Slate Money – The Ballpoint Pen Edition

Date: January 14, 2017
Hosts: Felix Salmon, Cathy O’Neill, Jordan Weissmann

Episode Overview

This edition of Slate Money takes a surprisingly deep dive into the ballpoint pen, uncovering the complex global economics, intellectual property intrigues, and cultural quirks underlying this everyday object. The discussion then transitions into a listener question about bond funds in a rising interest rate environment, culminating in a lively analysis of Anthony Scaramucci’s role in finance and his entrance into the Trump administration. The hosts finish with their signature ‘number of the week’ segment, touching on trends in health care, real estate, and higher education debt.

Main Discussion Segments

1. Ballpoint Pens: Engineering Marvel Meets Economic Globalization

[00:08–13:30]

Ubiquity and Transferability of Ballpoint Pens

• Introduction: The hosts riff on the notion that ballpoint pens are the last “freely passable” item—akin to how cigarettes used to be. (00:08)
  • Cathy O’Neill: “It used to be true of cigarettes... But ballpoint pens, you can still do it.” (00:32)
  • Jordan Weissmann: “All of your anarchist friends basically want everything to be like ballpoint pens.” (00:45)

Why the Obsession?

• Felix’s fascination was triggered by an article celebrating the ballpoint pen for its function and economics:
  • Jordan Weissmann: “There is a very small number of items in this world where the best version of that item is also the cheapest version... and ballpoint pens are pretty much the best pen.” (03:06)
• Cathy confesses to buying more pens after reading the article. (02:29)

Mass Production and the IP Battle for Pen Tips

• Ballpoint pens are engineered marvels, especially their tips—a blend of tough, malleable steel and precise mechanics.

  • Jordan Weissmann: “Ballpoint pens are, it turns out, an unbelievably high-tech thing for something which is so cheap.” (05:19)

• Chinese manufacturers make about 38 billion pens yearly, profiting a mere cent per pen due to Japanese control of tip technology (industrial trade secret, not patent). (07:03, 08:11)

  • Jordan Weissmann: “Chinese manufacturers of ballpoint pens make basically nothing on this... because the intellectual property and the high-tech bit of the pen is in the tip… jealously protected by the Japanese.” (06:00)
  • Felix Salmon: “This is actually a really interesting IP story, right? Because… it’s been effective just to not patent it, just to keep it in the dark.” (07:58)

• The Chinese government invested heavily in R&D to break this lock, and after five years, succeeded. (09:31)

  • Jordan Weissmann: “This is going to revolutionize the economics of the ballpoint pen industry.” (09:34)
  • Felix Salmon ties it to China’s broader leap up the manufacturing value chain: “It shows that… they’re getting better and getting smarter at things like R&D. And that actually bodes well for their future.” (10:36)

Ballpoint Pen Reviews and Social Satire

• The team discusses the Amazon reviews of “Bic Cristal” and the satirical response to its “Bic for Her” marketing.

  • Cathy O’Neill: “‘Do you think I can use this pen, even though I’m just a woman?’ You know, things like that.” (12:34)

• Memorable Quote:

  • Jordan Weissmann: “Bic Cristal pens… are one of the great achievements of modern civilization. Go steal a few because honestly, I’m sure they’re just lying around.” (13:02)

2. Bonds and Rising Interest Rates – Listener Mailbag

[13:30–26:36]

Core Question

• Listener Ronnie Anne Himmel asks if it’s wise to hold bond funds as rates rise, given the risk of falling values but potential for reinvestment.

Bonds 101: Contracts and Cashflow

• Cathy O’Neill: “You should think of a bond as a contract… coupons… and the last one is called…principal.” (14:45)
• Jordan Weissmann: “Every six months you get your $2.50… at the end of 10 years, you get your $100 back.” (15:35)

The Crucial Price-Interest Rate Inverse Relationship

• Felix Salmon: “If you buy a $100 bond with a 5% coupon… and then rates go up to 10%, well… that old bond… is not worth as much anymore.” (16:13)
• Jordan Weissmann: "So $5 is always 10% of something. And so you need to basically bring the price of the bond down." (17:02)

Bond Funds vs. Individual Bonds

• Bonds held to maturity are not as sensitive; bond fund values are (since bonds are often bought/sold before maturity).
• Cathy O’Neill: “[In bond funds,] the people who manage those funds are in charge of getting rid of some bonds and putting new bonds in… they control what's called the duration.” (21:24)
• Jordan Weissmann: “There are very few bond index funds… bonds don’t work the same way [as stocks]—effectively an infinite number of bonds out there.” (21:49)

How to Invest?

• Cathy O'Neill: “If interest rates go up slowly, you’re basically fine. …If they rise sharply, then maybe the price has gone down by $10, and you only make $3 in coupons, and then you’ve lost $7.” (18:55)
• Reinvesting coupons at higher rates and holding short-duration bonds can help mitigate interest-rate risk.

Key Takeaways for Listeners

• Don’t panic and dump all bonds because rates may rise; “set it and forget it” portfolio principles still apply.
  • Jordan Weissmann: “Do not change [your stock-bond ratio] just because you think that rates might be rising. Bonds still make sense even in a rising interest rate environment.” (24:49)
• Floating-rate bonds can also help, as their payouts rise with interest rates.

Notable Anecdotes

• Felix Salmon: “If Trump destroys the economy somehow or some crazy shit goes down, like, you want those bonds, man.” (26:05)
• Larry Summers’ famous lost bet on rising rates cited as a cautionary tale. (26:11)

3. Anthony Scaramucci—The Mooch Moves to Washington

[26:47–36:57]

Who is the Mooch?

• Hedge fund world character turned Trump administration insider, famous for networking and self-promotion.
  • Felix Salmon: “He is the consummate self-publicist. So he wound up going on television a lot and pretending to be a hedge fund manager, which he’s not. He doesn’t actually make any investment decisions himself.” (30:57)
• Runs Skybridge Capital (fund of funds), known for the glitzy SALT Conference.

How the Mooch Succeeded

• Acquired Citigroup's fund-of-funds business after the 2008 crisis, essentially buying its track record on clever terms.
  • Jordan Weissmann: “He didn’t put a lot of money down, but he promised that he would pay them back over time from the profits of the business, which he did.” (30:57)

Networking, Branding, and Political Opportunity

• The SALT Conference is seen not necessarily as a direct moneymaker, but as an expensive branding exercise.
  • Jordan Weissmann: “I don’t for a minute believe that SALT is profitable. I believe that it’s a huge and expensive branding mechanism for Skybridge and for Scaramucci.” (34:36)
• Scaramucci’s move to the White House is described as a revolving door play for future networking and business clout.
  • Jordan Weissmann: “...when I come out of the revolving door… after the Trump White House, I’m covered in Trumpian fairy dust and I’m going to be able to make lots and lots of money. I just don’t know that Trumpian fairy dust is going to be worth that much.” (36:13)

Memorable Jabs

• Cathy O’Neill: “Like all these motherfuckers in finance, they absolutely benefit from survivorship bias…” (32:40)
• The notion that the entire Trump White House could have just set up inside Goldman Sachs:
  • Cathy O’Neill: “So basically, instead of moving to the White House, he could just move to Goldman Sachs.” (29:34)

4. Numbers of the Week

[36:57–40:51]

Universal Health Care Sentiment

• Cathy O’Neill: “A Gallup poll… 58% of Americans want to have universal healthcare.” (37:01)

Bezos’ New Mansion

• Jordan Weissman: “23 million, which is the number of dollars Jeff Bezos just spent on the largest house in Washington, DC… He did that after Trump was elected.” (37:31)
• Jordan Weissman: “It’s the billionaires’ world, we just live in it.” (38:17)

Harvard Art Institute Debt Paradox

• Felix Salmon: “78,000, which is how many dollars students borrow, on average, to get a two-year certificate degree from the Art Institute at Harvard University.” (38:23)
• Raises the issue of MFA and certification programs failing “gainful employment” standards, questioning the value of certain elite programs when saddled with heavy debt.

Memorable Quotes & Moments

• Jordan Weissman (on ballpoint pens): “Ballpoint pens… are one of the great achievements of modern civilization. Go steal a few because honestly, I’m sure they’re just lying around.” (13:02)
• Felix Salmon (on China’s innovation): “…as tiny and kind of out of nowhere as the story sounds, it’s actually a really, really positive sign for China…” (10:36)
• Jordan Weissman (on bonds): “Do not change [your stock-bond ratio] just because you think rates might be rising. Bonds still make sense even in a rising interest rate environment.” (24:49)
• Felix Salmon (on Trump administration): “If Trump destroys the economy somehow or some crazy shit goes down, like, you want those bonds, man.” (26:05)
• Cathy O’Neill: “Like all these motherfuckers in finance, they... benefit from survivorship bias where all their stupid ass decisions are forgotten and their one lucky decision is remembered and they’re like, oh my God, you’re a fucking genius.” (32:40)
• Jordan Weissman: “It’s the billionaires’ world, we just live in it.” (38:17)

Key Timestamps

• 00:08–13:30: The ballpoint pen: technology, economics, and jokes
• 13:30–26:36: Bond fund mechanics, interest rates, and listener Q&A
• 26:47–36:57: Anthony Scaramucci, finance celebrity to Trump White House
• 36:57–41:02: Numbers of the week: health care polling, Bezos’ mansion, Harvard debt paradox

Tone and Style

Conversational, witty, and slightly irreverent, peppered with sharp asides and frequent detours into lighthearted teasing, especially on the quirks of finance and the absurdities of business culture.

Bottom Line Takeaways

• The ballpoint pen is a feat of unnoticed engineering and intellectual property intrigue, exemplifying the complexities of global manufacturing and economics.
• Bond fund holders should not panic about rising interest rates; portfolio diversification and long-term thinking are key, and some risks are already "baked into" typical asset allocation.
• Anthony Scaramucci is emblematic of finance's “branding-first” mentality and demonstrates how reputational capital can be even more valuable than investment acumen in certain financial and political circles.
• Underlying all this is a world shaped by the whims of billionaires and the subtly shifting tectonics of economic policy, technology, and personal ambition.

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