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- [00:11]
A
Hello. Welcome to the Bad Deals edition of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. I'm joined by Anna Shymansky. Hello. And by Emily Peck of the Huffington Post.
- [00:27]
B
Hello.
- [00:28]
A
Who has written a long and fascinating article in the Huffington Post about deal making in general and about the President's deal making in particular. We are going to talk about that, and we are going to talk about the worst deal that I think any of us have seen in a long time, which is not anything in America. It is the Brexit fiasco, which managed to become even more of a fiasco this week, if such a thing were even possible. Possible. No one knows what's going on, including us, but we are going to manage to navigate our way through that anyway. And we are also, we really do need to talk about Jack Bogle, because he's a hero. So we are going to talk about Jack Bogle, the founder of Vanguard and the man who probably saved you thousands, if not tens of thousands of dollars on your investment fees. Well done to him. Thank you, Jack. I must also mention that we will, in the Show Notes, be posting all of the juicy links that you have been emailing and asking for in terms of Anna's contentions about millennials. This was not just pulled out of her bottom.
- [01:45]
C
I swear.
- [01:46]
A
There are actual links and they're all going to be in the show notes. If you want to listen, if you want to click on those links and see for yourself, you are able to do that. So all of that is coming up on Slate Money. So Anna and I have had various fights in the past about index funds and the utility thereof and whether they're systemically dangerous and all of this kind of thing. And I don't want to litigate all of that necessarily. Again, because we don't like to repeat ourselves too much here on Slate Money, except for when it comes to Brexit, because that's just like all we ever do is repeat ourselves on that one. We will talk more about the fust o' cluck that is Brexit later on, but my goal right now is quite simple, which is, can I get Anna to just say something unambiguously nice about Jack Bogle, who died this week at the age of 89? Anna.
- [02:39]
C
Yes, you most certainly can.
- [02:41]
A
Wonderful. You see, this is going to be a very pleasant, happy segment because we're all just going to go, ah, Jack Bogle, he was awesome.
- [02:48]
C
No, he. Look, he brought indexing to the masses. He allowed regular Retail investors to take advantage of what some other institutional investors had known for a while. And it, you know, helped, it made investing accessible, more accessible to a lot of people.
- [03:06]
A
And he saved millions of people, probably billions, if not more, you know, tens of billions of dollars over their.
- [03:14]
B
I read one stat that said last year alone Vanguard saved investors $5 billion in fees according to someone's estimate, which is pretty amazing. But I guess the fund Vanguard is what, trillions of dollars?
- [03:25]
A
Vanguard is like 5 trillion now.
- [03:27]
B
Yikes.
- [03:29]
A
Which is, you know, a lot of money. And okay, so let's.
- [03:33]
B
Should we say who John Bogle is? I mean, I guess you're talking as Jack. Jack, I mean officially Jack.
- [03:39]
A
His official name was John Bogle, but he was universally known into markets as just.
- [03:43]
B
So let's just. Everyone knows you guys said you've talked about him before. So everyone knows who Jack Bogle is.
- [03:49]
A
Tell me who Jack Bogle is.
- [03:50]
B
He's this guy, this is this man who went to Princeton and wrote a thesis that said index investing is a good idea. Follow, you know, you should invest in the whole market, not just hand picked stocks. And he said there's the experts who proclaim to be geniuses at picking the saxago and mutual funds or it's kind of all bullshit, which now is sort of conventional wisdom. And so he pushed that for a while and he founded Vanguard, which is now multi trillion dollar company.
- [04:19]
A
And Vanguard was revolutionary in two ways. One is that it brought index investing through the masses, as Anna said. And the other is that it was mutualized. This wasn't actually something which Jack necessarily wanted to do. He was kind of forced into it, but it turned out to be amazing. What it means is that company is owned by the people who invest in the funds and there's no other fund manager basically in the world which really works that way. And that really was one of the main driving forces behind the ever lower fees that Vanguard managed to charge. And one of the interesting things, one of the noteworthy things about Vanguard is that you, even after Jack retired from Vanguard, its fees kept on getting lower and lower and lower. And one of the main reasons why it was able to do that and one of the main reasons why all other fund management companies kind of hate Vanguard is because it had no profit incentive to try and maximize its own profits. It was owned by the people who invested in the funds. And so it was kind of like it had that kind of artificial advantage on everyone else, which was great.
- [05:37]
B
And one of the many, many laudatory pieces I read so I can't remember where exactly I read this. And one of them was, like, talked about how Jack was proud that he was not a billionaire. Although I wasn't sure if he's quite proud because he also reportedly said he was a little embarrassed because he knew he was being judged by his fellow, you know, by other moguls, because he wasn't a billionaire. Only was worth like $80 million or something.
- [05:59]
C
Yeah, he was practically a poplar.
- [06:00]
B
I mean, he was. And he was famously cheap, too. Like, he would take the train early in the morning to New York for meetings, wouldn't stay in hotels. And there was something about not getting the breakfast buffet because if you go a la carte, it's cheaper, stuff like that.
- [06:15]
C
And I'm sure all of that is 100% true.
- [06:17]
B
I'm sure.
- [06:17]
A
Well, I mean, he was. People had a lot of interactions with him. He was famous for, like, you know, wrapping up sandwiches for the train ride home and everything. And he was naturally thrifty and the same way that many other rich people. That's not an uncommon combination. And yeah, if you're. If you're worth $80 million, that's not poor by anyone. Anyone's standards. But there is no one else who has created a multitrillion dollar asset management company who's worth that little.
- [06:47]
C
And I think regardless of what ends up happening, as more and more money is going into passive investing, we're seeing throughout the entire industry just fee compression.
- [06:57]
A
To the point of zero. Actually, I think Fidelity actually came out with some funds which now charge zero fees. And that's just amazing and wonderful. It's a little bit like miles per gallon in some way. Like, you know that you don't actually get that much extra benefit from a car which gets 80 miles per gallon versus like 50 miles a gallon. Like, at some point, it doesn't really matter that much. But, you know, if you're paying 0 or 1 basis point or 2 basis points or 4 basis points, but it's absolutely normal now for people to have substantially all of their investments in funds which charge less than 10 basis points. And that was literally unthinkable. Even. Even when Jack retired, that was pretty much unthinkable. And now it's. It's common.
- [07:43]
B
And I guess the real turning point for index funds was the financial crisis, after which people were like, huh, maybe just go with these index funds that just passively. No, well, no.
- [07:54]
A
A lot of it had a lot of big uptick.
- [07:56]
C
Yes. But I mean, it also. A lot of it has to do with the fact that like in the 90s, you know, you're looking at equity returns that were regularly like 20%. So when you're making that much money, no one really cares about these fees. But then equity turns, equity returns really started to moderate. And so that was really what started to make a lot of people look a little bit more closely at fee structures.
- [08:14]
A
So what we have now, you're absolutely right, Emily, is this big secular rotation, this long term trend of people moving out of mutual funds into index funds.
- [08:29]
B
30% of the market is an index fund moving out.
- [08:34]
A
Stock picking like it used to be that, you know, people would subscribe to Barron's and try and work out what stocks they should buy and buy those stocks. And because they thought those stocks were going to do well, not because they thought they were very clever, this is one of the things which I've realized. But just because they didn't have any choice and you know, it's an enjoyable hobby when you're in the golf club talking about, well, which stock do you think is going to go up? But the reason you're talking about it is because you kind of have to make that choice anyway. You know, your broker is going to put you in this or he's going to put you in that and you need to make, you need to think and make that decision or trust your broker or something. And it took a while, but eventually people realized there was actually a better way and a cheaper way. And this has revolutionized retail investing. And it still hasn't really made it into the big institutional investors. Some of them do. Like the Norwegian sovereign wealth fund is very close to an index fund. But the really big institutional investors who more or less control like most of the market still aren't indexes. The amount of money that you see in index funds in the market is not actually a sign of the amount of passive investing that's going on in the market because a lot of very active investors will use index ETFs for.
- [09:59]
B
Sure, which both did not care for this.
- [10:01]
A
And yeah, so that was one of the things he didn't like about ETFs. He preferred index funds to ETFs precisely because ETFs are tradable. And so people are like, I bet the stock market is going up, so I'm going to buy spx. And then I bet the stock market is going to go down, I'm going to sell spx. And you can't do that with an index fund.
- [10:18]
C
Well, also it's very useful as a hedging instrument.
- [10:21]
A
Exactly. So that's why I'm very hesitant to take at face value the arguments that, like, there's too much indexing going on. Because just look at the amount of money in these instruments like spx. Because really, that's not passive investing. That's a lot of that, if not most of that is active investing.
- [10:39]
C
Yeah. So at this stage, I think, you know, it doesn't seem to be particularly dangerous. I think it does offer a really good product to a lot of retail investors. My only thing, Can I just say one thing?
- [10:50]
A
Just one, I promise, just one.
- [10:52]
C
Is that I sometimes feel like in these discussions there's this idea about, like these stupid active investors that. And I'm kind of like, okay, passive doesn't work if you don't have active investors. You need people doing this work. So just, just making that clear.
- [11:08]
B
But as you have. I mean, in terms of retail investors, if you have so many Americans, you know, in 401ks with their retirement plans, things like indexes makes just so much. And if you're going to. If you're going to like. Yeah, exactly. They make so much sense, they're more secure, it's for the long haul, etc. It seems so perfect for that.
- [11:26]
A
And Anna's absolutely right. You need active investors for the price discovery. Like, if you just have a bunch of passive investors, you don't get the price discovery. You don't actually need that many active investors for the price discovery. As long as they're more than, I don't know, 20% of the market, they will be the marginal price setters. Passive investors are not marginal price setters. They just pay whatever the price is. But in any case, Jack Bogle, you revolutionized the market. You were that rarest of beasts, which is someone who came up with a financial innovation that was actually good.
- [12:03]
B
And he said, never call. He didn't like the word product.
- [12:05]
C
I know. I actually laugh because I just used product. And I was like, yeah.
- [12:08]
A
And also don't use the word product because it's a horrible word. We all try.
- [12:12]
C
What else do you want to call it?
- [12:15]
B
A thingy.
- [12:16]
A
A thingy. Thingy. You buy. No, he called it an index fund. It's a perfectly good thing. You can call it a fund. Okay, so we are going to keep on talking about Brexit.
- [12:24]
C
It's going to be like a weekly thing.
- [12:26]
A
It might actually.
- [12:27]
B
Checking in.
- [12:27]
A
It might actually be a weekly thing. I did get a couple of requests on Twitter saying like, felix, can you just talk about Brexit every day?
- [12:34]
B
You're making that up.
- [12:36]
A
I was like, no, I'm not going.
- [12:37]
B
To talk about Brexit, just making it up. It's like Trump saying he talked to other presidents.
- [12:43]
A
But this was a very big. This was the biggest week yet in Brexit, at least since the original referendum. The meaningful vote finally happened. We were meant to get the meaningful vote in December and Theresa May put it off for a few weeks because she thought she was going to lose. Turns out she was right. I've gone back to the 1840s and I cannot find a government defeat this big or this devastating. It's basically never happened in the history of the UK that the government has had this many of its own party rebel against it in a loss. I mean, that makes sense because no sane government would even bring to a vote something which they realized they were going to lose so enormously. But obviously Brexit is kind of unique. So what we wound up was a 230 vote loss for Theresa May. It was like 202 to 432, something like that. 432 MPs just saying, no, we don't want this ridiculous deal of yours. And it makes sense because if you're a leaver, her deal basically keeps you wedded to a bunch of EU institutions which you hate. And if you're a remainer, her deal takes you out of the EU and so you hate it. And so basically no one likes this deal. So no one voted for this deal. And so now that deal is off the table, it's not going to happen. And so now absolutely no one knows what is going to happen. Now there is no majority for any particular thing, although there is almost certainly a majority for anti no deal. Like there is almost certainly a majority for like we do not want to just crash out without a deal.
- [14:28]
B
But the deadline is looming.
- [14:30]
A
But Theresa May is saying like, I can't promise we won't do that, but.
- [14:35]
B
She could, couldn't she go back to the EU and ask for an extension? That's one of. There's like four options. It's like they could crash out, they could ask for an extension, they could do the people's vote, so called. Or she could come up with like a new, a new deal.
- [14:50]
A
Maybe there's almost, I don't see how the EU would agree to an extension unless they were extending it to a referendum, to a second referendum in people's vote.
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B
What she can do, big delay a.
- [15:05]
C
Because that's always what the EU does. Favorite tactic.
- [15:09]
A
There are 27 of them and they do need to be unanimous. And trying to get 27 of anybody to agree on anything is very difficult. And especially when they're naturally fractious European countries, you know, I don't think it would be. I think it's possible they would agree to a delay. Much more likely they would agree to a delay pending a people's vote, which would actually clear things up. The really good news, if you want some good news, is that there was a European Court ruling, which is that Britain can just unilaterally repeal Article 50. It can just unleave. And it doesn't need the EU27 to agree to anything. If they don't want to delay, if they just want to completely scrap the whole thing and say, never mind, we're staying in, they can do that and.
- [15:55]
B
Just ignore the will of the people. I mean, they voted for this.
- [15:59]
A
So the idea is that the government would almost certainly not do that without also calling of people. So because, you know what you wind up with then is this kind of thing where you, like, you repeal Article 50, you have another referendum, and then if the referendum, if the second referendum says leave, then you trigger it again and it's just a nightmare. And that really pisses off the Europeans.
- [16:20]
C
Yeah.
- [16:22]
A
But the chances are that a second referendum would not be for Leave. All of the opinion polls indicate that Remain would win. There are one and a half million new voters who weren't eligible to vote last time, who are by definition very young voters. And the young all want to remain. The old people who voted to leave, a lot of them have died off. Plus it's increasingly obvious that there is no workable version of Leave anyway. So I'm reasonably optimistic that if there was a people's vote, then it would vote for Remain.
- [16:53]
B
That's what you think is the best option?
- [16:54]
A
Well, obviously Remain is the best option.
- [16:56]
B
No, but the voting for it is the best option.
- [16:58]
A
Yeah. I think that if you're going to remain, having gone through this ridiculous referendum process once, the only way you can really credibly reverse that is by going through the whole ridiculous referendum process a second time. Don't ask me what the question should be, because that's a very difficult question.
- [17:17]
C
Yeah, I mean, I do think, just to play devil's advocate here, a little bit like, look, I imagine all of us, and I probably think probably a lot of people listening would, Would like the UK to remain, ultimately think that's probably the best option. But I do think it's not invalid to say, look, there was a vote. We don't agree with it. But if then you go back and you're like, we're just going to do this over again, we're going to hold another vote, which is kind of the idea of, like, we didn't like this outcome, so we're going to keep doing until we get the outcome.
- [17:45]
A
The Europeans do this all the time. Yeah.
- [17:47]
C
But I guess my concern concern is that, and I, as I said, like, I ultimately don't think this is the best argument in the world, but I do think it's somewhat valid to say you could then make a lot of people in the UK really start to think, you know, democracy isn't real, my vote doesn't matter. And you could push a lot of people into the hands of another far right candidate or just make people not want to be involved in the process.
- [18:10]
A
There's absolutely no doubt that a bunch of leavers would be very upset if that. If, like, you know, the government suddenly said, oh, wait, take back seats, I want to do it all over again. The fact is, a whole bunch of people in the UK are going to be really upset no matter what happens. And there are any number of precedents for, you know, people trying referendums 2, 3, 4 times. How many bloody Quebec referendums have there been? You know, and no one's like, this is a violation of the democratic will of the people. It's just something that happens. And, and especially given that the people who voted to leave had no idea what they were voting for and were voting for very, very different things depending on who they were. Like, some of them were wanting to be like this beacon of free trade in the middle of the world with free trade, with everyone. And some of them were like, no, we just want to be Little Britain and cut ourselves off from everyone. And a bunch of them just wanted to cast a protest vote against David Cameron, who they hated. And, you know, and it was a mess.
- [19:15]
B
There was a good. In one of the pieces I read at the end, someone went up to David Cameron and said, do you regret calling for this vote? And he said no, and then he went off jogging.
- [19:26]
A
David Cameron is the real villain here. I've heard people try and blame Jesus, Junker and various other types of, or even Theresa May, but she was dealt a basically impossible hand. I mean, she played it very badly, but there is no majority. And also, I mean, we have to mention that the other complete dreadful incompetent here is Jeremy Corbyn, the leader of the opposition, who is just being so unhelpful and all he really wants is to become Prime Minister. And he doesn't really care about Brexit. Well, I think he's. He's more or less outed himself as a kind of hardline Brexiter at this point, which is. Just.
- [20:11]
B
Wait, that's. That's what's going on.
- [20:14]
C
What?
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B
I thought he wanted a people's vote.
- [20:16]
A
No, no, no, no, no, no.
- [20:19]
B
Slave money, listeners.
- [20:20]
A
No, he does not. There are Labor MPs and there are Tory MPs who wanted people's vote, and there are a hell of a lot of Scotsnats MPs who want people's vote. But Jeremy Corbyn and Theresa May are weirdly in agreement on. In opposing a people's vote.
- [20:36]
B
I'm sorry, I don't have much else to say about Brexit. It's just a manufactured crisis that just gets worse with every news cycle. And I don't understand.
- [20:44]
C
And I think, unfortunately, as it continues and continues and continues, that even if it eventually is settled and they don't leave, the UK is still going to have suffered quite a bit and it's going to take a while to really make up for lost consumption, lost investment. And also just the fact of so much time, money and energy is being put towards this and not being put towards anything else.
- [21:04]
A
Right. It's a little bit like how none of us are reading any non Trump news anymore because Trump just drowns out everything else. It's exactly the same in the uk. I mean, it's Brexit and it's not just reading the news. It's. The entire economy is oriented towards trying to navigate this extreme uncertainty and that's not a good place for any economy to be.
- [21:28]
B
Yeah, it's very similar. I was thinking what's going on over there, similar to how we're dealing with the shutdown now, where really this is a manufactured cris that is putting a halt to conversation and to work on so many other things. It's just a waste of everybody's time, as you just said.
- [21:44]
A
And money.
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B
And money. Yeah.
- [21:46]
A
Billions of dollars.
- [21:47]
B
It's a real tragedy. It's a failure of democracy, really.
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A
So, talking about failures of democracy, Emily, you have a huge piece up on Huffington Post about the negotiator in chief and how he has managed to navigate the. The shoals of international diplomacy and various other major affairs of state. And having read it very closely, I think I come to the conclusion that you think he might have been able to do it a little bit better than he did.
- [22:21]
B
Yeah. So, I mean, everybody knows. I mean, we're what, like 35 days into the shutdown now. And if you didn't realize it already, we all know now that Trump is not good at deal making or negotiating, because he would have maybe perhaps made one already. So I got curious, like, what are the people who actually study deal making and negotiation think of Trump? And then I learned that there's a negotiation journal put out in part by Harvard Law School, and that they're about to devote an entire issue to Donald Trump looking at different aspects of not really studying him, because they're all in agreement. He's pretty bad at this, but sort of like studying the ripple effects of his bad deal making with trade and, you know, and here at home, too. And it all sort of the root of it all is this paradox that Trump sells himself as a deal maker, but he's clearly terrible at it anyway. So I wanted to find out, like, exactly what does he do wrong? And there's a lot starting with, turns out my discovery was Trump bad. So, yeah, I mean, probably his biggest fatal flaw is he sees everything as win, lose, zero sum. And in actual real world, deal making or negotiating with people who have equal amounts of power or some leverage against each other. As we're seeing play out now with Pelosi, you can't just say, like, me win, you lose, because the other person's gonna say, no, that's not how it's gonna work. And the other key factor that we're seeing with the wall deal is that most sophisticated negotiators wouldn't come to the table with a single demand. Again, that's part of the win, lose philosophy. You come and you have. Even if you're negotiating for a raise, for example, you come to the table and maybe you want a raise, but you could also, you bring in, like, vacation time or, you know, better benefits or a new office or work from home. Like, you have a lot of balls to, like, juggle around, a lot of different asks to ask for. So those are sort of like the two big things you've got to be able to do.
- [24:22]
A
The horse trading, you have to horse.
- [24:24]
B
Trade, you have to bring a lot to the table. And another mistake Trump makes is he treats everything one on one, when even now, during the deadlock, he's notone way to break the deadlock would be for either side to bring in, like, more people to negotiate behind the main players.
- [24:42]
A
Behind the scenes, when in fact, what he does is he just cuts off all of his negotiators at the legs whenever they agree to anything. He's like, wait, I'm not agreeing to that.
- [24:49]
B
Right. He doesn't have the surrogates that sometimes can come in and kind of like de. Escalate tension and do side deals. No one trusts that anymore. And that's sort of the third piece. No one trusts this man.
- [25:01]
A
So one of the more interesting things that I learned or realized or something from reading your piece is that insofar as Trump ever was a good negotiator and there was a time when he did deals which were not truly atrocious, that was largely because he actually was willing to delegate and he basically gave that job to Roy Cohn. And Roy Cohn, turns out, like, for all that he was an evil man and a bully and no one's shedding any tears over him, was actually capable of negotiating and getting things done.
- [25:40]
B
Yes, Roy Cohn. And he also had this guy George Ross negotiating for him as well. And like Trump would come in later and, you know, sign things, but he wasn't the one, you know, making. There's, there's a book out now by a guy named Martin Latz that really like delves into all the deal making. And there was a review in this negotiation journal and the stories were so brutal. Like, one of these guys, it might not have been Ross or someone working for Ross in a negotiation, wanted this female lawyer to go away from the other side. So he basically just belittled her and belittled her and trying to make her cry and like lose her shit while they were talking. And that finally happened and her client fired her and he got a new counterparty to come in. And that was like a pretty. Those were their common tactics, like they were bullies, they were really hard charging and it did work for them, but it wasn't Trump really doing it, it was these other guys.
- [26:33]
C
I also thought it was interesting to think about it maybe a little bit from the other side too, in thinking of what Pelosi and Schumer and the Democrats can kind of like, how best should they negotiate with, you know, this 800 pound gorilla that like. Because one of the things that I'm sometimes concerned about is I think, as you know, because look, we all, we all hate Trump, but it's like, if we want to get a deal done, we can't humiliate him because he's never going to agree to anything. I think that's one of the things that in negotiation they always talk about is you want to try to figure out a way that both sides can save face and both sides can say that they kind of won, even though one side usually wins a little bit more. And I'm a little curious about how this can really occur in this instance.
- [27:12]
A
And this is very reminiscent of the Brexit thing as well, which is that Jeremy Corbyn, if he wanted to be constructive, could be constructive and say, yes, I am willing to work with the government to put together some kind of a deal that doesn't involve crashing out of the EU catastrophically. But he has seemingly no desire or incentive to do that, because what he really wants to do is to humiliate the government and to become the next prime minister. And I think that when you are in a two party system where I think there is a certain amount of suicide, there is like, only one party can have the White House, only one party can have a majority in Congress or in the Senate, then humiliating the other side really does have strategic value and it becomes hard to not want to do that.
- [28:02]
B
Yeah. And I think taking Trump out of the equation for a second, I think we've been building up to a moment like this. We saw with the Supreme Court fight, you know, during Obama's time, when Republicans really were digging in and playing a lot of zero sum, like, we won't let you have a win kind of politics. And there was less, there was less negotiating, increasingly. And someone I spoke to said to bring Trump back in that his biggest win so far since he's been president hasn't been a negotiation victory. It was, it was Kavanaugh and it was just Trump and McConnell just sticking to what they want. But they were backed into a corner and it looked bad for them. And maybe another president would have withdrawn his Supreme Court nominee under so much pressure as he was with this Kavanaugh nomination, but they stuck it out and they won. And like, the kind of lesson they take away from that is, you know, is that that tactic works.
- [28:53]
C
But in that instance, they also had the vote, so at the end of the day, they didn't actually have to. And I think this is another thing when you're thinking about the government being zero sum, like long term, it's. It's like, it also is, well, is your goal to remain in power or is your goal to actually accomplish parts of your agenda? Because if it's the latter, then it's not zero sum.
- [29:11]
A
The idea is that we know that Trump doesn't.
- [29:13]
C
Well, I know he doesn't think that. I mean, with him, I kind of feel like, you know, he's. But I'm more thinking about, like, how did the Democrats approach this like, how. How do we actually come to a solution?
- [29:23]
B
Yeah, I mean, most people are rational. People are saying, you know, they have to figure out some kind of border security package that includes something Trump could call a wall or at least could call a VICT victory and reframe as, like, heightened security at the border that will solve the crisis. And I don't see why that wouldn't be a win. I mean, maybe Ann Coulter wouldn't like it, but country was.
- [29:44]
C
This is something actually that was interesting, though, because it seems like earlier on in the process, before we actually got into the shutdown, Trump looked like he was willing to kind of cave a little bit. And then the conservative media came out and just started saying all these things. And then that was when he really dug in his heels. And so I guess, because he does just seem to care about that more than almost anything else, it does seem.
- [30:03]
B
Like not only is Congress more willing and governments more willing to be dug in and zero sum now with Brexit and Trump and whatever, but then there's also in the background, like these media outlets that are also kind of very hard line in their own ways as well.
- [30:17]
A
And just. And the media outlets reflect genuine hardline polarization among the electorate that if you look at Republican support for the wall, it has been going up steadily from relatively low levels to almost unanimous support now. And conversely with the Democrats, you actually had a bunch of Democrats supporting the wall a few months ago. Now, basically none of them do. And so the electorate has become polarized. And the one thing that Trump has managed to do, I wouldn't necessarily call this a negotiation tactic, but the one thing he has on his side is, is the base. He can absolutely credibly threaten that if any, you know, Republican politician doesn't give him what they want, what he wants, then they will get voted out because the base is very, very supportive of him.
- [31:17]
B
One other thing I learned to move off politics. Well, not really move off, but hardline tactics like Trump is using used to be kind of normal. But then after World War II was over, there was like this rise of negotiation strategy as the Cold War came up and people wanted to avoid nuclear annihilation. And then at the same time that was kind of bubbling up, there was more and more litigation going on in the courts and sort of like a glut of court cases that people wanted to figure out an alternate way to resolve. And then at the same time that was going on, the divorce boom happened in the 70s, and divorces are very acrimonious. Although not Jeff Bezos divorce, of course, which we haven't talked about yet. But. And so that was like, another prong to it. So out of all these swirling prongs came this, like, army of experts that wanted to make, you know, negotiation and deal making very rational. And at the end of the day, it's not rational. Right.
- [32:14]
A
The background of, like, two world wars. Right, Right. All of this happened with world wars in living memory when people were like, well, we can see what happens when people really get stuck in and won't negotiate and won't deal with each other, and anything is better than that.
- [32:30]
B
And now what we're seeing is with Brexit and here in the US Is a terrifying return to or a terrifying movement away from that rationality and that want and desire to avoid these kinds of intractable conflicts that lead to war. Right. It's kind of like another sign that, like, the post World War II era is in trouble.
- [32:50]
C
Although I also wonder, like, how much of that, like, in business, in reality, was always the case that we had a lot of this kind of scientific negotiations. Because I'm just thinking of, like, you have a lot of firms who, like, you know, they want to get their way. They will throw money at lawyers until they get their way. And, you know, that's. That's not exactly uncommon over the last 20, 30, 40 years.
- [33:10]
A
But the lawyers are way more sophisticated. I mean, that's the thing that I think this is what Emily is saying, is that you throw money at lawyers to negotiate a deal, and the lawyers you're throwing money at are not Roy Cohn anymore. Like, that kind of lawyer doesn't really exist anymore.
- [33:25]
B
They're going to figure out how to make you think you're getting what you want. I've noticed that with dealing with, like, sophisticated PR machines at bigger companies. Like, they're so nice to you, but they're kind of being jerks and they're trying to just get you to do what they want, as opposed to at the less sophisticated companies where they just yell at you, which is counterproductive.
- [33:44]
A
Today I learned that yelling at people is counterproductive. What else am I going to learn? Let's have a numbers round so you can. I can learn something from numbers. Anna, what's your number?
- [33:57]
C
So my number is a little bit of an ode to Jack Bogle. So it is 3.7 million. So a man in Saudi Arabia was arrested for defrauding people of $3.7 million because he claimed he could use magic and sorcery to double their Money. And when I heard this on the news, I thought that the obvious joke to make was that that is what quite a few money managers have also historically done. But sadly, BBC did not make this joke. But I thought it was.
- [34:26]
A
Well, at least it made it onto Slate Money. Yes, I will double your money, dear Slate Money listeners, if you. If you give me $3 million or more, I promise to double it within what. How long?
- [34:44]
C
This particular person. I'm not sure exactly how long he's. He said he would, but my guess is pretty quick. Wonderful.
- [34:50]
A
I mean, whatever. Like, I'm gonna have to come up with a time frame which, like, gives me enough time to just leave the country, Right?
- [34:56]
C
And just like, yeah, you can't be like, 75 years. 75 years. I'll double your money.
- [35:01]
A
My number is 40, which is a Brexit number. This is Liam fox when Article 50 was triggered and he was in the government. And he said, one second after midnight after we Brexit, after March 29, 2019, one second after midnight, we will have 40 free trade deals signed. The EU has 43 trade deals with loads of other trading partners around the world. Canada, Japan, Korea, United States, you name it. Right. And Liam Fox said, well, okay, the easy thing to do is to just go to each of those 40 counterparties and say, listen, we have this relationship with you right now. Can we just continue this relationship post Brexit and nothing changes, and we will have all of those deals signed before we even Brexit. You will be shocked and surprised to hear the number they've managed to get signed. The number they're going to be able to have signed by March 29th. Out of those, 40 is zero.
- [36:09]
B
Shocking.
- [36:10]
A
Shocking.
- [36:10]
B
Wow.
- [36:11]
A
Yeah. Yes.
- [36:13]
B
My number.
- [36:14]
A
What's your number?
- [36:15]
B
I brought in two, but I'm going with 1500.
- [36:18]
A
Okay.
- [36:19]
B
Dollars.
- [36:19]
A
Okay.
- [36:20]
B
That is the amount of rent a Bay Area man is paying to rent out a house for two cats. Two cats. They live in the house.
- [36:30]
C
I feel like there was a wealthy man who bought a place, an apartment for his cat.
- [36:34]
B
They're called Louise and Tina, and they're his daughter's cats. And she's in school, and she can't have the cats at school, so he needed a place for the cats that was near her. And a friend of his or an acquaintance had, like, a little. I forget what it's called, a little house, like, separate from his own house. You know, it has a bathroom but no kitchen. So the cats live. There.
- [36:57]
A
Was a story about the US Representative to FIFA. Do you remember this?
- [37:02]
B
No.
- [37:03]
C
Yes, he had.
- [37:05]
A
This was like, not that FIFA is massively corrupt or anything, but the US Representative to FIFA, the soccer association, had an apartment, I believe, in Trump Tower. If it wasn't Trump Tower, it was very similar to one of those huge condo buildings. I think it was Trump Tower. And he had a big apartment in Trump Tower. And then he bought a second apartment one floor up for his cats.
- [37:27]
B
I mean, it makes sense. Cats can be smelly. No, it really doesn't make sense. We have two cats, $6,000 a month.
- [37:34]
A
Trump Tower apartment for his cats. Okay? So thank you. Thank you to Max.
- [37:38]
B
Jealous of that.
- [37:39]
A
Max has, like, the Internet as his finger. $6,000 a month Trump Tower apartment for your cats. And so in comparison to that, fifteen hundred dollars a month in the Bay Area seems easy. It's a 75% discount. Yeah, yeah.
- [37:52]
C
And two cats, they can't.
- [37:54]
B
They don't want to. You don't want one cat because they get weird if they're alone.
- [37:59]
A
I think that's it. Thank you, guys. That was fabulous. Slate Money podcast. We're going to have a Slate plus segment on. What's the Slate plus segment on?
- [38:10]
C
It is going to be on mandatory paid vacation.
- [38:13]
A
Bill de Blasio, if you know who Bill de Blasio is, you should listen to Slate plus this week because we're going to talk about him. He is the mayor of New York. He has an idea about mandatory holidays, which I am. Spoiler alert. All in favor of. So we're going to talk about that in Slate Plus. Otherwise, many thanks to all of you for listening to Slate Money this week. I have to say there's been nothing better than reading all of your emails about female Doritos and whether a crunchless Dorito is a good idea. And we still don't know whether injury New Year is going to be the next present to the World Bank. It's still possible. And if she is, will she have a Doritos strategy? Will she talk about snack foods in the developing world? Keep the emails coming. Slatemoneylate.com Many thanks to Max Jacobs for looking up factoids about cats and everything else he does on this show. And we will talk to you next week on Slate Money.