Slate Money — "The Breaking the Law Edition"

Date: February 27, 2016
Host: Felix Salmon with Cathy O'Neil, Jordan Weissmann, and special guest Guan Yang

Episode Overview

This episode dives into headline-grabbing cases where legal, financial, and ethical questions intersect sharply. The slate team investigates three major stories:

1. Apple vs. FBI – Digital privacy, encryption, and the slippery slope of backdoors.
2. Sci-Hub and Academic Piracy – The economics and ethics of paywalled research and disruption by Sci-Hub.
3. Argentina's Sovereign Debt Saga – How New York courts and hedge funds shaped default and restructuring, with global implications.

The show delivers signature Slate Money depth, humor, and open debate—especially around unresolved issues and complex tradeoffs between public good, government reach, and private sector responsibilities.

Main Segments & Insights

1. Apple vs. FBI: Law, Tech, and Privacy

(Starts ~03:22)

• Core story: The FBI asked Apple to assist in unlocking an iPhone used by the San Bernardino shooter. Apple refused, citing privacy/security implications, igniting national debate.
• Panel views:
  • Jordan Weissmann shares his “law and order” perspective shaped by personal exposure (his wife is a prosecutor), initially critical of Apple’s stance due to real-world law enforcement frustrations (05:28).
  • Guan Yang expresses caution about forced technical cooperation, citing slippery slope risks—“If Apple really has to unlock 175 phones that the Manhattan DA produces...it’s going to be really hard to keep that secure and to keep that under lock and key.” (07:19)
  • Discussion moves to principle vs. precedent: What kind of backdoors or court orders set new standards for privacy and security in society?
• Key technical issue:
  • The difference between perfect encryption algorithms and real-world implementations:

    “Algorithms are realized with code, code that runs in computers. These computers are used by humans. And security is really, really hard.”
    —Guan Yang, 09:19

  • Human and technical weaknesses, “social engineering” as the easiest hacking route (10:30).
• Privacy in Practice:
  • Explains distinction between “data in transit” (messages, emails) vs. “data at rest” (on a phone). “Data that’s on your phone is harder to secure,” says Guan. (14:28)
• Societal and Policy Angle:
  • Cathy O’Neil urges a shift in focus: less on Apple’s obligations, more on government’s duty to protect all citizens’ privacy. (15:59)
  • Government’s role is conflicted: some branches champion privacy, while others (like law enforcement) push for access. (16:56)
• Open-endedness:
  • “No one really knows why the government is going to court and trying to get Apple to do this,” Felix summarizes the ambiguity. (18:43)
  • Encouragement to read Guan’s newsletter for nuanced details.

Notable Quotes:

• “I personally hear about this issue at the dinner table. Like, my wife will come home and tell me about some iPhone she cannot unlock.”
  —Jordan Weissmann, 05:23
• “Apple will sit with a conflict of interest that the better Apple’s able to protect my privacy, the more difficult Apple’s job will be in the 6,000 cases where it has to comply with these court orders.”
  —Guan Yang, 17:04

2. Sci-Hub: Academic Piracy and Knowledge Access

(Starts 20:38)

• Core story: Sci-Hub, dubbed “the Pirate Bay of academic papers,” lets people bypass costly publisher paywalls for research. Founded by Alexandra Elbakyan, it’s been targeted by lawsuits but persists via technical means.
• Panel reactions:
  • All panelists support Sci-Hub's mission; Jordan confesses it makes his “heart happy.” (20:46)
  • Technical details: hosts in places beyond US court jurisdiction, leverages the Tor network for anonymity (23:12).
• Economics of Academic Publishing:
  • Libraries pay most of the bills, not individual $35-per-paper purchases, so Sci-Hub’s revenue impact on publishers is minimal (24:48).
  • “The authors are basically paid by the public through research grants. The editors aren't paid, the referees aren't paid.”
    —Guan Yang, 26:02
  • Academic system locks young researchers into old journal systems for tenure, entrenching legacy publishers (28:20).
• Open Access & Policy:
  • NIH/NSF requirements for public access face publisher lobbying, but have made progress (29:00).
  • Challenge: Decades of old, paywalled research remain inaccessible—Sci-Hub’s main utility is “freeing that old stuff” (29:51).

Notable Quotes:

• “It’s fun as a form of civil disobedience. But the fact is that nobody was really buying academic papers for $35. The people who are paying Elsevier are libraries.”
  —Guan Yang, 24:48

3. Argentina's Sovereign Debt: Law and Global Markets

(Starts 31:56)

• Core story: Argentina’s long-running fight with US hedge funds (“holdouts”) over defaulted debt, triggered by an unusually aggressive US court injunction.
• Legal weapon:
  • Nuclear remedy by Judge Griesa: If Argentina didn’t pay hedge fund holdouts (like Elliott Associates), it couldn’t pay any bondholder—a first in international finance (32:03–34:27)
  • The injunction’s scope: Even local-currency bonds processed by institutions with US connections (e.g., Citi Argentina) were blocked (37:51).
• Market consequences:
  • Countries now rewrite “pari passu” clauses in bonds to prevent repeat nuclear remedies—but old bonds with vulnerable language persist (38:33).
  • The episode illustrates judicial personality and unpredictability: “How idiosyncratic it is. I mean, it just completely depends on the judge’s personality, various maybe how much coffee he had on a certain morning.”
    —Jordan Weissmann, 39:56
  • Macro implications: Holdouts (who bought bonds for pennies on the dollar) make outsized profits—possibly making restructurings harder for other countries (42:03–43:17).
• Ethics and fairness:
  • Money needed in Argentina now goes to hedge funds—"that’s money which the Argentine population desperately needs. And it’s sad that they're having to pay this much money right now."
    —Felix Salmon, 42:55
  • Generational optimism: Millennials as future judges may change attitudes (43:17).
  • Broader theme: US legal and tech dominance projecting power (Apple & Argentina both as examples).

Notable Quotes:

• "If any other foreign country had treated the USA in a foreign court the way that American courts had treated Argentina, America would not be taking that lying down."
  —Felix Salmon, 44:13
• "Apple is the anti-Alphabet.”
  —Guan Yang, 52:48

[Numbers Round]

(Starts ~46:55)

• Felix: $400 million — Phil Knight's massive gift to Stanford’s endowment. Critiques utility: “I do not cannot understand why anyone with a single philanthropic bone in their body would pour $400 million...into this seemingly bottomless pit..." (47:00)
• Jordan: 20% — Of Trump supporters in a poll who disapproved of Lincoln freeing the slaves. “I can’t.”
• Kathy: 20% — The gap between UK Brexit polling (50/50) and betting market odds (70% bet against Brexit), discussing predictive value of betting vs. polls. (49:15)
• Guan: 1 — The number of profit and loss statements at Apple; company operates as a single unified business, unlike the “Alphabet” model of Google. (51:05–52:51)

Memorable & Notable Quotes

• “No one really knows why the government is going to court and trying to get Apple to do this.”
  —Felix Salmon, 18:43
• “Sci-Hub is ...the Pirate Bay of academic papers.”
  —Jordan Weissmann, 20:51
• “Apple is the anti-Alphabet.”
  —Guan Yang, 52:48

Notable Timestamps

• 03:22: Start of Apple vs. FBI discussion
• 20:38: Sci-Hub segment begins
• 31:56: Argentina debt saga recap
• 46:55: Numbers round

Tone & Style

Informal, sharply analytical, often humorous, and candid. The hosts bring personal experience, technical knowledge, and strong opinions, while also embracing the unresolved nature of many issues.

Summary Takeaways

• The Apple/FBI case is a microcosm of larger privacy vs. security debates, raising foundational democratic questions.
• Disruption of academic publishing by Sci-Hub exposes inefficiencies and injustices in paywalled knowledge economies.
• Argentina’s debt saga exposes the unpredictable power of US courts and signals enduring global financial system quirks.

Listeners are left with insight, curiosity, unsettled questions — and the encouragement to dig deeper, especially via Guan Yang’s well-regarded newsletter.