Slate Money: The "Don't Be Evil" Edition – Episode Summary

Date: November 3, 2018
Host: Felix Salmon (Axios), Anna Szymanski, Emily Peck (Huffington Post)
Podcast: Slate Money

Overview

This episode takes on a provocative mix of contemporary business and finance stories. The main themes include:

• Brazil's election of far-right leader Jair Bolsonaro and its economic/social implications
• The moral reckoning and workplace activism at Google, highlighted by a global employee walkout
• The cutthroat, high-performance culture at Netflix
• The risk-laden world of leveraged loans and financial market vulnerabilities
  Each topic is thick with analysis, debate, and memorable moments as the hosts bring their journalism and financial expertise to bear.

Key Discussion Points and Insights

1. Brazil’s Election and Economic Unrest

Timestamps: 02:41–13:35

• Bolsonaro’s Rise:

  • Compared to Trump and Duterte; is seen as more extreme due to openly authoritarian and misogynistic remarks.
  • Emily Peck [02:54]:
    “Some people are calling [Bolsonaro] the Brazilian Trump, but who is actually much worse ... This is a man who has said he wants Brazil to be a dictatorship.”

• Factors Behind His Win:

  • Widespread corruption ruined left-leaning Workers Party (PT), despite Lula's popularity. Many simply didn’t vote, and those who did saw Bolsonaro as a "clean" outsider.
  • Soaring violence and public safety fears fueled his law-and-order appeal (e.g., shoot-to-kill rhetoric).

• Market Optimism & Hidden Risks:

  • Stocks surged on hopes for University of Chicago-style economic reforms under economist Paulo Guedes.
  • Anna Szymanski [08:28]:
    “The reason that the market has reacted so positively is because Paulo Geddes ... is saying he’s going to be this kind of market liberalizer ... But ... Bolsonaro’s entire history has been to support the benefits of his cronies.”

• Structural Economic Problems:

  • Unsustainable pensions, dependency on political patronage, and vulnerability to commodity shocks explained.
  • Anna warns real reforms are unlikely, and the optimism is overblown.

• Democratic Resilience:

  • Despite Bolsonaro's nostalgia for dictatorship, the military's interest in democracy is reassuring.
  • Emily [12:24]:
    “People describe Brazil as a young democracy, but it’s not quite so young. ... Their institutions aren’t as fragile ... So the chances that it reverts to dictatorship ... are not as scary as some people are making it sound.”

• Misinformation and Tech’s Role:

  • WhatsApp was instrumental in spreading misinformation, influencing the electoral outcome.

2. Google Walkout and Tech Worker Activism

Timestamps: 13:58–20:44

• Historic Global Walkout:

  • Thousands of Google employees staged a coordinated protest against management’s mishandling of sexual misconduct cases and the continued practice of forced arbitration.
  • Emily Peck [15:21]:
    “They walked out and they had a list of demands ... ending forced arbitration, more reporting on harassment ... ending pay inequality.”

• Changing Corporate Culture:

  • Demands included employee representation on the board, showing a push for democratization within tech firms.
  • Notably, the protest included not just high-paid engineers, but also contractors and support staff.

• Power of Tech Workers:

  • Anna observes tech workers' unique leverage: specialized skills, wealth, legal access, and an ability to use publicity, a dynamic not shared by most US workers.
  • Questions arise whether these gains could “trickle down” to less empowered labor pools.

• Management’s Quandary:

  • Google’s leadership seemed unsure how to respond, not contesting the walkout. Clear signals suggest the company’s reputation and culture were under threat.
  • Felix Salmon [18:38]:
    “It’s the classic Palo Alto thing ... the story of all complaints and political tensions ... is always the millionaires against the billionaires.”

• Superficial vs. Substantive Change:

  • Critique that Silicon Valley companies tout superficially “squishy” management philosophies (bring your whole self to work) but retain anti-worker policies on issues like arbitration and accountability.

3. The Netflix Work Culture Exposé

Timestamps: 20:44–26:20

• ‘High Performance’ = Job Insecurity:

  • Netflix is revealed to have a ruthless culture: 8% of its workforce is fired annually, which means small teams constantly worry about job security.
  • Felix Salmon [21:29]:
    “If you’re in a team of four people, there’s a 50% chance that one of you will be fired within two years.”

• Perverse Incentives:

  • Managers are reportedly rewarded for firing staff and risk dismissal themselves for not doing so. Radical candor, extreme openness, and “up to one year” parental leave policies are criticized as being misleading in an atmosphere of constant fear.

• The Limits of Radical Candor:

  • The hosts debate whether being brutally honest and transparent actually works in real life, outside of TV “like an Armando Iannucci sitcom”—most agree that kindness and nuance are critical.

• Gendered Dimensions of Feedback:

  • Anna notes men often avoid giving candid feedback to women, which could hurt women’s careers—a reflection on broader workplace dynamics.

4. The Risks of Leveraged Loans

Timestamps: 26:20–37:33

• What Are Leveraged Loans?

  • Loans to companies rated below investment grade (similar risk profile to junk bonds, but are loans not bonds). Interest rates are usually floating (tied to LIBOR).

• Explaining the Distinctions:

  • Loans are complex, come with covenants, and take priority in bankruptcy (senior secured), whereas bonds are generally simpler and unsecured.

• Why the Worry?

  • Janet Yellen and others have warned leveraged loans pose systemic risk:
    • Debt loads are at record highs ($1 trillion)
    • Many loans issued to questionable companies
    • In a downturn, floating rates can crush indebted firms
    • Retail investors may exacerbate the collapse via mass mutual fund redemptions

• Felix’s Counterpoint:

  • While this market could “shut out” junk borrowers during a downturn, this routinely happens every cycle and doesn’t have to become a full-blown financial crisis.
  • Risks are acknowledged, but Felix notes “the sky didn’t fall” the last time warnings were so dire.

• Anna’s Final Assessment:

  • She argues that past complacency, record-low rates, and the scale of the market make the current cycle uniquely risky, if not necessarily crisis-inducing.

5. Numbers Round: Quirky, Fun Financial Facts

Timestamps: 37:33–44:19

• Emily’s Number:

  • $1.05 billion in Paw Patrol merchandise sold in one year—second only to Mickey Mouse in kids show merch.
  • “Amazing amount for a cartoon … unusual in this era of on-demand content.” [38:09]

• Felix’s Number:

  • $43.7 million: the amount Goldman Sachs’ Tim Leissner is forfeiting after being indicted for his role in the Malaysian 1MDB scandal.

• Anna’s Number:

  • $1,500 per gallon: special chameleon paint used on LSU football helmets for an (apparently one-off) color-changing night game.
  • Anna: “They change color, they shift from purple to gold ... every helmet needed like four coats.” [40:44]

• The round descends into playful confusion about college football logistics and the extravagance of US college sports.

Notable Quotes & Memorable Moments

• On the Brazil Vote:
  “This is a man who has said he wants Brazil to be a dictatorship ... He said things about women like, ‘don’t worry, you’re too ugly to be raped.’” — Emily Peck [02:56]

• On Tech Worker Power:
  “Tech workers are unique ... highly skilled and a little wealthier, so they have more access to lawyers, they know how to use publicity.” — Anna Szymanski [17:14]

• On Netflix:
  “There seems to be this culture of managers being rewarded for firing people and fired if they don’t.” — Felix Salmon [22:04]

• On Leveraged Loans Risk:
  “What turns a normal downturn into a crisis ... is when you have this type of kind of imbalance in the market that makes a normal downturn much worse.” — Anna Szymanski [34:53]

• On Silicon Valley Labor Strife:
  “It’s always the millionaires against the billionaires.” — Felix Salmon [18:38]

Segment Timings

• Brazil's Election Deep-Dive: 02:41 – 13:54
• Google Walkout and Tech Labor: 13:58 – 20:44
• Netflix Work Culture: 20:44 – 26:20
• Leveraged Loans Explained: 26:20 – 37:33
• Numbers Round (Fun Facts): 37:33 – End (44:19)

Tone and Style

Conversational, witty, occasionally irreverent. The hosts balance sharp financial analysis with skeptical, sometimes humorous banter, making even complex subjects like leveraged loans both accessible and engaging.

Takeaways

• The episode provides a warts-and-all look at the crossroads of politics, markets, and corporate power in 2018.
• Brazil’s crisis is as much about economics as it is about democracy, with tech-fueled misinformation in the mix.
• The labor movement’s future may be shaped by tech workers' activism against “evil” corporate actors.
• Netflix undercuts its progressive image with a brutal performance culture.
• Leveraged loans are the “hot potato” of the current credit cycle—potentially hazardous if rates spike or growth stalls.
• The Numbers Round offers memorable trivia—like just how much kids’ TV merchandise, or football helmet paint, can be worth.

Useful for: Anyone wanting an informed, lively crash course in the business headlines (and hidden stories) of the week.