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The Dire Costs of the LA Fires
00:48:50
The wildfires in LA raise insurance and labor issues, Meta takes a MAGA turn, and NYC has implemented congestion pricing.
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- [00:00]
A
Foreign. Welcome to SLEEPD Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios with Elizabeth Spires, an expert on all things ad sales.
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B
Hello.
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A
I'm here with Emily Peck, an expert on all things low wage labor.
- [00:32]
C
Hi.
- [00:33]
A
So let's talk about ad sales and low wage labor. This week we are going to talk about the fires in Los Angeles and there is a low wage labor very, very, very low wage labor angle to that story that we will explore. We're going to talk about the big moderation and content changes happening at Facebook which Elizabeth has opinions about. We are also going to talk about congestion pricing because it is a thing now in New York and we all live in New York and we all have opinions. We have a Slate plus segment on Birkin bags wherein I will tell you if you need to know how to easily tell the difference between a Birkin bag and a Kelly bag. This is all podcasting information that is useful and important. So stay tuned. It's all coming up on Slate Money. So obviously the big news of this week is that Los Angeles is burning down and last I saw there was, you know, 50, 60 billion dollars worth of houses had burned down and damages had been caused. There's going to be at least $15 billion of insured damages. This is going to really cause massive problems for the insurance industry and in fact there might just not be any more fire insurance like private fire insurance in California anymore after this. Emily, just how bad is this?
- [02:12]
C
Well Felix, we're talking on Friday morning right now at least 10 people have been killed by this fire. It hasn't been contained yet. The winds are making it worse. The celebrities homes are burning down. The homes of regular people are burning down. It looks to be the worst fire in history, the most damaging economically. The insurance issue is being well covered and seems really, really bad. So to your question of how bad is this, I would say it's quite bad.
- [02:43]
A
One interesting thing is that sofa we are really talking about homes. Yes, homes and a few like you know, art studios and pet sanctuaries and that kind of thing. The sort of commercial heart of Los Angeles seems to have been mostly spared. That I think is one of the differences between fires and floods slash hurricanes is that fires just generally don't really densely built up urban areas normally, although they can like there's nothing that is immune to fire. I'm interested to see where this ends up. But yeah, like just on a, on in terms of a residential catastrophe, we have definitely, definitely suffered that.
- [03:29]
C
Yeah, hundreds of thousands of people, I think have been evacuated at this point. I mean, that's massive. I mean, the disruption and we could get into it. Just I don't know how to feel about all the news about this celebrity's house has burned down and this celebrity's house has burned down and Billy Crystal and da da, da. Like, it's awful. But I feel like it takes attention away from real middle class people who are losing their homes and will have a harder time rebuilding.
- [03:56]
B
Yeah, well, not even just middle class people. I mean, the Palisades is not primarily home to Hollywood celebrities and it's completely gone now. I think the only reason why people are fascinated with celebrities is because they're fascinated with celebrities. I don't think it has anything to do with them being the primary victims of this. I think it's just our fascination with them in general.
- [04:18]
A
But Elizabeth, weren't you talking last week about Paris social relationships with celebrities? We feel on some level like these celebrities are our friends. And this is one way for people who may not have friends in Los Angeles to feel like, oh, you know, shit.
- [04:33]
B
Oh, yeah. And it's also, I think, uniquely if you do have parasocial relationships with celebrities, it's. It's sort of discombobulating to see somebody that you think is generally immune from problems like this leaving their house with nothing or being escorted out. You know, somebody sent me a video of Harrison Ford stepping out of a police car and he was just kind of dressed normally and dumping like a cup of coffee on the side of the road. It's just the lens through which I think most of America thinks of LA because it is the center of Hollywood and center of a certain kind of culture. But if you look at the sort of scarier things about what's happening here, I think it really has to do with even if this is the worst thing that's happened in terms of fires in California, there are so many structural problems that just nobody knows how to fix. One of them is just that the water supply is not really designed to fight this kind of fire that's widespread. It's really designed to put out limited house and apartment fires in an urban area. And so if we know that this problem's going to get worse because this kind of wet to dry season whiplash is just increasing with climate change. That's the really scary part. I think people are focusing on celebrities right now partly because the bigger macro problems are really overwhelming and terrifying.
- [05:52]
A
Yeah, like insurance works really well when you have a bunch of independent events that you're insuring against. If you insure against, say, people getting burgled, their houses robbed. There are sort of long term trends. They can go up and they can go down in terms of how likely that is. But ultimately, you know, roughly how many houses are going to be robbed every year. If you know how many houses there are. And if you set the insurance premiums appropriately, then you can make some profit by providing that kind of insurance and still paying out in full on every claim. With something like fire is just incredibly different because it's not, you know, there are certainly cases of individual fires, you know, someone left the gas on or something and the house burns down and the fire department comes and puts it out, and that's one house. But then you also are exposed to these kind of mass events where thousands of houses burn down at once and that can wipe you out. And that, from a basic risk management point of view, is just a screaming signal to any insurance company saying, do not write this kind of insurance because the tail risks are just too big. Or if you do write it, make sure that you have very good reinsurance. And then you just punt the problem to the reinsurers. And the reinsurers are like, why on earth would I want to reinsure fire risk? Because it's all downside already.
- [07:14]
C
California had lost a lot of insurers, Right. And it has this, it's called what Fair program. That's the sort of state insurance of last resort that looks to be in.
- [07:23]
A
Peril now for exactly the same reason.
- [07:25]
C
Yeah, yeah, but this, what I don't understand, if this fair insurance program company that's state sponsored runs out of money, then won't the state step in and make sure people get paid out? It's not like people won't get paid out.
- [07:39]
A
Well, California state does not have an unlimited amount of money. But no, the way it works is that if you, if the program runs out of money, then by law the state can basically claw money back or out of private insurers. And they can basically say, you know, we've lost so much money, we need you private insurers to pay us a whole bunch of cash. Even though you never wrote this business in the first place. Effectively what they're saying is you put 100% of the reinsurance fire risk onto us by not writing these policies in the first place. And so when our losses exceed a certain amount, you're going to have to share in that.
- [08:20]
C
That seems hard to pull off.
- [08:23]
B
Well, the thing is, whenever they do that, they say you have to do this or you can't operate in the state. So they don't really have a choice, especially if they want to sell other insurance products into the state of California. But another factor is, you know, when Felix talks about the reinsurance companies, there's a class of insurance called super catastrophic insurance. This is how Warren Buffett made a lot of his early fortune, was investing in general Re, which was a company that sold these insurance policies for catastrophic event that were really outliers. And now especially the insurance companies that deal with flood and fire and, you know, these sort of big climate catastrophes are having to rethink how they do their business because these things are so much more likely than they were 30, 40 years ago.
- [09:03]
A
They're much more likely. And so far, broadly speaking, the insurance industry generally, and the super cat industry in particular, has been incredibly lucky. The big fires and the big hurricanes and the big earthquakes have caused a lot of damage, but they haven't caused insane amounts of insured damage for whatever reasons. You know, if there's a massive hurricane in New Orleans, say, like, it wipes out a lot of people, but those people are often uninsured or underinsured. We haven't had a direct hit on Miami. We haven't had a direct hit. Well, we had like Hurricane Sandy in New York, but for whatever reason, it didn't cause a huge amount of insured damage. The wildfires in Australia were a big thing. But I think you're absolutely right, Elizabeth, that the insurance industry is not waiting around for some super catastrophic insured hit to happen, and they're just largely exiting that business.
- [10:05]
C
I also was hoping we would talk about because I dove pretty deep into. Our producer Jessamyn made up this great research packet because we wanted to talk about the prisoners who are fighting these fires in California, which is a subject I didn't know that much about going in, but I now feel very passionate about and is super interesting. Thousands of the firefighters in California who are battling these dangerous wildfires are prisoners who are making not a lot of money.
- [10:36]
A
Maybe like $10 a day sometimes.
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C
Yeah, which is a lot, actually, if you look at pay rates for prisoners who work, which can be like 74 cents an hour. So it's like a lot by comparison. But regular firefighters employed by the State are making $39 an hour. And these prisoners who are fighting the fires, their risk of injury or death from doing so is. Is disproportionately higher than the $39 an hour firefighters. And when we were talking in the prep, we sort of had like a mini debate real quick where Felix was like, this is great. It's great to have prisoners fighting fires. And me and Elizabeth were instantly kind.
- [11:16]
B
Of like, I don't know.
- [11:18]
C
And now I've read through. We read this Harvard Review piece that's like a lot of words. And I think Felix might be a little bit wrong, but not totally wrong. So that makes you feel better.
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A
Yeah, no, I'm not black and white about this.
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B
Yeah.
- [11:34]
A
But the first thing to say is that this is very much not just a volunteer force like every, everyone who's doing this has volunteered to do it, but it's actually. Well, yeah, it really is.
- [11:47]
C
I mean, it's like it's an offer you can't refuse. You know, you're in, you're a prisoner. And it's not coercion per se. It's. They're offering incentives. Right. If you volunteer for this work, you don't have to be in prison. You live in like a work camp that's actually nicer than the prison. So you have like incentives to do it. It's not, you're not being forced to do it.
- [12:11]
B
It's not even just that it's. You're not legally forced to do it, but there's an ACL prison labor report that says 76% of incarcerated people report being forced to work or they face additional punishment. So you can be coerced without.
- [12:29]
A
So, Elizabeth, that's a slightly separate issue. And no, it's.
- [12:32]
B
To be very clear, it's related. It's completely related.
- [12:34]
A
No, to be clear, these things are all related. To be sure. And I, you know, I am not going to come out like defending the American castle system in any way, shape or form. I think it's, you know, absolutely terrible. And there are many, many, many things wrong with it. All that to one side, Emily is absolutely right that there are big problems with the amount of training that these folks get before they get sent into the fires. Like, it's just a couple of weeks. It's nothing like what the professional firefighters get.
- [13:09]
C
Two weeks.
- [13:10]
A
And also, more profoundly, with the whole kind of stated raison d' etre of this program, which is that it's a path to a good blue collar job when you get released in that once you've been an active firefighter for a while, that's going to make it much more likely that you'll be able to get a job as a professional firefighter when you leave prison. That works in theory and in practice, it just doesn't seem to work. Out that way, and if they manage to get that pipeline working much better, I would be much more supportive of this program.
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B
Right.
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C
Because you have to have, like, an EMT certification. There are certain prohibitions on felons serving as firefighters. It's really not an easy switch. If it's true that people aren't forced to do this very dangerous work. The incentives are so great. It's like, one of those things where it's like, why would you say no? It's like, you couldn't. It's a great choice to make. But leaving that aside, because I don't want to fight about that. Where I came down on was just like, it's just wrong to pay prisoners a fourth of what the firefighters alongside them are making when they're putting their lives at risk.
- [14:19]
A
But, Emily, just logically speaking, if we're talking about the incentives are so strong, yada, yada, if you up the pay by, like, tenfold, that's just gonna increase the incentives and make the problem in that sense even, like, it's gonna feel even more forced. Like, how could you say no to $39 an hour as a prisoner?
- [14:37]
C
Yeah. I mean, but we read. I think it was a piece in the Guardian by someone who actually was a prison firefighter, and she was like, this job was great for me. Like, it made me feel. Because, I mean, I was trying to think of it like, you must feel. It must feel good to save lives and, you know, to come in and, like, help people in an emergency when you're a prisoner. And, like, what a way to. If we're not thinking too cynically about the prison system, what a way to make amends for your crime and, like, rehabilitate yourself. I feel like Elizabeth is just rolling her eyes, but I think that you can pay people more and treat them with dignity, like people who work should be treated with dignity and respect. And this woman's perspective was like, don't shut down this kind of work. But, like, she was, like, unionized prison workers, which. Can you imagine? Like, that's never going to happen in America. But, like, make better standards, do better training, like, make a better program.
- [15:32]
B
I mean, but this is all. That's so pie in the sky, though.
- [15:35]
C
But you have to have a pie in the sky if you want to get anywhere.
- [15:39]
B
But they're. They're already. Okay, so here's where I disagree with the. The Felix's assertion that this is kind of a separate issue. It's not, because this is about private prison labor in general, and you can't Sort of carve out firefighting and say the incentives are different. It's like they might be for individual people who might find some sense of meaning in firefighting as opposed to other forms of outsourced labor. But you have to look at the structural pressures if you're incarcerated. I don't know if either of you have any experience with the carceral system. I have a younger brother who was in and out of prison for 15 years. And when normal prison labor is paying you, like 10 cents an hour, yes, there is an incentive to take a $10 an hour job, especially when everything in the commissary is insanely expensive. It would be like experiencing 200% inflation in a private market. But another thing is that a lot of people feel like they're not even able to afford basic necessities with existing prison wages. So giving people an out where they maybe can afford something, it's like, that's not really, to Emily's point, it's like, is it a choice or is it kind of a necessity? Another thing is that 64% of people reported that they felt unsafe while working regular jobs. You know, and if you only get two weeks of training as a firefighter, that's such a high risk job to begin with, you're putting yourself in harm's way because you may not just have it. You sort of don't have a choice. And it creates these kind of bad incentives. If you have a shortage of firefighters in California, and we have a heavily privatized prison system in the US there's an incentive to put more people in prison so that you have cheap labor for firefighting. There are all sorts of things about this that are perverse. And it's not that I don't think that prisoners should be given rehabilitation options, but frankly, they're not given basic rehabilitation options outside of that. You know, there are a lot of prisons where you don't have access to education. One of the places my brother's incarcerated in, he wasn't allowed to read books unless they had a Christian theme. You know, there are so many problems that you'd have to fix before you would get anywhere near unionization. So I think the discussion's more academic than reflective of reality on the ground.
- [17:55]
C
And that was one of the pieces we read. As there are more of these climate catastrophe events like this Los Angeles fire, there's gonna be more need to for prison labor to come in and fight the fires. And that creates these perverse incentives that seem super bad.
- [18:23]
A
Let's just stick on super Bad things, shall we? And talk about what Facebook is up to these days?
- [18:30]
C
What do you mean? Super bad. They're, like, focused on free speech now. Back to their roots.
- [18:34]
A
Yeah, no more censorship. Facebook is. Well, we should call it meta, I suppose, or just call it Mark Zuckerberg, since he is the controlling shareholder. Mark Zuckerberg has done his big sort of heel turn. He's appointed Dana White to the board of the company, and he's basically, to a first approximation, abolished all restrictions on what you can say on Facebook if you're posting. Used to be that you couldn't fire up your Facebook app and say something like, women are domestic household objects, but now you can. So that's freedom. Yay. And this is a very sort of libertarian conception of what freedom looks like. It's very in line with Peter Thiel's opinions, especially. Peter Thiel famously was pretty much the first board member of Facebook and was on the board for many years until 2022, when he was forced to leave because he was donating so much money to the Republican Party. But he clearly still has the ear of Mark Zuckerberg, and he wrote this very fascinating piece in the Financial Times on Friday, which I urge you all to read, which, as my boss, Anaxios Ben Berkowitz put it, you know, is very much saying the quiet part out loud and basically saying, yes, we Americans believe a whole bun of things that we haven't been allowed to say. And you can dispute who was doing that, allowing whether it was the government or whether it was meta or whatever. And now we are going to enter this lovely utopia where anyone can actually start saying what they believe for the first time in forever. And isn't that wonderful? And I do think that this is a really profound and important change in how we all receive and disseminate information.
- [20:26]
B
So I think this is going to go the way that it went on X, which is, you know, you abandon these moderation standards and, you know, you cause an entire constituency of people to leave, and the advertisers don't want to be there because there's just a lot of crap that advertisers don't want to run next to.
- [20:42]
C
I don't agree. I think Facebook, Instagram and WhatsApp are so popular and so widely used and. And the company has such a big piece of the advertising market and advertisers have been so quiet so far about the change, which we should explicitly say. In the past week, there was like this triple shot from Mark Zuckerberg, which started with their Global policy chief Nick Clegg stepping down or getting. I don't know why he was stepping down, if he was ousted, whatever. He was replaced by Joel Kaplan, who's like a Republican operative who worked for George W. Bush. So that was like, step one, and then step two was Dana White, the UFC CEO, big Trump guy. There's a great daily episode all about Dana White. You can learn more. Put him on the board. That was step two. And then step three was this, like, wild video where Mark Zuckerberg is on camera and he's wearing a $900,000 watch and, you know, cool T shirt or whatever and saying, like, we're going back to Facebook's roots of free speech. And everyone has already made fun of this because Facebook's roots was just like a Hot or not website on the campus of Harvard. There was no, like, big, like, belief or theory behind it.
- [21:55]
A
No, but, like, if you were Aaron Sorkin. Right. You would kind of see that. Right?
- [21:59]
B
Yeah.
- [22:00]
A
In a weird way that Mark Zuckerberg creates this Hot or not website at Harvard. He is then sort of shamed into disowning such juvenile pranks, but in his heart of hearts, like, he feels that people should be able to rate students on how hot they are. And now he's like, okay, never mind. I'm post shaming at this point. Anyone can say what they like. And if you want to go out and just start, like, judging people on how hot they are, you just go right ahead and I'm going to let you. And I have such a monopsony on selling ad inventory that the advertisers are just going to have to keep on advertising. Oh, right.
- [22:39]
C
That was what I was just trying to say. And I was just. I'll finish the point. Even though Felix just made it, which is that Facebook is really, really powerful and I think distinct from Twitter X, which never had the big sweep and reach of Facebook. So it can do this kind of stuff, and it's still going to be raking in billions of dollars.
- [22:57]
B
So I'm. Yes, but I think it's going to hurt them. And here's. Here's my business case for not doing this. And I do think that this is entirely political capture and not some principled business decision. But my argument kind of stems from things that are already happening that are affecting Facebook on a secular basis. One is that there was a couple years ago a big Apple update that caused privacy rules, or what you can do on Facebook, the app to change. And a lot of the appeal of marketing on Facebook is really being able to target in a very discreet way. So you can't do that as much on Facebook now. And Facebook's remedy for that has been to use AI to make it easier to find audiences that they think would work for your product. And you can do this via lookalike audiences and things like that that are sort of algorithmically generated. But marketers are not loving it. The other thing is that right now, CPMs are a little bit, I think, artificially upheld by giant spends from Temu and Shein or Shine. I can never remember how it's pronounced, but they're spending a lot of money at a loss to just gain customers. And I've seen a lot of Facebook marketers and agency people that I've dealt with who are complaining about it because it sort of distorts what the ad market looks like. So putting all of this aside, you also have a problem with Facebook proper, as distinguished from Instagram and WhatsApp. So 70% of Facebook's advertising revenue comes from Facebook proper, not Insta. The other properties, a little under 30 insta. And then WhatsApp and messaging are kind of negligible in terms of ad revenue. But Facebook's audience in particular is aging pretty rapidly. It's predominantly Gen Xers and baby boomers. Only about 13% of Gen Zers use it. And when they use it, they say they use it mostly to keep up with people they already know, ostensibly the family members who are baby boomers and Gen Xers.
- [24:51]
C
I'd say like 20% of the content I see on my Facebook is like so and so just died.
- [24:56]
B
Yeah, yeah. And so. And the advertising based, for the most part, a lot of small businesses, a lot of people are using it for lead generation, stuff like that. So we're not talking about big brand advertising to start with. But then you have to look at who the audience is in the US So the audience is like, it skews heavily female. Surprisingly, the partisan lines are almost 50, 50, 47% of Democrats say they use it, 46% of Republicans. So when you think about what getting rid of these moderation effects due to what your Facebook feed is going to look like, and that's where I think the impact you're going to see the most. Because Instagram isn't very political really. It's image driven. So it's a much different platform. But if I go to my Facebook feed right now, even controlling for the fact that I know a lot of people in politics and media, it's so politics heavy and culture war Heavy. And I think that's where they're going to pay for it.
- [25:55]
C
I think that's you, Elizabeth. Mine is not. It's like people are dying. People are going to concerts.
- [26:02]
A
I think Emily is absolutely right about this that, you know, Facebook is really good at creating little bubbles of like minded people and filter bubbles. And we've heard all about this for decades. And kind of the point about filter bubbles is that if a bunch of transphobes get together in their transphobic filter bubble and say terrible things about trans people, they don't offend each other by doing so. And Mark Zuckerberg and especially Peter Thiel is out there saying like, this is exactly what Facebook is for. It's for allowing people to build up communities, even if it's like a terrible community that the coastal elite doesn't want to exist.
- [26:42]
B
Yeah, but if you're, if you're an advertiser, do you want your ads next to that?
- [26:46]
A
And that's the big question, right? Which is precisely, is Facebook going to give tools to advertisers to basically say like, you know, don't be placing my ads in the middle of a massive transphobic conversation. That's not a good look. Or if it doesn't, are the advertisers going to be so scared of being placed next to those conversations that they're going to leave the platform entirely?
- [27:10]
B
There are ways to do that. You know, if you're using a regular programmatic ad platform, you know, you can program in exclusions around certain types of content, but Meta's new rules about moderation are so weirdly contradictory and Meta that I don't know how you would even program in the exclusions.
- [27:27]
C
Talk about that. How are they contradictory?
- [27:29]
B
Well, for instance, there are things you can say, first of all, they have to do it within the context of law that already exists. That relates to how you can treat a protected class. If you're talking about the superiority of one racial group over the other, there's a kind of weird phrasing that says something like, you can't say it in a targeted way that basically is unsupported by data or something. But then, you know, race scientists will produce or you can produce. You know, there are so many ways to get around the few restrictions that they have. And they seem to also be focusing heavily, at least on the moderation guides that the Intercept is reported on. And particularly gay people, trans people, Muslims, you know, marginalized groups and being able to suddenly say nasty things about. There are these loose rules around dehumanization but what constitutes dehumanization is often contradict. In some cases it's okay to compare a protected group to an object. And so one of the heavily cited examples that would be allowable is calling, you know, a trans person it. But you can't say, you know, an ethnic group are, you know, they're insects that need to be exterminated. And I don't know how from an advertising perspective, and this is aside from like the, the moral perspective, but I think you can guess what my opinion on that is. I don't know how you would even algorithmically, even using AI as an advertiser or as Facebook, be able to do those kinds of ad exclusions because the semantics and the context is too complex.
- [29:00]
A
I think you're right that it's practically impossible. So then the advertisers end up basically faced with this choice of do we wind up continuing to target people who might be spewing hate speech, or do we leave the platform entirely and we will see where that goes. I think the other aspect of this we should touch on though is that from a business perspective, it's not just advertisers that Facebook needs to worry about. It's also employees. It's a California based organization. A huge swathe of its gay employees are up in arms about this. And I think on some level, the sort of Mark Zuckerberg, Peter Thiel, Mark Andreessen axis at the top of Meta has persuaded themselves that the Silicon Valley workforce broadly is much more aligned with them than many people think, and that if they make these moves, then for all that, there will be a few people shouting loudly about how terrible it is that the Meta employee base will not just hate it and quit and find jobs elsewhere. But that's clearly a risk.
- [30:14]
B
Well, also, they're talking about moving part of the operations to Texas.
- [30:17]
C
Free speech bastion of Texas.
- [30:20]
A
I love that piece of the press release. They're like, in order to stop people thinking that we're biased, we'll move content moderation operations to Texas. It's like, what?
- [30:30]
C
I'm sure there are a lot of employees who are upset over this, but it's a very weak job market now in tech and the jobs at Meta are good. They pay really, really well. I sort of doubt there's going to be some kind of like principled exodus. People knew what they were getting into when they worked at Meta. It's not like Zuckerberg's been running this great moral principled organization, you know, for the past 15 years and, oh, now it's changed. It's like people knew and know what it is.
- [30:57]
A
Yeah. But I mean, I think that's one of the things that Nick Clegg was brought in to do was to try and say, look, we are a global company. We're trying to stay in line with global norms and be good global citizens. And even if Emily Peck is rolling her eyes and not believing it, I think a fair number of meta employees drank that Kool Aid and now he's out in a kind of ignominious exit and all of that has been jettisoned and they're like, oh, wait, again, like, we don't know.
- [31:29]
C
Slatemoneylate.com write to us slatemoneylate.com if you're a meta employee and you have thoughts, we will keep you anonymous, of course. But it would be interesting to know more.
- [31:48]
A
So let's talk about some good news, because we've had two segments of like, everything is terrible. So let's talk about everything is good. At least in New York City. New York has congestion pricing. Yay. It's only 20 years too late, but we got there in the end. It's not the $15 charge that might have made a difference. It's a $9 charge that is making less of a difference. But it's a beginning. It is a knob that can now be twiddled, which means that when the government needs more money or when there's too much congestion or anything like that, in theory, the price can be raised and all of these good things can become even more good. So yay to congestion pricing. And Elizabeth, is there a snowball chance in hell it will happen in any other city in America?
- [32:36]
B
Probably not. I mean, we have sort of a perfect.
- [32:39]
A
I think Boston has a possibility.
- [32:41]
B
Yeah, I guess so. I mean, I guess I don't know enough about traffic and congestion in other cities to say how pressing a problem this would be. I think in New York, it's, it's been a problem for a long time and there's a lot of political will to do something about it. Not sure that that's true in other places.
- [32:57]
C
No other city has as robust public transportation as New York, where you could, like, restrict cars and be assured that people can still get around. Although not the gentleman I saw in a viral X post who, I mean, it's a little off topic, but this guy was interviewed on video actually saying a person who lives, I think it was 61st street and 5th Avenue, which is like an extremely pricey zip code.
- [33:24]
A
It's impossible to live on 61st and 5th without living in like a $5 million apartment.
- [33:28]
C
You are very rich. And he then pointed out that he parks his car and he pointed right over there. So he's parking his car on fifth Avenue on the Upper east side. This dude has money. And he was like, now because of congestion pricing, I have to pay to drive and see my kids. And you're like, oh, that's, that's sad. Okay, where do your kids live? Like New Jersey or upstate New York? No, his kids live about 15 blocks away in walking distance on the east side of.
- [33:55]
A
On 79th Street.
- [33:57]
C
On 79th Street. There are so many options to get there. You could grab a bike, you could walk. It's not far. It's not even a mile.
- [34:03]
B
Well, also, where is he going to hit a toll?
- [34:06]
C
Because he's like, I have to go around the corner. So when I drive around the corner to go uptown, then I cross 60th Street.
- [34:13]
A
It's just the one way streets. They're forcing him into the congestion zone.
- [34:16]
B
Oh, let's, let's just retool all of public policy so this one guy can.
- [34:21]
C
It was just. But it was so like encapsulating of so many of the complaints that you see about congestion pricing. It was like, this is, this is not a serious complaint or person. And like, let's put that to the side.
- [34:32]
A
The one thing I will say that broadly speaking, this Upper east side millionaire notwithstanding, a lot of rich New Yorkers like this, insofar as they do drive around New York, they really hate being stuck in traffic. And if they can see the amount of traffic they're stuck in decrease significantly, they are more than willing to pay nine bucks to do that. The majority of New Yorkers who don't drive at all also like it because it means more money for the MTA and better subway service and better bus service and all the rest of it. So that really leaves, you know, the car driving suburban middle classes who probably think they drive into midtown Manhattan more than they actually do. But just in principle, there's this God given right to drive your car wherever you like without having to pay a charge. Even though, by the way, those trips have overwhelmingly been told for decades, because we live on an island and the bridges and the tunnels, nearly all of them are told.
- [35:38]
C
But what I want to talk about, Felix, this is either the second or the third, maybe the fourth time we've spoken about congestion pricing. Who can say, who can go back into the archives and figure it out? I don't know, but I had not realized until this week when I had to talk about congestion pricing on a different podcast that London, which famously implemented congestion pricing, I think, like 20 years ago. And I had thought in my head, like, big success actually is now more congested than ever. So I'm left wondering, have I been misled that congestion pricing actually reduces congestion? As the defender of the uk? Yeah, go ahead.
- [36:16]
A
Because everyone knows that I love the UK and will defend it to my dying day.
- [36:21]
B
That's why you live here.
- [36:24]
A
So London is very, very interesting. There's a few different things going on here and it's worth unpacking them a little bit. The first thing is that people get used to paying a charge, and then in order to sort of shock them into driving less, you need to raise the charge. So any decent congestion price is naturally going to rise over time. It's been a minute since the London congestion price rose and we are at the point at which it probably needs to go up again if you want to make a difference. The second thing is that, unlike New York, the majority of traffic in London within the congestion pricing zone is no longer private vehicles. And so bringing up the charge doesn't have that much effect, because at this point, people have actually successfully been dissuaded from driving into central London. And so what you're left with is a bunch of for hire vehicles and trucks and commercial vehicles.
- [37:20]
C
Lorries.
- [37:21]
A
Lorries, exactly. Who have very different sort of incentives and needs to be there. And so it becomes harder and harder to reduce congestion. The third thing, which is like a really good part of congestion pricing, is that all of those congestion pricing revenues in London really have gone into creating a much better bus network, a much better Tube network, a much better bike lane network, and so on and so forth. And certainly when it comes to things like bike lanes and bus lanes, those things deliberately take up chunks of the roadway that are not available to private cars. And so that leaves the amount of roadway available to private cars to be lower to have more congestion. But what we care about when it comes to congestion pricing is not how fast do cars travel. The purpose of congestion pricing is not to maximize the speed at which cars travel. The purpose of congestion pricing is to maximize the speed at which people travel and the speed at which people can get around. And in London, London's not perfect, I'll be the first to admit that, but people are getting around more quickly. If you get on a bus especially, you get around much, much more quickly than you did pre congestion pricing. And so that is kind of a feature rather than the Bug. In a, in a city with sensible transportation infrastructure, getting into a private vehicle should never be the fastest way of getting anywhere. You want it to be slower, you want to provide that time incentive for people to use public transport. And that's exactly what London is doing.
- [38:58]
C
So the two benefits are it's a way to increase taxes and spend on public goods and then the other is to just make it easier for people to get around on the public transport you've just invested all the tax dollars in.
- [39:12]
A
Yeah, so at the beginning, the wonderful thing about London congestion pricing was that it really sped up traffic speeds. But maybe we have now reached the point in London that that's not the point anymore. The point now is to create this sort of utopian city that people get around without having to get into a car and drive, which is the optimal place to arrive at.
- [39:34]
C
We'll see what happens in New York, I guess. Too soon to say.
- [39:37]
A
I was just spending a little bit of time in Paris and I think Paris now has reached that point even more than London has. It really is a terrible place to drive, but by the same token a really quite pleasant place to get around any other way.
- [39:53]
C
I love taking the train from my suburb to the city as opposed to driving. Driving to the city I find to be extremely stressful. And if you want to just take the train, you just sit there and you can read, watch movies, stare out the window. It's so much better.
- [40:06]
A
Yeah, exactly. It's always of fixing the what do you actually want to do problem. If people have this idea that taking the bus is terrible and driving a car is great, then people are always going to want to drive a car. If we can switch that and be like, people actually really like the relative pleasures of public transport over sitting in their private car in traffic, then that has wonderful, salutary, brilliant, knock on effect.
- [40:35]
B
I used to have to reverse commute from Grand Central to Greenwich, CT and I loved it because it was like an hour train ride on the Metro north and there was never crowded and I just got a lot of reading. So I can't fathom driving as a better alternative.
- [40:53]
C
They better spend the money, invest in those commuter trains though. I use Metro north and it's relatively pleasant, but I was reading up on a lot of people from Long island and the Long Island Railroad's already pretty crowded and if you're pushing more people to take the Long Island Railroad, I mean that sounds awful because then you're standing on your commute and it's really unpleasant. So they better spend some Money.
- [41:14]
A
And the real thing we do need to fix and this is the one place. And I, God knows, for all that, I don't have any sympathy for England, I really don't have any sympathy for New Jersey. But in this case, I do have a little bit of sympathy for New Jersey, which is that the public transport links between New Jersey and Manhattan are terrible. And if we extended the subway system, if we extended like the 7 train to New Jersey, if we did the things that made it a lot easier for Jerseyites to get into the city by public transport, then that is a necessary part of this. And their complaints about congestion pricing really hurting them are mostly stupid. But in this case they're not entirely stupid because the options really are kind of limited. And you wind up in New Jersey transit hell winding up with delayed trains and Penn Station or Port Authority bus Terminal or something. It's like, it's all bad.
- [42:06]
C
Yeah. It's not the same as the guy on Fifth Avenue who's sad because he can't drive 15 blocks without getting charged money.
- [42:24]
A
Numbers round. Emily, do you have a number?
- [42:27]
C
12.7%. That is the increase in unit sales for cottage cheese over the past year. Snack sales are kind of a little depressed right now. Coming off their high of the COVID era when everyone was snacking all the time. People are still snacking, but they're liking these protein heavy snacks. So like meat sticks and cottage cheese has just become extremely popular and I don't understand why. And I know we just talked about Meta for a really long time and said all kinds of like, scary things about Meta, but the truth is I am still on Instagram. I do look at Instagram reels and I'd say like, conservatively speaking, like 15% of them involve like weird cottage cheese recipes where people are like taking the cottage cheese and they're putting it on like a sheet pan because everyone's obsessed with sheet pans still. And then they make them into like gross looking things and they're like, it's just as good as whatever, like cheesecake or cheese this or that. And you're like, no, it's not. This is a lie.
- [43:19]
B
I think it's because it's super high protein and all these fitness influencers eat it with like every other meal.
- [43:25]
C
Yes. And it's. I'm sorry, I. You know, I grew up in the 80s and my cousin was really into dieting and I remember her buying the cottage cheese with the pineapple in it and everyone was really into the cottage cheese in the 80s. But I thought we had evolved, but no, we have not evolved. And these Instagram reels are very powerful, apparently, because cottage cheese sales are up and people are baking cottage cheese, which, I'm sorry, that is disgusting. If you disagree and you have baked cottage cheese, feel free to write to me@slatemoney.com I don't do with your commentary, but I do want to know.
- [43:57]
A
This is why no advertiser is going to abandon Instagram because, like, yes, that is why they are transforming the cottage cheese industry.
- [44:04]
C
They're selling this product that is like kind of not good. And look what they're doing with it. It's really amazing. We'll talk about more in the Plus.
- [44:11]
B
I think Emily's gonna be forced to read a cottage cheese ad just as a matter of torment.
- [44:17]
C
That's my penance.
- [44:18]
A
We'll continue with the numbers round after this short break where we'll advertise this.
- [44:23]
C
We'll be right back.
- [44:24]
A
Elizabeth, what's your number?
- [44:25]
B
My number is 73 and that's percent. And that's the number of men in a recent YouGov survey who say they do most of the chores in their household. And by comparison, only 60% of the women say they do most of the chores in the household. So I saw this and I thought this is just a good example of why survey design matters. So when you ask people to self report their own behaviors, they tend to do it in a very kind of flattering light. And if you're a guy and you realize you're doing more chores than your father did, you might assume that you're doing way more than you are. But the way to sort of check this is the Bureau of Labor Statistics has a time use survey that they do every year. And so the BLS numbers tell the opposite story, which is that women spend almost two times as much of their time on household chores and duties. Men spend around an hour a day. Women spend 1.9 hours a day.
- [45:18]
A
Elizabeth, I need to ask you, are you going to believe empirical data? Are you going to believe men's self reported awesomeness? Because I think it's obvious which one is true.
- [45:32]
C
70% of men say they do more chores than their partner.
- [45:35]
B
73% of men, yes.
- [45:37]
C
And 60% of women think they do more chores than their partner.
- [45:40]
B
So some of these men are delusional. That's the bottom line.
- [45:44]
C
That's the TLDR.
- [45:46]
A
My number is $700 million. And this comes from former Axios colleague Stephen Totillo, who has a games newsletter. And we all know how Expensive it is to create Hollywood movies these days. They broke through the $100 million barrier quite a long time ago. And now the big blockbusters can easily cost $200 million. $700 million is the low end of how much it cost to develop a video game called Black Ops Cold War, which I have to admit, I have never heard of.
- [46:24]
C
That's Call of Duty, right? It's like one of their variations.
- [46:27]
A
Ah, okay. Well, thank you for filling me in on that. But yeah. So video games have now become way more expensive than even, like, the most expensive movies. These things just cost an extra, absolutely insane amount of money. I have no idea where that $700 million goes or whether AI is going to bring it down.
- [46:49]
C
I mean, video games are complex, expensive to make beautiful worlds that last far longer than most movies. So it doesn't surprise me at all.
- [47:01]
B
And they're all in continuous development.
- [47:03]
C
In continuous development, constantly updated, very complex. Like, you're creating, like, a big digital world for people to explore in, and then they're connecting with each other online. It's like, of course it costs that much. I don't know. I'm not. Are you shocked by this feeling?
- [47:18]
A
I mean, I guess, yeah. I mean, as Stephen points out in his newsletter, these numbers are highly protected and confidential. And this came out in a sort of insufficiently redacted court filing that he found buried somewhere.
- [47:35]
C
Steven's so good.
- [47:36]
A
People keep these numbers very secret. So, like, yeah, I was not aware that they rose to that level, to that magnitude. But, yeah, I mean, on some level, you're like, oh, okay. But it's astonishing how much money they cost, and therefore, I guess the sheer number of copies they need to sell before they can begin to start making a profit from these things.
- [47:57]
C
Yeah. But I think they managed to sell the copies. Call of Duty is super popular.
- [48:01]
A
Yeah. Apparently this one sold, like, 30 million copies. But, you know, you can see why the copies cost a decent chunk of change, because 30 million is less than 700 million. You need to get, like, 20 bucks a copy just to lose money.
- [48:14]
C
Yeah. But video games, so much more of a successful and robust business than movies right now, I think we can probably safely say.
- [48:22]
A
I think that's it for us this week. Thanks so much for listening. Thanks for emailing us on Sleep Money at Slate. Thanks to Shayna Roth and Jesmyn Molly and Merritt Jacobs for putting this show together. And we will be back next week with even more Slate.