Slate Money – "The Big Mistake of the 2010s"

Episode Date: January 4, 2020
Host: Felix Salmon
Main Theme:
A reflective analysis of the decade’s most transformative economic and financial trends—especially “the big mistake” of the 2010s—austerity after the Great Recession—and a discussion of how geopolitical and structural shifts, from the US shale oil boom to the rise of big tech and the NBA’s global transformation, changed the balance of economic power.

1. Overview of the Episode

The hosts use the occasion of a new decade to look back on the 2010s, evaluating not only the week’s big financial news (US-Iran tensions and oil price moves), but more broadly, the long-term trends and critical missteps that shaped the global economic landscape over the past ten years. They reflect on oil’s diminished economic power, the impact of US monetary and fiscal policy post-recession, and the evolution of the sports industry, focusing on the legacy of NBA’s former commissioner David Stern.

2. Key Discussion Points & Insights

A. Oil, Geopolitics, and the Shale Revolution

• Current Events Context: US strikes in Iran leading to oil price spikes—questioned for their long-term relevance.

  • Anna (01:53): “The number one thing to understand is that oil prices have been... significantly lower than where they were... about a decade ago. Then in 2014, oil prices really tanked and now they've been in kind of this mid range.”

• Long-Term Trends:

  • Oil prices have undergone wild swings, with the most dramatic drop occurring after 2014 when prices collapsed from over $100/barrel to as low as $20–$30.
  • The US shale boom—“the most disruptive trend of the 2010s”—more than doubled US oil production, shifting power away from traditional petro-states and big oil companies.
    • B (Felix, 06:53): “There's literally more than twice as much oil production in the US today as we thought there would be this time 10 years ago. It is an all time high... 12.7 million barrels a day, which is unprecedented.”

• Diminished Economic Importance of Oil Shocks:

  • The energy sector now makes up only about 5% (down from 15%) of the S&P 500.
  • Middle East conflicts have a weaker effect on US/global economies because of American energy independence.
    • C (Emily, 05:19): “The oil and gas sector's importance... has really decreased over the past decade... It's just not what it was because of the shale boom that began in the 2010s.”

• Shale Market Structure:

  • The sector is now fragmented: lots of small producers, little profit, and less pricing power. This could make stabilizing the oil market difficult in the future.

B. The Decade’s “Big Mistake”: Austerity and Weak Fiscal Policy

• Post-2008 Policy Response:

  • The Obama administration and Fed’s response to the financial crisis is seen as too reliant on monetary policy (low interest rates, QE) and too timid on fiscal stimulus.
    • C (Emily, 13:10): “It was the lack of doing more, the lack of government spending that slowed down the recovery... If there had been more government spending and more efforts to help Americans and not just banks, then we could have had sort of like a new era of even growth.”

• Resulting Economic & Political Consequences:

  • A recovery that benefitted asset holders over workers, fueling inequality, discontent, and populist politics.
  • European austerity, particularly in Greece, is called out as even more damaging—fracturing the European project.
    • B (Felix, 17:24): “The place where austerity hit hardest was actually not in the US at all, but in Greece... the story of austerity is a missed opportunity story in the United States. In Europe it's much worse than that.”

• Contrast of Fiscal vs. Monetary Policy:

  • Central bank-driven recovery inflates stock/asset values (benefiting the wealthy), while Congressional (fiscal) stimulus could have been targeted at average citizens.
    • A (Anna, 14:17): “When you are relying so much on monetary policy, you're going to increase income inequality because you're going to inflate asset prices and the people who are holding most of the stocks and a lot of the real estate are obviously going to be wealthier.”

• Shifting Global Attitudes:

  • Growing skepticism of austerity—including at the IMF and among 2020 US Democratic presidential candidates—ushers in more creative economic policy proposals like the Green New Deal.
  • But political reality still blocks big ideas in both the US and Europe.

C. Most Disruptive Trends Beyond Shale

• Technology & Social Media’s Transformation:
  • Ubiquitous iPhones, Google Maps, proliferation of social media altered everything from politics to daily life.
  • (11:15) “The first is technology, which upended everything… we barely used social media compared to now.”

D. David Stern, the NBA, and the Business of Sports

• David Stern’s Legacy and American Sports:

  • Stern, former NBA commissioner (1984–2014), is credited with transforming the NBA from a struggling, domestically-focused league to a global superstar-driven brand.
    • A (Anna, 22:31): “When he took over… the NBA was kind of an afterthought. Most of the teams were losing money. They were showing games on tape delay…”
  • Stern promoted star players (Magic Johnson, Larry Bird, Michael Jordan) as global icons and pivoted the NBA toward international markets.

• Branding and Progressiveness:

  • Stern’s willingness to let players show personality, stand for causes, and handle crises (e.g., Magic Johnson and HIV awareness) branded the NBA as the most progressive US major sports league.
    • C (Emily, 27:00): “I think David Stern was instrumental in branding the NBA…not only in elevating players into stars, but… branding the NBA as a progressive sports league.”

• Contrast With NFL:

  • NBA’s openness and branding contrasted sharply with the NFL’s rigid policies and controversies like the Kaepernick protests.

3. Notable Quotes & Memorable Moments

• On oil’s shrinking power:

  • Felix (10:13): “The natural implication of what Anna's saying is that Middle Eastern wars, at least from an economic perspective... become just less and less important over time. There's no way we're going to have a 70s style oil shock because America's like energy independent at this point.”

• On the decade’s policy failings:

  • Anna (14:17): “You know, you could argue that yes, they did some things. It's impossible to say that had they stimulated more fiscally 100%, everything would have been better... but you may have had a stronger recovery for the average worker.”

• On the NBA’s global story:

  • Anna (22:31): “[Stern] really leaned into the growing stardom of players… The other big thing he did was actually in 92 when he put together the dream team… the first time that you had professional athletes in a U.S. Olympic basketball team. And that was another thing that really brought all of these stars kind of to the world stage.”

• On austerity’s broader damage:

  • Felix (17:24): “The attitude of Rick Santelli to the, you know, homeowners who might get bailed out in the United States is basically exactly the same as the attitude of most Germans towards the idea of helping out the Greeks.”

4. Important Timestamps

• 00:10–04:27: Oil prices, Iran conflict, long-term oil market trends.
• 05:18–10:55: US energy independence, changing market structure, global consequences of the shale boom.
• 11:11–16:51: Biggest trends of the 2010s; discussion of technology and the mistakes of fiscal austerity.
• 17:24–22:04: Austerity’s consequences in the US and Europe; changing attitudes toward stimulus.
• 22:31–30:27: David Stern’s legacy, the NBA’s transformation, and branding in sports.
• 30:27–33:38: End-of-show 'Numbers' segment—striking numbers from the week (koala deaths, estate taxes, China’s beer consumption).

5. Tone & Style

• The conversation is witty, candid, and filled with informed skepticism—balancing policy wonk analysis with pop culture and sports anecdotes.
  • Felix (22:04): “I know absolutely nothing about sportsball except that… not only team owners but also players went from ludicrously rich to Insanely, ludicrously rich.”

Summary Table

| Segment | Main Topic | Key Point | Notable Quote / Time | |---------|------------|-----------|----------------------| | 00:10–04:27 | Oil prices & geopolitics | Oil price spike is a blip vs. decade-long downward trend | “We've seen massive plunge in the price of oil…” (04:03) | | 05:18–10:55 | Shale boom | US production at all-time high, changed power globally | “12.7 million barrels a day, which is unprecedented.” (06:53) | | 11:11–16:51 | 2010s’ biggest mistakes | Weak fiscal stimulus led to slow recovery, rising inequality | “If there had been more government spending… we could have had… even growth.” (13:10) | | 17:24–22:04 | Europe & austerity | Greek crisis, Germany’s policies weakened the EU project | “In Europe we're really seeing the story of austerity having… fractured the entire European project.” (17:24) | | 22:31–30:27 | NBA & David Stern | NBA’s evolution into a global, star-driven, progressive brand | “He really leaned into the growing stardom of players.” (22:31) |

For Listeners Who Missed the Episode

This Slate Money episode offers a sharp, decade-in-review look at business and finance, focusing on how the oil market, tech, monetary policy, and sporting culture each re-shaped the 2010s. The central argument: post-crisis austerity and over-reliance on central banks “was the big mistake,” leaving a legacy of inequality and missed opportunities. The rise of US shale oil, the spread of technology, and the NBA’s global growth show how unexpected players and strategies can reshape economic and cultural power.

Memorable, nuanced, and never afraid to puncture the hype, it’s a rich listen for anyone curious how policy, markets, and brands altered the fabric of the decade.