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- [00:00]
A
Foreign. Welcome to the Accountable Capitalism edition of Sleep Money, your guide to the business and finance news of the week. I'm Felix Salmon and I am not going anywhere, just in case you were worried. I do have a new job working for Axios, but I am still staying on at Slate Money. And this show is only going to get better for reasons that will soon become obvious. I am joined as ever by Anna Shymansky.
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B
Hello.
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A
And also Emily Peck of the Huffington Post. Hello. And you might remember a few weeks ago I got into a little tiff with Anna about whether shareholders own companies. She seems to be laboring under this bizarre delusion. And I said we would come back to this question. We are coming back to this question with the person who knows more about this issue than anyone else I know, Mr. Justin Fox of Bloomberg.
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B
Hi Felix.
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A
Justin, are you. You're no longer Bloomberg View, you're now B Opinion. Bloomberg Opinion, Bloomberg Opinion. And Justin has actually brought along a book and the name of the book is Deutsche Vitschafs Gesichter. I'm trying to read. We are going to have a large chunk of this discussion in German apparent we have that.
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C
That's not happening to look forward to.
- [01:37]
D
I was kazation it.
- [01:40]
A
We are going to talk about Dollar General and how they've managed to sort of succeed by undercutting Walmart. We are going to talk about the future of television. We are also, if you are Slate plus members, going to be talking about turkey and contagion and that kind of thing. But the big news of this week, at least for those of us who are wonky corporate governance stipes, was Elizabeth Warren and Slate Money's very own right on lefty. Ms. Emily Peck is even she is rolling her eyes at the name of the bill that she proposed which is.
- [02:18]
C
Called what The Accountable Capitalism Act.
- [02:21]
A
I kind of like it. I feel like capitalism should become accountable. So this is the latest big idea to come out of Washington in the realm of corporate social responsibility. And yeah, Emily, why don't you tell us more or less what's in it?
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C
So it's Elizabeth Warren's idea or it's her bill. And basically it would revise. It would make companies accountable, it would reprioritize their priorities from maximizing shareholder value to making sure all the stakeholders values are considered. So that would include employees and the world in general, it seems to me, and customers.
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A
And in practice what it means is that a bunch of the board would be elected by employees.
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C
Yes, employees would elect 40% of the board and I thought was really interesting. 75% of the board would have to approve any political activity. So that means employees would have a stake in the kind of political contributions that companies make now, which is pretty interesting.
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B
Yeah. And there are also some restrictions on executive pay and buybacks.
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A
So you can, you can buy, you can continue to buy back your stock.
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C
But you can't, you can't, you have to hold on. All directors and officers have to hold on to shares for at least five.
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A
Years after any stock buyback. Yeah. So that's a good incentive to, not to, to do it the old fashioned way, which is dividends, which is the fight we had a couple weeks ago.
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C
So anyway, it's modeled on the B Corps. Now there are some companies, some companies are B Corps.
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A
We've had, we've had discussions on the show about B Corps. It's also modeled. And this is why Justin has brought his book about the Wirtshawsgesichter on Germany, where worker representation on boards is a very common thing and it seems to.
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B
Be required for most big companies there.
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A
And what's the history there?
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B
That's why I was reading this book in the subway and it taught me that it was basically imposed by the British occupying forces in the Ruhr Valley on the coal mining industry.
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A
And why would the Brits want such a thing?
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B
Mainly because Winston Churchill had just lost and the Labour Party had just taken over, I think. I mean, this book didn't go deeply into the British motivations. It was sort of then the German Union movement, as it reconstituted, thought, hey, that's kind of cool idea, and started pushing to do it nationwide. And basically the Social Democrats wanted to do it. The Liberal Party, the Free Democrats, who then had the famous economy minister Ludwig Earhart, they didn't want to do it. But the Christian Democrats, the centrist Conservative Party, Angela Merkel's party, said, yeah, that is the perfect compromise for us. We don't want the state to own all of industry, which a lot of the people in the Socialist Party wanted, but we don't want total pre Weimar style capitalism. So yeah, let's do this.
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A
And with 60 odd years of history under our belt, seems to have turned out okay.
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D
Yeah.
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B
And I mean, Matthew Iglesias wrote a big story that I think for a lot of people unveiled this Elizabeth Warren stuff. And he was assuming that if they did this in the US that stock prices would go down because overall stock values in Germany are lower than in the US But I don't think that's the reason they're lower in Germany. Than in the US and there have been a bunch of studies within Germany because there are different rules for different kinds of companies. And it basically finds that companies, the sweet spot seems to be around a third of the board elected by employees, that they are the best performers. The ones with less do worse. The ones with more do worse.
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A
So, Anna.
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D
So one, I think when you're talking about relationship between board representation and the equity market, I think that's, you're gonna have a hard time finding any type of correlation there. But I think in general, if you're talking about the German economy, as we've talked about when we brought up Germany in the past, part of the reason that Germany has been as successful as they have been is because they've kept wages quite low and because they have an undervalued currency. And if you're talking about.
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A
Well, I mean that, that might be true now, but if you look at post war Germany, that.
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D
So let's look at what was happening when they were the sick man of Europe through and make a number of labor changes. I'm just saying.
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A
No, no, but let's, let's, let's move off Germany for the time being and get onto this question of like, is the board, like, does it just represent shareholders because shareholders own the company and they should be able to do what they like, or does it make sense to have boards which represent a broader constituency?
- [07:15]
D
So just to be clear, when you're talking about like, what is often referred to as, you know, kind of shareholder capitalism, I think this is often misrepresented because it's this idea that, you know, you can do anything simply to increase the stock price and that's the only thing that matters in the short term, which is both not real in theory or in practice. If you've actually read a lot of Milton Friedman, listen to a lot of Milton Friedman. He, when he specifically was talking about shareholder, he was, he was talking about corporate responsibility and the idea that, so the social responsibility of, you know, investing in charities and such is not the role of corporations. But he certainly says time after time again that if a company behaves badly towards its workers, if a company behaves badly towards its suppliers, towards its customers, towards anyone, they have the right in a free market system to decide they don't want to work there. They have the right to say that they want to buy something somewhere else. So the idea that there is a complete break between shareholder capitalism and stakeholder capitalism, I think is misguided.
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A
But what you're saying is that the workers can Work somewhere else, the customers can buy somewhere else. But in terms of the governance of the company itself, that still remains entirely in the hands of shareholders.
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D
So I have no, I honestly don't have any problem with having some employee representation on the board. I don't. I think that that's actually fine. I think it's fine because I think for long term shareholder value that could be a good thing. I'm going to agree with you on that. I don't think that has anything to do about the ownership of the company. The actual ownership of the company is still obviously the shareholders.
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A
Well, okay, well, let's bring in Justin here. Is it, is that obvious?
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B
Well, there is, and Lynn Stout up at Cornell is the main progenitor of this. But I think the argument's been around a long time that formally, no shareholders. Shareholders are owners of these securities that give you certain rights with companies. They're not in a widely dispersed company really equivalent to owners, but they're closer to owners than anybody else. So it's sort of. But the whole idea is an owner is somebody who's kind of got some pretty big transaction costs if they want to get out of what they own. Whereas the whole point of equity markets in the US and many other places is to lower those transaction costs as much as possible so you can buy today and sell tomorrow. So I don't think there is a good and time honored legal argument that shareholders, especially those who don't have a significant stake in the country, in the company, are not really owners in the sense that we think of owners of houses or proprietors of businesses and the like.
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D
Although I think that's a bit of semantics because I, A little bit. Because I own a co op and technically I own shares in my co op. No, my relationship to my co op is no different than the relationship of someone who.
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A
It's very different. Yeah.
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B
And you live there.
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A
It's about, it's about liquidity. It's a hugely different thing.
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D
I mean, that's not true at all. When I am selling my co op, I'm going to have the same transaction costs as if I was selling my condo.
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A
No, co op versus.
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B
We meant versus stocks.
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D
Right? Yeah, of course, of course. I'm not comparing. What I'm doing is, I'm saying that if you're talking about what it means to own shares, because what does it mean to own shares? Well, that means you have a, essentially a stake in future profits. What is a corporation? A corporation is a set of assets, assets that generate profit. So whether you Want to call something an owner or not. I think that that's just, that's.
- [10:51]
B
That's not the only definition of a corporation. I think there's like Colin Mayer at Oxford, his whole argument is a corporation is actually relationships. It's long term relationships. That's what gives it value because it can survive beyond the lifetime of a single person. That's why we create these things. So there are the asset. That's the financial economics definition of a corporation. There are a bunch of other ones.
- [11:13]
C
I think what was interesting about Warren's bill isn't so much who owns the company, but who are the stakeholders in the company. And it's not just about the people that own the stocks. It's of course about the people who work there and more broadly, I think the people who live and not just the customers. But I mean, in 2018, we're talking about global warming, we're talking about environmental disasters, we're talking about social responsibility that goes beyond turning a profit. And this idea that this used to be something that people in companies thought about and seems to be something less and less considered as, you know, maximizing shareholder value becomes the priority.
- [11:59]
A
So can I come in and just make this a very specific idea? Because I think realistically there's no chance that Elizabeth Warren's bill will become law. But there is to a large degree, not maybe 100%, but probably more than 90% of it could be adopted voluntarily by just about any public company in America. If companies wanted to do this, they could do this. So my question is, should they do it unilaterally? Voluntarily?
- [12:32]
C
I think the idea of putting employees on the board is really intriguing. We all agree. Well, I don't know if Justin agrees with that.
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B
Yeah, no, I think that would be kind of cool for people to experiment.
- [12:40]
C
I think that would be great and it would be a really interesting experiment. I think companies don't typically volunteer to do things like this. They like to talk about it. They like to release reports about corporate social responsibility. A few companies have turned themselves into B corps, which is similar to Warren's thing. But I mean, they're not going to do this voluntarily. They're just not.
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A
And why not?
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B
Well, partly because they're slaves to fashion. And unless that fashion really gets going, they won't do it because it seems weird. And they'll get a lot of criticism, probably from hedge funds, mutual funds too, about doing it. But yeah, I don't really know the answer to that. Maybe it's a terrible idea in the end, but I don't think it, it's been disastrous. I don't know that it's, it's correct. It's not what has made the German economy do well in recent years, but it also hasn't killed it.
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D
To be perfectly honest. I doubt it would have a huge impact one way or the other. I think, though, that the thesis that a lot of this is working under, that corporations don't care about anyone else and that we need to make all of these changes because corporations are behaving so poorly, I think that's somewhat misguided.
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A
So let's just wrap this up with a real world example from this week, which is at Monsanto, where they recently acquired. Okay, Emily, give me quickly the background here.
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C
Bear bought Monsanto. Monsanto makes Roundup, the weed killer, which has an ingredient called glyphosate. And a lot of people have sued Monsanto because they said glyphosate gives them cancer. And this week, one of those people who sued Monsanto, a farm worker, I.
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B
Think it was school grounds guy.
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C
Yeah, school groundskeeper won a $289 million verdict.
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A
And that. And that hurt the Monsanto share price. They freaked out because people are now basically waking up and saying, hey, you know, what Monsanto has been doing does have negative externalities, even if it was legal. And those negative externalities are beginning to start to show up in court judgments which will be appealed. And no one knows how it's all going to end, but they're going to.
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D
Be a lot of them.
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A
But the stock market started getting very worried about this. And there is, I think, a case to be made that if Monsanto had taken its societal responsibilities a little bit more seriously, then maybe it could have headed off some of these problems.
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D
So I first, I want to say I am not saying that companies have the right to give people cancer. I'm 100% not saying this. And the man who was in this case was incredibly sympathetic. However, if you look at actually a lot of the science, it's not really clear that glyphosate is connected to many types of cancer, any types of cancer, and especially not non Hodgkin's lymphoma. So there is, it is true.
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C
But part of the reason the science isn't clear is because Monsanto has worked really, really hard to muddy the waters. Bloomberg had a good story last year that showed that they were behind a lot of the research coming out and actively working to shape these research. So that's coming out on glyphosate and.
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B
They used to have an ad campaign that said roundup is safer than table salt until the New York Attorney General's office made them stop in the 90s.
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D
100% true and I 100% agree with you.
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C
I think it is not totally clear that glyphosate causes non Hodgkin's lymphoma. But I don't. I think Monsanto has been such a bad actor in this case that it does sort of raise the.
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A
And that's the big thing. Like if they had been a little bit more stakeholder friendly to, you know, and a little bit less sort of evil capitalist, you can, you can kind of view this verdict as, as the pigeons coming home to roost in some way.
- [16:32]
D
To a certain extent I agree with you because I do think that to me it actually looks like, because there are hundreds and hundreds of studies that suggest that there is not a clear cancer link, that for them to then go and actually like, essentially a fund artificial researcher to have like ridiculous campaigns is not in the best interest of any of the stakeholders in the company, including the shareholders. So I agree with you. I do think the company behaved badly.
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A
So. So if you are running a big public company and listening to Slate Money, we would urge you to adopt, to voluntarily and unilaterally adopt Elizabeth Warren's proposals. If you do drop us a line, slate money@slate.com let us know. I will come into your company and I will watch the transformation and I will write a glowing profile of how visionary you are.
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B
And it'll be one of Mike Allen's 10 things.
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A
I will distill it down to bullet points. So when it comes to evil, faceless, rapacious capitalists, you can talk about Monsanto, but you can also talk about Dollar General. Oh yeah, because they're the archetypal company coming into small towns, driving out mom and pop businesses, replacing them with algorithms and low employees and food which gives you diabetes. And they're just, I mean, they're not really what you'd call a reflection of healthy stakeholder capitalism. And yet they seem to be doing quite well.
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C
They're doing really well. They're opening. Dollar General's opening three stores a day, according to this Guardian piece that we all read for this segment, which was about how Dollar General went into this one small town in Kansas and basically put the grocery store there out of business. And the town gave Dollar General a bunch of money to be there. Wouldn't help the local guy, you know, with his supermarket, which. And then he went out of business. And the town next Door said no to Dollar General. So kind of accurately sum up and.
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A
Yeah, they, they have found an interesting niche in the market which is they are cheaper than Walmart, which I didn't even think was possible because there were.
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B
All these arguments about Walmart 10 or 15 years ago.
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C
It's the same exact.
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B
And Jason Furman wrote that famous paper about how the lower prices at Walmart outweighed all the jobs that they destroyed.
- [18:57]
A
But Walmarts are by their nature extremely big, so they're not. So they don't work well suited to serve small town America whereas Dollar General is small enough that you can put it into small town America and still make it profitable.
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C
Yeah, it's not clear to me that Dollar General is actually cheap because everything's below $10 and something are cheap. It's nominally cheap.
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A
Right.
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C
But like still wealthier people are better off going to Amazon or Costco. And the whole premise is Dollar General preys on people that don't go to Amazon or they probably can't afford how.
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D
Are they preying on people by offering them low prices?
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C
No, no they're not. You're right. Appeals to people for the people that are shut out of actual cheap prices and have to go for the fake cheap prices like going to the bodega to buy your toilet paper kind of a thing.
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A
If you're, if you're, you know, very short on liquidity sometimes, you know, you can only afford one or two rolls of toilet paper for 99 cents rather than doing the middle class thing of stocking up in bulk and paying less.
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D
So it would have been better in the past when they places where goods were more expensive for them.
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A
Well, I mean the idea is that towns are communities and that the retail part of a small town is an incredibly important part of any community and that if it is effectively replaced by a Dollar General store, then you lose something. You might gain a little in terms of lower prices, but you lose something too and you lose something important.
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D
I disagree with that actually because I will say I was actually the small town that I grew up in last weekend and it has changed quite a bit since I was younger and some area that was all farmland has now been made into strip malls. And you might say, oh, that's so horrible, it's lost its.
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A
No, the question is who owns those stores? Is it owned by local people who are part of the community or is it owned by a massive national corporation who have no idea and don't care?
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D
It's a complete mix. And I think the idea that they don't care is also inaccurate. I think that the town has actually changed, I think in a lot of ways for the good. It's far more diverse than when I was younger. And so I think we have this nostalgic idea of what things were like in, you know, the, you know, the post war era or in these small towns. And people don't a look at the reality of what actually caused that, what people's lives were actually like, what people were actually being paid at mom and pop stores and what's happening now.
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B
I think the other thing is just that Dollar General is partly, maybe a cause sometimes of dislocation, but it's mainly a symbol of how stinking poor rural America is. I mean, you just look, it's always just amazes me how you look at sort of national levels, we keep getting wealthier. You look at most measures of really tiny towns in really rural areas, and it's been a disaster for decades now.
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C
And it struck me as really sad too, to your point that like at the high end, it's like Amazon, it's, you know, Whole Foods delivering in an hour. Target just open and I think in Manhattan they'll deliver to you in an hour. And there's all this customization for people and retail is like going to the next level and it's like so interesting. And on Instagram you can buy stuff.
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A
Wait until you go to those like Chinese supermarkets, which are all completely digital and just like so futuristic.
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C
But it doesn't even have Dollar General. They don't even have fresh fruit or vegetables.
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B
It's partly just major metropolitan areas against really tiny towns too, though I think lots of not rich people in New York now benefit from the fact that there's a whole food on 125th Street. And it's not all high end, but it's definitely urban, rural.
- [22:36]
D
So we can certainly talk about the fact that we all know that because of globalization and automation and changes, that many parts of rural America and also people that aren't particularly highly skilled or highly educated have been having a very hard time and both parties have completely failed them. And I think everyone is going to agree with that. But I don't think the way to solve that is to demonize stores that offer those people inexpensive products. And I think that if we're trying to think of ways to actually help those people, it's not going to come from demonizing businesses.
- [23:13]
C
The one thing that I don't want to demonize, Dollar General, I don't know, whatever, like, who cares? You buy some Candy and packaged food there, whatever. But the one thing that was interesting about the Guardian piece was just that the town gave them the tax breaks to come there. And it winds up not helping anyone. It winds up putting the supermarket guy out of business. And once he goes out of business, sales tax revenue actually falls. And a lot of the profits and revenue from the Dollar General go to Dollar General. Out of the. Out of the town for sure. Out of the state. Bye. Bye. Like, it just. It's sad to me that what you.
- [23:46]
A
Get is money being dividended out of these local communities, which we all agreed have very little money to begin with.
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C
That struck me as bad.
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D
And I'll agree with you that I don't like the idea. Just in general. I don't like the idea of giving tax breaks to places to locate. I think that that's stupid. I've always thought that that was stupid. But I would be very curious to look at what the tax flows actually are in a lot of small towns, because I don't actually think it's that all this money is being sucked out.
- [24:14]
A
Well, I mean, by definition, these stores are profitable, otherwise Dollar General wouldn't be opening them. And those profits are going to Dollar General's, you know, institutional shareholders. They are not. They're not remaining in the community in the way that they would if you were shopping at a locally owned business.
- [24:33]
B
And it is. There used to be in this country a big political movement against chain stores. I mean, it was really the A and P that caused this huge pushback. And there were people. I don't know if it was Wright Patman, but these populist rural legislators who would pass all these laws against tax.
- [24:50]
A
Dollars here in the state, it's still a thing. I can tell you that in Cold Spring, New York, there is an ordinance against chain stores. You're basically not allowed to open a chain store anywhere in the town. I can tell you that in New York State as well. I mean, as anyone who's ever visited New York will know, there are. You can't buy wine in supermarkets. And there's no. You are literally by law not allowed to own more than one wine store. You know, it's like there's definitely a legislative feeling that often just keeping things locally owned, you only own. You only own one store. You keep the retail heart of the community in the community, rather than being some faceless corporation somewhere is a good thing. And if you hang out, except that.
- [25:34]
B
Everybody loves Costco, if you hang out.
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A
In those towns and in those neighborhoods which don't have chain stores. It feels better than if you hang out in neighborhoods which are mostly chainsaws.
- [25:46]
B
That's why new hotel springs already wealthier than 90% of.
- [25:49]
D
But this is the issue we're talking about. If you're a wealthy person, yes, of course we all want our local this and our local that. But if you're not a wealthy, wealthy person, those things are not necessarily going to improve your life. There's a reason that a lot of people shop at these stores. There's a reason a lot of people who shop at these stores want these stores where they're located. So I think for us to kind of sit around here and say, like, oh, you know, we want this and this. Yeah, that's easy. Because we're not low income.
- [26:15]
A
No, but I live in a pretty low income part of Chinatown where the locally owned, you know, fruit and veg and food stores are genuinely cheaper than the big chain supermarkets on the periphery. And it's awesome that there's still a bunch of, like, local business there. And to your point, Anna, maybe the people running those businesses are not very well paid, but it can be done and it's great when it happens.
- [26:43]
D
And also, just to say, am I like another rah rah big business that if you actually look. Because again, I think we, when we talk about small businesses and mom and pop, we kind of romanticize them. But when you really look at how workers are treated, how customers are treated, how wealth is created, big businesses do a much better job.
- [27:01]
A
Ooh.
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C
They also push small businesses to change. Like at the end of this guardian piece, one of the grocery owners concedes. Like he said, you know, people were shopping at Dollar General and Walmart because they're open, they have better hours and they have more things to eat that people want to eat. And he said, you know, I'm going to open a new store and I'm going to have, you know, prepared foods read. And it's true. Like, there is a certain amount of innovation push that happens when you have the bigger changes.
- [27:28]
B
Well, and to bring it all back to Germany, they have all those closing hours that are supposed to protect small stores and all. And I mean, I gotta say, it's horrible.
- [27:37]
A
Try and buy some food in Germany on a Sunday. Let's talk about Jeffrey Katzenberg, because he has a new toy. It's called New tv. That's literally the name of his company. It's the worst name for a company in the history of corporate naming. And that's, I mean, except for maybe Trunk. They were like Wait, wait, hang on a sec. What about Trunk? At least Trunk wasn't, didn't begin as Trunk. This is like coming out of the womb. I mean, it's amazing what this company has managed to do on day one, like before actually getting a penny of revenue or actually producing any content. Number one, it has a really boring name, utv. Number two, it has a multi billion dollar valuation on day one, which is kind of impressive for any brand new company even these days. As far as I know, that never happened before. And number three, which is kind of most impressive, his seed capital, like the first round of investment, his Series A is a billion dollars and that's unprecedented as well. There's a bunch of craziness and for all of this, I'm deeply skeptical and I'm pretty much convinced it's going to fail.
- [28:49]
C
But I was really surprised Felix isn't saying that. He wrote a piece about new TV in Wired magazine that everyone can go read. And in the piece I think you basically said TV is far from dead, that it's gonna last a long time, that it's. The TV isn't dying. And I don't know if I agree with you.
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A
Well, I mean, statistically speaking, the insane number of hours of linear TV that Americans have watched for decades is not going down. And if anything, it seems in recent months to be going up.
- [29:18]
B
But isn't that just because old people keep watching more and more and everybody else is watching less?
- [29:23]
D
How do the trends differ by age group?
- [29:26]
A
So young people always watch less than old people. That's been true since time immemorial. You know, I mean, when I say young people, I mean people in the.
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B
World, but it's just, there's more old people now, so that's what's driving it.
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A
That's also. Yeah, I mean, that's part of it, but it's by no means all of it. And if you looked at the projections for, you know, how much linear TV people would watch and the degree to which it would be replaced by digital platforms, they were all wrong, basically.
- [29:54]
D
And I think you make a good point also. I was kind of thinking about this in terms of how we think, how we think of growth, where we think TV growth is going to come from. And I think people just inevitably think, well, it has to be from cord cutters. That's the only thing that makes sense. And I think people who say that have not been to a lot of rural parts of the United States where access to Internet is horrible. And so until that changes, until we have kind of massive digital infrastructure, people are going to continue to watch linear television.
- [30:22]
A
And it's not even a question of cord cutting so much as it's a question. The big point I was trying to make in Wired was this is a question of ad dollars, that you have $70 billion a year being spent by advertisers on TV that has been more or less constant for decades. And that money isn't going anywhere. The growth in advertising is absolutely in digital, and digital ad dollars are now bigger than that, $70 billion. And if you're Google or Facebook, you're very happy and you're seeing lots of growth. But the amount of advertising being spent on TV is not going down at all. And even if we end up watching less tv, which has not happened yet, but might happen in the future, it's still not going to go down. If you look at the. I mean, to take the classic example, if you look at the price of a Super bowl ad slot, the price of advertising in the super bowl has been going up rapidly. 2 million, 3 million, 4 million, $5 million, even as ratings have declined. So if you are a CPG company, like we were talking about Pepsi last week, and you want to advertise your brand to people who are going to be buying it on a weekly grocery shop, basically no one has invented anything other than television, which can effectively do that. So the advertisers are forced to continue spending that money. And so long as TV has $70 billion of advertising revenue coming in every year, they're going to be just fine.
- [31:54]
C
But, I mean, we know that fewer people like the super bowl gets. Super bowl advertising is expensive because it's the biggest thing to happen on TV every year. But the Super Bowls viewer numbers, I'm not sure I'm going out on a limb here, but I think they're going down.
- [32:09]
A
They are, yeah.
- [32:10]
C
Just like all viewership numbers are going down. But it still remains true that, like, if you want to get the largest amount of people to watch one single thing and shove advertising in front of them, you have to go to tv. Even though.
- [32:23]
A
Right. And the same is true in political campaigns. If you want to reach the broad electorate, you have to be on tv.
- [32:28]
C
So as soon as. But as. But that's declining. Declining. As soon as someone like a Jeffrey Katzenberg maybe comes up with the thing that everyone wants to see, maybe that changes.
- [32:38]
A
Well, maybe it doesn't. Because if you look at the digital alternatives like Netflix, they don't have ads like, this is one of the interesting things about Netflix is that it doesn't provide an alternative outlet for advertisers to reach people. So the advertisers are still locked into TV because they cannot move to Netflix.
- [32:58]
C
But what if someone comes up with something that we haven't thought, that I certainly haven't thought about because I'm dumb, but like I like Netflix and stuff. But what if someone comes up with a Netflix kind of thing, a big quality thing that everyone watches like, like the Facebook of.
- [33:13]
A
That's ad supported. Well, I mean, because I'm going to say, I'm going to say they're not like the, if you look at, if you look, if you look at Netflix and HBO and the golden age of tv, those things are not ad supported. So they don't provide an alternative for the Advertisers.
- [33:28]
D
What about YouTube? Because I know that that's also where, especially with younger people, that is where a lot of viewership is going.
- [33:34]
A
Sure. And tell me, when was the last time you saw a pepsi ad on YouTube?
- [33:38]
D
There are lots of. I don't know if it's a Pepsi ad, but there are you. But there are ads on most things on YouTube? No, no, probably not most things, but.
- [33:46]
B
On a lot of.
- [33:46]
A
Absolutely no. YouTube has an enormous amount of advertising. Digital has an enormous amount of advertising. You know, Google and Facebook, we know they're this massive duopoly. They're dominating the advertising market. They're getting a huge amount of, of growth and a bunch of that advertising is video. So I don't dispute for a minute that there's a huge amount of ad dollars moving into digital. What I'm saying is that when it comes to those really beautifully crafted 30 second mini narratives that consumer packaged good companies use to build their brand and to make sure that people keep on buying that brand at the supermarket every week, those brands are not moving to digital because that kind of messaging doesn't work very well in digital.
- [34:30]
B
But do you realize, Felix, that you're making the same argument as Michael Wolff did two years ago, which Michael Wolff. The 2F Wolf television is the new television. And then he went and wrote his Trump book after that. But this is exactly the thesis of that book, which I like the book, but I mean, he felt like even.
- [34:49]
A
The kind of thing that's gonna lock is right twice a day. Like it is conceivable that Michael Wolff might have inadvertently been correct about something. Let's have a numbers round. Justin, did you bring a number and did it come out of Deutsche Wirtschaftsgesichte?
- [35:03]
B
Yes and no. And it's two numbers. It's 8 to 16, which is the number of people who will be supposedly be able to fit into the electric skates.
- [35:14]
A
Oh, my God.
- [35:15]
B
This is another from Dodgers Stadium, the red line in la. If Elon Musk has his way.
- [35:22]
A
This is like if you were trying to invent the most ridiculous way of getting huge numbers of people in and out of a stadium, it would be to, like put them into little eight person pods.
- [35:35]
B
And we should credit Josh Barrow for having exclaimed this on Twitter. At least that's what inspired me. But it got me thinking. Like, I then went and looked at a map of Dodger Stadium and I remember this from. I visited the first time a couple years ago. It's right next to downtown la. If they actually created a pedestrian path, you could walk in 10 or 15 minutes.
- [35:55]
A
But like, this is, this is simple.
- [35:57]
B
This is.
- [35:58]
A
The wonderful thing about Elon Musk is that, like, he has never found a problem that like his companies don't have a solution to. It's like there's a bunch of kids stuck in a, you know, cave. So I know I'm going to inv. No, no. It's not about inventing things.
- [36:15]
D
No. Elon.
- [36:16]
A
Get some sleep. Elon.
- [36:18]
D
Yes.
- [36:21]
A
Emily?
- [36:22]
C
Well, I'm really torn here because I had an Elon Musk number, but now I feel like I don't want to go.
- [36:28]
A
Well, I'll give you two numbers this week. What was your Elon number?
- [36:33]
C
Okay, my Elon Musk number was $420.
- [36:36]
A
Okay, we can.
- [36:37]
C
We know. But he's in this New York Times interview today and he explains his thinking behind the $420 because he did the.
- [36:44]
A
Math and it came to 419.
- [36:46]
C
And he said that 420 would be better karma. But then he clarified that he was not on weed when he did that.
- [36:56]
B
But he was on sleeping pills.
- [36:58]
A
He might have been on Ambien.
- [37:00]
D
He should definitely have workers on his board.
- [37:02]
C
Yes. And my other number is, I guess more boring that it's. Walmart's sales are up 4 and a half percent over last year and it's like its biggest sales increase in a decade. And everyone was very excited about it. And it's an interesting sign. I'm not sure exactly what it means, to be honest with you, but it's an interesting sign that people are buying stuff, I think. And also 40%, its online sales are up like 40%. But I want to know who shops@walmart.com because I can't believe that anyone does. It's called jet.com again, who shops@jet.com email us.
- [37:38]
A
My number is 51%. There was this big report which had a look at US charitable foundations and added up how much money US foundations in total wound up giving to international charities like non, non US destinations, mostly like developing countries over the five years from 2011 to 2015. And they added it all up and it came to 35 billion. The number which jumped out to me is of that $35 billion, 51% of it came from the Gates Foundation.
- [38:20]
C
Wow.
- [38:21]
A
More than. Yes. So it's like American foundations, they do do a lot of good work, but like with the exception of the Gates foundation, almost none of them really put big dollars to use internationally where of course, the need is greatest.
- [38:37]
C
That's amazing. Also, Bill Gates was like the Elon Musk of his time. Well, maybe not the Elon Musk, but everyone used to hate Bill Gates, remember?
- [38:43]
B
They did, but for different reasons.
- [38:45]
C
Totally boring.
- [38:46]
B
And Borg like, not because he was.
- [38:48]
C
And evil. People thought he was kind of a little evil.
- [38:51]
A
He never dated any pop stars that we know about?
- [38:54]
C
Nope.
- [38:55]
A
Anna?
- [38:56]
D
My number is 19%. That's the quarter on quarter decline in video game sales at Tencent.
- [39:03]
A
Oh my God.
- [39:04]
D
So the market has been spooked this week for a number of reasons, but one of them has to do with some negative data points out of China and one of them has to do with Tencent performing worse than it has in quite a long time. And this is an enormous company and this is perhaps an example of why extreme government involvement can be kind of a bad thing. Because part of the reason that it went down is because of changes in the regulation of content for some of these, for all companies, but for some of these kind of national champions, things like, like 10 cents. So the government is essentially saying, we don't like what's in your video games, so you can't sell them, you can't release them. They actually had one game called Monster Hunter that had many, many pre sales that actually had to be pulled because the government didn't like the content.
- [39:51]
A
This is, this is another reason to have worker representation on the boards of companies. There was this big sort of internal petition at Google saying you've got to stop developing a sort of censored version of the search engine for China. And there's a big fight about that. And the Google senior management does seem to be incredibly out of touch with the rank and file. And it's.
- [40:16]
B
Well, they're out of touch with Sergei too because he claimed not to know about it. I mean, that's the thing. You've got him on the board and if he had known, he claims he would have been against it, but that was, to me, the most bizarre thing of that whole.
- [40:27]
A
Sergey is getting enough sleep. Yeah. He's just sleeping through, like, major crises in his company. I think that's it. For those of us who aren't Slate plus members, if you are, we're going to have a brief chat about Turkey. Otherwise, thanks for listening to Slate Money. Keep the emails coming. Slatemoneylate.com if you want Justin Fox back, which I think you should, because he's amazing, then, you know, tell us and we'll pass it on. So thank you, Justin, for coming on. Thank you for bringing this amazing book, which is you should all run out and buy.
- [41:01]
B
Can the Slate plus people, can they get some of the German from.
- [41:05]
A
We'll read some German in Slate Plus. Many thanks to Max Jacobs in New York City who's producing Slate Money now. And we will talk to you next week on Slate Money. Sam.