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- [00:11]
A
Hello and welcome to the Finders Keepers episode of Sleep Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. I'm here with Emily Peck of HuffPost.
- [00:25]
B
Hello.
- [00:27]
A
I'm here with Anna Shymansky of Breaking Views.
- [00:30]
C
Hello, welcome.
- [00:32]
A
We are going to talk about the post office this week because honestly, who is not talking about the post office this week? We are going to talk about shopping and whether it's all going online and what that means. We are going to talk about one of the craziest lawsuits that I have seen in a while involving Revlon, of all people. We are even going to have a Sleep plus episode about productivity. But the one thing I want to ask you is to just stay tuned until the end or if you have to fast forward until the end. Because I have a question for you all after the numbers round, which I want you to write in with your answer. That is coming up on Slate Money. So let's talk about the post office. There are big hearings going on right now and everyone thinks that it is facing existential threats and people aren't sending as many mail letters and it's losing billions of dollars. And this is a problem. And Emily, bring me up to speed.
- [01:31]
B
Well, it's kind of a mess, Felix. Basically, this new guy came to run the post office named Louis Dejoy. He is a Trump donor who used to work at this company called XPO Logistics and before that owned his own logistics company. Anyway, he is doing a lot of cost cutting stuff that people don't like that was underway before he even started, which was only like 70 days ago. And the cost cutting stuff is reducing the amount of overtime post office workers can take and removing these mail sorting machines. And all this is happening as the president is out there decrying mail in voting and sort of making it look like the process of mailing in your ballot is shady and dicey at a time when more and more people are going to be voting by mail because of the pandemic. So this means that progressives and Democrats are essentially freaking out and saying, basically implying there's some kind of conspiracy afoot where like a Trump donor and Trump are kind of working together to undermine the election. But that's not really what's going on. It's really the post office has been going through a long period of transformation ever since the Internet became a thing where people like you know, said Felix are sending fewer letters. So it's got declining volumes. And then like all businesses, though, that we can talk about it's the post office is a business faced a hit with the pandemic. A lot of postal workers have gotten sick at the same time they cut overtime. So there have been slowdowns in getting the mail out, which sort of like feeds the conspiracy theory at the same time.
- [03:13]
A
So I want to jump in here and say like, the big picture is bad and it has been bad for years and it is going to continue to be bad for years. And there are big structural problems in terms of the way that the board of governors is appointed by the government and various other problems involving health care benefits. But this short term problem is actually not as bad. There's no immediate cash crunch. The post office has billions of dollars. If you ask for a ballot and your state is remotely competent, you should get your ballot in plenty of time. If you mail it back in plenty of time, you should be fine. You do not need to mail it back. You can just drop it off at a ballot box or drop off box or something like that. And the President has done a very good job of politicizing this whole thing. The Democrats honestly have also done a very good job of politicizing this whole thing and making it seem like the election is at stake. And I kind of don't think it is. And people should just be aware of this as the post office is a big problem. I do agree that the optics of Louis Dejoy look terrible, but I don't think that there's some grand conspiracy to delegitimize the entire election. I do think that Trump is going to try and delegitimise the entire election, whatever happens with the post office. And he'll take any excuse, whether it's based in fact or not. But Anna, where do you stand on this?
- [04:43]
C
Yeah, I think we're probably all basically on the same page that the conspiracy is definitely, massively overblown. The state of the post office is. It's a little complicated because obviously a lot of their losses are non cash losses because as you alluded to, Felix, they have to account for all of these health care and retirement expenses. However, yes, it is certainly true that as the economy changes, the post office has had trouble. They actually didn't have a particularly horrible quarter, but that was mainly because of census ballots or census that more than anything else. If you kind of look at their financials and moving forward, they are definitely going to take a hit. The thing with the post office though that I always find a little odd is that it's not really a business. Part of the reason we have A post office is because you have routes that will always be uneconomical for private enterprises. There's a reason that FedEx isn't going to want to go to that random guy way the F out there. And that's why we have a post office to make sure that everybody can get their medication, that they're getting through the mail. By definition that's going to lose money. If it wasn't losing money, then it would make sense for a private company to do it. So there's a part of me that sometimes thinks the way we talk about the Post office is a little odd.
- [05:57]
B
Oh, it's really dumb.
- [05:58]
A
And also the post office is a natural monopoly. It's one of those things which exists in basically every country in the world. It's a monopoly in every country in the world for very good reasons because it only makes sense to for one entity to do this. It is very rare for the post office to be particularly profitable in any country in the world. And the fact that the post office has been able to fund itself internally up until this point is a sort of American exceptionalism thing, which I think a lot of Americans don't understand. Here's my favourite data point. The U.S. post Office delivers 50% of all of the mail in the world. It's like no one else sends remotely as much mail as Americans do. And it's only because Americans send enormous amounts of mail and you know, we've talked about this in the past, that people literally send checks in the mail to each other, paper physical checks in the mail to each other and put them into their bank account in 2020. This is a common thing that happens millions of times a week. And this kind of thing is embedded into the American culture in a way that it just isn't anywhere else. And because of that, the post office has been able to be vaguely self sufficient up until this point. I think it's pretty obvious that it won't be completely self sufficient going forward again, depending on how you look at the accounting. And so my point in my newsletter this week was we just need to get away from this convention that the federal government pays no money to the post office. And the minute you get away from that convention then the federal government can just fund the post office to the degree that it needs to be funded and problem solved.
- [07:40]
B
Yeah, it's just this weird and to my mind inexplicable rationale, mostly coming from Republicans and conservatives that the post office needs to be self sufficient, it needs to be a business and people want to Privatize it, which, again, I don't really understand. It's a service. If you look at the polling, a lot of people are writing stories at the post office right now, sharing the polling information. And it's like 90% of Americans like the post office. Like, why. Why would anyone want to mess with that? Literally no other part of the government has that kind of numbers. I mean, it's really wild. And it. And it is the one institution left that seems to connect everyone in the country. Like, I live out kind of in the country, I guess, and like, in some areas there's like, nothing else, but there's this, like, cute little post office where people can go and get help and talk to a human being and feel connected to the world. It's like, this is good stuff, people. And now we're seeing with the pandemic how important it is for, like, actual democratic processes.
- [08:43]
A
Like, voting is the most visible sign of big government. It is everywhere. There is nowhere in America that you can't find the post office. And. And they are all wearing these uniforms and you have these government employees literally walking up to your front door and putting mail on your post box and all of this kind of stuff. And so on some level, I can kind of understand why the small government arm of the Republican Party would rail against it. It's a little bit like gas prices. They're not the most important thing that we spend money on, but. But they are the most salient thing that we spend money on because we see them in big, glowing letters every time we drive down the road. And the post office is like the most salient part of government that we see every day.
- [09:31]
C
I also wonder if it has to do a little bit with the Postal Workers union. And I partly think of this because I was recently reading the last book in the Robert Carroll Lyndon Johnson series, And in the 60s, they were even talking about at the time when they were trying to get this tax cut through. And so they needed to get the senator on board, so they needed to get the budget down.
- [09:49]
A
And.
- [09:50]
C
And the hardest time they had was with the postal union. And it does seem like this has been something that's actually kind of been a long, long standing issue that a lot of small government types have had. So I do wonder if that's been part of the push as well.
- [10:04]
B
I think we have seen a lot of information now. I think the postal union has been trying to get people to pay attention to the post office for a long time. And the cuts that have, like I said, have been going on for a while. And the combination Donald Trump and the pandemic have like allowed the postal union to finally. People are listening to these guys, you know, they've been raising the alarm for a while. And the other thing I wanted to say about the Post office is in terms of thinking about wanting to cut it and all this, they have a huge workforce, right? It's like 660,000 employees or more. And more than a quarter of them are African American, which is just something to think about. It's a post office job, has been like a good entryway into the middle class, stable job, good benefits. So for the people who want to cut that workforce and to privatize it, it's just interesting coincidence there.
- [10:57]
A
It's not clear that privatizing the post office would actually involve cutting the workforce either. Like, I don't think it's a deeply inefficient organization. It is certainly heavily unionized organization and you know, it is conceivable that if it was privatized, then the private sector owners would drive a harder bargain with the union. Maybe they wouldn't, I don't know. But what you definitely see is this thing that you see with a lot of industries that have been unionized for decades, which is that there's been years and decades of negotiations over pay basically which is the most important part of any worker's job. And the way those negotiations invariably end is the unions want more money, the owners don't want to pay more money. And so the way they fudge it is by improving the benefits, the pension benefits and the health benefits in retirement. And that means the owners don't need to pay more money because that's all 20, 30 years in the future. But it's great for the workers because they get awesome retirement benefits. And that's fantastic as a short term band aid and it's absolutely terrible as a long term solution. And one of the reasons why the post office has been running these enormous non cash deficits is because those health and retirement benefits are coming home to roost at this point. And this is just the worst possible time for that to be happening. And those kind of deals work in a growing industry and they just completely kill any kind of shrinking industry. And that is, yeah, just very broadly why you can't fix this problem with a, you know, silver bullet like privatization or a one off appropriation from the government to the post office. It needs to be like an ongoing annual subsidy or the one thing we have talked about on this show in the past, coastal banking. You Know, which would solve a bunch of problems. Maybe. We don't know for sure, but I'm pretty sure.
- [13:02]
B
Yeah, like it, like, okay, fine. The post office is a business. If the post office is a business or business adjacent, then what it needs to do in order to stay alive is to innovate. And one of the things they could do to innovate would be do new stuff, offer new services, really modernize. Right. And one way of doing that would be banking. I think it's. We should do it. Probably would maybe solve it. All the problems Anna looks like.
- [13:30]
A
Anna looks highly skeptical.
- [13:32]
C
We can have a whole other segment another time about some of my concerns about postal banking.
- [13:37]
A
But yeah, so that's not going to happen anyway because the banking lobby is way too strong. Although the one overriding reason why I believe that postal banking would be a good thing is precisely the fact that the banking lobby is so incredibly opposed to it. They know how much competition it would provide. Like, they spend billions and billions of dollars on building branches just on certain urban street corners. If every single post office in the country automatically became a bank branch, that would be the biggest bank in the country overnight and would have just incredible market penetration. So talking about physical retail, at some point in the future, we will all be walking around and entering our post offices and doing our physical banking and physical post offices. But right now I just saw some numbers about how the surge in people actually bothering to pick up their phones to do their banking, it's just like doubled. Basically. Everyone has, for obvious reasons, anything that can be done online, they're doing online rather than doing it in person. Especially in New York State, where we all live, but basically nationwide. And the equally obvious corollary to that is that if whatever you are now doing online that you used to do in person is something that you are no longer doing in person. And the implication of that is that anyone in the physical retail world is hurting badly.
- [15:07]
C
Anna, this is one of these things that, like many things with COVID there was an underlying trend and Covid has accelerated it. Bricks and mortar was obviously having issues before then, especially certain large department stores. And unsurprisingly, those are a lot of the names that we've seen now go into bankruptcy. I agree that, yes, we're clearly going through a massive transition that has been sped up. Personally, I think long term, this is not a bad thing.
- [15:38]
A
I'm inclined to agree. I think that stores play an important role, and one of the signs that they play an important role is that retail rents have been going up Quite a lot. And what happens is that at the sort of big economy level is that as stores make more and more money and become more and more productive, those profits get siphoned off literally in rents by landlords. And now as people spend less time in physical stores and more time ordering stuff online, those rents are going to come down and that's going to be bad for commercial real estate landlords. And no one is crying for them.
- [16:23]
B
Yeah, I mean, I think it's. I think it's a really complicated situation. I mean, everyone's spending money online and things like online grocery shopping has finally taken off. I think this has been in the works for like two decades. Everyone's been saying, we're all gonna buy our groceries online. Now finally people are doing it. But the question is like, when this is over, if this is over, assuming it ends, I don't know anymore who wants to keep doing that. I just wonder, like at the end of it all, what is going to stick? I think is a really big question. And some of the retailers that are surviving now, the brick and mortars like Home Depot and Lowe's and things like that, where people are now spending all of their money instead of taking vacations, they're just like building new bathrooms and stuff. The rich people. Anyway, like, what's going to happen there, I think is a big question. And I mean, ultimately I think people will want to go back to in person shopping again. And when they do, like, who is going to have the means to create those businesses and things? That seems like a lot of open questions.
- [17:28]
C
I really think a lot of this is going to stick. I could be 100% wrong. And again, some of this is anecdotes from just speaking with people who have not done as much of this online shopping and then now have and are like, actually this is way better. And there are many different iterations of this or many different versions. You know, you have the pickup at the store you have actually delivered to you. You have a lot of these things that are frankly just better because the shopping experience is not great for most people. Going into a store and wandering around to find things is not something a lot of people necessarily enjoy. And one of the things you've heard, if you've listened to investor calls for so long with a lot of these places, they all talk about their needing to build up this digital infrastructure and blah, blah, blah. And then a lot of them haven't. And now they've seen that the ones who did that, like Target, have done significantly better. And so now you're seeing a lot of these places really speed this up. And this is the kind of thing that long term can be really good for economy because this is the type of investment that can lead to productivity growth.
- [18:24]
A
I think that I will push back on that. The cost of one of the things that retail stores do is that they push the cost of last mile delivery onto the customer rather than from the store. Right. The customer will typically drive to the store, pick up the goods in some kind of a bag, put the bag in their car, and then they will personally drive that car back to their home, which is no great hardship for the customer, but it saves the business a huge amount of money. If now the business starts doing a lot more online retail, then a huge proportion of that online retail, not all of it, but a lot of it, puts those costs onto the consumer and forces them to become financialized. You need to charge for those costs in some ways. Also, if you look at the direct to consumer brands that are popping up all over the place, the reason why so many of them are opening up physical stores is because those physical stores weirdly wind up being more cost effective in terms of marketing than buying ads on Instagram. Like right now, because the digital world is dominated by the Facebook and Google duopoly, trying to get any kind of visibility for your retail brand online is ludicrously expensive. And it's actually cheaper in most of the country to just open up a store to manage to sort of reach people than it is to buy ads online. And you know, when you're talking about retail, you are really talking about brands and branding and that becomes incredibly important. And so it becomes extremely difficult for brands to break through. And there was a really good newsletter that came out this week talking about about how basically, with the exception of Razors, none of the big direct to consumer brands that have received a huge amount of venture capital money have been able to have any kind of successful exit. So there's a bunch of moving parts here. And I do think that the natural equilibrium is going to move more online from in person. I just don't think that it's necessarily obvious that online is more efficient or more productive. I do think if you. One of my other favorite statistics is just looking at the just sheer square footage and number of retail stores devoted. Square footage devoted to retail in America per inhabitant is like double what it is in any other country in the world. So that it's natural for that to come down.
- [20:58]
B
One thing that you said, Felix, you said earlier that the in person Retail stores, they're paying all this enormous amount of rent to landlords and that's not good. So going online is more efficient. But in the online sphere you have these massive companies, Google, Amazon, Facebook, kind of running the show. And the little online guys are facing big challenges there. They're not, these aren't landlords exactly.
- [21:25]
A
The rents move from physical rents to online rents. And one of the things, in my newsletter this week I had this chart which I put together showing the stock price this year of Shopify, Etsy, Amazon Square ups, all of these companies that provide services and charge money for services to small merchants online. And literally these companies have gone up by two or three times this year. Like, you know, if you look at Etsy and Shopify and people like that, those stocks have just been going through the roof. And the reason is obvious, that they're just charging rents that in previous decades landlords would charge. And all of those rents, rather than going to thousands of smaller landlords around the country, are now just going to a handful of large digital platforms. And I'm not sure that is a positive development.
- [22:16]
B
And I also worry about the labor force with online face to face shopping going away, like you lose the connection to the people who sell stuff. And those people, the workforce becomes more disparate, more spread out, more hidden. And I kind of wonder about their rights, their pay. I don't know, it doesn't seem necessarily. I'm not saying it's good or bad yet. The jury's still out. We're in the middle of a crisis. I don't know what's happening anymore, but there are a lot of things to worry about.
- [22:45]
C
I'm not saying that yes, everything is going to be perfect, but I do feel like we are in a transition. This transition has been accelerated and I think that yes, you probably going to have a lot of shift from the people who worked in stores to people working in warehouses. And yes, there is certainly a call to have more rights for people who work in warehouses and decent pay for people who work in warehouses and deliver packages. But I don't think we need to kind of cling to the idea of, oh well, somebody worked at a store and you had this connection with someone at a store. I don't know, most people, when they go to stores, I don't really think they have much of a connection with the people who are selling them.
- [23:19]
B
This is going to store so much. Anna, we're about to do back to school shopping here and I have to do it all online and I would, I Think there are a lot of people out there like me who would love to go to a store and like try on some stuff, who don't want to return a bunch of stuff. Finding stuff on Amazon, that's not easy. You ever shop for clothes on Amazon? It's kind of a nightmare.
- [23:38]
A
Discovery on Amazon is terrible. And like buying clothes online is terrible. Buying shoes online is terrible. There's a lot of.
- [23:45]
C
Yes.
- [23:46]
A
Yeah, there's a lot of stuff which people. It really does make sense to do it in person. When working in a store when you're, you know, 17 years old is like an American rite of passage. Going to the.
- [23:59]
C
None of those jobs are going to 17 year old high school students anymore. That is like the rate of like teenagers employment has gone down massively. Just saying.
- [24:08]
A
So, you know, I mean, yeah, there is going to be a big change, but I do think especially in apparel, it just, it's one of those industries that naturally exists on in person. And virtually all luxury as well is like that. And there are hundreds of millions of Americans who actually like shopping. I am not one of them, but there are lots of people who do. And it's, it's something which holds value for people. And busy urban professionals are the exception here. Most people actually kind of like going to the store is something they enjoy.
- [24:43]
B
It's our church in America.
- [24:45]
A
It's our church. Shopping is our church. So let's talk about the other kind of store that people really like to visit in person, which is cosmetics. People love to go in there. They like to have like free makeovers. They like to spend ludicrous amounts of money on product and then they go out and they look beautiful. And none of that is happening right now because they are not going into the store. They are not buying the cosmetics, they are not putting on the cosmetics, they are not going out, they are not looking beautiful. We are all just stuck in homes. The obvious consequence of that is that the big cosmetics companies are, Anna, not doing overly well.
- [25:30]
C
Is this how we're getting into Revlon?
- [25:32]
A
This is how we're getting into Revlon.
- [25:36]
C
I was like, I think I know where you're going. I think I know where you're going with this.
- [25:38]
B
I thought you were just bringing a new topic on us out of thin air. I was like, I'm here for it. I'm on the ride.
- [25:46]
A
No, I am talking about Revlon, which at the height of the cosmetics boom, decided to spend untold billions of dollars to acquire Estee Lauder. And in order to acquire Estee Lauder, it needed to issue a bunch of debt, and it issued a bunch of debt in the form of a syndicated loan, and a bunch of hedge funds ended up owning that loan. And that loan is now trading at about 30 cents on the dollar because it's never going to be able to pay back that money.
- [26:13]
C
And this is the world's longest way of getting us into a story about how Citigroup sent $900 million accidentally.
- [26:22]
A
This is my point. Revlon does not have $900 million to pay back its loan. But you know who does have $900 million just sitting around in corporate treasury because it has that much money is Citigroup. And what did they do? By mistake, they sent the entire $900 million to all of the creditors, which is. That is a fat finger error to.
- [26:46]
C
Like, indeed, they were supposed to just be paying an interest payment. And they accidentally, you know, sent all of this money. And having it be that much is bizarre. Like that. That is obviously not something that normally happens. This does give a little bit of a window into how creaky the back office of finance is that. When I heard this, I'm like, I'm not shocked. I'm shocked at the amount. I'm not shocked that it happened. But what is really shocking about this is the fact that a number of the creditors are not giving the money back. That they're saying, no, this wasn't an accident. We are due money.
- [27:18]
A
I mean, they clearly know that it was an accident, but they're saying that it's not. And this is. So the biggest creditor, or at least the biggest creditor that didn't pay the money back is this hedge fund called Brigade, which I'm sure, Anna, you have come across many times in your career. It's a big distressed debt hedge fund with like $25 billion of assets. And yeah, they're sitting there that they have $175 million of this debt, which is worth maybe one third of that. So call it 50, 60 million dollars. And they're saying, how do we get value out of this $50 million position? And then suddenly one day, $175 million lands in their bank account and they're like, ka Ching. We win. We've just hit the jackpot. This is the lottery win. And then Citibank phones them up and says, oh, whoopsie, sorry, that was a mistake. That money didn't come from Revlon. That money came from Citibank. Can you please give it back? And they're like, fuck, no.
- [28:23]
C
It is the investment strategy known as finders keepers.
- [28:26]
B
To me, it just shows that the finance industry lives in a completely different moral universe than everyone else. And they don't have to play by any of the rules that normal people do. We all can be shamed for, I don't know, like, getting a stimulus check we didn't need or something. And, like, that's really bad. But, like, hedge funds are like, fudge you. I'm keeping all this money. I know it was a mistake and I know it's wrong and I don't care. And everyone's like, that's really brave of them. It shows how hardline and tough they are.
- [28:55]
C
I mean, nobody's saying that that's the strategy.
- [28:58]
B
Felix said in his newsletter that the strategy was for this hedge fund to show, like, how, like, tough it is, basically, or how hard it is. Right.
- [29:07]
A
That was my theory. Anna, do you have a different theory? Why are they doing this? Because they're almost certainly going to get forced to give the money back at some point.
- [29:14]
C
Yeah, I mean, you're probably right. Or they just think, like, we have amazing lawyers, so we're going to try to fight. But at the end of the day, the idea that they would possibly ever be able to take on all the lawyers that Citigroup could put up, I think is unlikely. Perhaps, just maybe they're just being dicks. I mean, like, to a certain extent, which I know may sound like not the most sophisticated answer. Look, in the distressed world in general, a lot of people distressed. I happen to like a lot of people in distressed. I think there can be some real value in distressed investing. However, you also get people in distressed investing. And I feel like, Felix, this is something you also indicated in your newsletter, who, frankly, their strategy is often like, guess what, we're going to litigate longer than anybody else is going to litigate. We are just going to be completely unreasonable. And we know that we can outlast other people. And perhaps this is indicative of that, although it does seem to be, frankly, just kind of stupid.
- [30:07]
A
But there are two jobs. There are two jobs that a distressed investor has. One of the jobs, the more obvious job, is to make lots of money by buying distressed debt and getting a return on that investment. The other job, which is actually more important, is to maximize your assets under management and to get a bunch of pension funds, insurance companies, and other limited partners to give you their money so that you can make 2 and 20 on all of this money that you get given. And so you want to sort of maximize inflows into your hedge fund. And if you look at the kind of people who invest in distressed debt, a bunch of those people select for who are the biggest dicks because they think that being totally dickish is a way to maximize returns. And there is on some level a correlation between who are the most dickish hedge funds and which ones make the most money. And I kind of in the back of my head think that this is a marketing attempt on the part of Brigade to basically, they can go out to their potential clients and existing clients and say, look how much of a dick we were. That's why you want to invest in this.
- [31:21]
C
I'm going to disagree with you on that because I feel like it is true that the thing in investing is that your returns are just an advertisement to get more money in, because that's really the business is just getting more people to give you money ultimately. So, yes, that is true. But I'm just going to say that no clients, especially because you are talking about a lot of state pension funds and sovereign wealth funds who don't necessarily want horrible press. And they are the ones who, like, they often will give money to funds because these funds have a better reputation, whether that reputation is earned or not. I don't entirely agree that they're like, well, you're a bigger jerk now. The bigger jerk, you're right, may have better returns. And so that same client may be like, we're just going to pretend that we don't see that they're a jerk and we're going to give them money because we need to make our 7%. But I don't think that actually helps them.
- [32:13]
A
Yeah, I don't necessarily think that this move by Brigade is sensible, but, yeah, they've made it. And the other thing is, it's not just them. People are talking about Brigade because Brigade is the one that is being sued in federal court by Citigroup. It's pretty obvious that a bunch of other hedge funds are free riding on Brigade and are happy to hold onto their principal payments for as long as Brigade manages to hold out. And then if Brigade loses in court, then everyone else will just follow suit. But it looks like probably less than half of the people who got that 900 million have given it back.
- [32:55]
B
Would you guys give back a million dollars that accidentally got deposited in your bank account?
- [33:00]
A
Yes, because it's illegal not to. You can actually, like, go to jail for not doing that.
- [33:08]
C
Also, just have something in the back of your mind. I feel like if, like, a cashier gives you, like, two extra dollars, I feel like most Reasonable people would be like, I should probably give the $2 back.
- [33:16]
B
But if you get, this is why.
- [33:17]
C
I'm no longer working in finance, if.
- [33:19]
B
You get home and you realize you got like $5 extra, do you drive back to the store?
- [33:26]
A
Moral questions. The one thing I will say is that this is the main reason why bitcoin is terrible. People in the bitcoin world talk about how the irreversible nature of bitcoin transactions is a feature. In fact, it is a bug. People make mistakes all the time, and transactions need to be able to be reversed. And there's basically no way in the bitcoin world that you can do that.
- [33:52]
C
I completely agree with you on this. This goes back to my whole when you see the bizarrely creaky world, that's the back office of finance, and I know the bitcoin people will be like, well, but if we made it all in the blockchain, none of it would be creaky. And it's like, no, no, I'm sorry. As long as any human being is involved, you will. And when you're making mistakes with large amounts of money, you're going to need to be able to undo them.
- [34:12]
A
Let's have a numbers round. Anna, do you have a number?
- [34:15]
C
I do. So my number is 13.6%. So that is the positivity rate for COVID testing at the University of North Carolina, which is an increase from 2.8%, which was before there were many students on campus. The reason I bring this up is just because of this thing I'm obsessed with, and I'm the only person obsessed with this on this podcast right now, which is the bizarre state of college football. And so UNC is now not having students on campus because they have had this kind of outbreak yet they're still playing football. They're still planning to play football because bizarrely, the SEC and ACC are still saying that they are going to play, even though the Big Ten and the Pac 12 have been like, no, they're not really students.
- [34:54]
A
They're just now football players.
- [34:56]
C
Well, that's my thing. And at this stage, you're like, you've got to be kidding me. It's a complete joke. It also shows you to me just like the complete uselessness of the NCAA because you have all these conferences where just, like, everybody's disagreeing with everyone, players want to transfer. It's just complete chaos. And the NCAA can do nothing. And you're like, why do you even exist?
- [35:17]
B
Wait, so is college football happening or not happening?
- [35:21]
C
Well, in Theory, it depends on where you live. So the Big Ten in the Pac 12 came out and they said, we're not having seasons. We may have spring football. If everybody thinks that's nonsense, but in theory, they're not playing. However, you have the other conferences and sec, which frankly, in college football is the most important conference, is saying, no, we're playing. So they have come out with their schedules, they're planning on playing, which makes absolutely no sense and almost certainly will not happen. However, they still think it's going to happen, and there's no one to organize everyone because the way college football works, it's just the conferences kind of organized themselves.
- [35:55]
A
One thing I will say is that we journalists talk a lot about in journalistic Jack back channels about style guides and Oxford commas and really boring things that no one else cares about. But the Daily Tar Heel, which is the newspaper of, you're going to tell me which university in North Carolina came out with an editorial saying that they will no longer use the term student athlete? There's a complete misnomer and complete bullshit. And I. And this is a prime example of why that term just should be barred from all journalism.
- [36:29]
C
Well, so to be fair, like, the vast majority of student athletes, the vast majority of athletes on a college campus are student athletes. I mean, like, there are a very, very small number of sports, and in those sports, a very, very small number of programs that actually are the big money makers that we think of. But I agree with you. In this moment, when you're seeing this, you're like, you've got to be kidding me.
- [36:51]
A
I have a number two. It is 4.4 million, which is the number of phantom people who have applied for unemployment benefits since the week of March 21, when the pandemic started. And I'm not talking about people who don't exist. What I'm talking about is a statistical artifact from the seasonal adjustments that the Bureau of Labor Statistics does to the initial unemployment claims numbers. The initial unemployment claims numbers have been much higher, significantly higher every single week than the actual number of people claiming unemployment because they do this thing called seasonal adjustment. And in the first couple of weeks, they multiplied by a certain factor, which was completely insane. They've now moved to adding a certain number rather than multiplying, which is slightly less insane. But the fact is that if you add up all of the seasonal adjustments, it comes to 4.5 million people, and it just doesn't make any sense that four and a half million people applied for unemployment on a kind of seasonally Adjusted basis that wouldn't have done normally. It's this weird thing that people don't know which one of these two time series to use, the seasonally adjusted one or the non seasonally adjusted one. But the main thing that's reported is always the seasonally adjusted.
- [38:14]
C
No, it just goes back to a little bit of what we were talking about last week about how at this moment, statistics are kind of pointless because normally, obviously you want seasonally adjusted because you want to be able to compare based on. Because there are seasonal factors that affect things. But in this moment where everything's just nuts, so much of the data we get just. People draw conclusions from data that may be completely ridiculous because the data itself isn't necessarily that useful or accurate.
- [38:39]
B
Wait, I don't. Maybe I lost the thread here, but what are you saying? Are the unemployment numbers right or wrong?
- [38:51]
A
So the non seasonally adjusted numbers are released and those are. Right. Those are the number of people who are applying for unemployment. But the headline numbers that we read are the seasonally adjusted numbers and those.
- [39:05]
B
Are overstated because the seasonal adjustments aren't relevant right now because things are weird.
- [39:12]
A
Exactly.
- [39:14]
B
Okay, so we shouldn't pay attention to the seasonally adjusted numbers right now or they should figure out how to re seasonally adjust the numbers to account for the weirdness of now?
- [39:25]
A
Both. Yeah, exactly. More the former than the latter. They've tried to re seasonally adjust, but no one really believes in that. It's a hard statistical job you can't really do on the fly. Emily, what's your number?
- [39:36]
B
My number is 31%, I wrote this week. 31% is the percentage of women with children in the home from age 25 to 44 who aren't working right now because of COVID 19 reasons. So it's about 31% compared to about 11% of men. And it's a number. The Census Bureau has been doing surveys of people's Covid experiences. So. And it's been doing it for several weeks. So basically for the. Since the crisis started, about three times the number of women than men have have been unable to work because of COVID And I think this is just the latest indicator that kind of shows how imbalance. It's just the effect of this pandemic on women has been really horrendous and kind of shows the imbalance in our economic policy and in our other kinds of policies that don't really account for women's work in the way that they should. Which means that when a crisis like this happens and the school system shuts down. There's no policies in place that can kind of help the people who take care of the children adjust in a way that could help them still do their jobs. There's no leave policy in place that makes any sense. There's very little planning and attention paid to the education system should a crisis like this emerge. There's just like no backstop in the economy for caregivers except like literally women's unpaid labor. And you see it in the numbers. Sort of interesting to me.
- [41:08]
C
It's actually interesting going back to. I know it's a very long numbers round. Going back to what? You know, this idea of statistics because, you know, obviously one of the problems with gdp, and it will always be a problem with GDP, is that it obviously doesn't account for work that isn't generating. People aren't paying for it. That is not what GDP covers. But as you say, this kind of shows us that, yes, GDP doesn't account for this. However, it still exists. There is still a value here.
- [41:30]
B
Yeah. And it's like all this unpaid labor is underpinning the paid economy because now all these women can't literally go and do their jobs because they have to do all this other stuff. And that's never been accounted for in policy because policymakers don't think about it because they're mostly people that don't do this kind of unpaid labor or don't give it much thought. And I feel like it's all coming home to roost now. But I am not hopeful that it will change in any meaningful way.
- [41:56]
A
I think that.
- [41:58]
C
Sorry.
- [41:59]
A
On which note, I think we will wrap up this episode of Slate Money. But not before I ask you all the question that I was promising that I would ask you in the intro. This is something which I've been thinking about a lot and I haven't quite been able to come up with my own answer. But I know that I'm going to ask Emily and Anna to come up with answers. And there's a huge number of interesting implications to this one. Here's the thing. I have a good old fashioned six sided die and I will roll it as many times as you like. You just need to give me a number. It can be 1, 2, 3, 4, 5, it can be 100 if you want any number. You. I will roll it that many times and then I will. I almost like a multi billionaire. I have no counterparty risk. So I. If I promise to give you money, I will give you that money. You give me a stake. It can be $10, it can be $10 million. Just give me the money, and then I will roll that die as many times as you specified. Every time it comes up 1, 2, 3, or 4 or 5, I will double your stake. So if you start with $1, and let's say you say roll it three times, I roll it and it comes up a two, you've got $2, it comes up a five, you get $4, I roll it, you come up three, you got $8. The only thing is, if it comes up a six, it will get zeroed out. So you. If it comes up as six, you get it all goes to zero. And then obviously, if I keep on rolling, it doesn't matter because twice zero is zero. So the question is, how many times do you want me to roll this dagger and how much money do you want to stake? This is obviously a positive sum game. You have a 5, 6 chance of doubling your money, which is a great bet. So please Write in to slatemoneylate.com and tell me how many times are you going to ask me to roll the die and how much money are you going to put up? And you can either do that in a dollar amount or you can do it as a percentage of your annual income. So let's say you earn $100,000 and you want to put up 100, that would be 0.1%. I'm super interested in how people answer this question, and I will talk about some of the different ways you can think about it and what it means coming up on some future episode of Slate Money, which was, as ever, produced by the great Jessamine Molly. Thank you for producing this. And we will talk to you next week on Sleep Money.