent of Barnes and Noble, this massive national chain, and did exactly what you said. That was the strategy. He was like, let the friendly local English people in their local towns sell the books that the local English people want to read. And he's basically just taken that playbook and ported it into the United States. And my weakly held opinion, but this is definitely where I stand on this, is that it doesn't port that you can't do to Barnes and Noble what you did to Waterstones that like these shopping mall locations and this like green and beige color scheme and just like the general mindset of the entire workforce and the demographics of the people going in and the feeling of what's local in Kansas City is going to be different from what's local in Topeka or whatever. Like none of that reads across and that like it's going to be very hard for him to do a Waterstones in the United States by trying to effectively bring. Stacey, would you agree, just a few of the indicia of independent bookstores into the.
- [32:29]
C
Chain. I was very prepared because again, I have a very specific perspective on this fight, but I was very prepared to not see that strategy working. And the covers that I've been reading and certainly in the literary and book Twitter groups that I pay close attention to, one thing that those local store managers have said is the ability to influence by say, like, we have a book, we have an author coming to town, and so we're going to structure around this has helped them drive book sales perhaps at the margin to folks in those neighborhoods. But what I don't know, Felix, to your point, is how has that scaled across the entirety of this very complex brand that I do agree has a retail presence that is very different in terms of where those stores are concentrated than was true for.
- [33:20]
B
Waterstones? Yeah. And to be clear, I think they're definitely sailing into the wind as well. I don't know if it's going to work. Margins in bookselling have always been like, quite bad. I think a lot of the reason for the resurgence in independent bookstores in the last few years has been because at least they have these like, closer community ties. I think there's probably an innovation story in there somewhere as well that I haven't quite pinpointed. I agree, but this is. But this is difficult.
- [33:47]
A
Yeah. What's your opinion, Stacy of bookshop.org and the way that the independent stores are trying to sort of become a.
- [33:53]
C
Collective. So when I first found out about bookshop.org I was like, I don't understand how this works. So I went and I found out. But two things happened. One was, one was the pandemic and two was all of this reporting on Amazon and worker conditions, etc. Etc. And what bookshop.org proposition is fundamentally that if you buy through us, we will not be the big bad, we will be the big good. And we will funnel some percentage of the sales that we make on these books back to local.
- [34:28]
A
Bookshops. And they actually originate with the local.
- [34:32]
C
Bookshop. Exactly right. So it's like the bookshop isn't getting 100% of the sale, but they're also less responsible for some of the like, logistics and transactions and other things. Because in as much as I love my indies, their websites are not as good as, say, that of bookshop.org often non.
- [34:49]
A
Existent. Good luck. If you can just find opening.
- [34:52]
C
Hours. And bookshop.org does a lot of interesting things that are explicitly in support of those bookstores. So when you enter your zip code, they'll say, hey, the bookstores closest to you are these. If you wanted to kind of go in and have that retail experience. And I have absolutely seen a big shift in people when they're promoting their books, et cetera. It used to be like the Amazon link was always first in the press release from the publisher, et cetera. But I've seen way more bookshop presence in recent.
- [35:18]
A
Times. I think that one of the things that we've seen in media is a willingness to pay more, you know, $5 a month for a substack when you're getting like, even when you don't open, just because you want to, like, support that person and that kind of like, you use of discretionary income to support the kind of things that you think ought to be supported. So whether that's like independent journalists with a substack, whether that's local independent bookstores, whether that's your local farmers market or something like that, there's definitely been a move to saying, I think it's a good thing if you have a little bit of spare money to spend that spare money in this kind of place rather than at the bigger, cheaper place. And that has really driven a lot of the resurgence of independent bookstores. And 100% does not apply to Barnes and Noble. No one thinks of Barnes and Noble as, like a place they should be supporting. Whereas, and I think this is important, I think people really do kind of like their local waterstones and they feel like it is actually something worth.
- [36:31]
C
Reporting. I wouldn't say that's true of all waterstones. They're not certainly not evenly distributed in.
- [36:36]
A
The. But like, that big one on Piccadilly is a lovely.
- [36:39]
C
Wilt. That one's great. I.
- [36:40]
A
Agree.
- [36:41]
B
Yeah. I mean, look, sample size of 1. But I love my local Barnes and Noble knows he absolutely.
- [36:49]
C
Does. He has sent me photos of him at Barnes and Noble for.
- [36:53]
A
Browsing. Is that the one with the, like the windowless basement where I did the event with Kathy o' Neill that time? I don't know, man. That was. That felt dingy to.
- [37:01]
C
Me. I think that one comes down.
- [37:02]
B
Maybe it's definitely no windowless basement. Definitely no windowless.
- [37:05]
C
Basement. Well, actually, Felix, to that point about author events, one of the interesting innovations of the pandemic has been the rise of the virtual author events. And suddenly I think I have encountered in the wild more friends who have attended some kind of book thing than has ever been true historically. Because you no longer have to rely on your local bookshop ever remembering to tell you that a thing is happening. And a lot of bookshops have been very clever about this, where they will bundle. They were like, you can get a ticket and the ticket will come with a book and the cost of entry to this thing. And then you're in the system and they're marketing to you. And so I do think that in as much as the retail experience hasn't been helped by people's either inability or aversion to browsing in store, that taking advantage of everybody's on zoom, all book tours went virtual. Let's figure out how to sell some books and create that community affinity in an interesting way has been cool to.
- [38:02]
B
See. Yeah. And that is definitely something, by the way, that's hard to replicate at a Barnes and Noble. But one reason to sort of root for them, besides just because I like them, is that competitive landscape. It's great that independent bookstores are doing better. I mean, I joke around about them, but, like, I'm really happy that there's this kind of different, newish kind of way of approaching book sales that's an offset to Amazon. But in between independent bookstores and Amazon, there really is just Barnes and Noble. I mean, Amazon doesn't have much of a retail presence at all. Independent bookstores are a very specific kind of experience. And with Barnes and Noble sort of the only national retail outlet left that just has this enormous offering in each of their stores, I think, for basic competition is good reasons, and basic. It makes Cardiff happy reasons. It's a good idea to root for them because they are no longer the bad guy and because they're trying to be more like the good guys than they used to.
- [38:59]
C
Be.
- [38:59]
A
Absolutely. Even if they're owned by Elliot.
- [39:01]
C
Associates. Even if they're owned by.
- [39:03]
A
Elliot. Cardiff, you teased your number earlier, so what is it? I need to.
- [39:10]
B
Know. So, for the numbers round, I brought a whole calculation, but it's a simple one, so don't worry. Goldman Sachs has said it's going to pay its analyst $110,000 a year. Goldman Sachs analysts say they work about 95 hours a.
- [39:24]
A
Year. A.
- [39:25]
B
Week. A week. Excuse.
- [39:26]
C
Me. Yeah, would be great.
- [39:27]
B
Right? Yeah. I rounded down to 90 in case they were exaggerating a little bit, and then I assumed 48 weeks of the year. So they actually took some holidays and national holidays and things like that. Well, if you do the calculation, that comes out to about $25 an hour. All right. And what's interesting about this is that $110,000 a year is roughly twice the average wage in the U.S. according to the Bureau of Labor Statistics. But $25 an hour is actually less than the average wage, and it's roughly in line with what dancers and choreographers make. Motorboat operators, construction workers, if you want, like, a sort of point of comparison there. So just keep in mind that, yes, you're getting paid a lot of money, and you're setting yourself up for a lifetime of getting paid a lot of money, but in those early youthful years, you are trading away something for.
- [40:19]
A
It. So it's the kind of math that reminds me of when I became the finance blogger at Conde Nast Portfolio, and I did some back of the envelope math and worked out what my per word rate was. I'm pretty sure it's the lowest that Conde Nast has ever paid for words in its entire existence, going back to, like, the.
- [40:37]
C
1930S. You were a very prolific finance blogger. As two people who were competing with you, I can say confidently that you wrote a whole.
- [40:46]
A
Bunch. Stacey, what's your number this.
- [40:48]
C
Week? My number is 8.2%. That is the unemployment rate for black Americans, which is the lowest since last March and declined from 9.2% in June. The problem is a lot of that participation came from black American workers just straight up leaving the workforce. And there's a kind of a similar trend in Latino.
- [41:08]
A
Women. I thought the workforce went up. I thought in the household survey, the workforce went.
- [41:11]
C
Up. Well, the numbers that came out this.
- [41:14]
A
Morning. We're recording this on.
- [41:17]
C
Friday. We're recording this on Friday. For the numbers that came out on Friday morning, there was a workforce decline specific to black people and Latina women over the age of.
- [41:27]
A
20. There was some astonishing declines in unemployment. The overall unemployment rate went down from 5.9 to 5.4, which is a huge drop. The drop for graduates went down from 5.8 to 5.0, which is an even bigger drop. So, yeah, we're getting back to, dare I say it, full employment, but still at 5.7 million fewer jobs than we had pre pandemic. So it's a weird job situation. Right now. I think I want to throw in a fun one for my number $1.7 billion. You're going to like. Stacey knows what this one is already, don't you, Stacey? Stacey, what.
- [42:10]
B
Is. I'm on the edge of my seat.
- [42:11]
C
Now. No, you please give our listeners the.
- [42:14]
A
Pleasure. $1.7 billion is the official. Or Forbes magazine, which is the closest we can come to official net.
- [42:22]
C
Worth of Rihanna Bajan, superstar, philanthropist.
- [42:26]
B
Genius.
- [42:28]
A
Wow. You can quibble about her philanthropy, but you can't quibble about her success in the cosmetics industry, which is just like the vast majority of that 1.7.
- [42:39]
C
Billion is money that I spent on moisturizer from.
- [42:43]
B
Fenty and not on her.
- [42:47]
C
Music. Well, she hasn't dropped an album in a.
- [42:50]
A
While. Cardiff, it's been five years. It's literally been five years since her last album. She's been far too busy being an entrepreneur and starting up fashion.
- [42:58]
B
Lines. That sounds great. I had no idea she was worth $1.7 billion or that she had a fashion line, but that's.
- [43:04]
C
Fantastic. And this is an example of her co branding genius. Amazon is one of the exclusive sponsors of her fashion show and it was a stake in the ground in the post. Victoria Secret's angel model for how to do lingerie shows. For anybody who is mysteriously into watching lingerie shows on Amazon, it's a good.
- [43:21]
A
Tip. Her Savage line, her lingerie line is not as successful as her cosmetics, but it still adds what was it like 2,300 million to her net worth. It's, it's up there, you know, nothing to sneeze at more than her music earnings for.
- [43:34]
C
Sure. Riri Stands, please do not come for us like super not in Rui.
- [43:39]
A
Here. I'm personally just supporting her by streaming her.
- [43:41]
C
Music. All about Many a Banger, Many a.
- [43:44]
A
Banger. Okay, I think that's it for us this week. Thanks so much for listening to Slate Money. Thanks to Jessamine Molly for producing. But most of all, Cardiff Garcia. Thanks for coming on the show. It's awesome to have.
- [43:59]
B
You. This was super fun. I think this show, by the way, should be labeled the Bloggers Inevitably Become Podcasters Episode of Slate Money because we all came up in the blogosphere.
- [44:10]
C
Right? That's a fair.
- [44:12]
A
Point. So we are going to have a Slate plus on the Fed chair, which is Jerome Powell and will remain Jerome Powell, but according to certain people, maybe shouldn't. We're going to talk about whether it could or should be Lael Brainerd instead. That's coming up on Slate plus, but otherwise we will be back on Tuesday with the final Slate Money goes to the movies with Taffy, Rodifer Agnes or talking about Sense and Sensibility. It's going to be an awesome one. There's also a really crap movie which I won't even mention, which we also talk about. And then after that, next Saturday, even more Sleep.