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Gambling on the Globes & Geopolitics
00:46:28
Polymarket was all over the Golden Globes, Jerome Powell is now under federal investigation, and Chinese universities are outranking us in scientific output.
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- [00:05]
A
Hello. Welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Hammond of Bloomberg with Elizabeth Spires of the New York Times.
- [00:17]
B
Hello.
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A
And Emily Peck of Axios.
- [00:20]
B
Hello.
- [00:20]
C
Hello.
- [00:21]
A
We three are going to talk about Jay Powell being sued by the Department of Justice. We are going to talk about about the way that China is winning the research university wars. But mostly I think what we're going to just talk about is betting and prediction markets and poly market and stuff because there's so much awesome stuff going on around there. Golden Globes, you name it. It's all coming up on Slate Money.
- [00:51]
D
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- [02:19]
A
So Emily, Elizabeth, did either of you guys watch the Golden Globes award live on the telly?
- [02:27]
B
I did not, but I watched clips later.
- [02:30]
C
I watched the first 10 minutes.
- [02:32]
A
Okay, and so you need to tell me cause I've read about this but I have not personally experienced it in a visceral manner. When you were watching the first 10 minutes, Emily was there all manner of like weird chiron y things from Polymarket saying bet on the outcome.
- [02:48]
C
No, I only saw it in clips that they put up the polymarket odds ahead of things.
- [02:52]
A
And during Elizabeth, you saw the people who were carefully clipping the polymarket clips and getting outraged by this, right?
- [02:59]
B
Yes, yes I did.
- [03:00]
A
So we don't really know how much Polymarket bought. And we also don't know how much Polymarket paid. And what we do know, which has been true for years now, is that whenever there's an awards coming up, it is possible to bet on who is going to win those awards on, on prediction markets and specifically on Polymarket. That is an offshore thing where Americans, wink, wink, nod, nod aren't allowed to use it. And so it's not really subject to US Laws. And they've been offering these markets for a long time and they're not super deep and liquid. But if you want to flutter, as we say in England, it is something you can do. What is new now is that, number one, Polymarket is in the process of becoming a fully legitimate player in the United States. And number two, as part of that process, it is investing quite heavily in marketing stunts like actually partnering with the Golden Globes while they are on and having things on the screen saying, oi, you can bet on this if you think you know who's going to win, you know, have a flutter, make some money. And this is one step beyond what I grew up with in England, where people would bet on everything all the time and it was perfectly legal. But you wouldn't see live Oz, you wouldn't see partnerships on the television. It wouldn't be like incorporated into the programming in the way that it has been in the Golden Globes and it has been in a bunch of sports programming as well. So it doesn't seem super harmful to me. But I'm sure, Elizabeth, you're going to tell me that this is a terrible thing that's mean.
- [04:34]
B
Well, it depends on. It depends on what we mean by harmful. I think in the context of the Globes, what sort of weirds everybody out is that the, the globes are supposed to be about rewarding artistic achievement. And that's not something that I think people are accustomed to betting on. It's not a. People don't think of it as a game. Whereas in sports betting, you are literally betting on a game. And so particularly whenever you have awards categories like best documentary and you're talking about a documentary about what's happening in Gaza and there's some gravitas to feels a little bit strange to then see a screen that's like. And bet money on whether or not this is going to win. It just seems crass, you know, that.
- [05:16]
A
Doesn'T weird me out in the slightest. It's interesting that it's like the thing that you're betting on, if it's a liberty gibbet game, like the super bowl, who cares? You go ahead, bet on it, because that doesn't matter. But if it's the best documentary at the Golden Globes, that's serious. We shouldn't be doing frivolous things like betting.
- [05:33]
B
It's a continuum. You know, Like, I think the sort of worst case that people are. Are imagining now is if people are betting on whether or not a political leader will be assassinated. You know, it's. You know, what. What are the proper contexts and categories for these kinds of prop bets? And I agree with you that it's not the worst thing in the world that betting on the Golden Globes, but I do understand why it kind of grosses people out, you know, in a sort of ick way.
- [05:59]
C
We should point out that of all the Hollywood awards in the award season, the Golden Globes is probably the one best suited to have this, like, trashy betting aspect put onto it, because it's.
- [06:11]
A
Kind of trashy anyway.
- [06:12]
C
The Golden Globes is recently bought by Penske, the publishing company overtaken from the previous owners, who were basically forced out over a corruption scandal.
- [06:22]
A
And was that the Hollywood Foreign Press Association?
- [06:25]
C
Hollywood Foreign Press Association. I think the LA Times had a bunch of reporting on corruption, and there was racism. So the Globes has always been known as, like, the award show where the celebrities go and they get really drunk. And it's not like the serious award show. It's not the Oscars or anything. So it completely, like, lines up with Globe's lore that this is the arena in which, I mean, just seems really corrupt for the owners to kind of sell the sponsorships to Polymarket. And, like, you assume the voting was on the up and up, but, like, who really knows? 20 polymarket got 26 out of 28 globes categories, right? They called it.
- [07:03]
A
Okay, wait, hang on a second, Emily, let me jump in here very quickly, because that's not necessarily a sign of an efficient and good prediction market, Right. Because these awards generally had five nominees per award. Okay, so when someone says, like, Polymarket got it right.
- [07:25]
B
Yeah.
- [07:25]
A
What that means is that each of the five nominees will have had a price on Polymarket, and one of those prices would have been the highest. So one would have been trading at, like, 40%, one would have been 20%, one would be at 10%, one would be at 5%. Whatever, it will add up to very close to 100. But in an efficient market, that highest one, which was trading at, like, 40%, will only win 40% of the time. If the highest one wins, like 90% of the time, that means it's mispriced. And so what you really need to do to work out whether Polymarket got it right is take into account where were these things trading. And if it turns out that they should have been trading at, like, 90%, in fact, they were trading at 40%, that means the Polymarket did a bad job of predicting the winners.
- [08:11]
C
I did hear Matt Bellany talking about this on the town, and I feel like the 90% was the way a lot of them were going. Like, he was basically saying, you don't have to be like a genius. You don't have to be on prediction markets to surface like the movie with the leading odds to win. Everyone knew coming in that the best actress from Hamnet, Jessie Buckley, I wanna say, was the one who was going to win. Like, it's not hard, in other words.
- [08:36]
A
Yeah.
- [08:36]
B
Where there is a potential conflict of interest is that Penske owns three of the biggest Hollywood trades. And so if you were just sort of evaluating who was gonna win based on coverage in those three publications, you might be spot on. Even if, I guess, even if there is no coordination between.
- [08:53]
A
Okay, so this goes back to what you were talking about, like assassination contracts, right? The idea that there are two different ways of sort of insider trading prediction markets. One is where you know the outcome and you bet on it knowing that it's going to happen. And the classic example of this one was there was something. I think it was on polymarket. I think it was like the invasion of Venezuela and the contract, like, surged. Like, some guy made $300,000 by betting on, like, there will be something happening in Venezuela. And it did. And obviously there's this person who knew that it was about to happen. A bunch of people knew that it was about to happen, including the New York Times, who, you know, sat on it because it was national security data. So one of those people who knew that it was going to happen made some money by betting on it. It is very unclear whether that is legal or not.
- [09:44]
C
That seems yucky, but whatever.
- [09:46]
A
Like, it is. Actually, if you look at the literature on prediction markets, that is a feature rather than the bug of prediction markets. The whole point of prediction markets in many ways, is to try and surface a bunch of information that isn't necessarily public. And so if that price moves ahead of the invasion quite sharply, that's a sign that this is actually likely to happen. Even if, you know, it hasn't been made public yet, we can talk about whether it's a good idea to do that. Or not. Whether it's legal or not. Whether it should be legal or not. But let me just finish my thought here, which is that the other form of insider trading, which is absolutely yucky and really something that we want to avoid, is where you have control over the outcome yourself. So I bet on the assassination of Politician X. I then go out and assassinate Politician X and make money and effectively pay myself. Or I am, you know, a pitcher in a baseball game, and I bet that I will throw exactly 17 sliders. And I throw exactly 17 sliders and I make money. Or I am Carolyn Livitt, the press secretary, and there's a huge bet that my press conference will last less than 75 minutes. And I end up, like, calling it off abruptly after 74 and a half minutes, which I think is something which actually happened. And so there's a whole bunch of things where people have control over the outcomes and can make money by betting on themselves doing that thing. And that is really weird.
- [11:23]
B
One of the best things that I learned in the prep was why you can't now trade onion futures in certain ways. Because there was a guy in the 1950s named Vincent Castua who bought up 98% of the available onion supply in Chicago via futures contracts. And then he went around to all of the other onion producers and told them that they had to raise prices or he would flood the market. So then they start raising prices and he buys up a bunch of short contracts and floods the market anyway. And as a result, there is regulation around onion futures specifically, not other types of food, just onion futures.
- [12:01]
A
Well, it's onions and Hollywood. Weirdly, yes. In 2010, they added Hollywood. And I remember, like, I am and old, and I'm old enough to remember back in the 1990s, there was a website called Hollywood Stock Exchange, which was basically this exact thing, but 30 years ahead of its time, which was people betting on, you know, box office grosses and who was going to win awards and this kind of thing that was all like play money. And then the whole idea was that it was going to pivot into real money and that eventually it was going to be real enough money that you could, if you were a filmmaker, sort of hedge your investment. So, you know, you announce a big film starring Jennifer Lopez and then you hedge your bet by selling a bunch of Jennifer Lopez futures on the site so that if it does well, you're effectively co investors, manage to make money, and if it does badly, you've not lost as much because you've got money from these investors. Again, this is all potentially a very legitimate form of financing, which is why futures markets exist and why there's futures markets in almost everything except for onions. But also, this is. We have to mention this very explicitly. If we're looking at polymarket and Cauchy, which are the new kids on the block, and they're doing prediction markets, they're overwhelmingly sports. We can talk about polymarket, we can talk about politics, we can talk about all of these weird prop bets that get all of the headlines in Slate Money, but really what these are used for is betting on sports. And sports betting has historically been very regulated. And for really dumb regulatory reasons, Kalshee and Polymarket have managed to place themselves under the purview of the cftc, which is run by a Trump appointee who's basically got an opinion that they should regulate fuck bugger all, and not under the purview of sports betting regulators in each individual state. And the sports betting regulators in the individual states are furious about this, but there's seemingly nothing they can do. The sports books in places like Las Vegas are furious about this because it's actually much more efficient to bet on Calcium Polymarket than it is to bet in a casino. And certainly places like FanDuel and DraftKings, which I think is the same company now, they're furious about this because they too are seeing all of their business go to Calcium Polymarket. But I feel like on some level it is just a more efficient way of betting. And so I'm not particularly upset if it's going to be legal, at least allow people to bet directly against, against each other, because that does stop a couple of big middle men from making all the money.
- [14:43]
B
We've talked about before. The fact that when you legalize sports betting in a state, poverty rates go up. Does this kind of exacerbate that? Do we think that people are going to start betting on all sorts of things and you'll have the same effect?
- [14:57]
A
Well, so the first thing is, no, they're not going to start betting on all sorts of things. They're just going to start betting on sports. I think more than 90% of the sports betting on Kalshi and Polymarket is just going to be sports betting sort of migrating over from both legal and illegal betting, sports betting elsewhere, and onto these platforms rather than new people betting. But certainly there are states where sports betting is illegal. In those states, some people bet illegally, a lot of people bet illegally, but then some people just don't bet. And now that they are able to bet legally, they will Start being able to bet legally and they will do so on calcium polymarket. So at the margin. Yes, I think this is a little bit like when a state introduces the mega millions lottery. You know, it is a form of. It is a kind of attacks on poverty.
- [15:47]
B
Last night I was watching the Night Manager, which is a great show, but I kept getting ads for MGM Sportsbook and I don't remember ever having, you know, before the last few months seeing sports book ads.
- [15:58]
A
That's because you're researching this show, Elizabeth, and they know you're interested in betting.
- [16:03]
B
I was not. This is my husband's accusation.
- [16:06]
C
So I think you just said this a few minutes ago, Felix, but an efficient prediction market basically needs insider trading to be a good prediction market. And that seems sort of wrong, but maybe it's right. Like, you need people who know what the outcome is going to be to make the right market and to create the right odds.
- [16:25]
A
So, like, if Matt Baloney, like, is he an insider? Yeah, I mean, that's his whole shtick, right? He's like, I'm an insider. I know what Hollywood knows. But it's not like he has actual inside information of like, what the results are. And there was at least one major upset where Hamnet beats sinners, you know, so when he's like, it's really easy to make money because everyone knows that Jesse Buckley is going to win. Like, who is the everyone and how do they know it? And is that inside information? Like, it's a very fuzzy area.
- [16:56]
C
Right. That's different from like, we know that the US Is gonna go into Venezuela and snatch out leader tonight.
- [17:03]
A
There are very few people in the prediction market world who want to try to prevent insider trading. Partly because this is how they make money. And it's partly because they believe in a sort of libertarian way that insider trading is good. It's price discovery. And I have seen this argument about the stock market. It is not a popular argument, it is not a common argument, but I've definitely seen it and I am to some degree sympathetic with it, which is like, insider trading is a good thing, which we should have more of because it makes the markets more efficient and because it's kind of a victimless crime.
- [17:41]
B
Not if you're talking about certain prop bets. I mean, the problem with the Venezuela bet isn't so much that it's insider trading per se, it's that whoever bet on it is taking what's presumably classified national security information and in a way making it public.
- [17:58]
E
Right.
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C
You could endangering the troops. Is the argument and.
- [18:01]
A
Exactly. And so the illegal thing, the most obviously illegal thing here is making confidential information public. It is not, you know, betting on inside information. There's a slight sort of distinction there, which is worth maybe teasing out. But also the big problem here is that none of this is regulated at all. Right? The weird regulatory arbitrage that's happened in sports betting and the reason why polymarket is becoming legitimate and the reason why Kalshi became able to offer sports and all the rest of it is basically just because the CFTC is sitting on its ass and doing nothing. Like back in the Biden administration, none of this would have been possible because the CFTC was a genuine regulator. And indeed, under even Trump won, the CFTC was a genuine regulator. Now, the CFTC seems to be, you know, one of those places. It's like usaid kind of, what the hell is it doing? It seems to be doing nothing. And I do think that on some level, the default of we are just going to regulate nothing is clearly the wrong default. You know, there should be something that is regulated here.
- [19:12]
B
My question would be, if you're like, let's say you're an executive at a public company and you bet on something that's sort of tangentially related to insider information that you have, is that a potential reg FD violation, in which case, you know, the CEO.
- [19:27]
A
No, because there's no securities involved. Reg FD only applies to securities. This is part of the problem. Like, this is a really, really good question.
- [19:34]
B
Well, but I mean, what if the stock moved because somebody noticed that the CFO made a bet on polymarket?
- [19:41]
A
Yeah, you're really putting your finger on something important here, which is that none of these markets exist in a vacuum. You know, they are all related to each other. And it is clearly illegal for me as a corporate insider to trade my own stock on the basis of information that I have. It is not clearly illegal for me to trade a Polymarket contract on the basis of inside information that I have. You know, it is not a security. It is like there's a whole bunch of legal gray zone. There's. And then if people see the polymarket contract moving, then stock traders can see that and move the stock. And those stock traders don't have any inside information. They just have public information about what's happening to contract prices on Polymarket. But you're moving the stock anyway by making a polymarket bet. There is a whole bunch of stuff that hasn't been thought through. None of this is internally consistent at all. It's a mess. It needs to be addressed by some non zero degree of regulation and the SEC and the CFTC need to get into a room and work this shit out and no one is doing that.
- [20:51]
C
Well, the President's son happens to advise both Kalshi and Polymarket. Do I have that right?
- [20:55]
A
Yeah. I mean if you are Kalshi or Polymarket, like he's the first person that you hire for your board, right? Obviously. Obviously.
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- [26:53]
A
So now what we've done is we've proved that there was enough information in that polymarket factoid to stand up an entire segment. But we do need to talk about the actual news of the week, which is Department of Justice sued Jay Powell and the Fed criminal investigation, which not only resulted in immediate pushback from Jay Powell in the way that this guy who has taken so much flak from the president, you know, both in the first term and in his second term, and has just been very, like, never responding, just letting it wash over him, being very professional. This was the point at which he's like, okay, fuck you. I'm gonna come out, I'm gonna record a video. I'm gonna be like, this is obviously a pretext. This is bullshit. What the actual fuck? Didn't quite say that, but close. And then everyone came out in support of him. Like, not only all of the CEOs, not only all of Reddit, not other central bank governor on planet Earth, but also a huge chunk of pretty maga Republicans. And it turns out that this was basically Jeanine Pirro freelancing and not telling anyone. But the whole thing is a bit of a shit show. And my hot take here is that this is the best thing, weirdly, that could have happened to the Fed. It has strengthened the Fed. It has shown that the Fed has massive support. And it does mean that the Fed independence is actually, it turns out, stronger than we thought. Like, they tried to kick out Lisa Cook. They failed. They tried. This attack on Powell is obviously going to fail. And this is one of those things where if you come at the King, you best not miss. And they just missed.
- [28:39]
C
I just think you're totally wrong. Okay, first of all, Claudia Sahm, inventor of the SAHM rule and who has a substack like everyone does now, including the ft, wrote a great substack about this that I was reading this morning before we taped. And basically what she was saying is, Jerome Powell is a unicorn. He has been around for a long time and has. Is one of the last sort of bipartisan Fed governors and chairs. He was made a Fed governor by, I believe, I think it was Obama.
- [29:09]
A
No, it was Trump. Oh, Obama made him a governor, then Trump made him chair.
- [29:13]
C
Yeah, one of the last like, bipartisan nominations for even a Fed governor. And then, of course, he was put into the role of Fed chair by Trump and then renominated by Biden and has spent the past decades building support among Republican and Democratic lawmakers. So to the point where he's getting attacked by the administration. They all, as you said, Felix, rallied around him, including the Republicans. There aren't any other. He's a unicorn. Coming up behind him is no one else like him. So, yes, he got the support of central bankers around the world and crucially, the support of Republican lawmakers. But that's just a one off. This is going to happen again. His term ends in four months. Whoever Trump nominates now is just in an impossible position where he's going to get the same amount of pressure. And there's.
- [30:04]
A
Well, he's not going to get the same amount of pressure because it's not going to be a criminal investigation into the new Fed chair.
- [30:10]
B
Well, I wouldn't put it past, I.
- [30:12]
C
Mean, this is not our first criminal investigation into, as you pointed out and Lisa Cook, as you said, that hasn't worked. But that case is going to the Supreme Court later this month. It is certainly not over in any way. And then the final thing I should add, Jerome Powell is a millionaire, a multimillionaire. He has vast resources to fight. And to, yes, when you come at a multimillionaire Fed chair, you best not miss. But like, how many bipartisan supported, multimillionaire Fed chairs do we have coming up behind him?
- [30:42]
B
You know, Powell was a Republican, but he was sort of a moderate, kind of, you know, safe, especially for Obama, who was kind of centrist. He felt like a safe bet. And he was a known quantity before he ever went to the Fed. So it does, you know, it makes total sense to me that, you know, Thom Tillis would get behind him, Republican congressman from North Carolina who's saying he's not going to, you know, approve any new nominations to the Fed until this goes away. And I do think, you know, it might have been Pirro jumping the gun. That's what, you know, Trump is claiming. He didn't know anything about it. But I also think that there are a lot of things happening in this administration where Trump doesn't have to give the direct order. If Pirro thinks that she's doing his bidding by doing this, and, you know, so do many other cabinet members. You know, a lot of them are sort of freelancing on behalf because they think they're advancing his interest. There's no guarantee that we have another Fed chair come in, even if it's somebody Trump approves of that. This just isn't going to happen again.
- [31:45]
C
Yeah. Because one thing to note, and we Talked about this with Austan Goolsbee when he came on, like, Trump nominates a Fed chair and he gets someone in there who is willing to do his bidding and lower rates to 1%. But, like, he still needs to convince the other Fed governors that. And I'm saying he, because I think we're pretty clear it's going to be a dude named Kevin. Kevin. So he comes in and he's like, let's get it to one, let's go. And everyone's like, yeah, no. And then eventually President Trump becomes frustrated with this pattern, kicks that guy out, and then you just have this like, revolving door of Fed chairs. I mean, this is one of the worst case scenarios. There's other worst case scenarios that happen if he succeeds in lowering rates to 1% and then we have hyperinflation, become a banana republic or whatever.
- [32:31]
A
I mean, I understand how this is definitely not how the Fed should work. But on the other hand, if you have a revolving door of Fed chairs, each one getting nominated by Trump and then turns out to be incapable of persuading the FOMC to reduce interest rates as much as Trump wants, that is not the worst case scenario. That is a scenario where the Fed retains independence and keeps interest rates where they should be. And ultimately the job of the Fed is not to have the same person in charge for a long period of time. The job of the Fed is to keep interest rates where they should be. And, you know, that is what happens.
- [33:08]
C
That's a good point.
- [33:08]
A
The worst case scenario is when the Fed loses independence and Trump has de facto control over interest rates. And I guess the reason why I'm relatively sanguine right now, and even more sanguine now than I was a week ago, is that while all of us can come up with some dystopian future where Trump does end up being able to set interest rates, I would say the poly market odds on that are very low, on the order of 10%.
- [33:38]
B
One fun thing is that now that Trump has attacked Jay Powell, he is less likely, I think, to step down the way that he was hinting that he would. I think this has hardened his resolve to stay there as long as it takes.
- [33:51]
C
Burrow looks tired, though.
- [33:53]
A
And to be clear, this is the question of when his term comes to an end as chairman, does he then leave the Board of Governors entirely or does he stay on the Board of Governors just as a, you know, in parliamentary terms, does the Prime Minister stay on the sabbatic bencher or, you know, does he leave Parliament? Everyone kind of expects that if you've been the chair, you don't want to just be a regular voter. But there's no reason why Powell can't stay on as a regular voter. And he seems kind of pissed off. And if this is going to piss off Trump, then maybe he is going to stay on as a regular voter and that will deny Trump another nomination. But yeah, as you say right now, even the Fed Chair nomination seems to be really, really fraught because Pirro is not dropping her criminal investigation. That could go on for years. Who knows when that's going to end. And so long as she doesn't drop it, it looks like it's going to be really hard for anyone to be able to get.
- [34:49]
B
Well, I do think this Republican blockade on approving nominees will help because if you have four Republican senators saying we're not going to approve anybody Trump puts up until this is taken care of, then you know, there's an incentive to get it done one way or the other.
- [35:03]
C
Don't be skeptical. They hold out there. You know, these guys are not.
- [35:07]
B
I think they would for self interested reasons.
- [35:09]
A
I think they will hold out longer than. Yeah, like one of them is going to have to blink first, right. Either it's going to be like Tillis and Kennedy and those guys or it's going to be Pirro. And frankly I would bet again, if I was a polymarket bettor, I would bet on Pirro blinking first. But the DOJ has processes and stuff and it's not even clear to me, you know, what is like she would need to eat a lot of humble pie at this point. Like there's no obvious pretext she could use to drop this investigation.
- [35:40]
B
Well, she's a bit of a chaos monkey though. Like I think predicting what Piro will do is. And I think the Republicans have an incentive. They generally like Jay Powell and they like the sort of stability that the Fed brings to the situation and they like it as a hedge against Trump being a chaos monkey. So I think that they don't have to believe that the investigation is wrong or that they need to defend Jay Powell for any kind of moral or principled reason. They largely want him to stay in the position for very pragmatic, market driven reasons.
- [36:14]
C
Can I just add one thing, please? There was reporting and I'm not sure it's confirmed, but that once again Bill Pulte showed Donald Trump a poster at Mar a Lago.
- [36:27]
B
And it was a wanted poster of Jay Powell.
- [36:30]
C
Yes, that's the reporting.
- [36:32]
A
Bill Pulte runs the fhfa and he is definitely off on the wackadoodle side of MAGA along with Jeanine Pirro.
- [36:40]
C
And he has been policy making. I mean, it's just, that's how we go about it. You get a poster board, you put something on it and the next thing you know you're moving markets, you're getting senators to say things like that's all it takes. You don't need a white paper, you need a big white poster.
- [36:56]
A
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- [40:41]
A
So let's move on and talk about the country where all of the most interesting scientific research on the planet is happening, which is China. Once upon a time there was a time when the greatest research universities in the world were all American and you could rattle off the list of the Harvards and Yales and Stanfords and Berkeley's and Caltechs and all the rest of it and they would have all of the Nobel Prize winners and all of the top research and everyone wanted to work there because that's where all the most interesting leading edge research was happening. Now all the top institute, well nearly all the top institutions with the possible exception of Harvard are Chinese according to one ranking. Well, according to multiple rankings. Actually any ranking of universities that is based on research output rather than like how good of a university is this to go as an undergrad is going to be overwhelmingly dominated by Chinese institutions. And this is across many, many different rankings. And this is something I've been thinking about a lot in the context of the sort of Trump administration's war on higher education is that the war on higher education is really aimed at and focused on US Universities as teachers of undergrads. And they're like you are indoctrinating our children in woke, yada yada. And you can agree or disagree with that. But these universities also have a really important other function which is to be scientific research centers and that is being thrown out with the bathwater and all of the science, the cutting edge, bleeding edge science. Well the science isn't necessarily moving to China because it's still happening in America. But the rate of growth of research in America is anemic while the rate of growth of research in China is stratospheric which means that China is now doing way, way more research than any other country. And that, I think, is a really profound and important development.
- [42:43]
B
Yeah, it pains me to defend Harvard, but Trump's particular attacks on them have. They've come at Harvard from several different angles. But maybe the. One of the worst ones is that he so heavily defunded the National Science Foundation. And Doge was a big part of this. They were just vetoing grants without even evaluating them. But 12% of the research grants provided by the National Science foundation went to Harvard, and those are just gone. There was a 56% cut to the NSF budget and a 73% reduction in staffs and fellowships. That's an insanely high amount of research funding that just disappeared overnight.
- [43:19]
A
And then add to that the Centers for Disease Control and, you know, all of the other massive. The US Government used to invest tens, if not hundreds of billions of dollars into fundamental research every year, and that number is going down rather than up. That money was the reason why US Institutions massively did way more scientific research and were way more bleeding edge than their European counterparts. The Europeans just weren't investing as much as the Americans were on a government level. And now the Chinese have taken over, and the Chinese are investing billions and billions of dollars across a huge range of universities in China. And it turns out that just throwing money at it is something that works.
- [44:03]
C
The rankings that we looked at for the research for this story and the one that sort of inspired us to talk about this, is the Leiden rankings, where Harvard was bounced from its number one position. Those rankings look at academic output, and that predates anything the Trump administration doing. In other words, this was already set in motion years before. Now we don't even know yet what the effects of the current administration's funding cuts are. Or, you know, to be optimistic, maybe they could be reversed. I mean, it's. It's not too late.
- [44:31]
A
And, Emily, this is a really important point which is worth underscoring. Research takes time. And what these rankings do is they look at the number of papers that are published, and especially the number of highly cited papers that are published. And, you know, between getting the money to do the research and then writing the paper takes years, and then between publishing the paper and it getting cited all over the place takes more years. So, as you say, all of this is a longstanding issue that has been in place for well over a decade. But it is obvious what is causing it, which is this disparity in funding, which has been in place for well over a decade. And as that disparity in funding gets even greater, which is what's happening now under Trump too, the result in terms of these rankings is only going to become even more stuck.
- [45:20]
B
Well, these rankings also look at patent applications, which are much more short term. But another thing that I sort of want to point out, which is that there's a sort of conservative line of thinking about higher ed, that it's inherently elitist. And I think that sort of line of thinking becoming more prevalent has been escalating since the 1970s. And now if you look at political incentives for particularly MAGA people, they just cannot connect the idea that the US as a superpower is really connected to scientific and technology advances. They just don't make that connection. So they're happy to kind of be very hawkish toward China and talk about American dominance, but they really don't understand the fact that if you attack higher ed the way that the Republican Party is doing right now, and you're attacking immigrants who are, you know, the US's dominance in technology is a function of the smartest people in the world wanting to come to school here and then staying here in a lot of cases. So without a lot of political will to kind of reinstate these programs, I don't see us going forward. I don't see a lot of it being reversed.
- [46:24]
A
It's definitely not going to be reversed. I think this is absolutely a structural thing. The Chinese have, as you say, they aren't answerable to an electorate. They can just say, we want to have the technology superiority and we can invest a relatively small proportion of GDP in getting there. Everyone else does not have that freedom. They're answerable to an electorate. And the electorate is like, why are you spending billions and billions of dollars on eggheads? And the answer, something, something self powered.
- [46:48]
B
They also just culturally value education in a way that Americans don't.
- [46:53]
A
Right. And the other aspect here is that in fact, the sort of MAGA slash populist turn in American politics does result in people saying, in a quite explicit point of view from the Trump administration, for instance, that drilling for oil is just obviously a better idea than manufacturing solar panels. And drilling for oil is a low tech kind of thing, and manufacturing solar panels is a high tech kind of thing. The Chinese can manufacture solar panels at an astonishingly low cost because they have the technology and because they have these incredible. And it is important to really underscore this, all of this investment that China is doing in its universities has resulted in incredibly cheap solar panels, much cheaper than anyone thought they would Be it is one of the many real world consequences of this investment. And meanwhile the Americans are like, well, we don't want your stinking solar panels. We're just going to drill, baby, drill. And that is not a way, as you say, for a superpower. That is not a rational sort of geostrategic response.
- [47:50]
B
It's just so depressing.
- [47:52]
C
Like I can't even deal with it. It's so sad. I mean, I guess it's good for China. Look, it's good for.
- [47:57]
A
It is good for China.
- [47:58]
C
It could be good for the world, who knows?
- [47:59]
B
They're opening their economy and we're making it hard for anybody to do business with us at all.
- [48:04]
C
We really are self owning our way into something not great into this back to the stone Age or something. Like as right before we were taping there was an announcement that Canada was getting rid of its 100 tariffs on Chinese EVs. You know, like everyone's moving on. There's nothing written in stone that like the US has to lead in education or.
- [48:25]
A
EVs are another really good example of this. We've talked about this on the show. The US government has stopped supporting EVs. Ford took that $19 billion charge and said, fuck it, we're not going to do EVs anymore. Basically gave the entire future of the automotive industry to China on a plate. China meanwhile, is investing heavily in EVs. And again, why is it that Chinese EVs are so much better and so much cheaper than anyone else's? EVs? Do we think it's completely unrelated to all of the investment in primary research in Chinese universities? Of course it's not. These things are connected.
- [49:02]
B
A sort of line of rhetoric that you hear from Silicon Valley people is that all of our great technology comes from the private sector. And this is usually people like Elon Musk kind of alighting the fact that their companies are built heavily on government research and government contracts and that most of our largest technological developments come either out of academia where you can do research for its own sake and it doesn't have to be immediately profitable, or from research units at defense contractors that work with academic institutions. And I think that's another policy thing.
- [49:33]
A
That, yeah, it depends who you're talking to in Silicon Valley. Like most, you know, a huge chunk of Silicon Valley is connected by one degree of separation or is actually a part of Stanford University and knows full well how important it is for institutions like Stanford and Berkeley and Caltech to get that funding. Yes, you're right. There is A sort of libertarian bent in Silicon Valley, especially when we had this period of people making a lot of money from social media where there was very little sort of bleeding edge tech involved in, like, I'm going to build Facebook. But now we're back in the realm of Silicon Valley's future is based on scientific advances and not just on hacking social media algorithms. And at that point, yeah, it's going to be a big fight with China.
- [50:22]
F
Which we'll probably lose.
- [50:32]
A
On which note, we should have a numbers round. Emily, do you have a number?
- [50:37]
B
I do.
- [50:37]
C
It's $3.
- [50:38]
A
$3.
- [50:39]
C
Elizabeth knows what this is.
- [50:41]
A
Is this a gas price thing?
- [50:42]
C
No. $3 is the cost. According to USDA Secretary Brooke Rollins, $3 is the cost they came up with after running a thousand simulations. Don't know what that means. $3 is what it costs to have a meal consisting of piece of chicken, piece of broccoli, a piece piece of broccoli, like one floret, a corn tortilla, and something else. That is what she said on TV this week. She said that they run over a thousand simulations and a simulated chicken breast. You can have a $3 meal made up of the piece of chicken, piece of broccoli, corn tortilla, and something else. Something else, apparently she meant was a dairy.
- [51:20]
A
You can put some mayo on your.
- [51:22]
B
Flavor, but you have the world mayo blandest taco.
- [51:25]
C
She was talking about this because, you know, Robert Kennedy Jr. Updated the Food guidelines and now they're very protein and dairy heavy and like the administration's out there pushing whole milk really hard. A very disturbing amount of whole milk pushing is, is taking place. And the question was like, seems expensive to push so much protein because, you know, if you. We've talked about ad nauseam on the podcast how much beef costs these days, but chicken, to be fair, hasn't gone up as much. And the Wall Street Journal even went out and they had some reporters try and find a $3 piece of chicken, piece of broccoli, corn tortilla and something else meal. And they were able to do it. But the problem is you have to go to the supermarket. You can't just buy a single piece of chicken or broccoli. We know this. Even us, even elitist slate money knows that we can't just buy a piece of. So anyway, they had to spend.
- [52:12]
A
That's like $12 for a family at 4.
- [52:14]
C
Yeah, you have to spend like 12 or more. I think it was like $26 to like Eke out the piece of chicken, piece of broccoli, and something else meal. So it, you know, it's not.
- [52:26]
A
But, guys, this is January. We've all, like, made our New Year's resolutions to lose weight this year. And the best way to lose weight is to eat nothing but, like, chicken breast and tortillas.
- [52:34]
C
Like, chicken breast, piece of broccoli.
- [52:35]
B
Can't go wrong. Nothing, really.
- [52:37]
C
That's free mainlining. The Ozempic. That's enough, right? Yeah.
- [52:41]
A
But then again, the Ozempic cost more than $3, so, you know, but I.
- [52:44]
C
Think the administration is moving to make it cheaper, so it kind of makes sense. Holistically.
- [52:48]
A
I think my number is related. My number is 22, which is also a price. It's $22. And because, you know, I am basic, I have also decided to do the dry January thing this year. And I went to a restaurant in New York, perfectly nice restaurant called the Dutch down on Prince Street. And $22 is how much they charged me for a fake Negroni.
- [53:16]
C
What?
- [53:16]
A
Yeah, the mocktails are now $22 people. And while I have had many very good mocktails in my time, I have to say this was not one of them.
- [53:28]
C
So it's juice. You paid $22 for juice?
- [53:31]
B
There is a really good company that I think is Brooklyn based that makes a phony Negroni.
- [53:37]
A
Yeah, I'm not a massive fan of the phony Negroni, but it's better than this thing I had at least. And also the great advantage of the Folio Negroni is it's like, what is it, like six, seven bucks? It is definitely not 22.
- [53:48]
B
That is true.
- [53:49]
C
That's three meals.
- [53:52]
A
You could feed a family of eight for that.
- [53:54]
C
That's like so many pieces of one.
- [53:56]
B
Taco for one meal.
- [53:58]
A
Elizabeth, what's your number?
- [53:59]
B
My number is seven. And that's the number of fire code violations that Pure Jim has experienced in New York City.
- [54:05]
A
Oh, this is the gates.
- [54:06]
B
The 24 hour gates is a company that bought the chain Blink Fitness, which very low cost. It's like $10 a month for membership. And then they don't have some things, like they don't have towels. You have a sort of Clorox wipes that you can wipe down the equipment, but you got to bring your own towel. But they were bought by this company, Pure Gem, that has installed these doors that look like the Star Trek tubes that people beam themselves up and down. And they. They said they did this because it ensures that, you know, people who aren't members can't get in. But it also has a kind of creepy vibe. And initially people thought that they were body scanners and they were like, I don't know if I want my gym scanning my body.
- [54:46]
A
Yeah, if I want my gym scanning my body, I'm going to pay $3,000 for that. God damn it.
- [54:50]
B
But there are two one person tubes. So it's also like, if there are people in line, you got to wait and stuff. And there was one woman who went through a tube. Yeah. And you use your phone to activate it. So there was one woman who got in the tube and then her phone died and she had to wait for somebody to get her out. So, yeah, people are still adjusting to this. And, you know, I think the person who invented the revolving door was a sadist. So this feels worse to me.
- [55:14]
A
But revolving doors are very important and very green. And I will defend the revolving door. I know that.
- [55:21]
C
I know you had a revolving door take, but of course you do.
- [55:25]
A
I know that revolving doors are not the best, like human ux, but yeah, if you have a revolving door at the bottom of a skyscraper, then, like, it helps in a million different ways.
- [55:37]
B
Have you ever tried to get a small child through a revolving door, though?
- [55:40]
C
Oh, my God. I've definitely had some, like, close calls.
- [55:42]
A
No, this is. This is a feature not about. It keeps the small children out of the skyscrapers. It's awesome.
- [55:47]
C
I'm a huge fan of towels at the gym. I belong to a fancier gym, and that's my favorite part. Unlimited towels. Sometimes I'll take a shower and I'll use like five towels. I don't care. I know, I know I'm destroying the environment, but there's destroying the environment. And, like, it's so.
- [56:00]
A
You would never do that at home.
- [56:01]
C
Taking clean towels, towels, it's like wee. It's my favorite thing.
- [56:05]
A
You are why my gym costs so much money because you are using all the towels.
- [56:11]
C
I love the towels.
- [56:12]
A
All right, I think that is it for us this week. Please email emily on slatemoneylate.com and castigate her for her towel usage at the gym. You're destroying the environment. How dare you, miss Peck. How dare you.
- [56:28]
F
Or tell her that she is absolutely.
- [56:30]
A
Within her rights and go ahead and you go, girl. One or the other.
- [56:34]
C
Those are the only options. Yes or no? Poly Market.
- [56:38]
A
Yeah. Thank you for listening. And thank you also to Jesmyn, Molly and Shannon Roth and Micah Phillips for producing the show. And thanks for being a Slate plus member. If you're a Slate plus member, we all talk about something isolated in the Slate Plus. Otherwise, either way, way we will be back next week with more sleep, Money.
- [57:08]
E
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