Slate Money - "Megxit" Episode Summary

Podcast: Slate Money
Date: January 11, 2020
Hosts: Felix Salmon (Axios), Anna Shymanski (Breaking Views), Emily Peck (Huffington Post)

Overview

This episode of Slate Money dives into three big topics: the financial and political ramifications of "Megxit"—the departure of Prince Harry and Meghan Markle from senior royal status; a looming crisis in the global wine market driven by threatened US tariffs; and the growing power of index funds in financial markets and the questions around how they should vote their shares. The episode features lively debate, critical insights, and sharp wit, with recurring themes of accountability, tradition, and the intersection of money and power.

Main Discussion Segments

1. The Economics and Symbolism of "Megxit"

Timestamps: 00:10–18:30

Key Points

• What Is "Megxit"?
  Meghan Markle and Prince Harry announce financial independence and partial relocation outside the UK, a move characterized by the media as "shocking" and "unprecedented."
  • "They're declaring financial independence from the family, which turns out to be quite murky." (Emily, 01:31)
• Family Dynamics and Fallout:
  The announcement caught the royal family off guard, with confusion about whether the couple can keep royal privileges (housing, income) without traditional roles.
  • "Can they continue to live rent free in Frogmore Cottage... will he continue to get his income from the Duchy of Cornwall?" (Felix, 04:10)
• Financing the Royals:
  The intricacies of the Sovereign Grant, Crown Estate, and Duchy of Cornwall are discussed, exposing complex, archaic, and partially public royal finances.
  • "There's something called the Crown Estate... she turns it over to the government and they give her like 25% back." (Emily, 09:17)
• Broader Critiques:
  The segment evolves into a critique of the monarchy as a relic of white supremacy, privilege, and anachronism.
  • "The British monarchy is basically this symbol of white privilege... Oh, no, not white privilege. White supremacy." (Emily and Anna, 06:10)
• Celebrity and Money:
  Debate over the legitimacy and implications of royals making private money, with references to modern celebrity versus public entitlement.
• Sovereign Grant and Taxpayer Money:
  Highlighting public support for an institution of unclear modern-day benefit.
  • "It's more than that because they don't disclose security costs and Harry and Meghan will still have security." (Anna, 12:38)
• Tourism and National Brand Argument:
  Skepticism about claims the royals drive significant tourism or function as valuable "IP/assets" for the UK.
  • "I'm always very suspicious of those stats. People would still go to London if the Queen wasn't there." (Emily, 15:05)
• Could This End the Monarchy?
  Hosts muse on the potential implications for the British monarchy's future, especially post-Queen Elizabeth II.
  • "Could this be the end of the British monarchy?" (Felix, 17:52)

Notable Quotes

• “I do not understand why, in this day and age, people still want to pay money to the government to support people who don't do anything, who think that they're better than everyone else...” (Anna, 05:31)
• "If you can resign from being a royal, it kind of undermines the whole operation, right?" (Emily, 13:36)
• "The whole thing is unbelievably anachronistic." (Felix, 17:47)

2. The Wine Tariff Wars

Timestamps: 18:30–30:03

Key Points

• Background:
  US threatens tariffs on European wines in retaliation, mainly for disputes over Airbus subsidies and French digital taxes.
  • “They retaliated to European subsidies to Airbus by putting a 25% tariff on still wine from France, Spain, and Germany under 14% alcohol.” (Felix, 19:52)
• Impact:
  Tariffs threaten to severely disrupt the US wine import and retail industry, harming mostly American businesses.
  • “The people you are hurting are not in Europe. The people you're hurting are all in the United States.” (Felix, 21:04)
• Trade-Offs & Supply Chain:
  Switching to other wine sources is not viable due to years-long supply chain and relationship building; tariffs risk making many EU wines essentially unavailable in the US.
  • "These relationships take decades to build up... you can't just wake up in the morning and say, 'I'm going to start importing Australian wine instead.” (Felix, 24:26)
• Political Calculations:
  Tariffs may be seen as a political move targeting demographics unlikely to support Trump.
  • "On some level, the wine drinkers, the Californians and the New Yorkers... they're just doing this to hurt them." (Felix, 26:58)
• Will tariffs really happen?
  General skepticism that such drastic tariffs will be enacted in an election year due to the economic impact even if it's targeted.
  • “I just have a hard time believing that going into an election year that Trump is going to allow... tariffs to Europe that could potentially hurt Americans.” (Anna, 26:48)
• Numbers Game:
  European wine imports to US are ~$4.5–5 billion/year, translating to ~$20 billion in consumer spending.

Notable Quotes

• “If the price increases 100%, the prices double. So what?” (Emily, 21:50)
• “The realistic effect of these tariffs is going to be that the European wines will just disappear from the US market entirely.” (Felix, 22:18)
• “It's not like you can buy an Australian Burgundy. There was no such thing.” (Felix, 24:53)

3. Index Funds and Voting Power

Timestamps: 30:03–39:01

Key Points

• The Issue:
  The "Big Three" index fund providers (BlackRock, Vanguard, State Street) now control over $10 trillion in equities, raising concerns about the concentration of voting power and its impact on corporate governance, especially concerning issues like climate change.
  • “Index funds control... more than $10 trillion of equities.” (Felix, 30:09)
• Should They Vote as a Bloc?
  Debate over whether it is appropriate (or ethical) for index fund managers to use this voting power to support environmental or social goals, given their fiduciary duty to clients with potentially diverse views.
  • “Is that really the role of these people who are running index funds? Like, is it really their role to be making these political decisions?” (Anna, 32:22)
• Practical Challenges:
  Complexity, cost, and neutrality are cited as reasons for passive behavior—even as abdication of voting responsibility is itself a powerful (and potentially political) act.
  • “The way that public companies work is that the companies do need to be answerable to shareholders. And if the shareholders are just sitting there saying nothing and not voting, that's an abdication of their responsibility as shareholders.” (Felix, 33:23)
• Climate Action and Outsourcing:
  BlackRock's membership in the Climate Action group means some hope they may begin voting more proactively, but skepticism remains.
  • “...by joining [Climate Action], they're able to outsource a whole bunch of that work...” (Felix, 37:53)
• Reference to Al Gore:
  The segment is sparked by a BusinessWeek cover story and an Al Gore quote:
  • “Do they want to continue to finance the destruction of human civilization or not?” (Al Gore, quoted by Emily, 38:43)

Notable Quotes

• "Not voting, stepping back from that responsibility that shareholders have to vote, is itself a political act..." (Felix, 35:13)
• “We have never obviously had a period of time where [index funds have] had this much power.” (Anna, 33:44)

Numbers Round

Timestamps: 39:01–43:47

• Emily: 73 – Age of real estate agent Faith Hope Consolo at death, uncovering her web of fabricated backstory. (40:32)
• Anna: 87% – Average asset to liability ratio for Fortune 1000 defined benefit pension plans (even after a great stock year, underfunding remains due to low rates). (40:55)
• Felix: 12% – Proportion of Axios employees working remotely in 2020, part of a marked national upward trend in remote work. (41:35)

Memorable/Eloquent Moments & Speaker Attributions

• On the Royals' finances:
  “They're giving the impression that they are totally sure about what they're saying, even though no one has a clue because this is completely uncharted territory.”
  – Felix Salmon, 02:24

• Royalty and White Supremacy:
  “The British monarchy is basically this symbol of white supremacy. And then along comes this woman, Meghan Markle, who upended the whole thing.”
  – Emily Peck (06:10–06:18)

• Tariffs as Political Devices:
  “On some level, they’re owning the libs. The wine drinkers, the Californians, and the New Yorkers... they’re just doing this to hurt them.”
  – Felix Salmon, 26:58

• Index funds and responsibility:
  “Not voting, stepping back from that responsibility that shareholders have to vote is itself a political act and essentially hands over an untoward amount of power to management...”
  – Felix Salmon, 35:13

• Al Gore quote:
  “Do they want to continue to finance the destruction of human civilization or not?”
  – Al Gore, quoted by Emily Peck, 38:43

Tone and Style

The episode is sharp, opinionated, and irreverent—frequently poking fun at the subjects (especially the monarchy and tariffs), while still engaging seriously with the financial and political ramifications of the stories. The hosts approach each topic with a mix of expert knowledge, skepticism, and dry wit. In discussing traditional institutions—whether the monarchy or index fund companies—they push for accountability and transparency, questioning the persistence of outdated structures in modern society.

Useful Timestamps for Important Segments

• Introduction: 00:10
• Megxit Segment Opens: 01:30
• Royal Finances Explained: 09:00
• Sovereign Grant/Crown Estate: 09:04–11:42
• Tourism & National Branding: 15:05
• Wine Tariffs Segment Begins: 18:30
• Impact on US Wine Industry: 21:00
• Wine Numbers/Stats: 28:19
• Index Funds Segment Begins: 30:03
• Al Gore Quote: 38:43
• Numbers Round: 39:01

This summary captures the essence, tone, and insights of the episode, providing a useful guide for those who want to fully understand the substance and spirit of the "Megxit" episode without listening to the entire show.