Slate Money: "The Blame Iowa Edition"

Date: July 28, 2018
Hosts: Felix Salmon, Anna Szymanski, Emily Peck

Episode Overview

This "Blame Iowa Edition" of Slate Money features a rare four-segment format, reflecting the sheer volume of pressing news in business and finance that week. The hosts dive into:

1. The dramatic plunge in Facebook and Twitter stocks and what it signals about tech valuations
2. The Trump administration’s $12 billion farm aid bailout and the wider context of farm subsidies
3. The transformative legacy of Sergio Marchionne, head of Fiat Chrysler
4. Privacy and the business of genetics in light of 23andMe’s massive deal with GlaxoSmithKline

Segment One: Tech Tumult – Is This the Start of the Tech Crash?

Timestamps: 00:46–09:58

Key Discussion Points

• Facebook and Twitter’s Record Market Value Drops

  • Facebook lost $120 billion in a single day, an unprecedented event, while Twitter followed with a 20% plunge (00:47–01:34).
  • Felix frames the discussion: "Is this the beginning of the tech crash?" (01:44)

• Market Correction vs. Crash

  • Anna argues that "it's more of a...correction" and is not the beginning of a catastrophic crash (02:56–03:12).
  • Emily comments, “To me, the big deal here…is it suggests that they’re not really…telegraphing to investors where they are.” (03:12)

• Investor Communication & Narrative

  • Felix: “[Facebook] have been saying forever that user growth is going to slow down… And when user growth does slow down, suddenly the market says, this is shocking. You never told us this was going to happen.” (03:25)
  • Discussion of investor psychology and market narratives shifting from “utopian tech story” to “bad company” (05:17).
  • Anna counters that institutional investors care chiefly about users and revenue, not corporate image (06:19).

• Regulation & Narrative Risk

  • Emily highlights mounting regulatory risk and broader skepticism about tech: “I think any notion that this was a good company that was gonna change the world in a positive way has sort of vanished.” (06:29)
  • Felix retorts, “I don’t think you can really explain the run up in Facebook stock by looking at discounted cash flows” (07:24), arguing for the power of narrative.

• Regulatory Threats in Europe & Beyond

  • Emily: Cites journalist Carole Cadwalladr’s call on Fresh Air for a ban on Facebook in the UK for electoral meddling—underlining growing regulatory hostility (08:32–09:18).

Notable Quotes

• "When $120 billion is wiped off the market cap of a single stock in a single day…we should at least take notice of that." — Felix (01:13)
• “You might be happy that you’re making money from owning Facebook, but you’re not proud to be a Facebook shareholder in the way that you might have been, say, four years, three or four years ago.” — Felix (06:00)
• “There is a tremendous amount of regulatory risk that a few years ago people didn’t, weren’t pricing in.” — Anna (09:18)

Segment Two: $12 Billion in Farm Aid – Trade Wars and Subsidy Realities

Timestamps: 09:58–17:21

Key Discussion Points

• The Tariff Fallout and Farm Bailout

  • Trump’s tariffs prompt retaliatory tariffs from China and other countries, harming US farmers and leading to the $12 billion aid package (10:18–10:46).
  • Felix: "Even if they get written a $12 billion check…those long-term relationships with Chinese importers are going to disappear. And that's bad for US Agriculture." (11:04)
  • Anna and Emily highlight the risk of permanent market loss as exporters turn to Brazil and elsewhere for staples like soy and dairy (11:29–11:56).

• Political Logic and Subsidy Distribution

  • Anna: The bulk of aid "are going to go to massive agribusiness…Not to, you know, small farmers. There are very few small farmers left in the United States anymore." (12:20)
  • Farm subsidies around the world are described as inefficient, with much aid going to the wealthiest producers (12:56–13:30).
  • Emily: “It’s a bitter pill to swallow to see an announcement about $12 billion in farm aid at the same time that…Republicans…are cutting back on…SNAP or food stamp benefits.” (16:00)

• The "Blame Iowa" Angle

  • Felix blames the US primary system’s focus on Iowa for the persistence of corn and farm subsidies (15:33).
  • Anna connects the enduring nature of subsidies to smart lobbying that ties them with food stamps and conservation programs, broadening political support (16:17–16:34).

Notable Quotes

• “We live in a socialist utopia where if farmers don’t make money…then the government will give them $12 billion. And this is awesome, right?” — Felix (09:58)
• "If you want to win in Iowa, you need to be incredibly supportive of corn subsidies. And so that just sets the frame for all of national politics." — Felix (15:33)

Segment Three: Sergio Marchionne & The Triumphs (and Bluntness) of a Real CEO

Timestamps: 17:21–27:01

Key Discussion Points

• Sergio Marchionne’s Unprecedented Feats

  • Felix outlines Marchionne's turnaround of both Fiat in Italy and Chrysler in the US—an achievement “virtually everyone thought was impossible” (17:21).
  • Emily: “The obituaries…the pieces about him were just glowing. Even from the union members in Detroit thanking him for saving them, saving their jobs…” (18:50)

• Marchionne’s Management Style

  • Anna: “He didn’t seem to really care about being popular. He was notoriously very blunt. He would fire executives.” (19:19)
  • Felix and Anna agree his layoffs targeted middle management, not factory workers, and he focused on core products—“making cars and selling cars rather than sitting in offices moving emails around.” (19:38)

• Risk Taking and Adaptation

  • Felix recounts Marchionne's major strategic error launching the Dodge Dart, but credits him with learning and quickly shifting focus (20:38).
  • Anna: “He took risks and sometimes they work, sometimes they didn’t. But he did appear to learn from them.” (21:09)
  • Emily highlights Marchionne’s genuine, jargon-free communication style in contrast to modern corporate speak (21:23–22:34).

• Jargon and the Modern CEO

  • After a humorous example of a CEO spouting biz-speak (“…best in class solutions in the issues management space.”), the hosts discuss the rise of jargon, risk aversion, and loss of authenticity among leaders (22:41–26:47).
  • Felix: “It’s amazing how few CEOs actually talk like that [plainly].”

Notable Quotes

• "This guy really did something which virtually everyone thought was impossible…" — Felix (17:21)
• “When you see interviews with him, he would talk in a very kind of disarmingly blunt manner.” — Felix (21:29)
• “I think there’s a trend now where people are more wanting that kind of authenticity. And it can often get us in trouble, as we’ve seen in the Oval Office, but not always.” — Emily (26:47)

Segment Four: 23andMe, Privacy, and the Monetization of Genetic Data

Timestamps: 27:01–37:22

Key Discussion Points

• The Deal and Its Implications

  • GlaxoSmithKline invests $300 million in 23andMe for access to genetic data for drug development (27:42–28:39).
  • Use case: Targeted outreach to individuals with rare genetic mutations, e.g., for a Parkinson’s drug (27:58).

• Consent and Monetization

  • 80% of 23andMe users have “opted in” to data sharing, but the hosts question whether this consent is meaningful (27:13, 29:48).
  • Emily: “We’re essentially letting ourselves be these guinea pigs for free. We’re…paying for the privilege of being monetized.” (29:28)
  • Felix: “If my genetic information is going to be sold for 300 bucks, I want the 300 bucks.” (30:14)

• The Public Interest vs. Private Gains

  • Concerns about private companies capturing the value of data volunteered by individuals, and the absence of public benefit mechanisms (32:08–32:59).
  • Anna: “There’s going to be more questions about people owning their own data and…make money off of their data…” (30:51)

• Role of Government, Private Sector Incentives, and R&D

  • Anna defends the role of private enterprise and profit in drug innovation; Emily counters that all-profit focus can distort priorities (33:44–34:39).
  • Felix: Declining productivity in pharma and increased desperation for blockbusters prompt these data deals (35:03).

• Creep Factor and Power Imbalances

  • Emily: “It would be nice...there should be some kind of…public buy in to big programs like this. When you’re talking about people’s genetic information and drugs that may be good for the public...I gave up my genetic information for free and now you’re gonna sell back to me a drug…for God knows how much money. That doesn’t seem right.” (36:27)

Notable Quotes

• "On the one hand, this is creepy as fuck, and on the other hand, you can see how it's actually quite useful." — Felix (28:30)
• “We’re essentially letting ourselves be these guinea pigs for free…paying for the privilege of being monetized.” — Emily (29:28)
• “Some tick the box that you do when you buy a test shouldn’t be…you shouldn’t be able to give up super valuable data in that way.” — Felix (30:14)

Numbers Round

Timestamps: 37:22–42:11

• Felix: 11%

  • Income boost in later life for those exposed to iodized salt in utero—a testament to cost-effective public interventions (37:22).

• Emily: 29,000

  • Hungarian pigs bartered for 20,000 wagons of Czech wooden fuel in 1932, amid a global trade crisis (38:51).

• Anna: 1,000,000 (% Inflation in Venezuela)

  • The IMF’s prediction that Venezuela will hit a one million percent inflation rate by year’s end; coffee prices doubling every 20 days (41:02).

Notable Quotes

• “The big Slate Money investment recommendation here is go long yaks.” — Felix (40:55)
• “Every time you think it can’t get any worse in Venezuela, it can get worse.” — Felix (41:34)

Memorable Moments & Quotes

• On tech stocks:
  "The bloom is off the rose." — Emily (04:43)
• On subsidies:
  “If you want to win in Iowa, you need to be incredibly supportive of corn subsidies.” — Felix (15:33)
• On genetic data:
  “Paying for the privilege of being monetized.” — Emily (29:28)
• On CEO communication:
  “What we need to do is be concentrating all of our efforts on making cars and selling cars rather than sitting in offices moving emails around.” — Felix (19:38)
• On financial jargon:
  “A whole language developed in the finance industry to make it seem harder to understand.” — Emily (25:04)
• On Venezuela:
  “Every time you think it can’t get any worse in Venezuela, it can get worse.” — Felix (41:34)

Useful for Listeners Who Missed the Episode

This episode offers incisive, sometimes biting, analysis on the week’s top financial stories with a healthy mix of skepticism, humor, and policy insight. The hosts expertly connect the week's dramas—tech stock tumbles, trade wars, iconic CEO legacies, and genetic data privacy—to bigger themes about regulation, incentives, and the role of narrative and communication in business and politics.

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