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- [00:00]
A
Foreign. Hello, and welcome to the Nerd EGOT edition of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios and the Shymansky is here from Breaking Views.
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Hello.
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A
Emily Peck is here from HuffPost.
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B
Hello.
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We are going to be talking about the first person ever to probably, we don't know for sure, probably fill all three of the top economic roles in the country. It's the economic equivalent of the egot. We will talk about that person. You can probably guess who that is. We are going to talk about a monopolistic merger or it looks very much like a monopolistic merger in the world of book publishing. And I need to ask you, do you prefer Random Penguin or Penguin House? I don't know. I still haven't worked out which one of those two is better. Of course, neither of them actually exist. It's called Penguin Random House. They are merging with Simon and Schuster. We are also going to talk about philanthropy and the United Way. It's Giving Tuesday. On Tuesday, please give lots of money to wonderful causes. We're not sure about the United Way, though. There's a little bit of a scandal there which Emily has written about at great lengths. So read that, that story. We have a Slate plus on Brexit. And before we get there, I need to remind you that we also have a Slate Money live show on Wednesday. So tune in for that. All that coming up on Slate Money. So the big story of the week is obviously Janet Yellen the nerd ygot, as I put it on Twitter, the first person ever, ever to be chair of the Council of Economic Advisors and chair of the Federal Reserve and Treasury Secretary, which makes her much more rare than any EGOT, because there are what, 14 or 15 EGOTs, and there's only one Janet Yellen.
- [02:11]
B
And if her nomination is confirmed, she will be the first woman treasury secretary ever, which is a whole other category. I don't know. It's not an egot, but it's big. It's a big deal.
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A
It's big. And there is this weird thing where finance ministers in particular, they tend not to be women like most other cabinet minister posts. You find women in them quite frequently. But for some reason, it's much more rare for women to be finance ministers. And so I'm super happy to see a woman being finance minister. I'm much more happy to see Janet Yellen be finance minister because she is like, incredibly qualified. And I have to say that there's a little piece of me as well that is super particularly happy that it's Janet Yellen who is the first person to get all three of these and not Larry Summers.
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C
That's a very, very good point because.
- [03:02]
A
He came extremely close. And in the end, Barack Obama decided to nominate Yellen to be the chair of the Fed rather than Summers. He had the inside track. Everyone assumed it was going to be Summers and he wound up getting basically knifed in the back. One way or another, people debate whose fingerprints are on that knife. But he lost out on that job. Yellen got it. And people are talking a lot about like, does Yellen have the political nous to be Treasury Secretary? Because Fed Chair is a much more technocratic job. CEA chair is an extremely technocratic job. It's all like, let me go off into my office and do economics and then come out with wise words. Whereas Treasury Secretary is a very like, get your hands dirty, meet with Congress, try and rustle bills through, react to news that's happening on a daily basis, react to movements in the dollar, whatever it is. The Treasury Secretary is a very fast paced and political role. And people are like, can this quiet technocrat do this fast paced political role? And my answer to that is basically, well, she managed to get the Fed chair, which getting that job involves playing a non zero amount of politics against Larry Summers.
- [04:18]
C
Yeah. Although honestly I do think that is probably her biggest weakness. I'm sure she can do it, but it's not something that most likely comes naturally to her based on what she has chosen to do in her entire career. And so I don't think by any means that means she won't be a very good Treasury Secretary. My guess is she may delegate some of that and focus on the stuff that she really does excel at.
- [04:41]
A
I'm not sure how much of that is delegatable, to be honest. I mean it is possible that she will create a whole new structure within treasury where like the Under Secretary for Domestic affairs or someone suddenly becomes like the go to person on Capitol Hill. But really treasury is one of those organizations a little bit like many corporations where basically everyone in the corporation works for the CEO and then the CEO is the one person who does the external relations to the major state stakeholders. And treasury is like that. It's very rare to find anyone at treasury giving interviews to the press or having high profile meetings with Senators or members of Congress or even the President in the White House. Like all of that stuff, the outward looking stuff at treasury tends to happen at the actual Treasury Secretary level. So it would be interesting to see her try and delegate it, but as far as I know, I can't think of any previous secretary who's really managed to do that.
- [05:42]
B
I think one advantage Yellen might have in 2020, I think the notion that we could have gotten a Treasury Secretary that was really politically savvy and astute and could have gotten more than she could done in Congress now in this era is maybe misguided. I mean, I think she has an advantage in that she's a known quantity in Congress and she's respected on both sides for the most part. I mean, there's senators, Republican senators might disagree with her about things, but I think everyone kind of agrees. This is a really smart woman who's extremely qualified, and she has the respect of lawmakers, which is no easy feat.
- [06:20]
A
And she has the respect of, like, Donald Trump, who came very close to renominating her as Fed Chair, you know, too short. Yeah. And then he changed his mind because, like, he didn't want to have a short person as Fed Chair. You're like, okay, whatever, Donald. But she is utterly, utterly respected economist. She has been proven right about a million different things over the years. She's been very ahead of the curve, especially on gender issues and inequality. And she also has a little bit of history as a fiscal hawk, which may or may not be what the progressive wing of a Democratic Party wants, but should serve on some level to mollify the Republicans.
- [07:00]
C
Although I do think the statement that she's a fiscal hawk is a little bit overstated. I mean, a lot of this goes to some comments she made where she talked about the trajectory of the debt. She wasn't even talking about the fact that 75% debt to GDP was so horrible. She was saying the trajectory of the debt, which essentially almost anyone would agree with, except maybe Stephanie Kelton. Otherwise, I think essentially everyone would agree with that. It is true that I think, especially in the last maybe two years, I think she has listened to a lot of people, listened to a lot of experts as well, and shifted and become even more of a dove. But she's always been a dove her entire career.
- [07:33]
A
Although she was the one who raised interest rates. Right.
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C
Well, I'm talking about the difference of a fiscal hawk and a monetary hawk, which are separate. I would also argue that.
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A
Yes, but they're similar.
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C
They're related. But I think the idea that she raised interest rates as slowly as she did based on the fact that almost anyone in that role would have been pushed by everyone in the Fed to raise interest rates does not necessarily make Her a hawk. It makes her a conventional monetary thinker. I also think it's interesting that she shifted on that too, because even before the pandemic, when Jay Powell was lowering rates, despite the fact that unemployment was very, very low, she was like, I think that's the right thing to do. So I actually think some of these things are good, just because it shows that she is clearly incredibly intelligent, but also willing to shift her opinions based on the facts on the ground, which is something that a lot of people actually don't do. And I think that.
- [08:23]
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That extremely importantly, not in any way, shape or form an ideologue. And I think this is the one thing which we can all be extremely. Or one that we can be extremely happy about in terms of Janet Yellen as Treasury Secretary, is that she just reacts in the best possible way to the facts on the ground. And she is famously, incredibly well prepared and on top of her brief, and she knows what the facts on the ground are better than any of her predecessors. Almost certainly. She doesn't have, like, favorite indicators that she looks at and she doesn't ignore the ones that aren't her favorites. So in that sense, she is going to be invaluable in trying to help steer the United States out of this crisis, especially once she has control of the 455 billion. Oh, wait, she's not going to have control of the 455 billion that her predecessor, Steve Mnuchin, is clawing back from the Fed. We talked about this last week. It turns out now that he wants to basically put that 455 billion into a box that can't be opened by Yellen. And they're only Congress can really authorise spending out of. If Mnuchin had just kept it at the Fed, then she couldn't have spent it because it would have been at the Fed. If Mnuchin claws it back from the Fed, there's two different places he can put it. One of them is in this, like, Congress authorisation lockbox thing that I'm talking about. The other one is this place called the Exchange Stabilization Fund, which no one knew existed before, like the Mexico Tequila crisis of the 1990s. And then suddenly it was like, my God, it turns out the White House has this amazingly useful slush fund of money they can use in emergencies. And if it was Mnuchin, like, put it this way, if Trump had won the election and Mnuchin had decided that this money was serving no purpose at the Fed and he wanted to bring it back, he would certainly have Put it into the Exchange Stabilization Fund where he could then turn around and spend it on basically anything he wanted. Because the Exchange Stabilization fund is this like executive branch controlled slush fund. And he's not putting it there. And the reason he's not putting it there is because he does not believe in dealing the strongest possible hand to his elected successor.
- [10:39]
B
That's probably true. But some things we could say looking forward would be that Yellen's success is going to depend a lot on who's in charge of the Senate and what the Biden administration can get done fiscally. She's already said, she testified before Congress this summer and she said the deficit is not a concern right now. Interest rates are very low. We should be spending more money. We're in a big crisis. So I feel like a lot of the talk about how she is a deficit hawk, that might have been true, as Anna was saying at one point in time, but is not true in this moment when we need her not to be that.
- [11:10]
A
And even if she was a deficit hawk, she's certainly less of a deficit hawk than like the most dovish Republican in Congress. So the constraint is always going to be Congress and not Yellen.
- [11:22]
C
Right.
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B
And then another thing worth noting is a lot of people wanted Elizabeth Warren to be Treasury Secretary. And I think we could all agree this is so much better and so much less disastrous because if you had put Warren in this position, she would have just been this like lightning rod for criticism.
- [11:36]
C
She wouldn't have gotten confirmed. There's no way Elizabeth Warren would have gotten confirmed.
- [11:39]
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It would have been insane. So we know that Yellen is a thousand million times better than Warren. And I think everyone would agree with that, even Warren herself. And the other thing I think is kind of interesting about Janet Yellen to think about now is that she has spoken out in support of automatic stabilizers, which I think would be so great if, if she could make Biden care about that and that could actually get through Congress. This is when you don't have to push to beef up unemployment insurance. When there's economic crisis, if rates cross a certain thresholds, more benefits just start kicking in. So you kind of take these benefits out of politicians hands in a way. And I think a lot of economists see this as a really good idea and it's hopeful that Janet Yellen sees it as a good idea. And it's just an indicator of how smart she can be about a lot of these policies. And I think the question is how influential can she be also.
- [12:31]
C
Right.
- [12:32]
A
Basically all governments have automatic stabilizers to some degree or another. Any. Like, if you have any semblance of a welfare state, then as unemployment rises, you wind up spending more money on unemployment benefits and that kind of thing. So automatic stabilizers are part and parcel of what government does. But in this context, it's really an attempt to try and formalize what's known as a countercyclical fiscal policy, which is this wonderful word syllable salad, which basically just means that when the economy is doing badly, you spend more, and when the economy is doing well, you spend less. And it's a great idea. Emily, you're absolutely right that most economists do support it. And in that sense, she's far from out of the mainstream on this, like most economists would support this. What's fascinating, of course, is that it is actually very uncommon for an economist to be Treasury Secretary. Most treasury secretaries, in fact, I can't even remember a Treasury Secretary who was an economist. So it's going to be great to have someone who actually understands macroeconomics on that kind of a level in charge of the Treasury Department for this reason and many others.
- [13:42]
B
What a welcome breath of fresh air.
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A
And I am not someone to be nice about economists, but I think, like in this particular case, it's good to have an economist there. Yeah.
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C
And I think moving forward, I imagine that in the next, not only just four years, but probably the next 10 to 20 years, fiscal policy is going to take a much more dominant role than it has in the last 20 years. So I think that Janet Yellen and whoever the treasury secretary is after that, is going to play a much more dominant role and have to play a much more dominant role than anyone has in the past, because we just simply aren't going to be able to rely on monetary policy the way that we have.
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A
Okay, let's talk about more deals, because we're in. There's a bunch of business and deals, and the stock market is hitting record highs and everyone is flush with cash and they're all trying to spend it. And we now have a $2.2 billion deal, which I guess by the standards of M and A transactions is quite small, but by the standards of book publishing is absolutely enormous, whereby Random Penguin or Penguin House, I never know which one of those two I prefer, which is owned by this massive German publishing house called Bertelsman, is going to buy or has said that they want to buy, has agreed to buy Simon and Schuster, which is the third biggest publisher in America, for $2.2 billion. And according to a statement from News Corp, which I don't know if I take this at face value, but I haven't seen anyone say that it's not true. This will create a publishing house with 70% of all literary fiction. They basically have 70% of all decent novels in America, and they have about a third of the entire book market. If this goes through, this looks to me like a monopoly. And it looks to me like Bertelsmann's trying to create a monopoly. And does anyone disagree? And if they are, shouldn't this be blocked?
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B
I don't disagree. I think this could be very bad for book publishing in general, especially for authors. There's one less house to compete for authors and titles. So that means lower advances, that means bigger titles. There's already all this consolidation in the book business and there's this tendency now the trend is, you know, big blockbuster titles. Simon and Schuster made a lot of money this year because they. They had the John Bolton book and the Mary Trump book. Penguin Random House made a lot of money this year because they had the Obama book and the other Obama book. And so the consolidation isn't really good news for people who care about, you know, interesting books getting published. It's just more bad news. And it is a monopoly. But at the same time, I center on this piece that Franklin for wrote in the Atlantic about how this is actually not about book publishing per se, or book publishing companies, but is actually about Amazon, because while this combined company would have a third of the book publishing market, Amazon has about half of book publishing distribution. So it's like maybe a counterweight to that. I don't know how convinced Amazon is.
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Arguing is very like Amazon's position in book sales is clearly monopolistic. And as if you remember back a million years to the episode where we talked about when they got into a big fight with Hachette, you know, they basically stopped shipping Hachette books and they were all marked as unavailable. And this kind of thing, in this big fight, they are not afraid to play dirty when it comes to fighting with book publishers. And it is colorably possible, I suppose, that a combined Penguin, Random House and Simon and Chester is going to be so big that, that they will be able to stand up to Amazon's bullying a little bit better. And I kind of buy that. But everything else that Frank wrote in that piece is just like, oh, my God, you are such a fogey. And he was like. And plus he was like, we need to do something about this Amazon monopoly without ever saying what it is that we need to do. It's very hard to break up that monopoly at this point. There's, you know, for all of us trying to buy like bookshop.org instead of Amazon, like it's not going to move the needle very far. Amazon just has that monopoly. That monopoly incidentally, is so entrenched in people's minds that people simply assume that Amazon has a monopoly everywhere else as well. And it doesn't. And this is one of the weird things about Amazon is that like, because it started as a bookstore and because it has such a powerful position in books, every time it makes an announcement like it did last week, saying, oh, we're moving into pharmaceuticals and prescriptions, everyone's like, oh my God, it's going to have a monopoly in prescriptions. Of course it's not going to have a monopoly in prescriptions. Books are unique. They're a very, very unique market. It does seem absolutely obvious that the big loser here is authors, and especially authors of fiction. Because what always used to happen is that you'd have an auction, your agent would like send out your manuscript to a bunch of different publishers and then the highest bidder would win. But now when all of those different publishers are all owned by the same company, they basically just agree between each other which one of them is going to make the bid. And then they don't need to worry about what the other ones are going to bid because they all know that they're not going to receive a competitive bid from one of the others. So it's very bad for author advances. And is that enough for the DOJ to try and stop this on anti monopoly grounds? I don't know.
- [19:22]
C
Yeah, it's a good question. I mean, I think from what we've seen recently, it seems like it's definitely more likely than anyone probably would have said five years ago. I mean, you had the McGraw Hill cengage and it's textbooks, but still that was merger that was stopped on antitrust grounds. So I think this will definitely be scrutinized quite a bit. Whether or not they consider, they'll consider it obviously a less competitive market. Whether they consider it monopolistic is definitely up for debate. I would say the other losers here are going to be that you're going to have a lot of people are going to lose their jobs if this goes through. That's specifically what they said in terms of where you get your synergies is that they're going to cut a bunch of sales and marketing jobs.
- [20:00]
A
More importantly, they're going to cut a bunch of weird backend that whole infrastructure of printing and distribution now can be like, de duplicated, which we east coast media types don't like to think about, like the truckers driving the books around to bookstores or whatever. But books are big, heavy, physical objects which weigh, like, a lot of physical weight. If you add them all up, something like the Obama book, which is 700 pages and sold 2 million copies already, that's a lot of just logistics of moving it around the country. And those logistics all get centralized, and that's a bunch of savings right there. And one of the interesting things about the book industry right now is that the COVID pandemic has hurt book printing plants at exactly the same time as everyone is reading more books, especially things like Mary Trump. And so there's this incredible crunch. All of the publishers who were meant to be publishing books right now, which have been scheduled for months or like a year, pushing them back because there's just no capacity to print them, because you have people like Barack Obama and Mary Trump just dominating the printing presses. So we're going to have a lot of books really crowding onto the bookshelves in the next year or two, which have been pushed back thanks to Covid.
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C
Yeah. You also had a lot of books pushed back because authors weren't going to be able to do tours. And so publishers were concerned about that, so they pushed some big names as well.
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B
The other losers here are readers, because if the trend now continues to be towards these blockbuster books, I would like to speak for most readers of just regular fiction books or interesting nonfiction books, or groundbreaking. But, like, we need a variety of books to feed the intellectual life of the country. And if all the books are going to be like the memoirs of various politicians or inside stories from the Trump administration, I feel like that hurts readers. And again, the intellectual life of the country, there's then sort of like a dearth of good ideas floating around, and it's not dissimilar to what's going on in the digital media industry. Although someone actually paid money in this case, whereas some recent digital media companies were bought for no money. But what I'm saying is this. This trend toward consolidation in media is bad for everyone's brains.
- [22:22]
C
Yeah. Although I don't think that this change is gonna be a huge difference. Like, I think that if this doesn't happen, you're going to get a lot of blockbuster books that are especially about politicians and celebrities. And if it does or it doesn't, you're going to get. That doesn't matter.
- [22:35]
B
True, true.
- [22:36]
A
Fair but still, I mean, I've definitely been hearing whispers of a bunch of people trying to start talking about starting new media companies both on the Internet and on tv. And I wouldn't be at all surprised if this merger goes through if like a few big name book editors decided to go off and start their new a new literary fiction imprint. Now is a good time to start a publishing house precisely because you get much less competition. Now we will see. It is Thanksgiving, which means that Tuesday is Giving Tuesday. This is the time of year, people that we don't go out and just start spending crazily on Black Friday. This is the time of year that we think about giving back and spending money a little bit more charitably. And looking at the list of the biggest charities that people give money to in America, what is the number one charity on that list? Emily Felix.
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B
The number one charity on that list is United Way Worldwide, which I wrote about this week, actually.
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A
So what does United Way Worldwide do?
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B
United Way is this big sprawling thing. There are United Way branches in all the major cities in the US and even internationally. And each branch raises money for its local community to fight hunger lately to do Covid stuff, PPE help kids, you know, very basic, like local community charity stuff. And then on top of that is United Way Worldwide, which kind of functions like franchise owner, like a McDonald's almost. It's a small office staffed with people who are paid a lot of money, relatively speaking. The CEO makes I think over a million dollars. And they kind of help centralize the organization. So each branch looks to them for guidance on like, what software to use or, you know, marketing materials and stuff like that. So it's this, it acts like this big company as the hub. And then there are all the branches all around the country doing local things for their communities that most people like. But what I wrote about this week is problems with the United Way Worldwide office.
- [24:56]
A
And I'm going to come out and say that big charities in general, the really biggest, most popular charities in general are rarely, if ever, a particularly smart way to donate money. If you look down this list where the United Way worldwide is number one, the rest of the top 10 is the Mayo Clinic, the Salvation Army, St. Jude's Children's Hospital, Harvard University, the American Red Cross, which any regular listener of Slate Money will know is extremely problematic. Catholic Charities, which it's right there in the name, Stanford University, the Y, and Columbia University, all of which have enormous amounts of money, obviously because they're at the top of the list. But none of which are at the top of any kind of bang for the buck or efficiency list, and also very few of which can really be claimed to be helping the lives of the neediest in. You know, I mean, you give money to, like, Harvard or Stanford or Columbia, and it's just like, yeah, you know, it's like, why they. They're already richer than Croesus. And a little bit of thoughtfulness in where you give your money and how you give your money, I think, goes a long way. And I am not saying that you need to be fully dialed into this idea of effective philanthropy and calculating the bang for the buck and trying to work out whether deworming pills are as effective as the randomized control trials say. But I am saying that this is a significant expense for most of us. If you were giving $1,000 to charity, then spend at least as much time thinking about that as you would thinking about a purchase where you'd spend $1,000 on a thing, which is quite a lot of time.
- [26:51]
B
So my story looked at three different complaints filed by women in that central office, all alleging that they've been retaliated against by the CEO after they reported sexual misconduct or sexual harassment, as per policy. And this happened just in the past 18 months, after MeToo, after the United Way Worldwide did, like so many other companies, and said, you know, we believe women, sexual harassment is bad. We have a policy. We're going to beef it up. We're going to send you to training all this. Two of the women I spoke to were like, we were doing what we thought we were supposed to. We were reporting, you know, harassment to hr. And instead they reported the harassment to hr, and it was like their fortunes at this nonprofit sank. One woman after she reported, just following, you know, the policy, the CEO tried to get her fired multiple times. Went to her boss and said, you have to fire her. The boss was like, but why? And all he would say, according to the complaint, is, she's bad for culture.
- [27:54]
A
What?
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B
And the other woman, she had a big team. They took away people from her team, gave the people to her harasser. So she complained about a guy, and they took the complaint and then took people off her team and put them on the harasser's team. And then in the third complaint, it's pretty complicated, but basically, this woman, Ana Avendano, discovered a pattern of sexual harassment throughout United Way in the branches between women who are trying to raise money and men in labor unions who have some control over those purse strings. And the women trying to raise money were basically getting sexually harassed, reporting it to their local United Way. No one was doing anything. Some of the women got retaliated against for even reporting. And she was trying to kind of fix that. And she was being really outspoken. And the head of the aflcao, who runs all the labor unions, got upset, went to the CEO, was like, I don't like this. And then this woman, Ana Avendano, was suddenly Persona non grata at United Way Worldwide. So it's a story about just retaliation, not really about harassment like a lot of the MeToo stories are, but really about, like, what an organization does when someone speaks up about this kind of stuff and the kind of blowback they get. So two of the women were fired, and the other one was basically pushed out. So that's why, Felix, you asked United Way maybe not the ideal charity this year.
- [29:24]
A
And I have to say that the philanthropic sector in general is not a great place to look if what you are looking for is organizations that do a really good job on this kind of thing. And the Metropolitan Opera is another key example. After, you know, countless complaints about the sexual harassment from their star conductor, James Levine, like, it took them years to react to that. And even then they gave him this massive, great payoff. And you look at any other number of, like, cultural institutions and nonprofits, you can see that kind of story playing out over and over again. It's almost as though, if you are presumptively on the side of the angels because you're some kind of a nonprofit, then you don't need to worry about such things. And we cannot talk about this entire subject without mentioning the Catholic Church, which is just like exhibit A and thing where you want to talk about covering up of malfeasance. So it's great to give money to charity, and you should all do it, and we should all do it. But it is also true that there are big problems in this sector, and this sector does seem to be endemically bad at facing up to those problems.
- [30:48]
C
I was just going to ask, from the reporting you did, do you think there's anything specific about the way United Way is structured that made this occur?
- [30:58]
B
That's a good question. I do kind of feel like all the local branches are actively fundraising and working in the communities, whereas this United Way worldwide is really this, like, corporate office that's kind of removed from that work one step. So I don't know if that caused the problem here, but it does seem kind of like an interesting setup to me. That is more. Could be more problematic. One thing that Felix said, it was Hard to get people to talk about this because they see this nonprofit is doing good work and they're really loathe to put it in a bad light because then that puts donations at risk. So it's different, I think, than doing this reporting with companies because people are. No one really cares as much about. Like I did a story a few years ago on monster energy drink and not one person said to me, like, well, we don't want to damage the brand. People will drink this stuff, you know. But everyone said to me, you know, just to be clear, this organization does good work, blah, blah, blah, we don't want to damage the brand. But it's like at the same time, the corporate structure, the CEO is making like a million dollars. All these people in the central office are really well paid. They should be held to a really high standard. And now they're paying, you know, they're faced with these charges and complaints. They're paying lawyers to deal with them. It's a waste of the nonprofit's money too.
- [32:27]
C
And I imagine that the non disclosure agreements probably don't help.
- [32:31]
A
No.
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B
Yeah, exactly. One thing Ana was saying she wants to do is maybe get some rule pass where nonprofits aren't allowed to kind of not force, but to coerce these women into into NDAs. And they would have to disclose those settlements. There is no rule on that.
- [32:50]
A
There is absolutely no good reason why any nonprofit should ever ask anyone to sign an NDA. Yeah, that's just completely bizonus. But the reason that they do, it's really instructive. Right. And I think what you're talking about, donors is, is just really key here that who is it that nonprofits work for? Right. On one level, the whole point of the nonprofit is to serve the people that it's trying to serve, or, I don't know, animals or cultural objects, whatever it is you're trying to protect or help, that's your job. That should be like priority number one. But realistically and practically, nonprofits by their nature just shrivel up and die if they don't get a steady stream of donations. And the people who ultimately control the fate of the nonprofit is the people who write the big checks. And the people who write the big checks are going to be rich and powerful individuals and they're going to be able to twist arms. And I think that's just again, endemic to the sector. And it's another reason why it's super important for individual small donors to be able to be important. And one of the rather more depressing things that we've seen in terms of charitable giving over the past 10 or 15 years is that the charitable sector has been getting more and more money from large foundations and endowments and less and less money from individuals. And that just gives, I think, too much power to utterly unaccountable individuals. You can on some level hold United Way to account, as Emily is doing with this journalism. It is basically impossible to take some almost unknown billion dollar endowment in wherever they are in Kansas and say, we're going to hold you to account, because that foundation probably only has a couple of family members on the board. It does what it wants. There's no accountability at all. And if we think that accountability in the charitable sector is bad, which it is, accountability at the foundation level is basically zero.
- [35:10]
B
One thing that was interesting that I learned, speaking of donors in this reporting was United Way has this very kind of old fashioned, I guess you call it a business model, a non profit business model where employees of big corporations give money to United Way through their paychecks. Like that's what the big union connection is. Union members, they automatically deduct A$10 a week and goes to United Way. And this apparently brings in like $250 million a year to the organization, you know, across the country. And that's like no joke for the, for the $3 billion it's making in revenue a year. And that's why the AFL CIO is so popular. But I guess the whole business model now is really threatened because people don't stay at companies as long as they used to. And you know, people, those crazy millennials, they don't want to do this like paycheck tithing thing. So its business model is a little bit in danger too. And then I was, I don't know if people have corporate matches at their companies or things like that right now. How people are donating is sort of interest. If people still do that through their employers. I don't know.
- [36:13]
A
I feel like, yeah, corporate matching from employers is something which has never totally caught on, but is, you know, it's been here and there and you find it at places like Google and big, you know, rich companies. But I do like the idea on some level of encouraging people to choose, actively choose who and what they want to support, rather than just like ticking off a box and saying, yeah, I'll give a dollar a paycheck to the United Way. When the alternative is not giving a dollar a paycheck to Maison Sans Frontiere. You know, the alternative is just keeping that dollar a paycheck for yourself. And one of the things I like about Amazon Smile, for instance, is that you get to really pick whichever charity you choose. And that's better than having some union choose it for you. You for sure. I remember like every so often there will be some kind of campaign. Normally when there's a natural disaster and you'll go to like the ATM and get some cash out the bank. And the bank will be like, while you're here, would you like to donate $2 to the American Red Cross? And you're like, I would happily donate $2 to any number of organizations, but not the American Red Cross. But it's these huge big United way American Red Cross type organizations which always find their way onto those default lists. And I just wish there was more div there.
- [37:36]
B
Oh, actually, Felix, I have a question for you about sort of that. Because I go to the supermarket, it's my big outing usually these days, and when I check out with my credit card, it always says, do you wanna give money to feed the hungry? And then it's like 2, 3, 5 dollars. And I always give whatever 2, 3, 5 dollars. Cause seems really easy. And then I was told that like that benefits the supermarket more than if I gave this organization on my own. Like they're getting a write off.
- [38:07]
A
I know the answer for Whole Foods because I actually spent a few days reporting this once and I never really wrote it up because it was all very unsatisfactory. But Whole Foods does this campaign every so often. Like there's like a couple of weeks every few months where they'll be like, do you want to give money to the Whole Foods Foundation? And so I was like, what is this Whole Foods foundation and is it worth giving money to? And I kind of looked into it and it turns out to be what you would expect it to be given that Whole Foods was set up by this sort of entrepreneur who believes in entrepreneurship and it gives loans out and we had kind of grants to something, something micro, entrepreneurship, something microfinance, something, you know, Africa. Lots of photographs of smiling, you know, white Whole Foods employees in Kenya next to some woman who's just bought a goat. You know, this kind of like very cliched charitable picture. And the more I looked into it, the more I was like, oh, this is just terrible. And the more I was like, I don't want to, you know, give any money to the Whole Foods Foundation. But it is the case that the easier it is to give money, the more people wind up giving. And these things are not zero sum. If you don't make that $3 donation at the supermarket. It is almost certainly there's not like you will take that $3 and you will spend it on a, you know, you'll give it to GiveWell instead or some place that really, you know, tries to optimize their giving. It's just that you'll wind up not donating that $3. We don't have a finite bucket of how much we give each year. We just kind of give here and there, a little bit here, a little bit there. And it's not really added up and it's not really thought through in that sense. And so I think a little bit more thinking it through and a little bit more planning and a little bit less just like throwing money in a bucket and someone coming along to you and saying, I'm going to run in circles for two hours. Can you pledge some money? And you go, okay, like, you know, is would be good. But so much of the way that money is raised is based on those kind of personal relationships or corporate relationships. You know, it's like you shop at our supermarkets or raise money from you or we're friends, so give money to whatever charity I've managed to, you know, or like I want to run a marathon. And there's this team which is paying my entrance thing and then I need to repay them by raising money for charity. And like there's a lot of transactional philanthropy going on and it's always related to something else going on in the real world. And it's a little bit impure, but it is the reality and it's worth looking past that reality and just being a little bit more conscientious about how and when and how much we give.
- [41:06]
C
I think I will say that the most money I've ever raised for anything was when I ran a marathon. I never in a million years would have been able to get that many people I know to raise as much money as I did if I had not been doing that.
- [41:17]
A
I will say long term listeners of Slate Money will remember this. The most money I've ever raised for charity was when I decided on a whim one year to announce that I was going to match all of Slate Money listeners donations.
- [41:31]
B
Oh my God.
- [41:32]
A
Doctors Without Borders. And it started, and it started like snowballing and I thought I was going to have to write this like $2,000 check. And then in the end I wound up writing like a $20,000 check. Oh my God, that was a lot of money. I wound up giving to Doctors Without Borders that Year. But I'm very happy I did.
- [41:52]
B
So what should I. Should I keep giving the little dollars each time I go food shopping, I feel like it's good. And you're right, I would never do that like that. Otherwise, it's just probably better than nothing.
- [42:03]
C
But not the optimal.
- [42:04]
A
Do you even know what the charity is that you're giving money?
- [42:07]
B
Yeah, I looked it up. It was a good. I think it was. I'd heard of the charity. Like, I knew it. I've talked to them for stories before. One of the national hunger charities. So I felt good about it. It wasn't like the Whole Foods Foundation.
- [42:20]
A
Yeah, I mean, like, if you're giving it to a. I have to say, if we want like advice right here. Hunger charity, like, you know, in the age of COVID you cannot go wrong by giving to World Central Kitchen, which is Jose Andres charity, which is just absolutely amazing. He does spectacular work after disasters. He's been doing spectacular work during the pandemic. He is not a heavy handed fundraiser at all. And he tends to get like large checks from big institutional donors, which is great. But every penny you give to that particular charity is a. It's a great place to give. How about you guys? Do you have any. Do you have a favorite charity, Felix?
- [43:03]
B
I don't. I will say that there is a tax break this year. A one time $300 tax deduction that you can take on your 2020 federal taxes if you give to charity, even if you're doing the standard deduction. So that's an incentive to people maybe to give a little bit before the year is over.
- [43:22]
A
All right, let's have a numbers round. Emily, do you have a number?
- [43:25]
B
I have a number. It is $500. That is the price of the America Rides on Duncan tandem bike, which is a bicycle built for two, sold by Dunkin Donuts that has like the bright orange logo on it. So Dunkin Donuts posted a picture of the America Rides on Dunkin tandem bike on the Internet. And quickly people who ride bicycles were confused because it didn't look like a real tandem bike. It looked like someone drawing something from their imagination. A picture of a tandem bike. So my colleague had a big investigation. Is this tandem bike real or not? And the answer is it is in fact real. It is a $500 tandem bike. But the picture is one weird. And if you don't want a Dunkin Donuts bicycle, they also sell mini fridges, aprons, hoodies and scrunchies, which I also learned.
- [44:19]
A
My number is $108 billion, which is the amount that Elon Musk's wealth has gone up this year. There has been, in case you hadn't noticed, a major pandemic and recession and various other things. But somehow Elon Musk has managed to increase his net worth by $108 billion, and he's now the second richest man in the world. Congratulations, Elon.
- [44:45]
C
I suppose, yeah, he probably has Jay Powell to thank for that.
- [44:48]
A
You should give him a cut. Yeah, you should give him a tip. Anna, what's your number?
- [44:53]
C
My number's 100. So Peru issued a century bond this week.
- [44:59]
A
Well, should it actually be 101? The maturity is actually 101 years, which is a weird century bond.
- [45:05]
C
I actually think you're. Yeah, I think you're right about that, actually, because I try to think of when I looked at the bond price and looked at the maturity. I actually think you're right about that. So 101. I will change my number. So Peru issued a century bond. Peru is now on their third president in two weeks, their fifth president in five years. And yet they probably are actually a very, very low default risk. So it's not completely insane. It's only slightly.
- [45:29]
A
I mean, would you lend money to Belgium? They basically don't have a government at all and they're perfectly credit worthy. I feel like in a weird countries like Peru or Italy or Belgium that have sort of weak governments can be stronger credit risks than countries like Ecuador or Argentina or, you know, that have less turnover in the presidency, but where the incoming President can just feel the need to repudiate all of his predecessors and say, I'm not paying any of that debt. That if you have a kind of institutional civil service that effectively runs the country, then it doesn't matter who the President is. That said, I would not be a long term buy and hold purchaser of the Peruvian century bonds. Quite clearly what's going on here is that people are speculating that given its convexity, which we can look up in an investment dictionary if we're so inclined, the value of this bond could increase in the short term. I don't think anyone is going, oh, yeah, this is a great long term investment for my great, great grandkids.
- [46:42]
C
Yeah, probably not.
- [46:44]
A
All right, I think that is it for us this week. Thank you for listening. Thank you for giving us those amazing reviews on the Apple podcast app. Thank you to Jessam and Molly for producing. Thank you to just everyone who's managed to help this show and all of their friends and all of their family get through a truly terrible year. We look forward to 2021 being a lot better. But this is the time of Thanksgiving and so thanks to everyone who's been a great person in 2020. And thank you to especially to anyone who has emailed us. We love you all. The email address is slatemoneylate.com we do not reply to everything, but we do love all of your emails. To keep those coming, do tune in on Wednesday for our Sleep Money live show, and other than that, we'll be here next week on Sleep Money.