D (2:32)

It's true.

B (2:33)

I'm just gonna lean back and let you know. I am your host, Felix Salmon of Axios. I am joined by Emily Peck of Huffington Post.

A (2:40)

Hello.

B (2:41)

And Anna Shymansky, who has actually published an article on slate.com.

C (2:46)

Why, thank you. Yes, I have.

B (2:47)

Anna Shymanski is now officially a Slate contributor. If you want to read all about the gnarly details of Turkish lira devaluation.

C (2:56)

And I know you do then pop.

B (2:58)

Along to slate.com you can find it by searching on Shymansky, which everyone can spell. But let's. Yes, let's talk about the business and finance news of the week. And the business and finance news of this week is undoubtedly. Well, you can say it's. I can't say it because I have an English accent.

D (3:19)

We have to talk about nafta.

B (3:23)

NAFTA is of course a free trade agreement between three countries, which is why it seems to be a free trade agreement right now between two countries.

A (3:34)

Hmm.

B (3:34)

Emily, what's going on?

D (3:36)

Well, this week our president Donald Trump, a very fine person, announced a deal sort of with Mexico. Although there's no, as I'm aware of, as, as of this taping, there is no actual documentation of said deal that basically tweaks NAFTA, which is the 25 year old trade agreement between Mexico, Canada and the United States.

B (3:59)

So it seems that what happened is that Trump has been talking about renegotiating NAFTA since pretty much day one of his presidential campaign. He was never entirely clear on what his problem with it was, but he was extremely clear that it was a very bad deal and we needed to renegotiate it. And these negotiations have been sort of sputtering on and off between various different players since the inauguration. And at some point it seemed that there were some very big issues between Mexico and the US and the Canadians basically said, well, you guys work out your issues and then once you've worked it out, we can come back and more or less agree to whatever you guys agreed to, but we have our own issues as well.

C (4:46)

And.

B (4:47)

And then that's exactly what happened, except for there was this Mexican presidential election which threw a spanner in the works. And then suddenly everyone said, oh, we need to have a deal by September the first, because otherwise something, something, Mexican politics, something. And a lot of something.

C (5:04)

A lot of something.

A (5:04)

There's a lot of something there.

B (5:05)

And so now suddenly there's this crazy deadline and Canada's like, but wait, hang on a sec. We have a whole bunch of things that we want to negotiate. And the Americans are saying, well, no, sorry, no time for that. We've got to just sign NAFTA right now. And so it's all a bit crazy pants.

A (5:21)

It's a little crazy pants.

C (5:23)

Yeah. I mean, I think that was the point though. Yeah.

A (5:26)

So I think, Emily, I think you're kind of right. Like, this is largely a tweak. And although it's always dangerous to make predictions about what's going to happen with Trump. It feels like we're seeing a lot of sound and fury that's going to signify not nothing, but not a lot is sort of in the end, I feel like it looks like things are heading towards a deal in the most orderly fashion. Anything can kind of happen under the Trump administration. Right now as we're talking, some bomb like the Toronto Star just published some bombshell thing that's supposed to derail negotiations cuz Trump said something insulting in secret marks.

B (6:01)

I don't think it's Trump has certainly insulted Justin Trudeau in very forthright language and that doesn't seem to have derailed anything. The big question which I have is like, is there actually any conceivable possibility that Mexico would agree to a bilateral deal and basically leave Canada out in the cold? Is that something which Mexico would ever be short sighted enough to do and is that something that the US Congress would ever sign off on?

C (6:32)

Well, I think the latter, I think it is unlikely, especially because it's going to go past the midterms in terms so you're going to be dealing almost certainly with a much more heavily Democratic Congress who I think even if they, even if some Democrats like certain parts of this deal, they probably wouldn't go along with it just because no one wants it to be Trump's trade deal. So I think in the US it's going to be very unlikely that this moves forward.

B (6:58)

So just just to be clear, you need Congress, you need Congress to approve any bilateral deal, but you don't need Congress to approve just tweaks to an existing. So if Canada is in, they need.

A (7:09)

To so here Congress is going to have to approve anything that Trump does, whether it's to a bilateral deal, to an existing nafta. The thing is that Congress gave Trump what's known as trade promotion authority. They fast tracked it, which basically promises him that he's going to get an up or down vote no matter what as long as he abides by certain rules. And that's sort of factoring into this whole rush just because the timeline with that works. But the thing is that for a while there seemed like Trump might be able to just threaten Congress by saying if you don't approve whatever I do, I'm just going to pull out of nafta. That was sort where I'm just going to use my unilateral authority to do that. And there was a lot of disagreement among lawyers about whether that was actually something he could do. And it seems like the conventional wisdom is shifting to People realizing actually Trump can't really just on his own end nafta because part of it is implemented through legislation that he can't just erase. It looks like he had less leverage than everyone thought in the first place. So he really can't just shove it down Congress's throat.

B (8:09)

So, so can he use trade promotion authority to sign a bilateral deal with Mexico, which basically excludes Canada, or is that too far even for tpa?

A (8:21)

A lot of senators are saying that he can't, that essentially NAFTA was a three way deal. They said this tpa, that this trade promotion authority was for a three way deal. You can't just use it for a bilateral. So even that he might be stuck on. So even though he's been saying the, you know, the press, oh, I've got Canada right where I want them, they're negotiating at the last minute. It's not really clear how much leverage he has.

B (8:42)

And also remember that Trump is, again, we are being polite on this show, a moron. You know, he's been making all of these noises. He's literally been talking about how he wants to slap tariffs on Canadian car manufacturers. There are no Canadian car manufacturers.

A (8:59)

Robert Lighthizer, though, is not a moron. Like, that's the thing. His trade rep is a very smart guy who's been in this space for a long time. And so I think that's what we're actually sort of starting to see unfold is that this is a process being run by Robert Lighthizer. This is really being spearheaded by the, by the experienced hand in the room.

C (9:17)

So I think that's, that's true. But I'm curious on what you all think because if you actually look at the details of this, Mexico really didn't concede too much. Not much is actually going to change in the auto sector.

D (9:29)

Really. The details, I think are really interesting.

B (9:32)

I think they're fascinating and I think. Okay, so I'm going to push back on that because. Well, Emily, tell me what you think. Because I thought there was a big concession here. I thought there was this big thing which the Canadians and the Americans both really liked, which basically said that something over 65% of the work on any car has to be done in a high wage country.

D (9:50)

Yeah, so it's 75. A higher percentage of auto parts essentially has to be made in a country where they're paying the workers 16.

C (9:58)

No, no, no, that's North America. Is the 75%. 40% for high.

D (10:02)

Oh, yeah, 40% of cars must be made by $16 an hour workers, which everyone's saying is really kind of a surprising good, surprisingly good for Mexican laborers, because minimum wage in Mexico is like $5 an hour.

C (10:16)

Sorry, this is. I'm actually going to point this out because I see this, like, misreported so many places. The minimum wage in Mexico is 88 pesos a day. Not that's like 460 a day, not an hour. Okay. Now, auto workers in Mexico make. I think it's around maybe like $3 an hour. So they do make a bit above minimum wage. But just, I'm just pointing that out because I've seen it.

B (10:35)

So the question. When there's a rule saying that such and such percentage of a car needs to be made by workers making $16 an hour, does that mean that it's effectively going to wind up getting made in the US And Canada, or does that mean that Mexicans are going to earn that much money?

C (10:51)

It means that almost nothing is going to change. Because the reason I say that is because if you look right now, almost all autos already pass this. There's a few small sedans that wouldn't meet these requirements that then might not come into the US market or they might try to absorb that 2.5% tariff they'd have to pay. But most cars, like, already meet this.

A (11:09)

This is a trade deal that's going to change the supply chain for the Ford Fiesta. Yeah, like, that's. That's, like, that's really what we're kind of looking at. And I mean, I think. I think these concessions are actually good. By the way, I think that $16 an hour, I mean, that's. There should be so. Well, I think they're useful. I do think that they'd be more useful if it was obvious how they were going to be enforced. This is something a lot of people are pointing out. It's what's going to actually, you know, there are things in this deal about giving. Supposedly things in this deal about giving Mexican workers more labor rights, for instance, more independent unions. It's not clear how that's going to be enforced.

D (11:46)

Yeah, there's no enforcement added to. And they had. There are some labor provisions already in NAFTA that are not.

B (11:52)

And since we're talking about enforcement, let's really get gnarly and talk about Article 19, because this is the big fight between Canada and the U.S. the Article 19 of NAFTA is basically the enforcement article where if any country breaks the NAFTA treaty, then it goes to arbitration. And the Americans want to get Rid of it. The Canadians want to keep it because if they think that America is dumping softwoods on Canada, they want to be able to take.

A (12:27)

So this is some funny history here.

C (12:30)

This is actually, this is really.

A (12:31)

So Basically, basically Article 19 is this arbitration system and if one country puts anti dumping duties on another, they can challenge Mexico or Canada or US can challenge it at this arbitration, Right?

B (12:42)

Oh, I see. So if America puts anti jumping duties on Canada, Canada can challenge it in an arbitration court. And the Americans are saying we don't want you to be able to do that. We want to force you to go to your through the US court system to do that.

A (12:56)

Exactly. And so this is like this system doesn't get used a ton. It's not like. But Canada is very attached to it. And the reason for that is there was basically like a propaganda campaign in Canada in the 1980s that they could not trust U.S. courts. It was like we need if we're going to do any. And this is when NAFTA was first being negotiated right back in the first Bush presidency. And he's like, we need these panels because otherwise we're just, you know, there's no way we'll get a fair shake in the U.S. district Court of Alabama or whatever. And you know, it's almost certainly not true. But it got so ingrained in Canada that somehow U.S. courts were biased against foreign corporations that they've painted themselves into corner that they really need to hold onto this.

B (13:39)

I feel like we should be asking Brett Kavanaugh this in his confirmation hearings. What do you think about anti dumping carries?

A (13:46)

But it actually kind of sucks for the Canadians because they're offering other concessions now to hold onto this thing that really isn't that important in the scheme of the world. It's like US courts are fine, US Courts are treat multinationals really, really well and other countries really really well. I mean, you know, that's, I don't, I, it's, it's weird.

B (14:05)

Anyway, so more broadly for all that there's this surprisingly normal trade negotiation going on around nafta. I mean all trade negotiations have artificial deadlines and a bunch of like noise around them. But it looks like an old fashioned trade negotiation.

D (14:23)

I mean some of the provisions they're talking about, like increased IP protections are the same provisions that were in tpp, which Trump said was a terrible deal and got rid of like from the people I was speaking to, they're saying there's remarkably similar deals here.

B (14:36)

So, but so actually a little bit.

A (14:38)

More evil I think actually like there's some stuff in the IP protections that are more like, draconian than what the US Would have gotten. And so, I mean, like, you know, for better or worse, I guess, like, Trump kind of proved his point that, like, if I take on Mexico one on one, I'll be able to extract more. And like, for like, in the short term, for like gene editing companies, he pulled that off. But anyway, sorry, because the jobs, I.

D (15:00)

Mean, the ones that Trump was allegedly upset about during his campaign, the jobs that had been taken away, those are gone. A lot of them, some of them went to Mexico, some of them went, most of them went to China. Like, this deal is not gonna get the job. The phantom jobs.

B (15:13)

When people voted for Trump on the basis of his NAFTA rhetoric, they did so because he promised that he would renegotiate NAFTA to bring all of the manufacturing jobs back. And whatever happens, that's impossible.

C (15:29)

Right. And also, I think it's important that some of what, some of the things that this deal does is make investment, and especially like foreign direct investment in Mexico a little bit harder for the, for US Companies or makes them less apt to want to do it. And that's a bad thing, both for Mexico and the US because I don't know how accurate all these statistics are, but I've seen something that says investment in Mexico for every about 100. And so jobs you create in Mexico, you create about 300 jobs in the United States. So this, it's because trade is not a zero sum game, despite what Donald Trump may believe.

B (16:02)

And yet, like, Trump has literally no conception of supply chains. So you know, it, he lives in this bizarre zero sum world where he does crazy things, like in the middle of nafta, NAFTA negotiations, starts shooting his mouth off about, like trying to withdraw from the wto.

A (16:20)

Yes.

D (16:21)

One thing, one point I thought was really interesting that an economist made to me on the phone yesterday, which I hadn't really thought about, but maybe you all have, is like what Trump is doing on trade actually does make a sort of sense. What he's doing is getting, trying to get rid of or upend rules based trade and make his own rules so then he could give favors to the countries he likes and the industries he likes. It's like crony capitalism, kind of like taken kind of onto a global scale.

B (16:48)

Exactly. And one of the key sticking points between Canada and Mexico is the steel tariffs and the aluminium tariffs, which already, which still exist, which are still imposed, which in place right now on Canadian steel and Canada's Saying, well, look, if we're having a free trade agreement, obviously that includes steal. And the Trump administration, I feel, doesn't really know how to react to that.

A (17:16)

Yeah, I think your point about getting rid of rules based trade is actually, I hadn't thought about it in those terms. I think that's really keen and it's really incisive. But it also, I think you're seeing in this deal how there's only so far the Trump administration can go on that front. One of the big issues has been what's known as ISDs, right. Investor state Dispute Resolution, these panels that Elizabeth Warren, for instance, hates the Left act, it really hates these things because it's essentially if a company feels like its stuff has been illegally nationalized, they go to the arbitration panel.

B (17:47)

We had an entire episode on these.

A (17:49)

Exactly. So, you know, Trump was against these, you know, or the Trump administration came out against these. But it looks like they're actually going to survive in some form because basically the energy industry is like, you can't get rid of this. Like, we have a socialist coming to power in Mexico and if you eliminate these, there's a good chance like our oil and gas interests in Mexico.

C (18:11)

Yes.

A (18:11)

And this is actually just to finish the point, you know, the Trump administration was like, shit. Well, we need some sort of rules to prevent that. We're going to get. So they're rolling it back for some industries, but they're going to try and keep it for things that they think it's really important for, like energy. And so even to the Trump administration, there's only so much farther, there's only so far you can push in the direction of anything goes.

C (18:32)

Yeah, exactly. And I think that's really important that the U.S. despite what Trump may think does exactly does exist in a world where there are restrictions. It's not the only game in town. The thing I want to point out about that is that I'm not going to won't go into a big debate about those, those particular investor estate. But one of the things that the Pinion administration did was open up the energy sector and telecom to private investment. And it's been very good. It has brought a lot of investment and really increased productivity. And that is a problem you've had in Mexico of very low productivity. So if you're talking about actually wanting to help Mexican workers and actually wanting to help the Mexican economy, you do need more productive sectors and having no protections for foreign investors is not necessarily a great thing.

B (19:23)

So I guess just the one final thing I want to Sort of just point out here is that for all that there is this weird artificial deadline to do with the Mexican handover, the AMLO incoming administration in Mexico has said explicitly that they're on board with this deal and they're okay with it. And it's kind of interesting that these two sort of fiery extremists, you know, Donald Trump on the one side and AMLO on the other, have both managed to meet in exactly the same middle point, really, that we've been in all along.

A (20:02)

Someone, I asked somebody about this, and what they said they think is going on with AMLO is that he just doesn't want to have to be the one to sign it. He does not want to be in the same position that Bill Clinton was in with NAFTA in 1993, essentially where he inherited the deal from his predecessor and then had to promote it and convince people to sign it, even if he didn't love everything that was in it. And so that kind of makes sense to me. It's like, it's not. The guy doesn't necessarily want to take full responsibility for whatever may or may not happen as a result of negotiation.

B (20:33)

But by the same token, he's. If it's signed by the time he comes into office, he's fine with that.

A (20:40)

Yeah, I think that's kind of what he signaled.

B (20:42)

Okay, it is now 4:20.

A (20:48)

Time to get high.

B (20:49)

Time to get high.

C (20:50)

I'm just thinking about Elon Musk when you say that.

B (20:52)

Exactly. I feel like we should take the show private at exactly 4:20. Jordan.

A (20:59)

Yes.

B (21:00)

We have this weird system now in America where marijuana is legal in what, six or seven states?

A (21:07)

Oh, off the top of my head, something like that. I mean, there are also medical marijuana. I forget there are lots of states that have it. I can't remember off the top of my head.

B (21:14)

But it is still illegal at the federal level. And the attorney general, Mr. Jeff Sessions, is deeply opposed to any kind of marijuana, anything kind of guy. And so tell me what that means in terms of business. If I am in the marijuana industry, and there are lots of companies in the marijuana industry, am I breaking the law or not?

A (21:38)

I mean, you're breaking federal law. Yeah. You're a criminal. Technically. It's a question of whether it's going to get enforced.

D (21:45)

So, Jordan, isn't marijuana legal in Mexico now?

A (21:48)

I think medical, maybe.

D (21:50)

Medical.

A (21:51)

Medical, maybe.

B (21:51)

But the former president, Vicente Foxx, is all in. He's on the board of a marijuana company and he wants marijuana to be, what, legalized part of nafta and the whole thing.

A (22:00)

Well, so this is so Vincente Fox. Yes. The expert troll who loves just, he kind of is like the Mexican Arnold Schwarzenegger in this sense. Like, he just loves going toe to toe with Donald Trump and like little Twitter video, YouTube videos, whatever, just to kind of promote himself. He is on the board of a marijuana company in Canada and he has, he said that weed should be part of the NAFTA negotiations, which was funny as hell. But this, that kind of, it's interesting to me because what you're like, at some point there is actually, I think, going to be a really big fight over weed protectionism. I absolutely think that that's. We're actually going to eventually assuming it is legalized federally United States. Eventually. Right.

B (22:47)

Okay, so that's a big assumption.

A (22:50)

Oh, it's. I.

B (22:51)

Is that a safe assumption?

A (22:52)

I think it's a safe assumption eventually.

D (22:54)

I mean, Canada is really big into marijuana.

A (22:57)

Canada is legalizing recreational starting as of 2019. Or that is, that is the plan right now. It's where it's headed. And so that is. So you are going to have a very developed legal industry right over the border, as well as legal industries in California or quasi legal, quasi legal industries in California, in Colorado, in Nevada, in Washington, Oregon, et cetera, Massachusetts.

C (23:21)

And aren't there already some oversupply issues?

A (23:24)

So this is something really. So to some extent, yes, it depends where you are in the US So when you talk to people in Colorado, for instance, in Denver, they actually freak out about just the sheer number of dispensaries because there was no cap on the number of licenses originally. And each dispensary, for historical reasons, basically grows its own supply. It's changing a little bit. So you just had this huge over, like just oversaturation of the market, driving down prices in a system essentially where they can't, where the taxes are extremely high. It's just a really hard climate to do business in. But essentially what you now have is Canada coming in, Right. They're legalizing and they are already kind of developing these massive growth. You are already getting these big public or relatively large public companies coming in. While I was out in Colorado at the same time I was talking to kind of, you know, people who thought they were, who were sort of a big deal there because they're running 12 dispensaries or whatnot, which is a huge chain by the standards of the U.S. the company that brews Corona beer invested about $3.8 billion into the largest medical cannabis grower in Canada, which Has, you know, which has greenhouses that are about 1.2 million, you know, square feet, just giant, you know, the same kind of thing that you do mass tomato agriculture with Canada. I mean, you have these big companies now forming up there, and if it's eventually federally legalized, you're essentially, they're all going to want to export to us and then you're going to have all these states that have their own, like, weird boutique systems for regulating marijuana that are going to be saying, what the hell's happening?

B (24:59)

Okay, so a lot of different issues here, but let's stick with Canada for the time being because Canadian cannabis stocks are the new Bitcoin.

A (25:09)

They are.

B (25:10)

Everyone is trying to jump on this rocket ship, every one. And their brother is trying to set up a company which looks like it might conceivably be able to be a cannabis company and list it on the Toronto Stock Exchange because there's this weird fever to just buy these things. There will certainly be a really nasty crash at some point, but no one knows when, what, what is, what is going on there.

A (25:36)

So it's actually, it's really funny. So basically the big Canadian companies are listing in the US because they're legal in Canada. So like Canopy, its ticker is weed. It is on the New York Stock Exchange. Right. That is, they are, they are a legit company as far as the, you know, financial markets are concerned. The US Companies that are breaking federal law here are they, they're not welcome. They're not going to list on nasdaq. And so which I think the first Canadian company to list in the US Went to Nasdaq, if I, if I remember correctly. So the way they are solving that is going over to the Canadian OTC markets. And often what they're doing is buying up another public company. And part of the reason they're doing that is because even if you can get like a bank account as a marijuana company, if you can do basic banking, usually they use like credit unions for the most part. They cannot get any kind of finance normal financing. You can't get a bank loan if you're in the marijuana business for reasons like you don't really have any collateral for that loan, among others. And so they're also.

B (26:35)

Because banks don't like to fund illegal activities.

A (26:38)

Yes, but even from like the credit unions, like, even the people who are willing to with them on some stuff, they won't lend. And so they have to find all these alternative forms of finance. Some of that is from private equity, some of that is from Just rich guys who are willing to give them like an 18% loan. And some of that is going to the Canadian OTC markets to buy up a small public company and go public.

C (26:59)

Because right now in the US even though it is legal in a number of states because it's still a federal crime, you. It's really basically a cash based business. Correct?

A (27:09)

Or some, some like the one I was at a dispensary where you could, where you, where I bought weed with like a visa. Like, you know, you can do it. Like, there are some, if they're big enough, they can, you can do a, you know, they can get into the normal payment system, for instance, but there are some who also can't. They're like, they're kind of mom and pop shops and they're probably still cash based.

D (27:33)

Can we just talk for a second about. There's something to me creepy and offensive about the marijuana business going to all these, like Leon Cooperman, the hedge funders like talking about marijuana and John Boehner is like on the board of some marijuana company. And you know, we've gone from this drug is, you know, illegal. People are getting locked up for it. And now it's like getting, becoming this, like the latest Bitcoin. It's this hot financial product. It's like it's gone from something that like maybe poor people were selling, buying to make money. And now it's, it's getting kind of just when it's becoming legitimate, it's getting ripped away from those people going corporate.

B (28:20)

One of the things which, which I, I had the most fun doing this week, I have to say, was watching the debate between Cynthia Nixon and Andrew Cuomo.

A (28:32)

Oh my God.

B (28:32)

Which was, which was so much fun for governor of New York. And this came up and it's actually one of the very few areas where they agree that if and when marijuana becomes legalized in New York State, they are going to try very hard to make sure that the companies selling it and making money off it and you know, being part of the tax system are local, owned by people of color, not basically being controlled by big hedge funds. Whether that's practical, I have no idea.

C (29:06)

How on earth would you possibly regulate that?

B (29:09)

You can easily, because, okay, because this is.

A (29:11)

Colorado tried.

B (29:12)

This is a highly, highly regulated industry. And the obvious corollary in New York state is alcohol. Now, every single alcohol company in the world, if you go along to their, you know, analyst calls, is being asked, are you getting into the marijuana industry? You know, how are you doing that? Constellation Brands as We saw, you know, is investing billions already and you know, all of the booze companies are looking at this space. But in terms of retailers in New York State, it is illegal to own more than one alcohol retailer. You could easily put rules like that into, you know, the marijuana industry. It's not that hard.

A (29:56)

So, yeah, every dispensary is going to have licenses, Right. And there's a licensing bidding process probably. And you can easily imagine where they'll give preference to someone from. You know, you're a small business person, here's how you're getting your financing. You're a person of color, maybe like you can actually see how they might try the federal or not how the state authorities might try to finesse this. You know, the issue is that sometimes these ownership rules have backfire in ways. They create weird financing situations and weird ownership structures where you actually, you don't know where the money is necessary.

C (30:27)

Everyone gets around these. If there's enough profit to be made, people will get around.

B (30:31)

I feel like in the case of alcohol retailing in New York State, that's not actually true.

A (30:37)

I think what's going to happen is there will be a push to try and make this as much of a mom and pop industry as possible. And then you're going to see people essentially paying a lot more for their marijuana in states that do that than they are in Canada, in California, in.

B (30:53)

Massachusetts, which is also possibly a good thing. Like, I don't have a problem with high marijuana prices.

A (30:57)

It's true. But also there's, I mean, no, I don't know. I don't necessarily either because it does dissuade abuse to some extent. You know, you don't want, you know, it's like a text, you know, you keep people, if you, if the price goes too low, you're more likely to have people just smoking a ton of fucking weed all the time.

C (31:14)

Or you could just, I mean, it's not as though if one state isn't selling it at a certain price and another state isn't selling, there's no way for things to possibly move.

A (31:23)

You can control the retail.

B (31:24)

Yeah, there are again ways to look at guns, look at tobacco. You can have.

C (31:28)

Yeah, we're doing a great job with guns.

B (31:30)

We have. New York state has done a great job with guns. It's very easy to just assume that interstate differences are always going to be arbitraged away in some kind of free market like paradigm. But that actually doesn't happen in practice.

A (31:46)

Fundamentally, what I think you're going to have Is you're going to have a. Like, the reason is important because it doesn't currently work like this in every state. But you're going to have a division between the actual growing of weed, where, you know, that's probably going to be a big interstate, you know, business where the biggest greenhouses are going to produce a ton, ship it everywhere, and then the retail level, and it is going to look a lot like the alcohol industry or you have distributors or something along those lines where the retail level is a little bit more highly regulated. And that's where. Where. Because that's where just people in communities worry about it because that's the face of the business. And they don't want, you know, shady pot shops essentially opening on their block, which for the most part, I think the owners I've met are extremely conscientious of that. And they try to make themselves as boring and upstanding citizens as possible. Like they participate in like the local chamber of commerce. Like, that's sort of. But that is still the concern is that you're going to have some shady, you know, drug business opening on your corner. So you're going to have that divide. You're going to have the biggest multinationals, international companies growing the stuff, and then you're going to have the more local, I think more localized, more regulated retail.

D (32:48)

My other concern, and maybe this is kind of a buzz kill, but as marijuana becomes more corporatized and becomes. And this has already been happening, right? Marijuana today versus 20 years ago is much more potent. Higher quality gets you very, very, extremely high, I've heard. And so as it becomes more corporatized and maybe even more high quality and more available, you know, more people are going to use it and there's actually not that much good research, according to this piece I read in the Atlantic by Annie Lowery, friend of the pod, on sort of marijuana abuse and addiction and, you know, effects. And I feel like we're unleashing some kind of new. We're unleashing a new drug, possibly.

B (33:32)

This is. This is a whole other conversation which I don't want to get too much into. But I will say that Alex Berenson, friend of the pod, who has never been on the pod, has an entire book coming out about this. And while Annie was talking about addiction, Alex is talking about how there is an incredibly strong correlation between marijuana use and basically psychotic episodes and how it makes people incredibly violent and sociopathic. And this is a thing and no one likes to talk about it. And I can guarantee you that if and when the debates about federal legalization start happening. Well, let's just say I think that Alex is going to make lots of money on this book.

C (34:18)

So one thing I would say, though is that you could probably say a lot of very similar things about alcohol.

A (34:25)

Every single bad thing.

B (34:26)

And people do.

A (34:27)

Yeah. I will say, if you're interested in this whole question of marijuana research and how people are doing it and what's available, one of the episodes of my show is with a researcher at UC Boulder who figured out who has essentially been able to totally change and revamp and improve the way she does research on this subject because of legalization in Colorado and realizing that you could kind of comply with federal regulations on academic funding if she just did all of her testing in a Dodge Sprinter van. So as opposed to bringing people to campus. It's a fun story, but basically it's going to be a good episode.

B (35:04)

Okay, people, it's Labor Day. Congratulations, all Americans among you who have Monday off, you get to do whatever it is you do on Labor Day. And to mark Labor Day, Bernie Sanders is going to introduce a bill in Congress. This is a very silly bill, if I may say so myself. Even our residential progressive lefty democratic socialist, Emily Peck, I think, is rolling her eyes at this one. But Emily, what does the bill say and why is it silly?

D (35:34)

The bill would tax employers 100% for each employee who gets public benefits. So if an employee gets $100 in SNAP or food stamp benefits, then Amazon pays $100. It's silly because it would be hard to enforce and it would be probably counterproductive in that it would give Amazon and the other low wage companies that this bill would presumably target. It would give them an incentive not to hire people who use public benefits.

B (36:04)

Exactly. It's like it attacks the very idea of helping the working poor by giving them jobs because you then don't want to give them jobs because you have this extra tax on doing so. The thing which really fascinates me about this bill is that Bernie Sanders has announced it very much targeted at Amazon, even though the number one employer of people receiving SNAP benefits in every single state is Walmart. The number two employer is McDonald's, and in general it's all fast food and supermarkets. And Amazon is kind of just an afterthought. So that's weird to me that like, of all of the employers who attack for this, that he's picking on Amazon. And it looks very much like an Amazon bashing sort of PR stunt rather than an actual policy proposal. But if we are talking about policy proposals. Donald Trump has now said that all federal employees are going to get zero pay rise next year.

A (37:07)

Yeah, you know, just a fuck you. Yeah.

C (37:09)

It's so ridiculous.

B (37:11)

Is that going to actually happen? Can he do that?

A (37:13)

Yeah, I mean, like, this is a thing, this is a thing on and off. Like, you know, Republicans often try to freeze federal pay. Like, it's just, it happens, like.

B (37:21)

But does he need congressional approval again? Is this some. Because a lot like he does, as.

A (37:25)

Far as I know. I don't think I've ever, I did.

D (37:27)

Read that Congress could overturn this, could.

A (37:29)

Overturn, but I don't think he needs to actually.

D (37:30)

No, he doesn't need that approval.

A (37:31)

But they couldn't do it. I mean, and this is.

D (37:34)

But Obama tried to lift a pay freeze when he, remember when he was president, so he tried to lift a pay freeze and Congress wouldn't let him.

B (37:41)

But this is a workforce of like almost 2 million people, many of whom are not particularly well paid, who are, you know, many of whom have, you know, budgeted for a pay rise that they were promised. And, you know, in comes Trump just throwing a spanner in a whole bunch of financial works. It's a nasty present to give people on Labor Day to be, you know.

C (38:05)

And to talk about the deficit when you're just like, oh, come on.

D (38:08)

Well, it actually seems to be, it actually seems to be retaliation because it looks like retaliation to me. Because what Trump tried to do was try to make it harder, make it easier rather to fire federal employees and he got pushed back from the courts and then so he couldn't do that, so he had to do something. That's what it seems like to me.

A (38:27)

To me, it's just like a reminder of what Donald Trump actually meant when he said drain the swamp. You know, he wasn't actually talking about lobbyists or the money or like wealthy business interests. He was talking about just like those pointy headed snobs who work in the federal government. Like, it's just part of his resentment politics. And that to him is the swamp is. And I've also, I don't think.

B (38:46)

Which is actually just like people who work for the Parks Department and. Yeah.

A (38:49)

Well, it's also, you know, I can't help but think part of this is his obsession with the deep state maybe too. Just like he's in his head, he's denying someone at the FBI funding for the deep state. Yeah. Who's currently investigating him a pay raise. And that gives him some iota of satisfaction.

D (39:04)

And it's a 2% pay raise. I mean, that's just keeping up with consumer prices, basically. You know, I mean, these people now essentially got demoted, they got pay decreases.

B (39:16)

So. All right, so if Trump's idea is horrible and if Bernie Sanders idea is a non starter and basically just a PR stunt. Emily, what's a good idea from Redmond?

D (39:30)

A good. Well, so Microsoft this week said it will be requiring its suppliers and contractors to give their workers 12 weeks paid parental leave. It's sort of like a follow on to what they did a couple of years ago, which was require contractors to give 15 days paid time off to workers. And that's. It's not a bad idea.

B (39:49)

This seems to me to be an extension of, I don't know if it's enough to call it a trend, but we recently saw, was it the janitors or the chefs or something like that at Facebook who all became like unionized employees rather than contractors. And there are a couple of ways you can do it. One is to just bring these people on staff and then the other thing is to, well, no, I mean, but that's what Facebook did. And the other way is to take your own standards for your own employees and then require your suppliers to have identical standards. And I think both are effective.

A (40:22)

Yeah.

C (40:22)

I think that we can raise criticisms about the power that a lot of these tech companies currently have. However, if some of them are using it to do something positive, I don't think that's the worst thing in the world.

A (40:33)

I am going to raise a slight dissenting voice here and just to say, I think what Facebook did in terms of actually bringing people on is far superior. Because when you say to a contractor, okay, you have to provide these, these and these benefits, I have zero faith that a contractor will not try to claw back that money from its own employees some other way. It's like, okay, if I have to spend more on X, I will find some way to save costs on Y. And overall, I think this is good that Microsoft is taking kind of a page from what Obama did in the federal government with its contractors saying you have to provide XX and X benefits. But just given a choice between the two, I think what Facebook is doing is much better.

B (41:11)

But it also spreads more this way. This goes back to when Nike started putting restrictions in place on its factories. You know, you don't necessarily, it's not practicable in today's world of supply chains to just bring everyone who contributes to your product on staff.

A (41:34)

Okay, that's fair. It doesn't. Okay, that's fair. I'm thinking of like the cafeteria worker types, the places where the companies have really gone to like a fissured workplace where they've offloaded jobs that could, they could hire themselves. But yes, your point is well taken.

B (41:48)

And I do think that the interesting thing about the Bernie Sanders bill is for all that it's a silly bill. What it does do is shine a light on the fact that a huge number of big companies, Walmart, McDonald's, Amazon and many others employ basically an uberized gig economy workforce. The people who are getting these snap benefits are not the full time employees working 52 weeks a year and on benefits. They're people who work for a relatively short amount of time or part time sometimes because that's all the time they have to work. They might be caregivers or single moms or something like that. But when we talk about the gig economy, when we talk about Uber and Postmates and all of these kind of companies, we forget that a huge part of the gig economy is also McDonald's and Amazon.

A (42:44)

I think what we're actually seeing is that kind of temporary workforces or the fissured workplaces are a much, much more important issue than the uber economy. The government has started coming out with numbers on this and academics have started researching it and they're finding that the actual Silicon Valley type Uber gig platforms are still a tiny percentage of the workforce. What people really do need to worry about is this thing that you're talking about, like kind of, you know, nonstandard labor, other kinds of nonstandard labor.

D (43:15)

And I think also what this has in common with the why Bernie Sanders is picking on Amazon. There's just so much resentment. These companies give amazing benefits, these tech companies, to their actual employees. And we saw this a few years ago with Netflix, which announced this very generous parental leave policy of one year. But then it came out that they didn't offer it to hourly workers essentially. And Netflix got kind of like really bashed for that. And then they, they gave it to everyone. And so tech companies have kind of learned to like, we're going to give, if we're going to give these really nice benefits, particularly parental leave benefits, because that's so, it's just so primal to think about, you know, having children and like, why should one class of workers get better benefits in that arena than others that like tech companies like Microsoft are sort of reacting, I think whether they realize it or not, to that, that resentment. And I think that's why we see.

A (44:10)

A lot of this, I think you're right. Symbolically, it's hard to think of another company that dramatizes American or kind of encapsulates American inequality better than Amazon. From having the richest man in the world as your CEO to having a large workforce of six figure employees who are treated very, very well, all the way down to these kind of factor, these warehouse workers. You do see sort of a microcosm of the whole economy.

C (44:35)

Haven't we always had that with every.

B (44:37)

I'm just saying, I'm just saying.

C (44:39)

Were you having.

A (44:40)

Yeah, I don't think we have, I think the same level.

C (44:42)

Yes, I agreed. I'm just saying that, yes, you've often had someone who, at the top who's going to make more, some people at the middle who are doing okay and then people at the bottom who aren't making as much. I would just say that's not incredibly abnormal, the scale we're seeing right now.

B (44:52)

I mean the fact that like some people make more than others obviously is, is, is not new. But the point about increasing inequality and extreme inequality is that I don't think there's ever been a company in human history that has the level of inequality that we see at Amazon.

C (45:09)

Right. Although I would say comparing, and I'm not going to go in the same thing I've said a million times, I'm just saying that like what people use, use when they talk about the wealth of Jeff Bezos and then comparing that to like a salary and income of an employee, I think it's a weird comparison because you're essentially comparing, comparing the value of a company because that's most of his worth to the income of an employee. I'm not saying that doesn't mean that the inequality isn't a problem. I'm just saying it's a weird comparison.

B (45:33)

But it's not comparing weird because if you look, if you look at the middle management, if you look at most of the employees in fact in Seattle of Amazon, the way that they get paid is with equity and their actual cash salary is surprisingly low. And all of these thousands and thousands of Amazon employees who have made lots and lots of money from working from Amazon have done so with equity. Equity is a form of pay. And I think it's perfectly reasonable to look at the value of someone's equity as part of how much they're being paid, not just at the level of Jeff Bezos, but also at the management level and the sort of developer, sort of white collar worker level.

C (46:16)

But that's not how much he's being paid. Per year. It's his net worth that they're comparing. That's what I'm saying. You're not comparing apples to apples.

A (46:21)

If you compare the net worth of your typical Amazon warehouse employee, I think it, like, would look. Look worse.

C (46:27)

I'm just saying that I think these are weird comparisons.

B (46:30)

We're saying take any comparison you like, take. Take the net worth comparison.

C (46:35)

And actually, I'll agree with you on that. I think you could make a normal comparison. It would make sense. I just don't understand. And I. That's not true. I do understand why people use these incredibly extreme numbers because it's easier to sell. I just. To me, then I start to critique it because I'm like, okay, but that's a silly comparison. You could use any other comparison.

A (46:50)

Well, it's also, I think, like, it's kind of nitpicking on some level because do we actually know the net worth of every Amazon employee? No. No, we don't. It's very hard to track that. But we at least do know what they're paid. So you can kind of ballpark that there's some shit going on here. Totally. Yeah.

B (47:03)

And I do think. I agree with Jordan here that it's nitpicking because I think whatever method you used, you would come up with the conclusion that the amount of inequality within Amazon is large, is growing and is high by historical standards.

C (47:28)

True.

B (47:29)

Let's have a numbers round. I'm going to go first just because.

C (47:35)

Oh, you have the same number that I do. I was going to say. I know we're going to have the same numbers.

A (47:39)

I was actually going to ask.

C (47:40)

I'm going to have a related number then, because we're going to talk about the exact same numbers.

B (47:42)

We're going to have the same. We're going to have the same. We're going to have the same number, but I'm going to go first because I only have one number and I know that Anna has many numbers. So I am going to. My number is 60%. And Anna is rolling her eyes.

C (47:58)

60.

B (47:59)

Because. Because I never go first. I feel like I'm allowed to go first once in a while. My number is 60% and Anna is going to tell you what 60% is.

C (48:08)

So in Argentina, they raised interest rates to 60% because of another massive decline in the value of the Argentine peso.

B (48:18)

So if you want to get a 60% annual return on your money, just put your money in Argentine pesos. What could possibly go wrong?

A (48:26)

I don't know. Except for further collapse of The.

C (48:29)

Yeah. Massive external financing needs, they're not gonna be able to meet.

B (48:32)

Yeah.

A (48:33)

I just like, you know, I'm not gonna say what I was.

B (48:35)

All right, what's your number?

A (48:37)

I'm going to Argentina for. I just bought plane tickets to go to Argentina for a vacation soon. And I was like, I wasn't paying attention to what was happening in the global fight, let's just say anyway of having a little bit of buyer's remorse.

B (48:48)

But things will be things cheap as a vacation destination. Like this is be able to buy cheap steaks.

A (48:57)

I'm going to preface this by saying that it's. This is the selfish very upper middle class that, you know, I can't even. It's going to sound bad. So this sucks that people argue that I am not the victim here. But it was basically like, like I went and looked at airline tickets right after the currency crash and I was like, I spent so much more going for this trip than I would have if I had waited. Like three days is basically the bottom line. Like, this is. My problems are not the center of the world here. Like this is. I have. But it just like, it was just like, how did this. Of all things, how was I not paying attention to the Argentine currency? Jordan Wiseman, Slate money trained me for seriously?

C (49:35)

Exactly.

B (49:36)

Jordan Weissman, is your number the amount of money that you could have saved?

A (49:40)

I think it's like it was like $600, but like, like that was the difference between.

B (49:46)

Or do you have a different.

A (49:47)

I do have a different number. So the average. The average. So My number is 3.2. And that is how much the average family making between 50,000 and $100,000 pays for their health insurance premiums, like out of pocket. If they get private insurance to their employer or a union, that number 3.2%. And that's from a chart that Ernie Tadeshi is a great economist who absolutely everyone should follow on Twitter. He's honestly, he drives so much of the economic conversation in the press and he does not have enough followers, but he put out this interesting chart. So that is why that number is interesting to me is because I think it's going to be really important when people are trying to figure out how to do design any kind of Medicare for all scheme. Like, right, if that's the number, it's like, okay, that's what people are paying out of pocket. Now. They are aware of on their premiums at work. If their taxes or if they are losing more than that in this scheme, they are going to feel that they are worse off. And that is sort of for like a typical family, 50k to 100k. So I think that's like, that is, you know, when Bernie Sanders says you're going to be better off in the end in this if in a Medicare for all scheme, because we're just replacing your premiums with taxes, and it's really the same thing. And the taxes are going to be lower than your current premiums. It's not going to be the same for everybody. And so these are the kinds of numbers you have to be very careful about.

C (51:04)

It's especially not the same if you're a doctor who's all of a sudden.

A (51:07)

Going to be making significantly less. And I will say the. One of the interesting things about the chart he put out is that people who are poor pay a lot more in their private. Like, for a person making 10k to 20k, apparently it's 6.5% of their income. So it's regressive right now. Like, right now, poor people pay a lot more for their private insurance, even if they're employed. But it's. I think these kind of figures are going to play heavily into the politics of this down the line.

B (51:33)

All right, Anna, what's your number?

C (51:36)

Can I just have Apple Peek another.

B (51:37)

Argentina number or make it. You can do a Turkish one if you want.

C (51:41)

So let's see if I can remember what happened yesterday. Pull a number up. I can write one of the many other Argentina numbers that I have written down in this little note card in front of me. I'll say My number is 50 billion. And that was the IMF bailout. And part of the reason, one of the multiple reasons that this new crisis is happening is because they want to accelerate payment from that IMF bailout. And that you, you know that when the president of Argentina is. Is kind of pushing to actually have like, increased IMF aid or at least accelerated IMF aid, that things must be really bad.

B (52:14)

There is literally, there is literally nothing and no one in the world that is more hated than the IMF in Argentina. So when the president of Argentina is like, imf, we need you. Like, you know, things are bad. Emily, your number.

D (52:30)

Oh, me? My number is $10 billion. That is how much it would cost a year to put into practice. Marco Rubio, Senator Marco Rubio's terrible parental leave legislation, which I wrote about this week. It is a terrible idea, I feel very comfortable saying, where people would be, quote, unquote, allowed to borrow. That's also in quotes from their Social Security money to pay for two or three months of time off after the arrival of a new child. And initially the conservatives that cooked up the scheme, which would really change the way people think about Social Security, which I think is the big danger. They said it would be a revenue neutral plan. They make it sound like Social Security is just like anyone's checking or savings account. You know, you could put money in, you take money out, blah blah, blah. It's revenue neutral. And Rubio had said this too. But a new analysis came out this week that showed it would basically cost $10 billion a year for the federal treasury to float the plan before these.

B (53:32)

People actually don't use Social Security for anything other than Social Security because it's barely good enough for that. Okay, I think. On which note, that brings the main part of Slate Money to an end. This week we are going to have a little quick Slate plus segment about what you should spend your Labor Day watching on the telly, which is seriously, I mean I'm going to spoiler alert, it's succession. But we're going to talk about that in Slate Plus. Otherwise, thank you for listening. Keep the emails coming to slatemoneylate.com thanks to Max. Thanks, Jacobs for producing and for being able to extract some semblance of coherence from this four way conversation. And we will talk to you next week on Slate Money.