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- [00:11]
A
Hello and welcome to the hipster antitrust episode of Slate Money, your guide to the business and finance news of a week in which a 32 year old wunderkind has taken over the FTC. I'm Felix Hammond of Axios. I'm here with Emily Peck.
- [00:32]
B
Hello.
- [00:33]
A
I'm here with Stacey Marie Ishmael.
- [00:35]
C
Hello.
- [00:36]
A
And we are going to talk all about Lina Khan, who is the new chair at the FTC and is a quite astonishing person. We are also going to talk about big tech, which is related to Lina Khan. We have a bunch of very natural segues in this week's show. We are going to talk about Amazon, which is not just part of the big tech and like whether it's bad conversation, but it's also part of the how does it treat its employees conversation. We're going to talk about the big investigation that the New York Times did into the New York distribution facility at Amazon. We also have a slate plus segment on MacKenzie Scott, the person giving away her billions in astonishing ways. Slate Plus, Emily and Stacey are both signed up members.
- [01:27]
C
Yeah, I subscribe for Joel Anderson's Slow Burn podcast and have renewed since.
- [01:32]
B
I subscribe because there's no ads, which is actually really nice. And also because I am a total advice column junkie. And Slate, I think everyone agrees, has the best advice columns with the craziest questions that are just, you have to, you have to read them. So I finally bit the bullet and signed up.
- [01:52]
A
So much as I want you guys to listen to Emily Peck's ads, because Emily Peck does the best ad reads in this history of podcasting, if you, for what some reason, don't like Emily beck's ads, it's $1 a month to get started on slate plus and then $59 a year, it's really not so much money. Anyway, we have a fun episode coming up. Stay tuned for the rest. Anyway, lots of big tech talk. Coming up on the hipster antitrust episode of Slate Money. I'm excited to talk about Lina Khan because I feel like we have touched on Lina Khan many times over the episodes. I feel like I got into many debates with Anna Shymansky over the years about what she stands for, but we've never really talked about her. So, Emily, who is Lina Khan and why is she important?
- [02:49]
B
Lena Khan Khan now chairs the FTC, the Federal Trade Commission. She is just 32 years old and she's really interesting and important because she wrote this great Law Review article outlining a new way. A new way. That's an old way to Think about antitrust. And TLDR is the way to think about antitrust leads you to directly to break up Facebook, Apple, Amazon and Google in some way or the other. It's like a radical rethinking of antitrust that could be a real bummer for the tech companies essentially. And this is a very controversial move. We should talk about whether it's actually controversial move for the Biden administration putting her in place like this because she's very to the left. She wants to really shake things up in the field of antitrust.
- [03:44]
A
So a bunch of things to talk about here and I really love that we have this opportunity. We should probably talk about the sort of jiu jitsu move in which she became chairman where Biden's like, we want to nominate her to the commission and everyone's yeah, that sounds good. And this is one of those areas which doesn't really split evenly along left, right divide. There are definitely big critics of the big technology companies on the right. And we had 12 Republicans vote for her. And then after she gets confirmed to the commission, Biden then announces, oh, she's confirmed, I'm going to make her chairman, which is allowed and it doesn't require another confirmation. But it's. If he knew all along that that was what he wanted to do, maybe he could have just nominated her as chair and then probably it would have been more of a fight.
- [04:33]
C
But why?
- [04:34]
B
Yeah, it would have been more. Yeah, why would it be, Felix? The vote in The Senate was 69, 28. Doesn't seem controversial. That's incredible in 2021 to get that kind of bipartisan agreement on something. And we know Republicans and Democrats alike don't like big tech anymore, like for different reasons, but they're united in that.
- [04:54]
A
Exactly. And so in that way, I think she would have had more of a mandate to really go out there and implement this, what the scholars are calling what is called neo Brandeisian antitrust or what everyone else is calling hipster antitrust. And she would have this mandate to really, to really come out and say, look, I have however many 60 plus senators, all of these Republicans voted, you know, for me to be FTC share. Now she doesn't quite have that, but she can still go ahead and do that job. And the idea is really very much that what you're doing at the FTC is cracking down on any behavior that is anti competitive, even if there's no quantifiable consumer harm. What we've had over the past few decades all goes back to Robert Bork. Who basically said you can tell if there's a monopoly because the prices are too high. And then what happens is someone like Amazon comes along or Google comes along and they're like, our prices are zero or our prices are the lowest you can find. And so it becomes really hard to prosecute that under that conception of monopolies. Whereas Khan has a very, very different conception.
- [06:00]
B
I would say you said behavior, that's antitrust, she would go after. But she's also talking about, I was just reading one of her papers before we got on the call here. She's also talking about structural reform. Like she's arguing that the way these tech companies are structured is anti competitive because Amazon is both a platform for small businesses and retailers and competes with those small businesses and retailers and has thus a really big anti competitive advantage in the way it's structured. And the same for Facebook and Apple. And that makes her more of an existential threat to these companies than someone who's just, I'm going to crack down and you can't do bad stuff. You know what I mean?
- [06:42]
A
And that's exactly what we saw from Elizabeth Warren in the Democratic primary for president. She was like, if you are a platform and a merchant, if you are selling goods on Amazon.com, you can't also allow other people to sell goods on the Amazon platform. If you are producing Apple software, you can't have an app store. All of this kind of stuff. Google has its own app store. There's a bunch of conflicts there. And she's saying the way to resolve those conflicts is to just make sure they don't exist and split the companies up so that they become part of their constituent parts. And what's fascinating to me is that if you look at the stock market reaction to this, if you look at reaction to the surprise announcement that she was going to be FTC chair was somewhere between a complete shrug and an actual welcome of it. Because the stock market kind of suspects, a lot of investors kind of suspect that these companies might actually be working worth more on a sum of the parts basis than they are as massive conglomerates, which include all of these different bits and pieces. It's bad for the management, it's bad for the strategic vision that they have right now. But on a purely financial level, I don't think it's necessarily something that investors are worried about.
- [07:54]
B
It's also interesting, and I'm curious what Stacy has to say because she's being very quiet. It's also interesting to me how popular this issue is. There was a clip on Twitter I saw yesterday of tmz, the gossip site, asking Elizabeth Warren about breaking up Facebook. I think like tmz, usually this is not what they're interested in. I think this is like a big popular issue and we should expect Lina Khan and would you call it hipster antitrust? Hipster antitrust to become even bigger going forward.
- [08:29]
C
I think what's interesting about that popularity, and this is very much related to the New Yorker article about does tech need a new narrative? Is the celebritization in certain ways of tech folks and entrepreneurs, but also the fact that tech companies now inform every single thing that you do with your life from the second that you wake up until the moment that you go to sleep again. And so it's no longer that unusual for a website that is obsessed with other people's business to be talking about. Here are the apps that make it possible for us to know everything about everything that's going on, or here's how these things affect your lives. And one of the other things that's really interesting about Lina Khan and a couple of the papers that she wrote is she actually talks a lot about the idea of the tech monopoly on your data and the ways in which that's been under considered in the discussions about monopoly. And she's, you know, like thinking about your inability to have control over your own data as part of the ways in which consumers are harmed and part of some of this structural discussion that she's happening about how to better understand the role these companies play in all our lives.
- [09:40]
B
Can you talk more about that harm? I was talking to my daughter earlier on the porch about what we were going to talk about here at Slate Money and I was like, we're going to talk about antitrust. And I said, you're not interested in that? And she said, no, I am. She said, the tech companies have our data. And I was like, wow, okay, that's.
- [09:57]
A
A precocious four year old right there.
- [10:00]
B
Older than four. But I would love to hear more about why it's not good for the tech companies to have my data.
- [10:09]
C
Well, there's a couple of ways to think about this. One is we had a whole episode about do people actually care about privacy? Do people care about their data and the idea of sort of privacy defeatism, et cetera. And we got a note from a listener after that said it might be too late for people of our generation, but it's not too late for people the age of your daughter, for example, to kind of assert more control over what platforms no one can control about them and how they can be retargeted. And I was reading, I think it was in Vice, that just like last week, people who own certain types of cars had their personal data released onto the Internet because the car manufacturers were insufficiently secure in the way that they were storing customer profiles in the cloud. And so there's this constant question from both a, do you want a totalitarian regime to know everything about you? To do you want a single platform, whether Facebook, Google, Apple or Amazon, to know everything about you from just an abstract theoretical perspective? And then there's also a much more practical question of can you even know how these things are being used and how you're being affected when increasingly, for instance, that data might be used to determine whether you get a job or whether you're even considered for a job. It might be used to determine what kinds of credit applications or what kind of credit you're applicable for in general or you're offered in general. It's being used to triage school applications. It's being used to monitor students who are doing tests to say, oh, well, this person might have a higher propensity to be cheating because of these kinds of factors. And so I do think there is an increasing recognition, perhaps not at the level of four year olds, that the different types of data that these companies have been collecting for years and years and years are being combined in ways that are very powerful and much more powerful than we could have imagined 15 years ago.
- [12:04]
B
Something which I why is the size of the tech companies important when thinking about what they know? Why would an antitrust action against them be good in terms of privacy?
- [12:19]
C
There was a phrase in the, I think it was the paper the Separation of Platforms and Commerce that Khan attributed to venture capitalists. And she said venture capitalists discuss a kill zone around digital giants, which are areas not worth operating or investing in, since defeat is guaranteed. And data in the context of these companies is often used as that moat. It's you can't compete with us because we already know everything there is to know about this market, about this customer segment, about our competitors in this space. And so, like, we have just developed an impermeable armor where anybody who comes up against US is like 15 years disadvantaged because we've been paying attention to this for so long. And that's much easier to do. The bigger you are, not just in terms of how many employees you have, but how many different types of products and services you offer.
- [13:08]
A
I'm going to push back on that idea a little bit. I think the implication of Emily's question is correct. We are in this world where enormous amounts of data about us are not just held by trillion dollar tech giants, they are held by hundreds of companies we've probably never heard of. You can look at the Lumascape of ad tech if you want to look at just hundreds and hundreds of companies, most of which you've never heard of, most of which have astonishing amounts of information about you. I just have finished come off this big dive into unemployment, fraud. And the thing that it is all based on basically is personal information available on the dark web which comes from a bunch of different hacks and leaks of companies that are not Amazon and Apple. They're tiny little companies you've never heard of, or it's the Texas DMV or who knows where it might come from. And I do think that the standard antitrust remedy of break up the big companies would not solve the privacy problems that Stacey was talking about. Those privacy problems are absolutely real. They're entrenched. I spend a lot of time in the world of fintech where you always get these companies coming up and saying there's this big problem with the unbanked. And what we can do is we can loan money to the unbanked and we can bank the unbanked and we can provide all of these clever financial services to the unbanked. And the way they can do that, if you look under the hood, is by basically saying, well, in the old world when financial companies wanted information on people, they would have to go to the credit rating agencies. And that was basically all the information they could get. Now, even when the credit rating agencies don't have any information, they have so much information about who you are from so many different sources that they can underwrite you in a millisecond even without any of that info. And that's will be the case regardless of what happens to big tech. So this issue is which Lina Khan has definitely talked about, she's a very broad thinker and is bigger than just antitrust. This isn't one of these problems to which there is, you know, one glorious solution and that is break up the tech giants. And then we live in this beautiful utopia where all the problems are solved. But breaking up the tech giants definitely solves a lot of the anti competitive behavior problems. It solves some, but not all of the consumer harm problems. And we do have now someone at the FTC who has been thinking very, very deeply and broadly about this and the ramifications of all of these behaviors in a way that just cuts against the grain of how most lawyers and antitrust lawyers have thought about it for many years. And it's just a very new way of thinking. And that's incredibly refreshing.
- [15:49]
B
I just loved just reading her work. It's so clear. And the thinking, it's just really smart.
- [15:57]
C
It is very clear.
- [15:58]
A
She's a journalist.
- [16:00]
B
Yeah.
- [16:00]
A
It's just she's a journalist by training, and then she quit journalism to go to law school, which, like, I like people who do that.
- [16:06]
B
Boom. Results. But it is. It's. And then it made me think how rare it is for someone to come along with fresh ideas, who's actually able to communicate them in a way that people can understand, who can step back from the minutiae and say, this is how it is. And when you read it, you're like, you get it. That is incredibly rare, yet seems so simple. Right.
- [16:25]
C
I mean, I'm reminded of. Felix, you remember this, right? Consider the toaster, which was Liz Warren's famous analogy and kind of the thing that the intellectual roots of this consumer finance protection bureau were in this idea of. Here's a really straightforward metaphor to understand why certain types of protections are helpful and necessary. And I think it's really interesting that we talked about this being like, also a Lizwaran approach to hipster antitrust, as it were. But I think the intellectual precedent, in terms of the clarity of the arguments and the writing are also. Those things remind me of each other, too.
- [17:03]
A
Absolutely. And, yeah, so Warren's toaster, I guess we can call it, is basically her saying, why is it that consumers have far more arms of the federal government with far more power protecting them from being harmed by a toaster than they do protecting them from being harmed by a credit card vendor? Which, when you put it that way, when you frame the question in that way, makes it kind of obvious what the solution is. And that ability to frame a question in a new way, in a compelling way is just incredibly powerful.
- [17:35]
C
Yeah.
- [17:36]
B
It's not underappreciated. I guess we are here appreciating this, but it's still astonishing to me sometimes how important it is to be able to think about things and express them in clear ways. Because in journalism, sometimes it's all about the scoop, but sometimes it's just all about the framing. And people make fun of takes and analysis, but they're just so important when setting the table of conversation. And clearly this is a person who knows how to do that. Also, imagine if you had to get educated in toasters. You know how finance people are always like, you need to be financially literate and understand banking and products. Imagine if they were like, you need to take a class to understand your toaster, refrigerator, and microwave. We'd be like, oh, hell no.
- [18:17]
A
No can. At some point, can we just have an entire segment where I get to rant about financial literacy?
- [18:24]
C
Oh, absolutely.
- [18:25]
B
Let's get Helene Olin on. You guys can.
- [18:27]
A
No, I know exactly who I want to have on for this one. But, yeah, any time anyone says the word financial literacy, I'm like, how are you bullshitting me? What is the. What is the thing going on? Your former employer, Emily Peck, reached out to me this week. Verizon is now offering prepaid debit cards for teens.
- [18:50]
C
No hard pass.
- [18:52]
A
Verizon is now a financial services company. Do not ask me why.
- [18:57]
C
Ah, so many things.
- [19:00]
A
But the press release was, we are doing our bit to improve financial literacy. Something is fishy when they frame it that way.
- [19:06]
B
Oh, no. Garbage. It just sounds terrible. And I am free to say this now. I have no loyalty to those people.
- [19:13]
A
Talking of framings, what was up with this New Yorker piece? Give me the TL Dr.
- [19:18]
C
If I haven't read it, it's many thousands of words.
- [19:21]
A
I am not admitting whether I managed to finish this piece or not.
- [19:25]
C
Well, this was, I think, an interesting exposition, overview, analysis. It was very much table setting of using Marc Andreessen and Andreessen Horowitz, famously known for founding Netflix, Increasingly known, or Netscape even. Oh, sorry, indeed. Different N. Increasingly known as a venture capitalist behind things like Clubhouse, et cetera. And how the pandemic and an essay that, you know, he wrote has attempted to change the conversation about the role of venture, about the role of software, about the role of Silicon Valley as like, metaphor for anybody making things, and about how a lot of that is an attempt to both deny the power and influence that Silicon Valley have had as to why we have some of these problems in the first place. Why can nobody afford housing in the Bay Area? But also kind of an acknowledgement of the ways in which government and the absence of certain types of digitization that have long been advocated for by Silicon Valley, the absence of those things have also harmed consumers. So I thought it was a useful overview, and I didn't think that it was either too soft or too hard on anyone, but it was just a useful overview of how that conversation about the role of venture capital and software development has changed over the years.
- [20:49]
B
It was really interesting. There was kind of a news peg for this piece, because this week, Andreessen Horowitz, the VC firm that Marc Andreessen founded, that invested in all these companies that everyone knows now, like Clubhouse and Slack and Stripe and whatever, they unveiled this whole content website called Future, and it has all these contributed articles and whatnot. And this comes after Andreessen himself has stopped talking to journalists and blocked most.
- [21:20]
C
Of them on Twitter also.
- [21:21]
B
Yeah, and blocked them on Twitter. And the story kind of pulls back and looks at how he used the press or how their firm kind of used the press to become a huge big name. And this was when, in the early 2010s, when tech was still exciting to people and journalists and everyone was, oh my God, look what Facebook can do. Oh my God, Slack is so cool. These companies are so great. They give free snacks.
- [21:44]
C
Saving the future.
- [21:45]
B
The future is great. And like, he was into all that and then things took a turn. And now it seems like this guy is like trying to set the table himself, tell his own story without that intermediation. Cause he doesn't really need it anymore. And that does seem like a bigger trend as well.
- [22:02]
A
I don't know if either of you two remember. I think it was definitely before Stacey's time, but even before Emily's time. We had Margit Venmachus on the show.
- [22:09]
C
And she is the PR person named in the story.
- [22:12]
A
And she is. I really like her. She's incredibly smart. It's not common to have her like come out under her own name and say things. But that was definitely back in the day when they were talking to the press. The fascinating thing about the block rampage that Marc Andreessen went on was that it was when John Caryrou's Theranos stories came out in the Wall Street Journal. And anyone who was being rude about Elizabeth Holmes on Twitter wound up getting blocked by Marc Andreessen. And with hindsight, I think those people were right. And his high dudgeon about the people who were criticizing entrepreneurs was probably misplaced. In that particular case, they weren't even.
- [23:00]
C
Investors, which was the other thing that was confusing, if I'm remembering.
- [23:04]
A
Silicon Valley basically didn't invest in Theranos. That was the crazy ironic thing. It was a Silicon Valley company, but all of its investors were people like Rupert Murdoch.
- [23:13]
B
True, but the machinery, the media machinery around that is like the problematic machinery that has since changed, in part because of John Carrey Roos reporting. I think, like, people were like, oh my God, this company is amazing. Look how blonde the founder is. And she's so smart. And she wears Turtlenecks. It's so cool. Doesn't she got like, on the COVID of Fortune and this and that? And those days are just gone.
- [23:36]
A
Well, they're not. I mean, we're seeing the implosion of Lordstown Motors right now, which was another one of those companies that was propelled to stratospheric heights basically based on the power of crazy projections. And now it's. It's come back down to earth on the basis of they were lying. They said they had binding preorders, and it turns out they didn't have binding pre orders. And they fired their CEO and they fired their cfo, and they've come out with an SEC filing saying, yeah, actually we didn't have any of those pre orders to. That we said we had. And they're still managing to trade above the SPAC price of $10 a share. Like, people really love buying into these narratives, even when they're not being peddled by journalists.
- [24:18]
C
I think that there is perhaps less frothiness in the stories in the sense that I do think there's been a reduction, not an elimination, but a reduction in the amount of what I like to call, like, gently lit. Aren't these founders the most amazing people you've ever met in your life? Kinds of profiles and a little bit more analysis of is this thing even going to work? And I think that last part, having worked in and around tech companies, is actually the hardest for Silicon Valley to accept. Right. It's like people aren't excited about their every single idea anymore. And there's much more of an expectation that you will have considered, how can this thing be used for harm? That you will have considered, how are you protecting people's data? How are you protecting privacy? Are you going to be used for war crimes? Like, you know, questions fewer people were asking five to seven years ago. And I think one of the things I appreciated about the New Yorker story is it did go into a little bit of detail about that military Silicon Valley complex, which is very, very old. Right. That's one of the oldest symbiotic relationships in technology. But a lot of the folks who just want us to be excited about apps do not want folks also thinking very hard about the fact that the technology underpinning your navigation software is also underpinning drones, and not the fun kind.
- [25:48]
A
So I disagree with you, Stacey Forget. I think that there is still a lot of excitement about. There's a lot of just naive excitement about what tech companies can do. I think that's in large part, part of the reason for the founding of Future, this new website, and the attempts by these tech companies to disintermediate the media. Because you're exactly right that journalists are asking these questions. Journalists are asking, like, how is your technology going to be used for harm? Journalists are being much more skeptical. Journalists, having been burned by Adam Newman and Elizabeth Holmes and all these other people, are learning to not take stuff at face value. But there is still a huge audience on Reddit, on LinkedIn, on Twitter. Hacker news, like the hustle culture, or whatever it is you want to call it, on TikTok on finance. TikTok is totally a thing. And these people are really kind of embracing the narratives and really jumping onto the bandwagons. And if you can disintermediate the media and go straight to those people, that's awesome. The wonderful thing about capitalism in a certain respect is that certainly while you're private and even to a certain extent while you're public, your share price, your valuation, the amount of money you can raise is entirely a function of how many optimists you can find and how much you can persuade them to buy into your narrative. And it doesn't really matter how many pessimists there are. You can let the pessimists be pessimists, and so long as the optimists will buy in and invest, you're fine. And if you're getting your message out through the media, that's increasingly difficult because the media is asking these tough questions. But if you can go around the media, then you can find possibly a minority of people, but still enough people who can be optimists and buy in and invest and make it all happen.
- [27:40]
C
I don't think that dynamic is so different now from the people shilling spurious real estate in Florida or essential oils. There's always an element of boosterism in industry. What I think is different, and this is where I do think this intermediation conversation is interesting, is the media has the power to normalize that as everyone's frame of reference. And to say that we are excited about the Marvel Cinematic Universe, we are excited about Facebook, we are excited about whatever those things are. And I think the absence of as much media frothiness combined with. I also think the rise of labor and labor movements among tech employees has changed the narrative a little bit as well. But I do think there's a difference between people are going to TikTok or they're in the comments on Hacker News because it's harder for them to find broadly sympathetic audiences on all of the platforms in a way that might have been easier not that long ago.
- [28:41]
A
I'm just going to hold up as a poster child here. Elon Musk. He closed down the PR department at Tesla. There was always a bunch of very skeptical coverage of Tesla from the press. He was like, I have no interest in dealing with you guys anymore. And he managed to find a very rabid fan base who really love his company and will hear no wrong said about it. He's managed to find investors for his other company, SpaceX, at ever increasing valuations. Even when a lot of investors think it's a crazy bubble and it's not worth anything like that kind of money, it doesn't matter because as long as you can find a few investors who will invest, that's all you need. And Elon, especially, you know, with his gazillions of Twitter followers and the rest of it, has done an amazing job of just saying, I don't need the.
- [29:24]
C
Press anymore, but this is celebrity.
- [29:26]
B
I was going to say the press hasn't always been great at understanding how amazing technology is. If we step back from like, the labor issues, the antitrust issues, the privacy issues, tech in 2021 is a miracle. The world shut down. We all kept doing our jobs all the time. Mark Andreessen wrote a whole cheerleady post about this, but he's not wrong. Like, these companies have done amazing things and sometimes, not only does the press lose sight of that because it's our inclination not to cheerlead or like, tell that story, because who cares? In a way before we came on, I was thinking about Amazon and somehow came upon some like 2006 article that was like an apology from a Forbes writer who said, I told you that Amazon would never make it, that the company didn't make any sense, that, like, selling stuff online was dumb. Like, everyone back then thought selling stuff online was dumb. It was not dumb. We can say that conclusively now. We know this, right? But, like, there is some kernel of, like, wonder that I think is a story that doesn't get told by the media, that I would bet that tech founders and investors want told because it's true and encouraging and positive and necessary.
- [30:47]
C
Yeah, but I also feel that way about, like, utilities. This is my perspective on this, which is so much of the tech you're describing is enabling things that we have come to treat as utilitarian. And it is optimization of being able to do basic tasks. And I feel, at least for me personally, I've seen fewer and fewer generally inventive and innovative things that I think are transformational for people who don't already have most of their basic needs met. Like, I was talking to a friend who is diabetic about the absolute lack of innovation in insulin pumps. And the absolute lack of innovation, which is very common when you get parents talking about things in breast pumps, bumps, and the absolute lack of innovation in wheelchairs. And it's just like, yes, there are all sorts of really interesting things that tech is enabling, but they're also very boring, frankly. It's, like, fantastic. The call quality for my video call is 10 times better than it was 12 months ago. But my friends who use wheelchairs still can't get them up slopes.
- [31:55]
A
Yeah, the innovation in insulin is like 100% concentrated in how much can we raise the price of insulin. The price of insulin in the United States is a national shame. The way that it has just been rising and rising for purely financial reasons. There's no underlying reason why it should be going up so much. And, yeah, like, can we disrupt that, please? Somehow? I mean, people are trying. It's not like this isn't an ignored problem.
- [32:26]
C
But, yeah, I will sign up to write the story about insulin pumps if there is, like, genuine innovation happening there.
- [32:32]
B
So you're saying you love innovation? Innovation's great, but it's only taking place in service of, like, cushy rich people who don't need an even better way to buy stuff online.
- [32:43]
C
Yeah, I mean, it's the Juicero problem.
- [32:46]
B
That was not a good example of innovation. That was juice. That was juice in a bag that got squeezed in a machine. Right, right. That was what Juicero was.
- [32:54]
A
It was glorious.
- [32:55]
C
Very expensive juice.
- [32:56]
A
Very expensive juice with a barcode. And it wouldn't get squeezed if the QR code said that it was too old. But this is a really good segue, actually, to the Amazon story, because there was a huge New York Times story which basically ripped the lid off the Amazon fulfillment center down in Staten island and showed what tech innovation really looks like on a human scale. That a lot of the innovation that Amazon did and enabled, especially during the pandemic, was based around a kind of terrible view of productivity, of productivity and labor. That came straight from Jeff Bezos, who was basically saying, like, you know, when people come in here, they really want our jobs and they work really hard, and then we just need to make sure they continue to work really hard. And then when they slow down, we can just discard them and replace them with someone else who wants to work really hard and who just instrumentalized labor in a very inhumane way. And then five minutes before he steps down as CEO, he comes out with a letter saying, we want to be the world's best employer. I'm going to leave that to my successor because it really is a complete 180 from how he's been operating what is now, I think the biggest employer in America. Or if it's not number one, it's definitely number two.
- [34:22]
B
They're like they're poised to be number one. Taking over from Walmart private employer. Yeah, that piece was incredible. Jodi Kanter, Karen Weiss and one more reporter who I don't remember the name of, teamed up and I think it took a nine month investigation. Talked to hundreds of Amazon employees, executives and people on the line about how the company operated in the pandemic, treating workers as just as widgets, as just completely disposable. Jeff Bezos's theory is like, workers become lazy over time. So there's all these processes in place to get them out. Like they stop giving annual raises after three years and they actually have a pay to quit program. If you want to leave, they're like, here, go, go, go, go. Here's some money. Get out. Bye. They do not want you to stick around. And because of the pace of hiring in the pandemic, they hired a half a million people in 2020, which is insane. And because of the pace and method of the hiring, which was like they just brought people in, there was very little vetting. The turnover rates were astronomical. The Times found turnover rates of 150%, which is just wild. And some executives are saying we might actually run out of people to hire. And then the jobs themselves are, I mean, we've talked about it. They're hard on people, hard to do. The company tracks you like a robot. They measure your time on task. If you go to the bathroom too long, that's bad. People got fired by email. And no one's, no one human is checking it. It's a crazy story. Everyone should go read it.
- [35:55]
A
It definitely reminded me of the conversation we had about the disappointing jobs report in April where people were like, it would have been great if we'd managed to create a million jobs in April. But creating a million jobs in one month is really hard. Hiring people is really hard. And it turns out if you look at the company which has done more hiring than any other company on the planet over the past few months, they wind up creating software to do it. And the software is not human and it makes terrible mistakes. And maybe that is the only way you can hire at that kind of extraordinary pace. One of the things we've really learned from the past couple of decades in Silicon Valley is scaling is hard. And the first question that any VC always asks is, does it scale? Just because you can hire 10 people does not mean you can hire 100,000. And you need very, very different systems to do that. And what we saw in the New York Times is how those systems just completely failed the workers.
- [36:52]
B
If any company can figure out how to scale hiring, it's Amazon. Though what comes across clearly in the New York Times piece is that, and in the book we just read and had Brad Stone on, is that this is a company that when it wants to do something, it throws everything it has into it spares. I don't know if it spares no expense, but it throws it all in there. It tries a bunch of stuff. It rents out rooms and has people talk in front of computers to make Alexa when no one else thinks it's possible. And it's just some weird dream cooked up by the CEO. So, like, they didn't want to do this in the right way. Like, treating workers as disposable widgets was, until recently, the strategy. And I bet they could figure it out if they gave it a real shot.
- [37:35]
A
So that's my question for Stacey, right? Is everything we know about Amazon is that when Jeff Bezos really wants something, like, nothing in heaven or earth can stop him from making it happen. And he has created this enormous company which is imbued with, really, essence, his personality. Essence and his personality and the culture that has come from him.
- [37:56]
B
Essence of.
- [37:57]
A
Is it possible is. Is Emily right, that if Amazon wants to do something, if the new CEO of Amazon wants to pivot into suddenly being much more worker friendly and being a great employer, if he has Jeff's blessing to do that, is it actually too late at this point to change Amazon's culture? Is that going to be impossible, or do you think that they. They can do it?
- [38:20]
C
You know what this reminds me of? It reminds me of when it was fashionable in certain economic circles to argue that GDP was an insufficient measure of productivity because it didn't consider happiness and some sense of kind of the qualitativeness of how the thing was made. You remember blog posts?
- [38:41]
A
Oh, my God, New Zealand has done it. They're trying to maximize Gross National Happiness. Bhutan did it first.
- [38:47]
C
Yeah. And then we found out more about Bhutan.
- [38:49]
A
Exactly. Yeah. That was a milkshake duck if ever there was one.
- [38:54]
C
I really was.
- [38:55]
B
Vladimir Putin had something to say about Happiness this week. I don't know if you saw it.
- [38:58]
C
It's not real.
- [38:59]
A
He was like, yeah, it's a very Russian. Vladimir Putin had a very Russian view of happiness. I think he was quoting Tolstoy, wasn't he? He was like, it's just a mirage.
- [39:07]
B
I don't know.
- [39:07]
A
All we can do is try and fool ourselves with the mirage that is happiness.
- [39:12]
C
Well, I think in most large companies, particularly in ones where there is this really pronounced split between labor and management, or to use kind of the lingo, corporate and retail and corporate and factory, the incentives are not aligned at all. And until somebody works out the mathematical formula that says if your people aren't suffering and are allowed to take bathroom breaks, then share price will go up or more widgets will get made, I am deeply skeptical that most places have the institutional will or interest in fundamentally rethinking things to shift more power to the labor force.
- [39:57]
B
It doesn't have to shift power. It just has to, like, be nicer and more responsive. Like just hire more HR people.
- [40:04]
A
I mean, like, the workers at Apple Stores are allowed to take bathroom breaks, right? It's not all big tech is, you.
- [40:10]
C
Know, the workers at Apple Stores are allowed to take bathroom breaks. And they are also often left out of the conversation about equity in the sense of like, how many RSUs are they eligible for? There's different types of inequity in Silicon Valley and some of it is very high class. But the certainly, to use a more prosaic example, the workers in Apple Stores were also exposed to coronavirus in stores and brought back out to work and then told, we're closing the store, we're opening the store again. In a way that their colleagues in Apple park were not. Because all of those folks were like, oh, no, you don't have to come to the office, do your job from home. And so I do think it is about power. It is about the ability of folks in those environments to have more control and more agency over their conditions of work and not end up being precariously fired by email because they're trying to exercise those rights. Fair.
- [41:05]
B
We should mention, though, Amazon. The last time Jodi Kantor investigated Amazon, she looked at their white collar workforce and they were even more miserable. Terribly so. It does seem like there was there used to be anyway, a more equal opportunity misery treatment of the workers. Everyone was treated badly at different levels, although of course, the white collar workers are much better compensated.
- [41:29]
C
Yeah, it's like, here's your $300,000 as a payment for your Tears.
- [41:33]
B
So, yeah, you cry at your desk, but you earn six figures, so it all works out.
- [41:37]
A
All right, numbers round. I think I'll go first this time. My number this week is 365%, which is the amount that sales of rubber footwear are up over last year. Wow, guys.
- [41:57]
C
People are buying shoes.
- [41:59]
A
People are buying rubber shoes, leather shoes, sneaker season, baby. What's happened is that rubber has suddenly become really smart and like, Balenciaga has rubber shoes now and they're insanely expensive, but they are cheaper than the leather shoes. And I think Bottega Veneta has rubber shoes now. And so, like, rubber shoes are cool and fashionable and everyone is running out and buying brightly colored rubber shoes, often extremely ugly, because ugly is very fashionable these days.
- [42:28]
C
Ugly is fashionable.
- [42:29]
B
I got Rubber shoes in 2020. Oofos, they're called. And they're so.
- [42:34]
A
You are so ahead of the curve, Emily.
- [42:36]
B
I was on trend, Felix. Yes, that they're great rubber shoes. So we are part of the trend for sure.
- [42:43]
A
Now the big question is the degree to which all of these claims of being biodegradable or recyclable or any of these things have any real. Because rubber can be one of two different things. It can either be like rubber from a rubber tree or it can just be like petroleum and no one really knows which is which. And neither of them degrade very well. So, yeah, don't try and let anyone persuade you that this is environmentally friendly, but it is at least ugly and colourful.
- [43:06]
B
So there is that they're ugly and squishy. I actually don't know if they're rubber or not, but they're like super shiny and they're definitely not leather. The oofos, I don't know if any listeners have them. They can let me know what I've gotten wrong about these flip flops that I like.
- [43:21]
A
Emily, what's your number?
- [43:22]
B
I also have a percentage, 15%. That is the amount that the child care workforce has shrank since the start of the pandemic. There's this really good piece that I missed a little earlier in the month on Bloomberg City Lab that talks about how the childcare workforce has shrank because not everyone has come back to work for the reasons we've discussed on other episodes. And what was interesting about the piece is not only has the workforce shrank, the work has moved because a lot of people left cities for the suburbs. There's like a mismatch in who needs childcare and the availability of childcare. So in a lot of Places have become like these childcare deserts where people can't find daycare or anything, anyone to watch their kids because there's no one available because so many more parents and children have moved to a certain area. Whereas in the urban areas there's plenty of spaces open for people. So it's like another one of those, like the pandemic messed everything up and there needs to be a kind of like a rejiggering. Meanwhile, childcare workers are really low paid, like average wages, around $12 an hour and they're not as responsive. Like those wages aren't going to go up the way like Chipotle has raised wages or Amazon or Walmart. There are better paying, low paying jobs right now. So that's like adding problems to the whole situation. It'll be interesting to watch it play out since the Biden administration seems cognizant of all these problems.
- [44:48]
C
Stacey, My number is not a percentage. It is 12,000. And that refers to how many megawatts of power generation were offline in Texas on Monday afternoon.
- [44:59]
A
Urquhart is back in the news.
- [45:01]
C
Back in the news, baby. It was hot this week in Texas and as a result, we received a series of strongly worded recommendations from the utility, from the power grid, from Governor Abbott's administration, saying, hey, it would be really cool if everybody turned their thermostats up to 78 and closed all your blinds and didn't use your oven because for reasons that have still not been fully disclosed or explained, a significant amount of power generation capacity was straight up offline on Monday and has been gradually coming back online. But to put that in context, 12,000 megawatts is like 2.4 million homes with full AC running. So we are once again facing what I am trying to make happen, what I'm calling power grid summer. I don't know if it will take off, but here we are.
- [45:50]
B
How was your electricity? Did you have any issues?
- [45:53]
C
Electricity was very stable. I am one of those people who always has my thermostats running above sort of 78 degrees. I'm like, I'm from the Caribbean. Like, what? So I was feeling like, you know, righteous in my energy conversation already.
- [46:08]
B
Amazing. Meanwhile, didn't Texas pass a whole crazy number of wild laws? Like, people can now just like run around Texas holding guns and it's totally fine. And. But teachers can't talk about race kids.
- [46:21]
A
Okay. Anyway, I do think that the pandemic is partly responsible here. Obviously the pandemic is not obviously responsible for the power generation going offline, but it is Absolutely known that air conditioning schools and office buildings is much more efficient than trying to air condition a bunch of single family homes. And if you have a system whereby people leave their homes and go into schools and offices and other workplaces and then allow the homes to get hot during the day and then they turn on their air conditioning in the evening when it's cooler, that saves a bunch of electricity compared to a system where people are staying at home and running their ACs at home all day.
- [47:02]
B
Yeah.
- [47:03]
C
This is another example of the ways in which the conversation about remote work ignores the fact that our infrastructure is also just not set up for this. Like people have individually higher expenses. And we're also running into the kinds of chaos that you've described where we've really optimized around commuter patterns of behavior in ways that are being upended.
- [47:24]
B
Yeah. Can I just tell you that the quote is from Putin, in life there is no happiness, only the specter of it.
- [47:33]
A
Wow. On that note, I feel like, yeah, Putin does not strike me as someone who either has a sense of humor or has ever really been happy.
- [47:43]
B
Not even when he's on the horse.
- [47:44]
C
Also, the bear.
- [47:48]
B
That seems happy for him. His happy for him.
- [47:50]
C
Incredible.
- [47:50]
A
Yeah. The idea of trying to understand the soul of Vladimir Putin is something which terrifies me and I'm just simply not going to do. But yes, I think that's that really is going to wrap up Slate Money this week. Thank you so much for listening. We watched the Slate Plus. We had a really fun thing to talk about on Slate.
- [48:09]
C
Mackenzie Scott.
- [48:11]
A
Mackenzie Scott. That's right. We're going to talk about Mackenzie Scott giving away $2.7 billion in slate plus. Stick around for that if you remember. Otherwise, come back next week for more Slate Money where we might even talk about the wonderful email that you send us. Slatemoneylate.com thanks for me. Thanks to Jessamyn and Molly. And we'll be back next week on Slate Money.