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- [00:10]
A
Hello. Welcome to the Jeff Bezos Midlife Crisis edition of Slate Money, your guide to the business and finance news of the week, in which Jeff Bezos dropped $165 million on a campaign in Los Angeles. And what else happened? Oh, there's a major Fed chair brouhaha going on in Washington. We're going to talk about that. We're going to talk about antitrust issues, not only as pertaining to telecoms, but also as pertaining to technology. We're going to talk about Jedi. If you don't know what Jedi is, you're about to find out. But it also involves big, big tech and the power thereof. And if you are a Slate plus member, can I just say you're in for a treat this week because there is a truly magnificent Emily Peck rant. So all I have to do now is just introduce ourselves. My name is Felix Hammond of Axios. Emily Peck, you are here from HuffPost.
- [01:14]
B
Hello.
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A
Alan Shymanski, you are here from Breaking Views.
- [01:17]
B
Hello.
- [01:18]
A
And we are going to be talking about all manner of techno awesome things coming up on Slate Money. So let's talk about the hearing that happened on Thursday in the Senate in front of the Banking committee. Pretty much 50, 50 Republicans and Democrats. But I watched a bunch of it and some of them were nice, but most of them on both sides were not nice. 2 Judy Shelton, who was one of the two nominees sitting there, and then there was this other guy sitting to her left who basically everyone ignored because they were like, okay, you're not so bad. You're a respected Fed economist. You've been at the Fed for years. Everyone kind of understands that you're qualified. So why are you even here?
- [02:03]
B
Right.
- [02:03]
C
And these are Trump nominees for the Federal Reserve, to be clear.
- [02:06]
A
And what Trump has done when he's nominated people to the Federal Reserve is they really have fallen into two buckets. He's sometimes he just nominates the obvious technocrat who is good at their job. And probably Jay Powell would fall into that bucket, but so would like Lael Brainard and various other people who, like, sailed through the nominations, had no problem.
- [02:27]
B
And then, yeah, I mean, I think we look at kind of early Trump. It was still kind of normal. And now we're moving a little bit into crazy Trump.
- [02:33]
A
But, but the point is that even with these two nominations, he's got one of each.
- [02:38]
B
Yes. And that's, and that's true. Yeah. The. Was it Chris Waller?
- [02:41]
A
Yeah. So Chris Waller is, He's from the St. Louis Fed. He's always been on the Dovish Side.
- [02:46]
B
Side, he's buddies, I believe, with Larry Kudlow and they're both into the idea right now that they can keep. Unemployment can go still much lower and it won't affect inflation.
- [02:57]
A
So you know, this is a debate that's happening in the Federal Reserve. And, and basically every time that the Fed has worried that unemployment has reached as low as it can go before inflation kicks in, they've, they've said like we, well, let's try and see what happens if it goes even lower and then it goes even lower and then inflation doesn't turn up. So it's an interesting debate in the central banking community and there's lots of talk about this thing called the Phillips Curve. And Chris Waller is right in that debate and he can add useful perspective to the Fed board in terms of that debate. And probably his conclusions are aligned with what Donald Trump would want them to be, which is you can cut rates more and that's fine, but ultimately he's a relatively professional central banker and he'll be fine.
- [03:45]
B
Yeah. The reason Judy Shelton is so worrying to people, I would say is twofold. One is some of the things she said in the past, specifically being a big fan of the gold standard, believing that the Fed just shouldn't exist at all, not believing in deposit insurance and.
- [04:00]
C
Not just, yeah, deposit insurance like FDR deposit insurance like the assurance that I have that the money in the bank will be there tomorrow. Cuz I know that the federal government will make me whole if I lose the money in my bank account.
- [04:17]
A
Who.
- [04:18]
C
I was really surprised that a human person that is nominated for such an influential position. I mean, I know Goldbug is crazy too, but for some reason I cannot stop thinking about that this woman wants to get rid of the fdic. So I'm blown away by that.
- [04:35]
A
This is, this is part and baseline. This is not just by the way, to be clear, this is not just something that she wrote once. She, this is something which she built her entire career around, which is basically, and this is not unique to Judy Shelton, this is a very, very standard like hard libertarian view of monetary policy, that the federal government should not be involved in monetary policy, that we should just outsource the whole thing to a lump gold and that banks, and that banks should, you know, rise and fall on their own merits and they shouldn't be backstopped by the federal government because that's the federal government like get interfering in private commerce and like the, the, the crazy sort of like Rand Paul wing of the Republican Party has always had an affinity for this kind of thinking. It has never been remotely mainstream, and it is entirely counter to really the existence of the Fed.
- [05:31]
C
Yes.
- [05:32]
B
Yeah, and I would say what, that's disturbing, but I would argue that what's even more disturbing is her partisanship, is the fact that she, as you said, Felix, built her career on this. And then when she, it became clear that she was perhaps more aligned with Trump, that he was maybe going to appoint her. Now all of a sudden, she's a dove.
- [05:51]
C
And so, yeah, when Obama was president, she was out there saying that the Fed should raise rates and it was ruining the economy. And now with Trump president, she wants the Fed to lower rates.
- [06:04]
A
And it's not just that she wants the Fed to lower rates. She also seemingly wants the Fed to start getting in charge of the dollar in a way that, like, has historically been the remit of the Treasury Department rather than the Fed. And she's like, the Fed should lower rates specifically to weaken the dollar so that we can enter this currency war and export more. And this is a very, very Trumpist view. And, and what is absolutely clear is that she has effectively jettisoned everything that she has ever said in the past after going to work for Trump on the Trump campaign in 2016 and is now a mouthpiece for whatever Trump thinks this week. And she would certainly just vote and act on the Fed board in accordance with what Trump wanted rather than in accordance with whatever wing nut libertarian ideals.
- [06:59]
C
She had at first would actually not. So I don't think it's so bad to keep rates low and keep juicing the economy and see how low you can get unemployment for now. I guess the issue is once Trump leaves. Well, the issue is twofold, as one would say, first that she, if Trump gets reelected, I think, as Felix has pointed out, that she could be put in charge of the whole thing.
- [07:21]
A
She could be the next chair.
- [07:22]
C
The next chair. Bad. And then second, if Trump gets voted out and she stays there, then she, and it's a Democrat who's president, she could flip, flip flop again and, you know, work to put the brakes on the economy instead of juicing it.
- [07:37]
B
And the biggest, the biggest issue is that she, if she is on there, and especially if she is the chair, that starts to call into question the independent.
- [07:45]
A
It doesn't call. If she is the chair. There is no Fed independent defendants.
- [07:48]
B
Well, there's the rest of the board of Congress. I mean, it's not just her.
- [07:51]
A
If she is the chair. No, I'm gonna just come out and say if she is the chair, then the only way that she becomes the chair is if Trump is president. So if she is the chair and Trump is president, there is no Fed independence. The chair of the Fed just does the bidding of Donald Trump and you know, maybe she has difficulty, you know, getting a majority of the votes on the Fed board, although at that point who knows, you know, who's on the Fed board. But the fact is the multi decade history of Fed independence has at that point come to an end.
- [08:23]
B
Yeah, and this is, this is incredibly dangerous like that. To me. The reason why I think this actually won't happen is because of how dangerous that is. Having an independent central bank is so important for market participants to have faith in the dollar, to have faith in our debt, to have faith in the ability of our government to like have a functioning economy. It is so important. And when you look at times when the Fed independent or when other countries have had their independence of their central banks questioned or clearly shown to not be the case, the consequences are devastating.
- [08:59]
A
And we saw that even in the United States, you know, with Arthur Burn, when Fed independence goes, that's harmful. And what was super interesting in the hearing was at one point Christopher Waller actually managed to get a word in edgewise and he was talking about the ability of the Fed to keep inflation under control even when unemployment is very low and you have a sort of full employment situation. And he was like, you know why we can do that? It's because no one expects inflation. And no one expects inflation because everyone believes in Fed independence and everyone trusts the Fed. And so long as people trust the Fed, no one's going to be like raising prices in expectation of inflation. Inflation to a large degree is a self fulfilling prophecy. Like the dynamics of inflation are that people ask for wage increases or increase their prices because they think that there's inflation out there and they need to keep up with it. And so long as you don't think that inflation, inflation is out there, so long as you trust the Fed to keep inflation under control, inflation just doesn't appear well.
- [10:07]
B
And also because I mean to be fair, if, also if you, if you had a, if you were just all of a sudden started printing money and you were printing money far in excess of increases in the productive capacity of the economy, in theory you would cause inflation. Right. So that, that is why we have an independent central bank, so that governments won't do that. Because historically, not necessarily always the United States, although can be in many other countries, when countries want to print money so that they can spend more and then they degrade the value of the money. And this is the dynamics of it.
- [10:40]
A
I mean, so, so, yeah, just to be clear here, right now, Donald Trump is on a bit of a spending spree. Well, not a spending spree, but certainly like a fiscal stimulus spree. He, he cut taxes a lot. And, and the way he's funding that fiscal stimulus is by borrowing money in the market and by issuing treasury bonds. It is conceivable if you lost the independent central bank, that he could just print money instead. Instead of going out and borrowing money from investors, he would just say, oh, you know, magic. I'm going to magic a trillion dollars of new money out of thin air. Because you can do that when you have control of the printing presses. And that, you know, as, as Anna says, is super dangerous on an economic level. You know, do I worry that the Fed would be cut, would lose so much independence that they would go that far? Probably not, but you never know.
- [11:34]
B
No, I mean, and I agree with you. I'm not saying that I think that is my base case. I'm just saying that that is the danger. Like when people say, well, like, why does it matter if we have an independent Fed? That is one of the reasons. The other reason is because, let's say, all of a sudden inflation, for whatever reason, does start to move up. And then if we do not have an independent Fed, they may be much less apt to actually act because the President will be like, no, if you raise rates, you're going to hurt the economy. And I don't want to do that. So you need, that's what the classic idea of what, what do central bankers do? They take away the punchbowl. Nobody likes the person who takes away the punchbowl. So they can't be a political body.
- [12:08]
A
The, the, the bigger picture here is that everything has become politicized. The Supreme Court is politicized, which is meant to be like this third branch of government, but it's become just R versus D in the way that it was never meant to. The Senate was never really meant to be an R versus D body, but it has now become that.
- [12:29]
C
The Department of Justice, I think, is a really apt example.
- [12:32]
A
And the Department of Justice, as we know, is happening this week. And if the Fed becomes politicized, if you put party political hacks onto the Fed, such as Judy Shelton or Stephen Moore or Herman Cain, their votes are going to be very, very simple and very, very predictable, which is a simple if. Then, if there's a Democrat in the White House, I want to Raise rates. If there's a Republican in the White House, I want to cut rates. And the Fed, if you have that, then what you wind up with is a Fed whose basic job is to reelect Republican presidents and to make the economy crap so that Democratic presidents wind up getting kicked out. You know, conceivably it would be possible, I actually don't believe that there's anyone who would vote the other way, like, be like a Democratic Party hack and always vote for, to raise rates under a Republican president. I can't think of any human being who would act that way.
- [13:30]
B
But like, but just the existence of.
- [13:31]
A
The possibility, of the possibility of the Fed board breaking along R versus D lines rather than across like hawk versus Dove lines is so terrifying to any kind of economist that they just want to prevent that. And I think that is ultimately why Judy Shelton is going to withdraw her nomination. But she has got much further than the previous party hacks who Trump nominated. And the reason why they pulled out Cain and more previously was actually not because they were party hacks, at least on the face of it, but it was because they had like, you know, personal life problems.
- [14:11]
B
And this is, I actually think what's interesting is that because they had some kind of like, me too issues that was a kind of a fig leaf that could be used so they weren't, didn't have to actually talk about the kind of independence issue or their, their actual beliefs. Whereas with Shelton, you don't have that. So then you really do have to say we are not nominating her because if, you know, we don't, we think her ideas are not within the mainstream and we do not think she would hold the independence of the Fed. And by doing that, they now are going to raise the ire of Donald Trump, which obviously people don't want to do.
- [14:42]
C
I guess the question is, when people are listening to this episode, is she still hanging around or not? Also, she did say something insane about she compared some frauds, financial fraudster to Rosa Parks because of his audacity, because.
- [14:59]
A
Yeah, he wanted to. He tried to print his own currency and he went to jail. And again, in this like, bonkers libertarian worldview, everyone should be able to print their own currency. The federal government shouldn't have monopoly on printing currency. And so she's like, this man is the Rosa Parks of monetary policy. And that went down about as well as you would imagine.
- [15:20]
C
So we have that. And I guess what I was going to say is it's interesting that Moore and Kaine, like, everything is partisan Congress, the Senate will do whatever the President wants. Now, DOJ is totally seems. Seems to be corrupt at this point. Bill Barr just does whatever Trump wants and is only upset if Trump actually tweets about it. So it makes it harder to do it. Trump wants. And the court is partisan, like, like Felix said. But there's seems to be a slight line in the sand for financial policy, like, what's his name? Guy with the gloves and the wife. That Instagram.
- [15:57]
A
Steve Mnuchin.
- [15:58]
C
Steve Mnuchin's still around, and he's like, kind of a. He's on the normal side of things.
- [16:03]
A
Okay, so Mnuchin is a super interesting one, right? Is that, like, on the one hand, he is the most reliable Trump surrogate and puppet. Like, he will happily appear in front of television cameras and defend, you know, statements after Charlottesville or building walls or pulling troops out of Syria or whatever, like, crazy thing Trump woke up this morning and wanted to do. Mnuchin can be relied upon to completely think that it's the most genius thing he's ever heard in his life. And this has made him slightly less credible in financial markets. But the one thing you are right about is that somehow treasury itself doesn't seem to have become that politicized.
- [16:49]
C
Exactly. This is what I'm saying. There is some kind of. You can do a lot in American politics and people don't care, but if you. You just don't mess with, like, the rich people's system or the economic system, to be. To be generous, the economic system, that's like the line you can't cross.
- [17:05]
B
And I think. And I think you're right about that. And I think you're right about that. In almost any kind of president, you.
- [17:10]
C
Can mess with women you can mess with, minorities you can mess with.
- [17:12]
B
It's horrible to say, but, yes, racist.
- [17:15]
C
You can. You can do pretty much anything but, like, don't mess with the money.
- [17:18]
B
Yeah, no, I mean, I think you're right. I mean, I think you're right. You know, and to me, that's why I, I just have a very hard time imagining Donald Trump actually putting people like Shelton or others, because I think the market reaction would be so negative.
- [17:33]
A
And yet he did. He did nominate her and he.
- [17:36]
B
Because there hasn't been a reaction yet. But I think that's also because no one thinks it's really going to happen.
- [17:40]
C
But maybe it will. I feel like anything goes now in, like, this post. Well, it also, it's like everyone seems to have given up a little bit.
- [17:47]
B
It also depends on if she's just like one of the members or if she's the chair. I think that's a big difference.
- [17:53]
A
Well, I mean, it is a big difference, but the. But let's not kid ourselves that if she is in those Fed board meetings, she will immediately turn around and tell Donald Trump and Larry Kudlow exactly what happened in those meetings.
- [18:08]
B
It's true. But like, just to maybe like last thing I'll say it's.
- [18:11]
A
Yeah, it's not. Emily is making faces here.
- [18:14]
B
Yeah, no, it's really bad. And like, maybe just last thing here, like, I don't want to try to say that the Fed is in no way political or that there's not. There's always been political pressure on the Fed. But this, this would be different. This, you know, this would really, really be different.
- [18:27]
A
Yeah, I mean, I think there is a conceptual and quite easy to understand difference between the Fed is an independent agency which is subject to political pressure on the one hand versus the Fed is a political agency on the other. And that's where we none of us want to go. Mergers, M and A. One of those things that used to be a big deal in the financial markets. And maybe we'll be again. The big news this week. Well, a couple of big news is this week, one of which was the FTC coming out and saying, you know, all those mergers that Big Tech has done over the past 15 years, we're going to go back retroactively and look at them all and say, well, maybe Facebook shouldn't have been allowed to buy Instagram after all. Which is so mind blowing. And I can't imagine where that's going to end up. And I'm fascinated to know where you guys think that's going to wind up. Meanwhile, over the objections of various state attorney generals, the courts ruled in favor of T Mobile being able to merge with Sprint and thereby reducing competition in the cell phone space. Emily, what's your take on all this?
- [19:37]
C
It's about time the FTC woke up and paid attention to the tech mergers. So even though they're doing it too late and it's a little weird and maybe it goes nowhere, someone had to start thinking about what antitrust looks like in 2020. Some regulators did. I mean, other people have been thinking about it for a long time and I guess the Facebook, Instagram or Amazon, Whole Foods, stuff like that, they weren't traditionally the kinds of things to get antitrust attention because, you know, it's not like Standard Oil owning all the stuff.
- [20:10]
A
It was hard to prove a consumer.
- [20:12]
C
Harm Hard to thank you. Hard to prove consumer harm. And they're using the Bork doctrine, and if there's no consumer harm, then it's a good thing. So they kind of, like, ignored. While everyone, you know, economists and others have been saying, like, you can't ignore this. These things are getting too powerful. You nuts. And so finally, it seems like people are starting to pay attention and think about what monopolies and what antitrust looks like in 2020.
- [20:33]
B
I love.
- [20:34]
A
I kind of love the idea of the FTC going back retroactively and saying, you know what? Google should not have been allowed to buy YouTube. Now, YouTube is totally integrated technologically and managerially into Google. It's a part of Google. It's not a separate company in any way, shape or form. When Google bought YouTube, they weren't like, we will operate it at arm's length and it will have its own. No, they, you know, they are using all of the data from YouTube, as Ed Lee talked about last week, to inform their entire business. And that is giving them a huge competitive advantage internationally. And it is easy to, with hindsight, look at a merger like that or look at Facebook buying Instagram and say, yeah, that's given you an enormous amount of power and probably too much power, and we would be better off if you hadn't been able to do it.
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C
What's funny?
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A
But then what do you do?
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B
Right, Because. And I think that that's important because I don't think this exercise is in any way designed at this point to undo these mergers. I think this is more an information exercise of looking back. But I do think, obviously, if you look back and you say, well, many of these things were mistakes. Now, number one, that's obviously gonna affect what happens moving forward. And number two, then it does raise the question, okay, well, if you can prove now that there is some type of harm that we didn't see before, does that mean then you do have to act?
- [22:01]
C
I mean, I think people are thinking about it. We have some of the Democratic candidates talking about breaking up some of these companies. We have David Sicilyn's, you know, Subcommittee on Antitrust having hearings about Amazon, where small businesses come in and they're like, this is how Amazon destroyed my small business. And I think there's, like, conversations, at least about, in Amazon's case, like, separating the platform from the vendors. Right. Because that's the issue. The antitrust issue with Amazon is that it controls both where you sell the stuff and the stuff that.
- [22:33]
A
So, yeah, so this is Elizabeth Warren's big Thing about Amazon, which is that on the one hand anyone can sell on Amazon, but on the other hand Amazon sells on Amazon and Amazon is giving itself an unfair advantage versus everybody else, which is probably fair, but it isn't as compelling to me as something like.
- [22:57]
C
But it's completely stifling Instagram or YouTube. Well, yeah, but it is really stifling to any innovation or new business because not only is it like.
- [23:05]
B
Well, is it, I mean, do we have actual evidence of that?
- [23:07]
C
There has been some testimony in the hearings where it's like some company has some device that they've invented. Like I think one example was, you know, those thingamajiggies you put on the back of your phone. The pop up thingamajiggies?
- [23:19]
A
The pop up thingamajiggies, yes. And then Amazon started selling pop up thingamajiggies and the thingamajiggy company started losing sales. Yeah. I mean, Allbirds is the classic example of this, right? Is that they started making their sneakers and then Amazon has a knockoff.
- [23:34]
C
Right. I mean that happens all the time in the real world too. But I think what's interesting with Amazon and we can turn back to Facebook and Instagram and everything is that they have control over the data. They like really have granular, deep knowledge of, of how these companies operate, who buys the stuff. And they, they know more about the market, I think, than just your average.
- [23:52]
B
Yeah, I mean, I think that that's actually been a decent point. That it does make it a little different than the normal world is that they have so much information on their competition in a way that would be very hard and kind of an analog, probably illegal. Yeah.
- [24:05]
A
But also this, like, as retail becomes increasingly digital, this is going to become a bigger and bigger issue. Right now it's about 10% of retail sales are online, which means that 90% of retail sales are not online. And you can run a small business without relying on online sales. But at the same time, it's clear that if you're starting an online business right now, you're going to want to be primarily online. That's where the big money is. That's how Kylie Jenner becomes a billionaire. And if you're going to be selling things online, then you are going to be reliant on Amazon or else you are going to have to make a very, very consequential decision to avoid Amazon. And either way you're like, Amazon is the elephant in the room. And so either you just say. And by the way, if you avoid Amazon, if you decide that you're not going to sell on Amazon, then what that forces you to do is to run straight into the arms of Instagram. That's the only other way to sell things online is to just spend a huge amount money on Instagram ads, which works. And you know, people can make a lot of money by selling things on Instagram. But either way, either you wind up being reliant on Amazon or you're reliant on Facebook. And it doesn't feel like a. I feel like the Internet in some because I'm old and I remember when the Internet wasn't controlled by big trillion dollar companies. You ought to be able to just go onto the Internet and sell things on the Internet without relying on Amazon and Facebook. Right.
- [25:38]
C
So that gets us back to I guess these antitrust probes. Should we touch back on Sprint and T Mobile? Like do we care that there'll be fewer cell phone companies? Honestly, was Sprint a good cell phone company?
- [25:50]
B
No. Then that's the. No, but that's the whole point. Sprints what? Sprint would have died anyway. I honestly think this was completely ruled correctly. Sprint would have died anyway. So you still so. And they also do have to sell part of the business to, I believe Dish. So it's. I don't think this is a bad thing for competition.
- [26:07]
C
And so.
- [26:07]
A
So there was this super interesting natural experiment which I wrote about in my newsletter this week. The ruling was a surprise to the market. Sprint stock literally went up by 75% after the ruling came out, like $3 to $5. But it went up. But the point is that when a major piece of news hits the market and the market reacts, you can see whether the market liked it or didn't like it. And specifically what you can do is you can look at the share prices of AT&T and Verizon. If the merger is good for competition, it should reduce the profits of AT&T and for rising and their share price should go down. If it's bad for competition, then their share prices would go up because they all get to make more money because there's less competition. And so we get to then look at what happened to the AT&T and Verizon share prices in the wake of this surprising court ruling. And kind of nothing. It was kind of inconclusive. They went up after hours. But then when they went back down again when the markets opened and so probably, yeah, it's a kind of toss up.
- [27:15]
C
So they did good there. The antitrust went the right way.
- [27:18]
A
But I mean we would know that they went the right way if AT&T Verizon shares had fallen and they didn't.
- [27:24]
C
And they didn't fall. Right.
- [27:26]
B
Yeah.
- [27:27]
C
And then in the case of just to. Because it seems like in the world of antitrust we're moving away from being concerned about things like Sprint T Mobile and moving towards being concerned about things like Google, YouTube or Instagram.
- [27:41]
A
Facebook. Exactly. And the easy thing is like the FTC also just came out and said they were going to prevent the merger of Schick Razors with Harry Razors.
- [27:51]
C
Oh yeah, what's up with that?
- [27:53]
A
And that's just like good old fashioned antitrust.
- [27:56]
B
Yeah, it is.
- [27:57]
A
There are four razor companies and you can't just merge three of them together and say that you're going to preserve.
- [28:02]
C
That's literally what they just did with T Mobile and Sprint. There was four cell phone companies that merged into three and they were totally fine with that.
- [28:09]
B
But Harry wasn't going to die.
- [28:10]
A
The idea there was that Sprint wasn't really helping consumer competition because it was such a crap task. But Harry is. Yeah.
- [28:20]
C
Fascinating.
- [28:21]
B
And I do wonder if they're kind of. If there's a sense of looking back to with the dollar Shake club. Unilever. I mean that was obviously a while ago.
- [28:28]
A
I mean I was looking at that. How can you justify barring Edgewell from buying Harry's and still be okay with Unilever buying dollar shave? You know why? It's because Unilever didn't make razors.
- [28:40]
B
Yeah.
- [28:41]
A
It wasn't actually anti competitive in that way.
- [28:44]
C
And do you think that the maleness of the FTC makes them overly concerned with a razor company?
- [28:52]
A
Well, Harry's own this thing called Flamingo.
- [28:55]
B
You know what? Harry's also has razors that women can use because I use Harry's razors. I don't use the stupid female brand because nothing gen about an effing razor like Flamingo.
- [29:06]
A
Razors are pink.
- [29:06]
C
Are they pink? How do you know it's your razor if it's not pink?
- [29:09]
B
I in fact prefer orange. So I like my Harry's razor.
- [29:14]
A
Imagine. Can you imagine a world where women use razors that aren't pink?
- [29:18]
C
I don't.
- [29:19]
A
I don't know man. That's a whole.
- [29:20]
C
I want to live in that world.
- [29:23]
A
It's the return of the Jedi. I can't believe I said that. We thought that the Jedi thing had been set that the government said I'm going to give this $10 billion CIA intelligence contract to Microsoft. I am not going to give it to Amazon. Everyone kind of knew that Amazon had the better bid. Everyone kind of knew that the government awarded it to Microsoft just because Donald Trump hates Jeff Bezos. And yet somehow, like this was just understood as this is life under Trump. And now a court has come along and said, wait, hang on a sec. Really?
- [30:00]
B
This is an instance where honestly, I don't think there's anything wrong with giving this to Microsoft. Like, number one, government contracts are always political, always have been, always will be. Now this one is more publicly political and that's not good. But the idea that they're like, oh no, there are politics and how you give out government contracts, I kind of roll my eyes at that. And second, you already have Amazon having such a large market share in cloud computing and already being essentially in charge of, I believe, the cloud comput for the CIA. So I actually think it makes more sense to have more than one company in there.
- [30:35]
C
Yeah, this is one of those confusing times.
- [30:38]
A
You just want everyone to lose.
- [30:40]
C
Yeah, I definitely didn't want Amazon to win. They already control too much. They have the majority of the cloud. As Anna just said, they're huge. And like, why should they have this $10 billion deal that could actually amount to $40 billion over the, you know, if they get more and more business, why not let Microsoft have it? I. Yeah, I mean, we just talking about politicization of things and now we're saying that it's okay to be political.
- [31:07]
B
I'm not saying it's okay. I'm saying it confusing. I guess what I'm arguing is that, look, in theory, of course, procurement, that none of this should be political whatsoever. But I guess I'm just saying, like, it always is. So yes, if they can find proof, which with Donald Trump, it's entirely possible they will be able to where he is saying like, like I have this email that says you can't do this, then that's bad. And then they shouldn't allow it to go forward.
- [31:33]
C
I mean, Mattis has in his book that Trump told him, I don't want, I don't want Amazon to get that contract.
- [31:38]
B
Right. But I, from what we've seen over the past month, we know that that's not going to do it.
- [31:42]
A
Like, wait, wait, that won't hold up in the courts of law. I mean, but they could hold on. They can call Mathis as a witness.
- [31:49]
B
That's true. That's true. And so look, if you can find actual evidence of it, then yes, of course you need to say like, no, we don't allow this. I guess what I'm More just saying is that. Is that I just. All government contracts are political. It's always about, like, who's giving money to who and, like, who has connections with here. It's just. I don't believe. I believe it's maybe in some instances less political than it was in the past, but I don't know.
- [32:13]
A
I mean, it certainly is on the level of local government and it, you know, it certainly is on the level of, like, international governments. You know, the Europeans will give contracts to Airbus and the Americans will give contracts to Boeing, and. And there's Anna's right, that there's always a political overlay when it comes to government spending. And often it's explicit and written into law that if the American government is spending money, they need to spend it with American companies. And that kind of thing is often not just implicit, but explicit.
- [32:45]
C
Amazon's really having a hard time this year. I mean, there was the whole debacle.
- [32:49]
A
Doesn't your heart just bleed?
- [32:51]
C
Well, it does seem like Bezos, by buying the Washington Post, has kind of like made himself a target in a little bit of a new way. With the President and this Jedi contract losing it and then a little bit. I mean, even, I guess the Washington Post angle doesn't really fit with what happened to him in New York. That was more just like.
- [33:08]
A
But can we talk a little bit about Jeff Bezos midlife crisis? Because it's kind of amazing where he's becoming John Lucart.
- [33:17]
C
He just bought that David Geffen house in Los Angeles.
- [33:20]
A
He bought the old Warnam Estate in LA for $165 million, thereby beating the record for most expensive property purchase in la, which had been held for just a couple of months by Lachlan Murdoch.
- [33:33]
C
Nice.
- [33:34]
A
He reportedly dropped $53 million, which is a record for an Ed Ruscha painting at Christie's last November. Bought a Kerry James Marshall at the same time. And because I'm the art nerd here, he's never been known as an art collector before. Like, you know, you really do. This is super billionaire whimsy. When, like, the first painting you buy is $53 million. Most of us are like, yeah, like, couple hundred bucks.
- [34:01]
C
That's like me spending $20 on a poster at Spencer Gifts.
- [34:04]
B
Probably, actually.
- [34:05]
A
Probably is. But the super interesting thing to me about him buying the Ed Ruscha and the Kerry James Marshall Christie's is that Ed Rushane and Kerry James Marshall are both still alive. And there are basically three different ways you can buy art if you're an art collector. One is you can buy art by dead artists who are established in the canon. And then if you're buying from that artist, almost by definition, you're buying from someone who owns that art. And so whoever owns the art gets the money. And then there's a trade. You get the art, they get the money. Alternatively, with living artists, you can go like, oh, wow, you have. I really like what you do. I like your work. So I'm going to pay you money for your work. And then that money gets split between the artist and the gallery normally, and. And then the artist, you're supporting the artist in doing that. And then there's this new thing which is only really. It hasn't been around that long, just a few decades, really, where you can buy the work of living artists on the secondary market and auction houses and stuff like that. And so you go along and you buy the Ed Ruscher at Christie's, and then all of that money goes to whoever just, you know, whoever's selling the Ed Ruscher, and the artist doesn't see any of it. And that's kind of the weird way to collect. It's like, if you're going to collect living artists, don't you want to support the living artists? And yet, Bezos, that's how he's doing it. He's like, I'm going to spend all of this money on art, but I'm not going to spend any money on artists. I don't know. That's just my little rant.
- [35:41]
B
Yeah. No, and I think it's very, very valid. And I think it probably also goes to the point that I don't think he cares anything about art whatsoever. I think he's just like, I guess this is what you do.
- [35:50]
C
I mean, he's truly. Seems to be having some kind of. I don't want to say midlife crisis, but it seems like he got his divorce and now he's just out there, Jeff Bezos, on the town, buying mansions. He's like, out in the town, Hollywood parties.
- [36:03]
A
He sold $4 billion of Amazon stock in one week. He's like, I just need some spending money. So I'm.
- [36:08]
C
He's some spending money. He's going out, he's gotta have the cash. You know, he's gotta buy the bottle. And he's a busy guy.
- [36:16]
B
This is why Bernie Sanders is gonna end up being our president.
- [36:19]
A
Good. But there was this great story, which we should link to, about the sort of inside the whole crazy HQ2 fiasco where the whole thing where Jeff Bezos decided that he Was gonna run around trying to get massive subsidies from cities in North America. Was basically driven by Elon Musk envy. He was like, elon Musk gets all of these subsidies. If he can get the subsidies, why can't I get the subsidies?
- [36:45]
B
I'll grow up.
- [36:46]
C
And then he just took it way over the top. Yeah, but that's how he's run his business all along, in a way, like, no competitor. He can have no competitor. He buys them and pushes them out of business. He dominates everything.
- [36:57]
B
I mean, it is interesting if you've read biographies of previous entrepreneurs in earlier eras. I mean, he fits the model so much, you know, which probably means at some point, he is going to run into an antitrust and he is. There are going to be real consequences because he doesn't seem to have anything inside of him that knows when to stop.
- [37:16]
C
I mean, I think he used to.
- [37:17]
A
Have a wife, and maybe she was. Yeah, I mean, maybe that explains it. You know, Maybe she was like, hey, Jeff.
- [37:23]
C
I mean, she clearly was holding him back from something.
- [37:25]
A
We already have $100 billion. We don't need another $100 billion. He's like. Like, you are cramping my style. I need to trade you in for someone else.
- [37:33]
C
There was a piece in the Times. I think I talked about this a bunch a few weeks ago that talked about, like, married Bezos would, like, go online to make reservations at restaurants. But, like, single Bezos would, like, never do that, because that's so cheesy.
- [37:46]
A
Married Bezos had hair.
- [37:48]
C
Married Bezos had hair. Married Bezos didn't have, like, those hulking swole. Is that what they call it? Swole arms.
- [37:54]
B
Which.
- [37:55]
C
Nothing wrong with that. Yeah, it's just interesting contrast. A little social experiment in front of our eyes.
- [38:03]
A
How about a numbers round? I'll start for a change. $154, which is the new price of a single ticket to Disneyland. If you want to go to Disneyland for the day, it will cost you 154 bucks.
- [38:21]
C
What does that get you?
- [38:22]
A
It gets you into the park on a peak day, and then I guess that includes. I have to admit, I haven't done the Disneyland thing in a while. But, yeah, I think it gets you on the rise, but you have to queue up.
- [38:31]
B
Yeah, I think you have to pay extra to, like, beat the line.
- [38:35]
C
Is that a lot? Seems reasonable to me. Disneyland's great, right?
- [38:38]
A
I don't have kids. I don't know what. I don't know what. What's cheap or expensive.
- [38:42]
B
My number is $360,000 per week. That is the cost if you are going to charter Daniel loeb's yacht.
- [38:50]
A
Oh, 360. That's like. That's much less than a million dollars.
- [38:53]
B
Yeah, so I mean, like.
- [38:55]
A
Yeah, I know. Million dollar a week. Yachts like 360, that's like you get two thirds off the price of a million dollar.
- [39:00]
B
Not so bad. The reason we actually kind of know this is because there's a bit of a scandal because someone who chartered it apparently was putting their. They were in a UNESCO World Heritage site in this. In Belize, this coral. And they actually had the anchor in the coral wrapped around it.
- [39:15]
A
Oh, no.
- [39:16]
B
And so. Yeah, that's.
- [39:17]
C
That's awful. My number is really big. It is 1 trillion.
- [39:22]
A
Wait, wait, wait. Hang on a sec. Wait. I just want to follow up on this one question for Anna. So, Anna, when you say the person who charted it, correct me if I'm wrong here, but when you charter a boat, it comes with the captain and the crew. So it's Dan Loeb's captain who did this. I don't think we can blame the person who charted it.
- [39:43]
B
That is true. Yeah.
- [39:45]
A
Okay. Emily.
- [39:47]
C
My number is large. It is 1 trillion. It is a number. I can't even conceptualize that well in.
- [39:53]
A
My brain, it's really hard to conceptualize. One trillion.
- [39:55]
C
It's one trillion. That is the number of trees that President Trump plant.
- [40:00]
A
Trillion trees. Yeah. He was into that endeavor, wasn't he?
- [40:02]
B
Yes.
- [40:03]
C
He said he would plant a trillion trees to help the environment. And there was a piece in the Times about this that marked Benioff, the founder and CEO of Salesforce. It was kind of like his doing. He basically. He said, I'm gonna get Trump to support this. I think he'll support it.
- [40:18]
A
Is this Davos thing they were hanging out in the Hotel Europe together.
- [40:22]
C
Yeah. And he. Well, Benioff went through Kushner to do it, and he said, trees are the ultimate bipartisan issue. Everyone is pro tree.
- [40:31]
B
I don't know.
- [40:32]
A
I agree.
- [40:34]
C
You're not pro tree.
- [40:34]
B
No, no, I'm pro tree, Anna. But I know of people who are not contrary.
- [40:38]
A
I mean, there was that famous quote from Ronald Reagan where he once you've seen one tree, you've seen them all.
- [40:42]
C
I mean, I guess now we'll see a trillion more. I mean, I'm anti tree in the perimeter of my house because I don't want them to fall on my house. But apparently planting more trees is really good for the environment. It's a form of carbon capture. It would take, like A century for the trees to actually start doing the carbon capture. So Trump would actually have to do other things besides plant the trees. But like, I'll take what I can get right now and I'm just gonna come out. I'm not cynical.
- [41:07]
A
I'm just gonna come out and say that. That like, mathematically it's impossible to reach a trillion trees. Like, it's just not exactly. But like, just think about it. I mean, like, should we do a quick back of the envelope calculation?
- [41:20]
C
No, I want to feel good about the tree thing. But fine, go ahead.
- [41:26]
B
This sounds like one of like the interview questions you get at like, Goldman Sachs.
- [41:30]
A
It does.
- [41:31]
B
Is it possible to calculate?
- [41:33]
A
But.
- [41:33]
B
So I'm just going to a trillion tree.
- [41:35]
A
Let's assume you're of part planting one tree a second. Okay. And now I'm just going to get Siri up.
- [41:40]
B
This is pretty quick if you've ever planted a tree before.
- [41:43]
C
Yeah, don't you just scatter some seeds anyway?
- [41:46]
A
But let's. No, you have to plant it. You need to build a hole. Siri, how many years is 1 trillion seconds?
- [41:54]
C
That would be 31,688.74 years.
- [41:59]
A
So at 1 tria second, it would take 30,000 years to plant a trillion secondary a second.
- [42:04]
B
It could be. But you would have more than one. Yeah, you would have.
- [42:07]
C
Across the globe. It could be like 20 million trees a second. Ask Siri that.
- [42:16]
A
Okay, if, if, if anyone has any idea whether it's remotely realistic that anyone will ever be able to plant a trillion trees, please write in on slatemoneylate.com and we will read out the best answers next week.
- [42:30]
C
I'm so unhappy now. Ruin everything.
- [42:35]
A
I'm just, I'm just gonna. I'm here to dash your dreams, Emily. Blame Siri and.
- [42:41]
C
Yeah, well, which one is Ciri so good at answering? Every time we ask her a question at home, she's just like, let me Google that for you.
- [42:53]
A
All right. Thanks, Emily, for your Trillian number. And, and thanks, Anna for coming on. Thanks, Jessamine for producing. Thanks all of you lovely people for listening. Keep those emails about how big a trillion is and everything else coming on slatemoneylate.com and we will talk to you next week on Slate Money.