← Slate Money
Slate Money
Jordan's Last Episode Edition
00:48:38
Slate Money on universal basic income, McDonald's, housing, and Martin Shkreli
Loading summary
Transcript262 lines
- [00:00]
A
The following podcast contains explicit language.
- [00:14]
B
Hello, and welcome to Jordan's last episode of Slate Money. That's Jordan opening a bottle of Prosecco to celebrate. He finally gets out of this podcasting studio. He's going glug, glug, glug. He is drinking Prosecco because he's a bit declassee. I'm drinking a fine natural wine from New Zealand with a bit of, like, thyme on the skins. Anna's not drinking at all because she doesn't drink.
- [00:47]
A
Dan's got some of the Sauvignon blanc from New Zealand, too.
- [00:51]
B
We have some fine Lebanese white here. We are celebrating the end of an era. This is our 200th episode. We're excited about that. This is the final episode featuring Mr. Jordan Weissman. Although I still suspect that somewhere and somehow we're gonna drag him back on this show.
- [01:09]
A
Yeah, I'll probably be back at some point.
- [01:12]
B
You know, if Cathy o' Neill can come back, you can come back.
- [01:15]
A
Yeah, exactly.
- [01:16]
B
I feel like it's a lot more. It's a bigger schlep for her. It takes you about two minutes to walk over.
- [01:22]
A
Here it is. And knowing how we do guest booking on this show, I feel like 15.
- [01:27]
C
Minutes before the show.
- [01:27]
A
Hey, Jordan, Jordan, can you just, like.
- [01:30]
B
Next time when Yanis Varoufakis just gives up halfway through and says, you know what? I'm not coming on after all. We'll just say, that's okay. We'll get Jordan on instead.
- [01:41]
A
Yeah, it'll be great. I mean, and, you know, I've shown up in the middle of episodes anyway, too, so if you just need to brighten one up, I'm happy to reprise that. There are all sorts of things, you.
- [01:50]
B
Know, instead of having, you know, the Slate IT person come in and do a Slate plus segment, we can get Jordan to come anyway. We are going to answer. Well, no, we are not going to answer anything. Jordan is going to answer.
- [02:04]
A
This is going to be a team effort, as usual. But, yeah, these questions are directed at me. You guys wrote in with some lovely inquiries. A lot of callbacks to former segments on the show or throwaway lines of mine about New Year's resolutions.
- [02:18]
B
And so, yes, this is going to be the last Felix Salmon, Jordan Weissman, Anna Shymanski show for a while. Yeah, enjoy it while it lasts. And let's get straight into it.
- [02:28]
A
I'm gonna pour. So Felix brought this Lebanese wine with. So I said, I'm bring Prosecco to celebrate. And Felix is like, I'll bring wine. And then he literally Shows up with, this is very sweet. This, like Lebanese wine from one of the world's oldest vineyards. It's half drunk, but still, that's. That's not a bad thing in wine world. That just means it may have, uh. Oh, wait. Uh. Oh, I just broke. All right, I'm going to go for the. I'm gonna go for the Kiwi Sauvignon Blanc as well.
- [02:55]
C
That doesn't taste like Sauvignon.
- [02:57]
A
Dan.
- [02:58]
B
Find the corkscrew.
- [02:59]
A
Find the cork. The cork is a disaster.
- [03:02]
B
All right, honestly, we need to work on Jordan Weissman's cork extraction technique. Let's start with a wonky thing and then we are going to get into stupider things.
- [03:14]
A
Yeah, we're gonna go wonky.
- [03:16]
B
Stupid, wonky and swole thing. I want to ask you about housing because this is the one thing that we talk about off air more than anything else. It's basically your misadventures in the Brooklyn real estate market. So we are going to talk a little bit that on air as well. We have some housing related questions. But yeah, let's actually talk about universal basic income, because we were gonna have Chris Hughes on this show.
- [03:41]
A
We were considering it.
- [03:43]
B
We invited him to come on the show.
- [03:45]
A
Yeah. And then you wrote a review of his book.
- [03:47]
B
And then I wrote a review of.
- [03:48]
A
His book, which actually I thought was a fairly kind review.
- [03:50]
C
Yeah, it was.
- [03:51]
B
It wasn't. It wasn't even a completely excoriating review. But for whatever reason, Chris Hughes, after reading that review, has gone quite quiet. And I'm going to assume at this point that he is not coming on this show, which is okay because Annie Lowry has a book coming out on universal basic income. And so when that comes out, we will talk to her instead.
- [04:15]
A
That's the book everyone actually was waiting for about universal basic income.
- [04:18]
B
And I started reading that one. And so we will talk to her in great depth about universal basic income.
- [04:25]
A
But so someone asked in the meantime.
- [04:27]
B
We have a voicemail. Yeah, Dan, can you play us the voicemail?
- [04:32]
D
Hi, yeah, this is a question for Jordan. My question is about basic income. Basically, if everybody were to get the same amount of money around their country, or at least a starter, every person that doesn't have much money, would it be get the same amount of money? Wouldn't that just raise prices for everything? And what would then happen? What would be the point of that? How would that solve anything? If all of a sudden rents are going up, food's going up, if that is actually the outcome? So, yeah, that's the question. What happens? What's the economics of if everybody actually gets the same amount of money, what happens to the price of goods? Doesn't that just rise?
- [05:12]
B
Does UBI cause inflation?
- [05:15]
A
So this is like kind of a brain teaser. Right. But it shouldn't in any. So it depends, like, how you'd implement it. Right. Like, in theory, if you just. If the government just printed money and handed it out to everybody, you'd expect some amount of inflation. Right. It's just like in the end, you're just adding money to the system and you're going to push up some goods. Some amount, probably not one for one, to the point where you're like, you know, just because food stamps go up doesn't mean the cost of food goes up. Exactly. Proportionately. But you'd expect prices to rise to some degree.
- [05:45]
C
You would. I mean, normally, fiscal stimulus, that's. Yeah, that's somewhat of the point. Yeah. Now we have seen that. We've actually had a hard time creating inflation. Yeah.
- [05:52]
B
But UBI is not the same as fiscal stimulus. And if you.
- [05:56]
A
Yeah.
- [05:56]
B
If you fund it with tax hikes or even if you just borrow the money, then that shouldn't necessarily.
- [06:06]
A
Well, so if you. Yeah, I mean, so you have to think about. If you do tax hikes, then you're. It's just redistribution, in which case there may be actually no increase in the total money supply. Right.
- [06:17]
B
I mean, I think so. I think there's. Yeah, but inflation is not entirely a monetary phenomenon.
- [06:22]
A
No, exactly. So we don't know what causes inflation.
- [06:25]
C
You know, what does.
- [06:27]
B
But let's have. But let's. Let's do something like a basic, like the intuition here, the intuition behind the question is if poor people get more money, then the things that poor people buy, like, you know, staple foods and rents on manufactured housing and that kind of thing are likely to rise because there's going to be more money in the poor population. And I think to a certain degree that's probably true, that even if you're paying for it with tax hikes on the rich, you're going to see a certain amount of price rises for the people who are receiving the money. But I think you're also absolutely right that the amount of money they get will vastly outweigh the effective inflation.
- [07:14]
A
Yeah, exactly. Like, you have to ask, where's the equilibrium? Right. Like, okay, people get more money, prices rise a little bit, but on net, are they still better off? And you have to remember, certain products they're buying aren't going to be based on, like, I think it's helpful to think these things geographically. Right. Like you're going to be dumping money on poor communities essentially. And so you'd probably expect something like housing to go up a bit because that's so geographically focused. But food, Food, right, like that's so, so much of food costs are nationalized and globalized. So, you know, you don't expect the effect to be.
- [07:43]
B
Even if decided to raise prices on their bread or whatever, then someone else would come in with cheaper bread and you would still the same forces keeping prices down right now, which is basically Walmart will continue to keep prices down. It's not like Walmart will suddenly take the opportunity to raise prices because what Walmart does is always try and keep prices as low as possible.
- [08:06]
A
Yeah. So if we were to kind of summarize this, I'd say if you just do it as redistribution, you might not get any inflation at all nationally, which is typically what we care about. Although you might see prices rise on some things and some communities. If you just dump money on the country and borrow it, you'll probably see some inflation. But as we know, it's very hard to create even when we really try prices rising, that we really try hard and for reasons that people, you know, no one is totally sure of. And even if they do rise, they're not going to rise on everything evenly because. Thank you, China.
- [08:36]
C
Yes.
- [08:36]
B
And I have one more inflation question for you.
- [08:38]
A
Sure.
- [08:39]
B
Which is why is it that we are still so scared of inflation when we haven't had it for decades?
- [08:49]
A
Because that's exactly why people are so scared, because of the 70s. Right. Like the people in power or decision makers came of age during stagflation and they were scarred by it for 30 something years. And so there's just this idea that you, you not only have to stick to an inflation, you not only need a low inflation target, you can't even budge from it because then that will make people doubt your dedication to sticking to this inflation target. Sorry, I'm about to start ranting.
- [09:15]
C
It's also, I mean, inflation is a, of a psychological issue as well. Once you create the idea that there is inflation, that can create more inflation also.
- [09:21]
B
Yeah, well, give me an example of that. Like in the past 30 years.
- [09:27]
C
So I think one of the concerns is that if you have an inflation spike that you really didn't expect and you have to hike up interest rates really quickly, you're more likely to push the economy into recession as opposed to if you just have kind of managed, expected slow hikes, you're going to have less of a negative impact on the economy.
- [09:42]
A
Yeah, I think that's true. I will put out a prediction, though. I think that when millennials eventually are actually, like, monetary policy decision makers, we're going to be very, very lax about inflation because we've never had it. Yeah.
- [09:55]
B
I mean, can I just say, as, as a Gen Xer.
- [09:58]
A
Yeah.
- [09:59]
B
And a large chunk of the economic decision making apparatus is now my generation.
- [10:04]
A
Yeah.
- [10:05]
B
Like, I don't remember inflation either.
- [10:06]
A
No. But there's just enough of you who came up right after, like, who were kind of in there, like, intellectually formative years in the Reagan era after Volcker had just slayed inflation. And that was seen as sort of the triumph of modern monetary policy. And so that was just sort of the religion. Right. Like that. That is sort of. I mean, you could really say, like the era of economics where monetary economics were in, started in the Carter era with stagflation, and then Paul Volcker came and showed how you end stagflation as far as everyone was concerned. And that became that, that became our religion. So there are still a lot of Gen Xers who are baptized in that religion, whereas millennials have been sitting around, all of us who are interested in economic policy and sitting around thinking like, we have a. We have a demand issue. We've. We've been dealing with subpar aggregate demand for a decade, basically, and we may actually still not be quite back to where we need to be, even though everyone's talking about a tight economy.
- [11:01]
B
Okay. So I'm not quite sure how much that had to do with universal basic income, but we will have Annie Lowery on if she will come on. I'm hoping that she will more willing to come on than Chris Hughes was.
- [11:13]
A
I think she will be.
- [11:13]
B
I think she will be. Okay, next. Next.
- [11:16]
A
Should we get stupid?
- [11:17]
B
Okay, let's get stupid. Jordan.
- [11:19]
A
Yeah.
- [11:19]
B
We have a combo question here.
- [11:21]
A
Yes.
- [11:23]
B
One from Pete is, what is your status on getting swole? The second one from Greg Young is, have you recanted? Do you still defend McDonald's or are you still intellectually maturing? And then the third one is, do you recommend giving up sugar for weight loss? And does it only work if you give up alcohol? All of these are connected.
- [11:47]
A
They are all connected.
- [11:49]
B
So let's start with the obvious one, which is, how much McDonald's are you eating these days?
- [11:55]
A
Okay. I actually. No, I'm saving a. I am eating. I had an egg white delight, like two days ago.
- [12:00]
B
Egg white Delight?
- [12:01]
A
Yes.
- [12:01]
B
Is that a thing?
- [12:02]
A
They are a delight. But I'm going to come to McDonald's last. Okay, I'm going to start with getting swole. So this for. For really attentive listeners. I definitely. I.
- [12:11]
B
At some point, it was a resolution there.
- [12:13]
A
We all talked about New Year's resolution, and I said my resolution was to get swole, which meant like putting on some just not like tiny bit amount of muscle because I built like a, you know, pile of pizza dough or something. So I. That never really happened. I did not get swole. I know it.
- [12:29]
B
Wasn't your grandfather a boxer?
- [12:30]
A
My grandfather was. My grandfather was very much a boxer. His name was Nady. Nady the New Deal Brown. He fought Joe Louis twice. Got his ass kicked both times, though he claims he took a fall the second or he claimed. I doubt that was true, although he was. He also was mixed up in the mob. He went to jail for being assisting in a bank robbery at one point. So I don't know. Who knows? Maybe he took the fall, but. So you'd think genetically I'd have some ability put on muscle, but I still haven't unlocked it. If that's true. What I did do.
- [13:01]
B
Did you try lifting weights?
- [13:02]
A
I have, but. So what I did instead was I lost about £25. So that is the.
- [13:07]
B
Where did you leave. You just like woke up one morning and said, I can't find my £25 today down the back of the sofa.
- [13:15]
A
It was some. No, it's been like about nine months of fairly hard work. But. So I'm going to try to put this in economic terms, but also, while also talking about alcohol and talking about McDonald's. So let's start with like three things I think I've basically done. Number one is I used to have a morning bacon, egg and cheese habit, which was, I think. Yeah. Shockingly, Felix is giving me this look.
- [13:40]
B
I'm all in favor of a morning bacon egg. I thoroughly approve.
- [13:45]
A
It turns out if you stop eating bacon, eggs and cheese on a regular basis, it's easy to take off some weight. One of the things I've replaced that with is like the McDonald's Egg White Delight, which is about 290 calories and is a perfect breakfast food.
- [13:57]
C
So I'm gonna point out that I think that's more about portion control.
- [14:00]
A
It's.
- [14:00]
C
Part of it is about the bacon, egg and cheese.
- [14:04]
B
So. Wait, wait, what? First of all, because I am an ignorant man who never goes to McDonald's, what is an Egg White Delight?
- [14:11]
A
It is, you know, an egg McMuffin vaguely. Okay, well, okay. An egg McMuffin is like one of the great national dishes of the United States of America, but it's just like, you know, egg.
- [14:21]
C
So wait, you're doing that only with egg whites.
- [14:23]
A
So the egg white delight is a egg McMuffin. So it's, you know, little Canadian bacon and English muffin and eggs, but it's just the egg whites. So it's like a little. And cheese and a little.
- [14:31]
C
I'm gonna.
- [14:31]
B
Not a bacon, egg and cheese. It just doesn't have egg yolks.
- [14:37]
A
Yeah, but. Well, it's. Yeah, but it's 290 calories. As opposed to the, you know, convenience store special in Manhattan, which is just this sloppy, monster, delicious, gooey thing.
- [14:47]
C
But it's also probably much larger. Whereas the One thing that McDonald's does is that they small. Exactly. Well, it's standardized and so standardization.
- [14:54]
A
Exactly.
- [14:54]
C
That's exactly what it is. Because actually the yolks are not bad for you. I'm gonna push back on and actually are much more nutritious than just egg whites.
- [15:01]
B
But I'm a big fan of egg yolk.
- [15:03]
A
Not the way they cook them at McDonald's though. So a lot of the. A lot of these fast food restaurants have made this horrible mistake, in my opinion, where to kind of latch on.
- [15:10]
B
Including McDonald's?
- [15:11]
A
Yeah.
- [15:11]
B
Are you gonna hate on McDonald's?
- [15:12]
A
Yeah. So they've all latched onto like the kind of freshness trend, like it needs to be wholesome. And so they've started cooking whole eggs and they just sort of boil them until they're hardened in the yolk. And so you just get this ugly, gritty, not very good yolk in the middle of your McMuffin. And so that's. You're better off, in my opinion, with just getting the egg whites because it's just. You don't want an improperly cooked whole egg. It's not good. You get a rubbery white and they chalk it.
- [15:35]
B
Can I just jump in here to give.
- [15:37]
A
Are you going to plug your sous vide machine right now?
- [15:40]
B
My absolutely foolproof hard boiled egg recipe. For the best hard boiled eggs you've ever had, cook them at 183 degrees for 10 minutes, take them out of the water, put them into the egg carton, and just let them slowly cool down to room temperature in the egg carton. And then once they've done that, it's perfect. The whites are solidified but not rubbery. The yolks are. I like to say it's the texture of Marmite. They've got a nice little texture to them. They're beautiful. Oh, man.
- [16:20]
C
A reference. All of our American.
- [16:22]
A
You know, we've got enough international listeners that I doubt that went over too many people's heads, but okay. So that's kind of switching to a more standardized breakfast. I'll say. The Egg White Delight is not my everyday. Actually, I eat a lot of yogurt. I have like a 1 cup of fascia yogurt.
- [16:37]
C
Is it sweetened or unsweetened?
- [16:39]
A
I add a table or a teaspoon of honey and half a handful of almonds, which is about 20 almonds. So a lot of it is about standardization.
- [16:45]
B
Oh, my God. You're doing the whole, like, Barack Obama counting your almonds thing.
- [16:48]
A
Well, I know roughly what fits into the palm of my left hand, but it's. When I count it out, it's about 20, 25. Anyway, so that's part one. Part two was. I can actually sort of thank Felix for this, I think, which is I used to be very much a beer drinker as a beer guy. We've had, you all know, there was the beer episode, but around, I think after the. The Bianca Bosker court dork episode, I finally decided I was gonna fucking learn about wine. It was just going to happen. And that had a really helpful side effect, which is at first I thought I was going to end up drinking more, but it turned out actually I just replaced most of my beer consumption with wine consumption. And wine is dry, right? Like, there is just less carbs, less sugar in it for the most part because it gets turned into alcohol. And so that actually ended up being, you know, when you read, like, these, you know, diet guru books or whatever they say, oh, alcohol is like the devil. I think you can make a lot of progress if you just switch from, like, you know, your Budweiser or your, like, you know, your Belgian triple or whatever the heck I was drinking to.
- [17:49]
C
You know, wine substitution.
- [17:51]
A
Yeah. To a lovely people.
- [17:52]
B
Beer is liquid bread and wine is liquid grapes. And intuitively, bread is more fattening than grapes are.
- [17:58]
A
Yes. And, you know, especially if you're into slightly lower alcohol, like reds or whites. You know, if you. I've been drinking a lot of Pinot recently in, like, the 12% range. So that's cutting alcohol calories as well. So I guess it's a. I guess part two. It's like the Michael Pollen formulation, maybe, or a paraphrase like, drink wine. Not too much, mostly Pino. That's part. And then part three is about commitment devices, which is, I just joined a stupidly expensive gym. I am now a bad bitch up in Equinox, as Kanye might put it. And while it hurts me every time I look at my credit card statement, it has shamed me into going to the gym regularly.
- [18:43]
B
Wait, if you go to the gym regularly, does that not make you swole?
- [18:48]
A
I do a lot of cardio and Pilates.
- [18:50]
B
Pilates?
- [18:51]
A
Well, I have my bum back, and so that's. It's wonderful for your core.
- [18:55]
C
They have good Pilates classes at that Equinox.
- [18:57]
A
They do. I have my favorites. Thanks, Dara. Anyway, but.
- [19:02]
B
And does Pilates help you lose weight?
- [19:04]
A
Not really. It does help with. But again, if you're on. If you're hunched over a bike a lot, which I am, it's good to you. I'm like on a spin machine kind of thing. So if you're hunched over a lot, it's good to then do a lot of stretching and work on your body.
- [19:21]
C
And exercise doesn't really make you lose weight. Exercise is good for other things in terms of overall.
- [19:25]
A
So I really. It depends on how much you're very limited. I mean, if you do a. If you're on a bike for 45 minutes to an hour on, you know, three times a week, that's gonna help you some. Right? Like just the sheer amount of calories. It's not gonna do it alone, but it's gonna help. You also have to switch from beer to wine.
- [19:43]
C
Right. But it's far less.
- [19:45]
A
Okay.
- [19:45]
C
Actually, I love exercise. It's great for.
- [19:47]
B
Okay, so now to get back to McDonald's.
- [19:50]
A
So that's okay. So to get back to McDonald's. So for listeners who've been with us a while, Kathy, Felix and I had an episode where we each had for Thanksgiving where we each had to talk about one company that we were thankful for. And Felix, what did you pick again? Do you remember?
- [20:06]
B
I can't remember.
- [20:07]
A
I can't remember. I can't remember what Kathy picked. I picked McDonald's. And this became a two episode argument. I think it was like I'd set off a bomb in the middle of slave money. And, you know, my argument boiled down to the fact that McDonald's had sort of brought a certain standardization of what the baseline quality of food in America should be when you're on the road, when you're in the middle of nowhere.
- [20:33]
B
And so even when you're in Brooklyn, apparently you have an egg white delight.
- [20:36]
A
Yeah. And it's sort of. Exactly. And so. And it said sort of, you know, in some places it also just kind of guaranteed a nice clean space where people could meet, you know, like, which is actually important to having communities when you're in these far flow suburbs and exurbs that I was sort of. They had also sort of figured out the franchise model, which was an important development in American capitalism, even though they weren't necessarily the first to franchise anything.
- [21:04]
B
Jordan, you're just repeating yourself. Yeah, we had a whole episode.
- [21:07]
A
Well, so now here's. Because I thought about this question because I saw it ahead of time and I guess part of the issue is can you be thankful for McDonald's if you also know that it's contributed to things like global warming because of how it's kind of helped increase American beef consumption and factory farming? And can you really be thankful for it if you know that the franchise model that it played such an important role in popularizing also has been probably horrible for workers. It's made it a lot harder to unionize because you're not part of one big company. And so the question is, is McDonald's responsible for these aspects of American capitalism or would it have happened anyway without McDonald's? And is it. Were they just the ones to sort of carry it out? And so can you appreciate the good things and blame the rest on the logic of, you know, capitalism itself and kind of separate the two? Or is it all just so entertained, intertwined that McDonald's is capitalism? I think maybe that's the answer. And so maybe I should have more mixed feelings because can you really say you're thankful for McDonald's in a sort of unqualified way without saying you're thankful for capitalism in an unqualified way? I don't know. So I actually, I don't. I don't recant. I'm going to complicate my answer, but I'm not going to recant fully because I still like their breakfast.
- [22:24]
B
I'm not even going to fight back on that one because I actually kind.
- [22:28]
C
Of agree with you.
- [22:28]
A
Thank you.
- [22:29]
C
I actually think McDonald's history of McDonald's there are some positive things. And I.
- [22:35]
B
Well, also, I do not even need to respond because all of my responses are in prior episodes and we have covered this already.
- [22:43]
C
I do. Also, one quick thing I will say, as a child of like the 90s, who. I had three sisters and when you were a little kid, my parents took us to McDonald's quite frequently and a lot of parents did, and our health was perfectly fine. And for parents, it was an inexpensive, easy way to sometimes feed their children when both parents were working long hours. And I think there was a benefit to that.
- [23:04]
A
Yeah. I also do, I do sort of wonder if McDonald's hadn't come along, if actually you would have had something like Chipotle earlier, because in a lot of regions of America that sort of, you know, steam tray, lunch tray approach was, was normal. You know, in the deep south you have the meat in threes and such and you know, obviously you had Howard Johnson's and sit down places that were taking over the American roadside. But I do wonder if maybe, you know, fast casual actually would have been, would have, would have conquered America if. Although fast casual doesn't work as well for cars. And that's what it boils down to.
- [23:35]
C
Right. And I think that's a big part of it. The story of McDonald's is also a story.
- [23:39]
A
And can you, can you be thankful for McDonald's if you, if you have mixed feelings about American transportation?
- [23:43]
C
And I hate cars.
- [23:44]
A
So.
- [23:44]
B
Yeah.
- [23:45]
A
Okay. Anyway, I'm just confused. Moving on to the next question.
- [23:47]
B
Let's. Yes, let's move on to the next question.
- [23:51]
A
Also, Felix, this Utah wine is lovely. I shot. I still wish I hadn't broken the cork on the thousand year old Lebanese wine or whatever, but this is good.
- [24:02]
B
So. Okay, let's. Let's move on to housing.
- [24:05]
A
Yeah.
- [24:06]
B
We have Rob in Toronto asking whether housing speculation is a good thing, whether it should be regulated. Should we stop people trying to flip houses to buy houses just because they think they're going to go up in value? Should we stop thinking of housing as an asset class? And related to this, the question which I wanted to ask a couple of weeks ago but didn't, what do you make of this factoid which has now been circulating for a while and I think might even be true, that 35% of millennials don't even look at their house before they buy it?
- [24:41]
A
I just, I don't believe it. But like, I'm going to treat that factoid as true. Right. Just for the sake of argument. So which part should we talk about first? The. The.
- [24:51]
B
I think it's related. Right.
- [24:54]
A
That. So you think money. Many millennials are just speculating at 35% of them are just deploying capital.
- [24:58]
C
I don't think that seems unlikely to me.
- [25:00]
A
That's a really high percentage.
- [25:01]
C
And I still wonder.
- [25:03]
B
But I think the, the part of the logic there is that if what you're doing is buying some kind of an asset.
- [25:13]
A
Yeah.
- [25:14]
B
Then the market and the housing is. Your house is going to go up or not go up in value, more or less, regardless of what it looks like. And so you don't need to care about what it looks like. But if you're thinking about it as an asset rather than if you're thinking about it as a place where you want to live.
- [25:34]
A
So I'm going to assume, because I don't trust this survey entirely, but I'm going to assume that what it shows is that there are at least a few millennials out there who bought a house to live in without seeing it, that they just decided the Internet was enough. And so it's not even necessarily that they are thinking of it entirely as an asset, although they might be saying, okay, this is my starter home, so it's only going to be a few years. I think this just like, gets to sort of a general absurdity about the way we buy houses in this country, or just the fact or really about homeownership in general. When Felix says we've talked a lot off air about my adventures in Brooklyn real estate, it's because I bought a co op a while ago and then I spent about a year with a hole in my bathroom ceiling that water would shower down on me from. Thanks to my upstairs neighbors. There was litigation involved. Anyway, it's a long, long, colorful rant. My ceiling has finally been fixed. Everything seems to be fine. But the fact is, like, we don't, you don't really get, for the most part, get to look at your home before. You don't get. You don't get to test drive your house, you get to test drive a car, but you get to basically visit your house a couple of times before you make an offer at most, and then maybe do one last walk through to make sure, after an inspection, to make sure that everything essentially is in working order. But you do, you don't get to like, stay there overnight usually to make sure that, oh, the neighbors upstairs aren't making an unholy racket regularly or that your downstairs neighbors doesn't like, you know, blast the Rolling Stones at some unholy volume anyway. But you just, these are things that you would think with a long term purchase you'd get to do, but you do not. And so I wonder if there's just like some, if there are just some millennials who are thinking, well, what am I really actually going to get out of even visiting? I've heard some people, I've talked about this to some people and they've said they've started Airbnb places for like one or two nights in order to test them out.
- [27:28]
C
That's actually kind of smart.
- [27:29]
A
Yeah. Which I think is interesting. And maybe that. I don't know how widespread that would ever become, but in a housing market where you don't have. Where people aren't just kind of racing to outbid each other, like in Brooklyn or, you know, Manhattan, although Manhattan's kind of calming down. But I could see that actually becoming a little bit more widespread, that maybe that could become a standard part of the process. That would actually be very nice, I think. So. I, you know, if some millennials are just buying, you know, real estate site unseen to live in because they think they're going to live in it for like three, four years at most and then move on like they would a rental. I don't know. It's sort of. I think it's acknowledging the absurdity of the whole. The whole.
- [28:08]
C
Yeah. I mean, I actually know a number of people who have bought sight unseen, and it's often been because they had a relative or someone in the area who went and saw it before them.
- [28:17]
A
Yeah.
- [28:17]
C
And I do think what you said is really important is that I know, like, when I bought my apartment, before I made the offer, I think I saw my apartment for like 15 minutes.
- [28:24]
A
Yeah.
- [28:25]
C
Because in New York, you have to make offers really quickly or you're not going to get the place within 15 minutes. No, I. But I probably only spent about 15 minutes in the apartment.
- [28:33]
A
And then there are only so many times you can walk around 800 square feet.
- [28:36]
B
Yeah.
- [28:37]
A
Okay. I've done the circuit again. Kitchen looks the same.
- [28:39]
C
Right. It's more like, okay, and then. And also, we do have a process of. Of inspections to. And that's how the real estate market has always worked. I think it's less weird than it sounds. Also, it's only site unseen before you make a bid. It doesn't mean that before the actual process is completely done and signed, you haven't seen it.
- [28:57]
A
Yeah, that's true. Before, you may have put up like a security, you know, something. But, but okay, so should. Let's get to housing speculation now.
- [29:06]
B
So. Okay, so do you consider your co op to be an asset?
- [29:13]
A
Yeah, I consider it an asset. I consider it a savings vehicle. I don't necessarily consider it like, I mean, yeah, it's an asset. It's a thing that I own that I could sell and, you know, for money. And it's not, it's not depreciating. It's not like a car where every mile I drive on it, every Minute I live in, it doesn't make the thing less valuable. So.
- [29:32]
B
But you do worry, I mean like one of the things that one of the sort of running themes that we had during the whole tax reform years, or it felt like years anyway, was your worry that the value of your co op would decline were this tax reform to go through. And it seemed at least at the time to me to be that you felt that a decline in the value of your co op would be a bad thing.
- [30:01]
A
Yeah, well, for, I think for most middle class families that treat their real estate as their main savings vehicle, that's. Yeah, that is their asset. I mean, that's just, that's the reality. It's a question. There's, there are two separate questions. Should it be an asset? And you know, should houses be assets and are they assets? Yes. Should they be?
- [30:19]
C
Why wouldn't they be?
- [30:20]
A
Yeah, I mean like if you engineer Germany, you don't have to worry so much about it. If everyone's a renter, then, yeah, people find other ways to save. But in the us you know, home equity's it. That's where the middle class puts their money. And so that is one of the things I really did worry about with tax reform. And we'll see how it plays out. Whether or not people in sort of the, let's say middle 60% would end up seeing some of their savings disappear for a tax cut that wouldn't pay off for a very, very long time compared to the amount that they would lose off their homes, you know, for. But I guess coming back to the speculation thing, right, So I think I see where you're going. Whereas if you think of housing as an asset, then speculation should be fine because speculation is really just a way of doing price discovery in a functioning market. And that's why, you know, when you hear about like oil, people blaming oil speculators for prices going up, it's like, well, also speculators managed to bring oil prices down. Yeah, exactly. It's just how you actually get speculators and hedgers. That's, that's, that's how markets function. So should you, if housing is an asset, should you allow speculators? I think the problem is that it's, housing isn't necessarily a functional market all the time because you can't like, you know, supply doesn't necessarily go up as more speculators go in there. You might be constrained by zoning, you know, rules and whatnot. And this question came to us from someone in Toronto where they just have tons and tons of Chinese money flowing.
- [31:46]
C
And so less now.
- [31:49]
B
Yes. But they do have inflows of people, even if they're not Chinese. And they can't build fast enough to, to accommodate all those people. And you do have a sort of systemic demand, outpacing supply problem in Toronto. And that has made not only property prices extremely high in Toronto, but it has also broken the market in a weird way to the point at which it becomes actually very, very difficult to buy anything at all.
- [32:19]
A
Yeah. And this is, I think the big question here in the end is with something like housing that is socially essential. Right. That you have to have people, people need to be able to live in a city. Should it just be completely dictated by the rules of the market? Right. Should it be treated just like any other asset? And you can come back to this with health care. Right. Should healthcare just run by market rules? And I think the answer is no, not entirely. You need to have, you can't treat it as a pure asset the way you would a bond or a stock. And you have to, you have to regulate and figure out how you're going to make it possible for middle class and lower income people to survive.
- [33:01]
C
Yeah. And younger people, I think this is an issue, is that we want to encourage people who are in parts of the country that are more economically depressed to be able to move to parts of the country where they have more opportunities. But the problem is housing is so expensive in those areas that we are potentially decreasing our amount of human capital in the country or decreasing the value of that human capital because of some of our housing policies.
- [33:24]
A
Yeah. So I guess I'd finish with this. Should housing be an asset for your typical family? Probably not. We'd be better off if it wasn't. Unfortunately, that's where we are and probably always will be in America.
- [33:38]
B
And finally, because this is the guide to the business and finance news of the week, let's talk about your former classmate, Mr. Martin Shkreli.
- [33:49]
A
I did not go. I was not his classmate. He was several years above me. He did date someone in my grade.
- [33:54]
B
Briefly, but he just got sentenced to seven years in prison.
- [34:00]
A
He did.
- [34:02]
B
And also this week, Elizabeth Holmes got dinged by the SEC and had to hand back half a million dollars and promise not to be a director of a public company in the next 10 years. And long story short, didn't go to prison at all. No, and very unlikely to.
- [34:23]
A
I don't know if it's 100%, it's not 100%.
- [34:25]
C
It's still outstanding.
- [34:26]
B
It's still improbable and I agree with that. The fact is that her fraud was $700 million and that's the amount of money that she basically fraudulently obtained from investors, which they will never see back compared to the size of Shkreli's fraud, which to a first approximation was zero. Like his investors did get their money back. Is there some weird what's going on here?
- [35:00]
A
You know, I think what you're seeing is politics and publicity play a role in prosecutions, right? That's like, that's the bottom line. But there are a lot of things about the Shkreli case that make me a little bit sad. And I wrote about them last week, you know, the big thing before getting to Elizabeth Holmes. And that comparison is just that I think symbolically it left a very sour taste in my mouth because in the end he is going to jail for essentially, essentially lying to investors in his first couple of hedge funds about his prior performance and what the hedge funds were and, and then running a Ponzi scheme for a while.
- [35:40]
C
There's that.
- [35:41]
A
Yeah, yeah. I mean he, he. It was small time Wall street crimes, right? This was not huge stuff. They were pretty obviously crimes, but it was not, it's kind of thing probably happens all the time and just never. We never hear about. And eventually he managed to pay them back because he finally got into the business of buying old drugs and hiking their prices radically and then just earning lots of profits off that. And he managed to funnel cash back to the people who had staked him before through what prosecutors said were these sham consulting contracts. What's funny is that he didn't even get convicted on the sham consulting part, even though the company, his drug company was supposedly the victim here or one of the victims here. There was some stock scam too that was involved in all this. It was sort of nebulous. But you know, in the end he got convicted for screwing some investors, sort of. And was not nothing he got in trouble for had anything to do with screwing patients or screwing the medical system or what. Everyone was actually angry about him. I just thought that really kind of spoke to the values that are embedded in our legal system.
- [36:48]
B
Wait, wait, hang on. Are you saying that he should have in, in like a better society we would put people in jail for hiking drug prices?
- [36:58]
A
No, that like there's no, I'm not saying. Embarrassed to say we'd actually put him in jail for it necessarily, but that is, we think it's a sent. What he did is okay in the end. Right? Like that is people will Continue to do that. Like just that is our legal system as is built our regulatory and legal system. It's all kind of of a piece says, okay, yeah, you can. You can corner the market on a drug. Like, that's what we have designed as society. However, we have made sure that you do not screw with investors. If you get caught doing that, you will go to jail. And I'm not saying necessarily isn't Elizabeth.
- [37:34]
B
Holmes, you know, a data point? If you really screw investors to the tune of $700 million, then you don't go to jail.
- [37:43]
C
I kind of disagree, just in the sense of. I. Well, like, I don't think the difference between their sentencing is unfair. I actually think it makes sense. I think it makes sense both because partly I actually think Shkreli is going to prison for raising the drug prices.
- [37:58]
A
In reality, I think that attract. That attracted attention to his case.
- [38:01]
C
Well, and that's also obviously affected sentencing.
- [38:04]
A
Yeah.
- [38:04]
C
And I also think Shkreli is someone who is a repeat offender. He has been essentially running a con after a con after a con. He has also. When he was going through his trial.
- [38:13]
A
He ran three cons. Really, in con after con.
- [38:16]
C
Okay.
- [38:16]
A
Yeah.
- [38:17]
C
Okay. He got three.
- [38:17]
B
Yeah.
- [38:17]
A
All right.
- [38:19]
C
And when he was going through his trial, he was extremely.
- [38:24]
A
He was a dick.
- [38:25]
C
Yeah, that's.
- [38:25]
A
Cause Shkreli's a dick.
- [38:26]
C
No, but I think that that's important because he, you know, he did that weird thing saying that he would give a, you know, a 500 or $5,000 bounty for a piece of Hillary Clinton's hair. He was showing that if this guy doesn't go to jail, he's not reforming in any way. He enjoys the infamy. And that is completely different with Elizabeth Holmes. I think that she should be punished for what she did, but the intent was completely different in these two situations. Also.
- [38:48]
A
What do you think was. Her intent was to make a lot of money? I think.
- [38:52]
C
Well, I think her intent was clearly. And I'm not trying to defend Elizabeth Holmes because I. But she clearly believed that it was probably somewhat delusional to believe that she could actually create this product. They thought that they would get there and that they were just buying time, which is still wrong. You are not allowed to do that. But I think that is different than Shkreli, who clearly was just trying to get rich and screw.
- [39:14]
B
Ok, so there's this Paul Kadrosky defense of Theranos, and he thinks that the punishment for Elizabeth Holmes is too big and she shouldn't be punished even this much.
- [39:27]
A
I missed that. What was that?
- [39:29]
B
And his defense is basically, this is what all startups do. They all lie about their revenues, they all take a fake it till you make it approach. And if you criminalize that, then that's the end of all tech startups.
- [39:43]
A
Oops.
- [39:44]
C
Yeah, I mean, I think that's the.
- [39:46]
A
Problem with the model.
- [39:47]
C
I agree. I mean, I think she is a victim of this Silicon Valley narrative. However, it's one thing when you're talking about this narrative with people who are, like, having a startup for, I don't know, delivering groceries or something, but if you have a startup that's related to testing of people's blood, related to illnesses, that's getting a little bit more serious.
- [40:05]
B
And yeah, there were human beings who were seriously harmed by Theranos. They went into Walgreens, they did blood tests, they got results which were very bad results, and they wound up having to go through procedures which they didn't need, and all of this kind of stuff as a result of those blood tests. You don't give people blood test results when you don't know that that's the actual truth.
- [40:27]
A
Yeah, I mean, there's so many issues that this case raises. I was reading through the SEC's complaint and just thinking about the fact that she tricked Walgreens the way she did was sort of. I mean, it tells you, like, they weren't able to do due diligence on this, that they fell for the scam. Just. I feel like that hasn't gotten enough attention. That. Right. Like the biggest, the country's top pharmacy chain just sort of listened to this and believed her. But another thing is just again, she's someone who got in trouble for screwing investors and is technically not getting in trouble for screwing patients. But in some ways, we rely on our securities laws as sort of a catch all for corporate wrongdoing, that if you lie to people in general and no matter what you're lying to, as long as you also lied to investors, then they can kind of get you for that too. Right.
- [41:16]
B
Like, you know, so this is actually a response. I mean, I kind of like this as a sort of umbrella explanation of everything. It answers Paul Kudrowski as well. Like, what you do is you say Martin Shkreli is a dick who needs to go to jail. Elizabeth Holmes is a Silicon Valley founder who went way too far in terms of the lies that she told. And, you know, your random startup row in Palo Alto with an app which fails is, you know, also theoretically guilty of defrauding investors. But we don't see any real harm in the startup row with an app. So we don't prosecute that person at all. We do see a certain amount of real harm in the Theranos case in terms of people going into Walgreens and getting bad results back. And so we do punish Theranos and Elizabeth Holmes for her sins. And we use the securities laws as a pretext. And when Martin Shkreli comes along and it's just like cocking a snook at the entire country, we throw him away for seven years. Again, we'll use the securities laws as an excuse, but that's not really what he's being jailed for.
- [42:36]
A
Yeah, but what makes me uncomfortable that is that in the end, the reason we were. The reason Martin Shkley was able to cock a snook at the entire country was for something he did. It was for an honest scam. Right. He didn't lie about what he was doing with Daraprim or any of the other drugs he pulled this with. He was totally on the table. He defended that on cnbc.
- [42:59]
C
And that's a separate issue about whether or not we should have certain regulations on the drug.
- [43:02]
A
Exactly. And so. So, you know, in a way, you just happen to get lucky with Shkreli that aside from being a dick, he was also a liar or not really that surprising.
- [43:12]
C
You often find that when people have these really, really awful business models, they tend to be a little bit creative in their accounting.
- [43:18]
A
Yeah, I just, I guess I'm uncomfortable the idea of relying on secure, like, securities laws are sort of a catch all. I'm sort of uncomfortable with that as well. And as far as Holmes goes, I am surprised actually that she's not. Hasn't been prosecuted. I mean, her lies were on the same. As far as screwing investors go, her lies were definitely on the same magnitude as Shkreli's. Like, they just, they were like.
- [43:39]
B
The amount of losses were much greater.
- [43:40]
A
Yeah. The losses were much, much larger. The severity of lies were arguably, were much. Was much, much greater. If she does not get prosecuted, I am going to be left with the feeling that, yeah, there's just, you know, she's a. She has powerful friends still, and that's what's somehow protecting her. Even though I don't know what connections they have to Washington, I don't what.
- [44:03]
C
Good is served by her going to.
- [44:05]
B
Prison, but what good was served by Martha Stewart going to prison?
- [44:09]
C
I completely agree with you. I actually don't think Martin Schweiler should go to prison for seven years. I think that we have A ridiculous system in this country where we put too many people in prison and we put them in prison for too long. But yeah, I think Elizabeth Holmes is at this point like her, you know, her company's value is gone, which was all the money she essentially had. And she is not probably going to be able to start a company even post 10 years, because who's going to invest in her company?
- [44:33]
B
Oh, I wouldn't put it.
- [44:35]
C
Okay, that's, that's possible. But I think that she has, she's being punished pretty harshly. I don't really understand why going to prison is really going to do much more. Whereas with Shkreli, he seemed to enjoy, like, going through this process of, you know, going to court every day. I think it makes sense for him to go to prison for a short period of time in a way that I don't think it makes sense. Makes that much sense for her.
- [45:01]
A
No, no, you can disagree with me.
- [45:04]
C
That's fine. It's just that I, I, it goes into the idea of, like, why do we send people to prison? What is the point of sending people to prison if it's the point to stop other people from committing the crime, to punish people, to, I think, rehabilitate recidivism.
- [45:18]
A
I'm not all for Old Testament style justice all the time, but a modicum of it is sometimes good.
- [45:26]
B
And I will add that my sort of big theory of white collar crime is that it's prosecuted so rarely that when you do find someone guilty, they really should go to prison because otherwise it's no deterrent at all. Given that your chances of getting prosecuted is so low, you need a pretty high chance of going to prison in order to have any kind of deterrent effect there.
- [45:53]
A
And I just want to add, for, you know, the sake of not libeling anyone, we do not know for sure that Elizabeth Holmes has, you know, she's not been charged with a crime. We do not know if she'd be convicted with the crime. We do not know.
- [46:04]
C
And she has not actually admitted that she's done it.
- [46:06]
A
Yeah, exactly. That was all, you know, she, that she did not admit fault as part of the settlement. So, Elizabeth, we're not libeling you. We just think you should be in jail.
- [46:17]
B
So let's finish this off with Jordan's final number.
- [46:22]
A
I had one about trade, but no, I think my final number is going to be four, which is the number of pours of wine I've had over the course of this episode. Felix, I still would like to try the Lebanon wine, but I will say the Colt Utah Grenache White Grenache is lovely. And I will probably be taking a picture of this bottle to go get myself one at some point later on. Do they have this at Asterwines or something? Where can I get that?
- [46:46]
B
You can get that at Chambers.
- [46:47]
A
I can get that at Chambers. Okay, I'm gonna go find that one.
- [46:50]
B
Hang out here on this podcast if you're a Slate plus listener to listen to the Jordan, Felix and Anna review of the Low Road at the Public Theater. Thank you to everyone who came out to say hi to Jordan to buy him a drink on PI Day. It was a fun PI Day. And on Slate plus we will talk about the play. If you're not a Slate plus member, become a member. You can do that@slate.com/ or go listen to Spoiler Specials instead, which is also a Dan Schrader production. It comes out every other week on Friday mornings and it's hosted by a rotating cast of critics who all have one thing in common, which is that not only have they seen the films, but they are going to talk in detail about all of those spoilers, which the reviews don't mention because they're spoilers. So once you know that he was dead all along, then you can listen to spoiler specials. Other than that, keep them emails coming. Slate moneylate.com do suggest other guests that we can have. We need. We have an empty chair here now which needs filling, so give us some ideas for people who should sit in it and we will talk to you next week on Sleep Money.
- [48:32]
A
Noah oh, whoa.