The Index Fund Problemtunity

Summary

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Slate Money – "The Index Fund Problemtunity"

Date: June 6, 2026
Host: Felix Salmon (Bloomberg)
Guests: Mary Childs, Elizabeth Spires (standing in for Emily Peck)

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Episode Overview

This episode dives deep into the financial and societal impacts of massive fresh equity issuance—more than $250 billion this year—driven by “AI type” companies. The hosts explore the significance of Alphabet’s (Google’s) unprecedented $80 billion equity raise, the role of Berkshire Hathaway and the implications for index funds with the flood of new AI IPOs. A strong through-line emerges examining who wins and who loses—investors, workers, and society—amid these big tech moves, with a robust debate on index fund inclusion, risk, and the distribution of capital gains.

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Key Discussion Points & Insights

1. $250B in Fresh Equity—A New Era for AI IPOs

[03:49 - 13:40]

• Felix introduces the staggering figure of $250 billion in new equity issuance from AI-centric companies: SpaceX, OpenAI, Anthropic, and notably, Alphabet (Google’s parent).
• It’s unusual for a company as established and profitable as Alphabet to issue equity rather than do buybacks or accumulate debt.

  "It is actually quite uncommon for public companies to do big equity raises. Not unheard of, but it's often a sign of weakness. And yet here we are, Google is raising $80 billion..." – Felix [04:44]

• Google historically focused on stock buybacks but now pivots to raising new capital, raising questions about motives and financial strategies.

Notable Exchange:

• Mary: “They already have $100 billion in debt... they were like, why don't we stop tapping that?"
• Elizabeth: “I think it's more about preserving balance sheet flexibility, though.”
• Felix: “That A bit like preserving optionality, which is the way Wall street refers to doing absolutely nothing.”
  [06:23]

On Berkshire Hathaway's Role:

• Berkshire, now under Greg Abel, is a major buyer (not Warren Buffett). This marks a symbolic shift:

  “He never quite got comfortable with Google. And yet now, finally, now Greg is another story. Greg Abel has taken over and he needs like, well, Warren never managed to like, pull the trigger on Google, but I am going to pull the trigger on Google.” – Felix [08:08]

Why Would Google Want Berkshire's Money?

• Mary suggests it's a narrative of confidence—not about validation for Google per se, but for “hyperscaling” and AI as an investable, profitable future:

  "Hyperscaling might... it does make one feel a bit better about the prospects of actual profitability from AI products if Berkshire's willing to co sign it." – Mary [10:06]

• Felix frames Berkshire’s involvement as akin to the financial crisis, when their “vote of confidence” was seen as meaningful, but notes Alphabet hardly “needs” it—this is about strategic positioning for both parties.

2. Debt vs. Equity: Equity Investors ‘Like to Win’

[13:22 – 16:39]

• Mary, a self-confessed "debt markets person," jokes that “equity markets are dumber and will buy an optimistic story,” sparking a lively breakdown by Felix:

  "Equity investors are the men who like to win and bond investors are the men who hate to lose." – Felix [14:17] "It's easier to sell equity if you're selling a story than it is to sell debt 100%." – Felix [15:14]

• High stock valuations make raising equity even cheaper (“buy low, sell high”), and Google’s timing is “just like a good stock trade.”

  “When your stock price is high... if you're issuing $80 billion of stock at a $4 trillion valuation, that is a tiny little sliver of your company that you're giving away...” – Felix [16:12]

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3. AI IPO Tsunami: The Index Fund Problemtunity

[23:34 – 37:38]

Index Fund Mechanics & Controversy:

• Mary, channeling Bess Levin's New York Mag article, critiques how index funds are “bending the rules” to include huge, often unprofitable AI companies (“monster IPOs”)—effectively making everyday investors participate in the AI boom, wanted or not.

  “All of those companies had been bending their rules to allow these monster IPO companies ... into the indices. And I’m an index fund investor, but I don’t want that. I don’t know about you, I feel...” – Mary [25:11]

• Felix is on the opposite side:

  "The whole point of index investing is you don't second guess the wisdom of crowds and the wisdom of the stock market. ... If you want to make that money ... you should include all of the stocks in the market, even the ones you don't like." – Felix [26:30]

• Debate ensues about whether these rules are about risk, “prestige,” gatekeeping, and the tension between “passive” and “actively constructed” indexes.

  "Every index is active because the selection at the outset and also on an ongoing basis makes them all different." – Mary [28:31]

• Elizabeth notes that more people are getting “so crazy overweight” in AI through their index funds, “because of their gargantuan size and like dominance and forward profit projections.” [32:18]

Societal Concerns:

• Mary: “Normal people ... just buy your index fund and go do your other job. ... This thing that I'm going to have to invest in without my consent ... is going to take my own job. Like, I don't like that.” [33:07]

• Felix (counterpoint): "At least you're invested in the company that is taking you a job." – [33:45]

• Mary: “I don’t think it works that way.”

• Elizabeth: “That is definitely not something people think about when they think about their own job loss.”

• The conversation turns to index funds’ role in societal wealth distribution and whether investors want exposure to companies they may dislike or even see as harmful to their own futures.

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4. Labor, Immigration, and the Future of Jobs

[38:00 – 49:53]

Distribution of Capital Gains vs. Labor Outcomes:

• Conversation pivots to the divergence between capital incomes and labor, especially as AI and automation could tip the scales further. The hosts question: How do we “fix the labor problem” as capital accelerates away from labor?

• The immigration debate is explored with contrasting examples:

  • In Finland, post-Ukraine immigration led to higher unemployment amid a mismatch for high-skilled jobs.
  • In Spain, millions of Latin American immigrants have entered, and unemployment has fallen; immigrants take roles (especially in care) that free Spanish women to enter white collar jobs, expanding the economic “pie.”

    “There are these jobs that are so crucial to the economy and that are not AI able, interestingly, that enable more work, that grow the pie. And ... these care-based jobs enable the family member who has been doing it for free to kind of outsource.” – Mary [41:25]

• Recent academic findings are cited: Mass deportations in the U.S. under Trump shrank the overall pie, harming native and immigrant workers alike as industries like construction couldn't replace skilled labor.

• Cultural and language barriers (e.g., Finnish) further shape immigration labor dynamics.

• Felix raises the specter that AI will eventually disrupt even “un-disruptable” jobs like care and service work, once robotics catch up. The Jetsons have set us up for disappointment, but eventually, he argues, “humanoid robots” will be doing housework and care. [47:19]

  “The real labor force revolution when it comes to AI is actually going to be in blue collar work and not white collar work.” – Felix [45:51]

Mary’s Counterpoint:

• Even as robots take over some jobs, “there will still be those jobs,” but "the skill transition sucks." [49:53]
• Referencing car manufacturing: automation reduced jobs but did not eliminate the need for human oversight or mechanical repair skills.

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Notable Quotes & Memorable Moments

• On the difference between equity and debt investors:

  "Equity investors are the men who like to win and bond investors are the men who hate to lose." – Felix Salmon [14:17]

• On Google’s stock strategy:

  “If Google was buying stock in 2022, like buying $60 billion of stock back in 2022, and now it's selling $80 billion in 2026, that is effectively buy low, sell high, right? This is just like a good stock trade for Google...” – Felix [15:35]

• On index funds and active vs. passive investing:

  "Every index is active because the selection at the outset and also on an ongoing basis makes them all different." – Mary Childs [28:31]

• On reluctant participation in the AI boom:

  “Normal people who have been taking the good advice of just buy an index... now they're like, great. This thing that I'm investing in by accident... is going to take my own job. Like, I don't like that.” – Mary Childs [33:07]

• On immigration and labor market dynamism:

  “There are these jobs that are so crucial to the economy and that are not AI able, interestingly, that enable more work, that grow the pie.” – Mary Childs [41:25]

• On AI’s eventual automation of blue-collar work:

  “The real labor force revolution when it comes to AI is actually going to be in blue collar work and not white collar work.” – Felix Salmon [45:51]

• Iconic banter:

  “I regrettably called them human hands. Hand jobs. I called them hand jobs.” – Mary Childs [49:12]
  “She talked about the hand jobs and the hand jobs.” – Felix Salmon [49:18]

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Key Timestamps

• 03:49–13:40 – Alphabet's $80B equity raise, role of Berkshire Hathaway
• 13:40–16:39 – Bond vs. equity market psychology, why Google chooses equity
• 23:34–37:38 – The “problemtunity” in index fund exposure to giant AI IPOs
• 38:00–49:53 – Capital vs. labor: immigration, wage effects, automation, and societal impact
• 49:53–54:13 – Numbers Round (vintage Knicks shirts, $100k college tuition, Mary’s new YouTube channel)

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Engaging & Useful Takeaways

• The equity markets are awash in optimism and fresh capital for AI, shifting both financial and societal dynamics.
• The index fund “problemtunity” forces passive investors into AI exposure, whether they like it or not—a microcosm of capitalism in 2026.
• Automation’s impacts on labor are only just beginning; as robotics improve, even “safe” industries may face disruption.
• Despite the excitement in markets, profound anxiety and skepticism persist about tech’s societal effects and the distribution of gains.
• Hosts combine sharp analysis with trademark wit, punctuating serious discussion with lighthearted rapport.

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For more, listen to the episode or subscribe to Slate Money at your favorite podcast platform.

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Transcript

[Felix Salmon]

Hello.

[Mary Childs]

Did I do good?

[Felix Salmon]

You did good. Mary Childs. Who are we? What is the name of the show that we are welcoming people to?

[Mary Childs]

Mary in America?

[Felix Salmon]

No, it's Slate Money.

[Mary Childs]

What if I did a Hostel takeover?

[Felix Salmon]

I am Felix Salmon of Bloomberg. I don't know how much longer I'm going to be hosting this show because Mary Childs is doing Hostel takeover thing and Elizabeth Spires is here as well. Hello Mary. Charles, of course, lovely friend of the show, stepping in for Emily Peck this week who is doing a Naxios retreat in Washington.

[Mary Childs]

I am a knockoff Emily Peck today

[Felix Salmon]

and we are going to have some awesome discussions very up Mary's alley about stock and bond and that kind of stuff. We're going to talk about the equity issuance that Alphabet just did. We're going to talk about employment and what happens to it when you increase immigration. We are going to have a Slate plus segment on you Money and whether it exists. Mary in America is performing a hostile takeover of Slate Money. So subscribe to that and stay tuned because lots of fun stuff is coming up on Slate Money. Slate Money is sponsored this week by Bill, which is the intelligence finance platform that helps business and accounting firms scale scale with proven results. Bill is a leading provider of software that simplifies, digitizes and automates back office financial processes for accounting firms and small to medium sized businesses. What does that mean? It means they help businesses pay and get paid by ach jet credit card wire transfers, you name it, it's secure. It has AI powered accounts payable automation that erases the busywork from capturing invoices and processing payments. It syncs seamlessly with accounting softw, it does your 1099 tax filings, you name it. It's an end to end workflow. Its customers come from all industries ranging from startups to established brands and nonprofits to accounting firms themselves. When business owners choose Bill, they aren't guessing. They're choosing infrastructure that is already proven by millions of users and over a trillion dollars in secure payments. Bill doesn't just move money, it enables the business's entire accounts payables workflow which and it creates the ability for them to control their financial operations securely and at scale. So talk with a payments [e-mail] proven and get a $150 gift card as a thank you. That's bill.com proven.

[Mike Townsend]

Slate Money is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab to hear the stories making news in Washington right now, Host Mike Townsend, Charles Schwab's managing director for legislative and regulatory affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors and even the entire market. Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and [e-mail] WashingtonWise or wherever you listen.

[Felix Salmon]

So, in an inversion of the usual Slate Money ness, I am going to start with the number, which is $250 billion, which is more or less the amount of money that is going to be raised in fresh equity market issuance from AI type people this year. And that is an enormous amount of money. And it is coming basically from four companies. There are three companies that are going public, SpaceX, OpenAI and Anthropic. And then there is the fourth, which might well turn out to be the biggest equity raise of all, which is a company named Alphabet. Now, I'm just going to come out and say that some of Sleep Money's listeners don't even know what Alphabet is. So, Elizabeth, who or what isn't Alphabet?

[Elizabeth Spires]

Alphabet is the company that most of you know is Google. It's the larger kind of holding company.

[Felix Salmon]

It is a massive, incredibly profitable company. And the way that the equity markets work is that you go public when you're small and you need some capital and you raise money from investors. And then for the rest of your existence as a public company, more or less, unless you're doing a major acquisition or something like that, you just share your profits with your investors and your investors can sell their stock back to other people and they can trade the stock on the stock market and that kind of that stuff. Investors don't need to stay the same, but the equity is permanent capital and you try not to dilute it. So it is actually quite uncommon for public companies to do big equity raises. Not unheard of, but it's often a sign of weakness. And yet here we are, Google is raising $80 billion, which is more than the 75 billion that SpaceX is raising. And Mary, why like they historically, they've been doing stock buybacks. In 20, 22 and 23 and 24, they were buying back like $60 billion of stock A year. They were like, this is how we're returning money to shareholders. And now they've done a complete 180

[Mary Childs]

on that yeah, they said that, you know, they already have $100 billion in debt. And I think they were like, why don't we stop tapping that? We don't want to overdo it in one area. And, you know, our stock price is pretty high, but.

[Felix Salmon]

But they have like $4 trillion in equity. I feel like $100 billion in debt is not so much.

[Mary Childs]

It's not that bad. They have pretty low yields. Yeah.

[Elizabeth Spires]

I think it's more about preserving balance sheet flexibility, though.

[Mary Childs]

That sounded good, Elizabeth. That was really good.

[Felix Salmon]

That A bit like preserving optionality, which is the way Wall street is referred to, doing absolutely nothing.

[Elizabeth Spires]

It's in the universe.

[Mary Childs]

You keep coming back to the debt markets, though, they're going to eventually be like, hey, we just saw you, like art market provenance. It's actually kind of delicate.

[Felix Salmon]

I don't know. I feel like the debt markets actually really like regular issuers.

[Mary Childs]

They like regular issuers, but they don't. I mean, I think there is a little bit of skepticism, a growing amount of skepticism about the hyperscaling.

[Felix Salmon]

Sure. I just want to make it clear here that there is no concern about Alphabet's credit quality. They have. I mean, they might have $100 billion of debt, but they have like $120 billion of cash. They have more cash than they have debt. There is no world in which they are going to default on this debt. Even if they raise. Even if they borrowed an extra 80 billion.

[Mary Childs]

I have my hand raised. Can you call on me, please?

[Felix Salmon]

Mary? Mary Childs, what do you have to say?

[Mary Childs]

Okay, what if they thought it was a great idea? Because one of the people who want to buy the equity is literally Berkshire Hathaway, and they're like, that's cool. What if it's like that?

[Felix Salmon]

Okay, so tell me. All right, next question. This is the new pop quiz. This one since Elizabeth got the last question right. Mary, let's see if you can get this one right.

[Mary Childs]

No.

[Felix Salmon]

Who is the chap in charge of Berkshire Hathaway?

[Mary Childs]

Greg Abel. He's certainly able.

[Felix Salmon]

Ding, ding, ding. It is not Warren Buffett anymore. Warren Buffett.

[Mary Childs]

Warren is, bless his heart, he has

[Felix Salmon]

retired finally at the age of 207.

[Mary Childs]

Good for him. Shouldn't we all?

[Felix Salmon]

And Warren Buffett famously made one of the world's biggest ever stock bets, I think, arguably the biggest ever stock bet that any investor has ever made on any company, when he bought a metric fuck ton of Apple shares. And that bet did incredibly well for him. And a lot of the time people started talking about Berkshire Hathaway as basically just being Apple plus a bunch of other stuff. It's not quite that anymore. But while he was very good at being early and right on Apple, he never quite got comfortable with Google. And yet now, finally, now Greg is another story. Greg Abel has taken over and he needs like, well, Warren never managed to like, pull the trigger on Google, but I am going to pull the trigger on Google.

[Elizabeth Spires]

Craig is able to do it.

[Felix Salmon]

Exactly.

[Elizabeth Spires]

Mary made a pun. I had to.

[Mary Childs]

We're looking at the buffet of options. All right, all right. Finally, we found a way to use it. It was warranted.

[Felix Salmon]

All right, guys, like, no, stop it. Only Emily Peck can do terrible dad puns.

[Mary Childs]

Oh my God, am I doing such a good job at being Emily right now?

[Felix Salmon]

You are. You're doing such a good job of being Emily. So this is one of those things that we will remember. Those of us with long memories from the financial crisis. We where like, if a bank wanted a big vote of confidence, the first thing they would do is go to Berkshire Hathaway. And if Berkshire Hathaway said, sure, we'll buy $10 billion of whatever security you're offering, then everyone else would be like, if Warren's good with it, we're good with it. And they would pile in.

[Mary Childs]

It was better than the government.

[Felix Salmon]

And certainly Abel is able to get a reasonably good deal. He's negotiated whatever he's negotiated for this $10 billion of stock he was buying. But Alphabet does not need Berkshire Hathaway's vote of confidence. Everyone is perfectly fine with Alphabet. Its stock is doing incredibly well. And so, like, I can see why Greg Abel, if he's a, you know, good old fashioned value investor and he looks at Google's profit margins and moats and all the rest of it, would be like, I want to be an investor in Alphabet. I'm still struggling a little bit. So, Mary, if you could like expand a little bit on your answer here. What is it that Google gets from Berkshire in particular?

[Mary Childs]

Well, I think one of the things that it gets is maybe Google doesn't need the vote of confidence, but hyperscaling might. It does make one feel a bit better about the prospects of actual profitability from AI products if Berkshire's willing to co sign it.

[Felix Salmon]

Right. So the idea is that everyone kind of understands Google as a media property. And now Google is quite explicitly sort of pivoting to hyperscaling and AI and search is sort of being, if not deprecated, then changed out of all recognition. And so they're like, this is a whole brave New world that we're entering here. And weirdly, this is like an IPO for new Google and Berkshire Hathaway is buying in with a $10 billion allocation.

[Mary Childs]

And it's so tiny when you think about it. That's adorable.

[Felix Salmon]

Yeah, I know.

[Elizabeth Spires]

It does make it though, one of their five biggest public companies that they own. The other four are Coca Cola and

[Felix Salmon]

there are three others, American Express, Apple and Wells Fargo, I think. I can't remember.

[Mary Childs]

I love that Coke is one of them because Warren supported them single handedly with his consumption. That's sweet.

[Felix Salmon]

That's great.

[Mary Childs]

That's. Buy what?

[Felix Salmon]

You know, the other thing is that Berkshire has a $350 billion cash pile or thereabouts and something and there are really very few things you can do with $350 billion. There aren't that many companies you can buy with $350 billion. And God knows they've been wanting, they've been out there elephant hunting, as Warren like to say, and they have failed to find any elephants. The last elephant they bought was Burlington Northern Santa Fe Railway Road. And that was what, 10 years ago? Something like that.

[Mary Childs]

Wow.

[Felix Salmon]

And so now it turns out that if you need to put $350 billion to use in the equity markets, it's actually really easy to do that by buying Alphabet stock.

[Mary Childs]

You can just pour it into a data center and they will evaporate it like water.

[Felix Salmon]

It is. No, but you know, there is, as I say, there's a $4 trillion free float of Alphabet. So like, if you're making this bet, the idea is that if it works out well and the company keeps on doing what it says it's going to do, you could increase that holding over time and it could become a really. Well, as Elizabeth says, it's already a pretty core position, but it could become an even more core position. So I can see this from Berkshire's perspective. I just want to sort of go back to the equity versus debt idea though and say, like, there used to be a lot of bellyaching, go back a couple months of people saying, oh my God, all of this investment in data centers and AI, where's all the money going to come from? The debt markets can't support it all. You know, it's all going to end in tears. And now like, hey, we have $250 billion of new stock issuance and it turns out that if the debt markets can't support it, then the equity markets can. And that's okay.

[Elizabeth Spires]

Well, I think there's still some concern about the debt. And I know that you like to tell me that that's pointless because the hyperscalers are funding most of the stuff out of cash flow. And that's true. But there was an earnings call for Nvidia a little bit back and they said that 50% of the forward demand for GPUs is coming from the hyperscalers. But that means that 50% is really coming from these neo cloud companies. And I think that's where the debt problem might come into it. It's not really a concern for the hyperscalers though.

[Felix Salmon]

Okay, fine. Like some of the debt goes bad. I'm still not worried if that happens.

[Mary Childs]

Mary, Sorry, I raised my hand again. Felix, I feel like you've been hunting for an answer and I wonder if you knew the emotional answer that I have in my heart and that's what you're looking for. May I submit that for consideration?

[Felix Salmon]

Yes.

[Mary Childs]

Is that what's happening here?

[Felix Salmon]

Yes. Tell me what is in your heart?

[Elizabeth Spires]

Yes.

[Mary Childs]

Okay. As a person who spent her career in debt markets and who loves debt markets and who is sourced in debt markets and not in equity markets. And that's on purpose because when I reported on equity markets for like three months, I was like, oh my God, I hate this. Everyone's just like kind of dumb and yelling at you all the time and trying to sell you a story and it's like not that smart, it's not that interesting.

[Felix Salmon]

I mean, hard cosine here.

[Mary Childs]

Right? Okay, Felix, is the thesis that you wanted for me that Google's going to the equity markets because they're dumber and they'll buy an optimistic story, whereas debt investors are going to get like, bro, I'm over it. No, I don't want your ipo, your little baby.

[Felix Salmon]

I really, really like this. I really like this because to use Nick Dunbar's formulation, equity investors are the men who like to win and bond investors are the men who hate to lose. That bond investors, all they care about is the downside because there is no upside. The best case scenario is the base case scenario and the you can get capital appreciation. Okay, bond traders are another thing, but bond investors, any bond, like long term bond investors, they're like, I am buying this bond because I want to get the coupons and then get the principal back at the end and go home

[Mary Childs]

and not have to worry in between.

[Felix Salmon]

Exactly. And yeah, if you are telling a story, bond investors don't care telling a story so long as they get their money back. And in the case of Google, they're going to get their money back. They don't care. Equity investors love a story. Equity investors are like, I know that this is risky, but my job is to take risk. I want an upside.

[Mary Childs]

And so, yeah, I want to go to the moon.

[Felix Salmon]

I want to go to the moon. So it's easier to sell equity if you're selling a story than it is to sell debt 100%. But then the other part of this, I think, and this is just also dumb and obvious, but it's worth saying, is that the stock market is high. And especially like Google stock is trading at very high levels and all tech

[Mary Childs]

stocks, it's a little dumb not to take some of that.

[Felix Salmon]

If Google was buying stock in 2022, like buying $60 billion of stock back in 2022, and now it's selling $80 billion in 2026, that is effectively buy low, sell high, right? This is just like a good stock

[Mary Childs]

trade for Google, a good hedge fund.

[Felix Salmon]

This is like, I know that in terms of returning money to shareholders, this is not exactly how companies think. But by the same token, when your stock price is high, what that means is that equity is cheap, cheap, and the cost of equity is low. And so if you're issuing $80 billion of stock at a $4 trillion valuation, that is a tiny little sliver of your company that you're giving away. And you can afford to give a tiny little sliver of your company away to get 80 billion fucking dollars. And that's a good deal for you. And it is cheaper right now for Google to issue equity than it is to for Google to issue debt. And even though its cost of debt is very low, its cost of equity is even lower. So it just makes financial sense to do it.

[Elizabeth Spires]

Well, I also wonder about something Mary said earlier, that maybe they're doing it because they want to build up confidence in the hyperscalers as a sector, given the skepticism that people are expressing now.

[Felix Salmon]

And so. Well, I've seen a bunch of commentary, and I don't really buy it, that they're sort of queering the pitch for SpaceX. Like, once people spend $80 billion on a bunch of Google stock, they're not going to have quite as much appetite for SpaceX stock, let alone the Anthropic and OpenAI stock.

[Mary Childs]

I wish people were that petty. Like, can you be that petty legally? I feel like you have some duties that prevent, but go for it.

[Felix Salmon]

But yeah, I mean, there doesn't seem to be any doubt that there is 250ish billion dollars of dry powder Just sitting there on the sidelines, happily waiting to get invested in AI companies. And that's kind of impressive given how much money has already been invested in these companies.

[Mary Childs]

It's almost like we dreamed up AI just to have something to invest in. We're like, oh, thank God. This is cash intensive. Ugh.

[Felix Salmon]

For real, for real.

[Mary Childs]

Everything was getting too cheap. We really needed it.

[Felix Salmon]

No, for real.

[Elizabeth Spires]

It is crazy, though, that 61% of all VC money last year went to AI. That is bonkers.

[Mary Childs]

It is bonkers. And it is just like, you know, you see the memes and the, like, really good tiktoks of people being like, we just think about AI. Can we have some money? And the VCs in the audience are like, here's my money. Like, that's true.

[Elizabeth Spires]

It does feel a little bit like.com 1.0, where if you just tacked on.com to whatever your business was, you were suddenly treated like a tech company. You can almost do that with AI. I feel like there. There are a lot of smaller companies who've definitely gotten away with that.

[Mary Childs]

And it's not clear. Like, I feel like there's. You need to have some sort of justification. Ostensibly, you need to be like, oh, like there's a reason why we're AI. Here's how. It's, like, part of our business. But I work so poorly so far that no one. There's very little ability to differentiate between, like, a company delivering a quality AI product and a company delivering a truly garbage AI product. I feel like those are kind of in a tighter range than I, as an investor might want.

[Felix Salmon]

Exactly. Like, it's. It's really hard to know or, you know, whether, say, Palantir's AI is actually amazing or actually crap. You're looking at it from the outside. Everything is covered in, like, veils of top secrecy and no one has a fucking clue.

[Mary Childs]

Right? And they're like, actually, it's alive. Sorry.

[Felix Salmon]

In a way, that's also why these big LLM companies, OpenAI and Anthropic and to a certain extent, Grok. I can't believe I'm placing it in with those other two.

[Mary Childs]

Yesterday, I heard someone pronounce it Gronk. I just am excited about that.

[Felix Salmon]

But, like, I think this is why they are able to attract such enormous amounts of money in the IPO market. It's precisely that people are like, well, I don't really have the ability to trust random company that says it has a good AI anything because lunch could get eaten by Claude tomorrow. The minute that Claude starts being able to do it. But Claude itself is investable, right?

[Mary Childs]

And if history is any guide, they'll just buy the better ones and wrap them into the anthropics and Googles of the world. Anyway.

[Felix Salmon]

If there's a better one that literally does something that Claude can't do natively, they will.

[Mary Childs]

Mark Zuckerberg will send an explicit email to kill the competition.

[Felix Salmon]

I mean, SpaceX is already.

[Mary Childs]

Just kidding, Mark.

[Felix Salmon]

No, but SpaceX has already done this, right? They have this agreement to buy cursor for $60 billion and they're like, Cursor does something we can't do. So, yeah, I'll throw $60 billion at you. Foreign is sponsored this week by Upside, which is an app you can use to make those high gas prices, high grocery prices lower. You can get cash back if you're using the Upside app. I am a rational human being. I like getting credit card points. But if I can get cash back on top of credit card points, then what's not to love? This is one of those habits. It's just a handy thing to get into. It literally costs you nothing. It makes you money. You can transfer straight to your bank account. Over 100,000 participating locations means that once you start checking the app, you realize just how often there's an offer right where you're already going. Upside has given back more than a billion dollars to its users. So to find out how much you could earn, download the free Upside app and use promo code SLATEMONEY to get an extra 25 cents back for every gallon on your first tank of gas. That's an extra 25 cents back for every gallon on your first tank of gas. Using promo code SLATEMONEY, today's episode of Slate Money is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky and let's be real, lots of funds. Throw a couple flashy funds your way and call it a day. But not Vanguard. Vanguard bonds are institutional quality. It's a commitment to your clients. It's top grade products across the board. There's more than 80 bond funds. They're actively managed by a 200 person global squad of sector specialists, analysts and traders. Of course, this isn't about star portfolio managers. It's about active strategies that aren't locked away with one person, that are shared across the team so that every client benefits from the collective brainpower. No one individual can really mentally encompass the bond market. It's way too complex. So if you're looking to give your clients consistent results year in and year out, go see the record for [e-mail] audio. That's vanguard.com audio all investing is subject to risk. Vanguard Marketing Corporation Distributor this episode is

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[Mary Childs]

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[Mike Townsend]

Get AT&T [e-mail] We should talk about

[Felix Salmon]

SpaceX in particular, but also these other two in the context of the number one subject of slate Money, the thing we love more than anything else, which is index funds.

[Mary Childs]

Here we go.

[Felix Salmon]

Here we go. Mary, explain what the problem or the opportunity is.

[Mary Childs]

The problem. Tunity.

[Felix Salmon]

The problemtunity.

[Mary Childs]

Thank you, Felix. I'm excited to present on behalf of my dear friend and colleague Bess Levin, an article that she wrote. I'm basically channeling Bess. Bess just wrote something for New York Mag the other day called Good luck trying to opt out of the AI stock market bonanza. And I loved it because it read my mind because it was exactly what I and I think a lot of people have been thinking about, which is these monster IPOs are coming down the pike. All of the all asterisks. Felix, I hear you. All of the index fund providers where you and I put our retirement funds, you know, they build the indexes and then everybody goes and buys them. And so my BlackRock fund and your TIAA fund and whatever all buy these products. And those products have rules that prevent unprofitable companies that prevent too new of companies that prevent like little guys from getting in that are maybe not the best companies Getting into those indexes which then you and I invest in our retirement accounts and, or in our discretion. I don't know what you do. So all of those companies had been bending their rules to allow these monster IPO companies to the anthropic OpenAI and Spacexes into the indices. And I'm an index fund investor, but I don't want that. I don't want that. I don't know about you, I feel

[Felix Salmon]

like you don't want that.

[Mary Childs]

I know people hate AI.

[Felix Salmon]

So, okay, so this is exactly. This is exactly. There are two incredibly different views of this. And I think I place myself on the exact opposite side of that spectrum on what you might call the Boglehead.

[Mary Childs]

You're bullish. You're a buyer of AI here.

[Felix Salmon]

So we talked about this many years ago on Slate Money when Tesla was not in the s and P500. For years and years and years, Tesla was this massive growing company that was becoming one of the biggest stocks in the stock market. And S&P 5 and S&P DJI, the company that builds the S&P 500 index, consistently refused quarter after quarter to allow Tesla into the index on the grounds that it was losing money. And they were like, in order to get inculcated into this grand group of 500 stocks, you need to be profitable. And so Every S&P 500 investor lost out on all of those Tesla gains because Tesla was never part of the index. And then when Tesla finally made enough money, like more than zero to become part of the index, it was already valued so highly that there weren't so many future gains, or so people thought. In the end, it wound up going up even more. But the story was the whole point of index investing is you don't second guess the wisdom of crowds and the wisdom of the stock market. The stock market understands that a company that is losing money today might be making money tomorrow. And so it's worth ever larger amounts of money. And you want to invest in the stock market and you want to make that money. And therefore it is a bit weird and wrong for the index providers to be like, yeah, no, you can't make profits on Tesla because it's not a profitable company. Like, who are they to stop us from doing that? And so long as you are investing in a company that is supposed to be a cap weighted collection of all of the stocks in the market, which is basically what an index fund is, you should include all of the stocks in the market, even the ones you don't like.

[Elizabeth Spires]

Well, isn't the point of these restrictions to really kind of reduce the risk profile of the index.

[Felix Salmon]

No.

[Elizabeth Spires]

The profile of a company like SpaceX or Anthropic or OpenAI is going to be different than, I mean even Tesla.

[Mary Childs]

Maybe it's not risk so much as like prestige almost. This is a gatekeeping function.

[Felix Salmon]

I would push back strongly on the idea that it's a risk thing. It is not. If all of the stocks in the S&P 500 start levering up and becoming ever riskier because they're all borrowing lots of money, then fine, that's up to them. It's not S&P's job to say, oh no, now you're too risky, we're going to kick you out.

[Mary Childs]

That's the debt market that does that.

[Felix Salmon]

Yeah. There aren't like bits of the S&P 500 where they're like, we are not going to allow the tech sector to be more than 25% of the index because then that would be too much concentration or anything like that. If you.

[Elizabeth Spires]

There is a worry about that.

[Felix Salmon]

No, no, there are lots of worries about the stock market. And the whole point of index funds is that if you want to put together your own personal portfolio of things that you consider to be low risk or you don't want too much concentration or whatever the hell, you can do that. If all you want to do is buy a cap weighted bucket of every single stock in the world, then that's what a broad index fund is designed to provide.

[Mary Childs]

What I love about this is it reminds me so much of that Adriana Robertson paper from a couple years ago. Passive in name only. She's a law professor at Chicago who's obsessed with index funds and she's extremely funny and smart. And the paper basically says that like you think you're investing in a passive thing. Every index is active because the selection at the outset and also on an ongoing basis makes them all different. There are more, as you know, I know you know that there are more products, more index products than like exchange rate than there are stocks to put in those. So I just think that, you know, it's a slippery slope.

[Felix Salmon]

My view on this is that there is a very legitimate worry and there is an illegitimate worry. The illegitimate worry is these stocks are too risky. These stocks aren't profitable enough. These stocks are just not gold plated enough to belong in a.

[Mary Childs]

These stocks didn't go to Harvard.

[Felix Salmon]

Exactly. That one I'm like, eh, fuck off. The legitimate worry is the one about the free float, which is that if you list your company at a $2 trillion valuation, but you only issue $50 billion of stock and suddenly every index fund in the world has to buy your company according to a $2 trillion weighting. Then you're going to have more people trying to buy your stock than there is stock available to buy. And you're going to get this artificial squeeze in the value of your stock. This is a problem that has already been solved. All of these indexes are what they call float weighted. So when If s and P500, it turns out that they're not going to. But if SP allowed SpaceX into the index on day one, as a lot of people expected them to do, but in the end they didn't, then on day one it would only be about 0.1% of the index because the float is so small. Eventually when in six months or a year when all of the stock is freed up and everyone is free to sell their stock and all the rest of it, then it would expand to being like a full weight. But in the initial months when people are worried about, that wouldn't be a problem.

[Elizabeth Spires]

I love that Bess is correct though in this analysis.

[Mary Childs]

Bess is always correct.

[Felix Salmon]

So Bess is basically saying that anthropic and OpenAI and SpaceX should not be in the index. Is that what she's saying?

[Elizabeth Spires]

I think she's saying that you can't avoid your money being in any of these companies if you are investing in indexes.

[Mary Childs]

Exactly. I don't know that she's.

[Elizabeth Spires]

There's no way to work around it.

[Felix Salmon]

But that's true of every large company on the stock market. Right. If that when they become a large company on the stock market, they're just going to be a large company on the stock markets. If you're buying an index fund, ipso facto you're buying them. Why is that bad?

[Mary Childs]

I think that an AI, you know, you've seen all these polls come out and Bess cites them, that the favorability basically of AI has plummeted in the last year or so. And I think people are seeing the effects in their lives of like layoffs coming. And we expect maybe more layoffs than have come. There's the water use, there's AOC holding up a bottle of like dirty water from near a data center. I think the deleterious effects or like second order effects of these technologies are pissing people off. And so more than when you're like, oh, I'm getting like a car company in my index fund, like it's whatever, but you're getting a batch here. You're getting a batch of companies that are enormous and that everybody on Wall street seems so excited about, you know, with some exceptions, but, like, generally excited about. And so you know that you're going to be like at some point in your life, like, so crazy overweight. These companies because of their gargantuan size and like dominance and forward profit projections.

[Elizabeth Spires]

Also because narrative is so important in stock market for the reasons that we all discussed. Somebody on Bluesky yesterday had a tweet or whatever we call one blue sky that said something like, you know, it's amazing how badly the tech industry has told the story of AI because now people associate it primarily with job loss and the deleterious effects of data centers. It would be like if you were putting out a new car and then you decided that you were going to market it by running over the family dog to demonstrate its efficacy. That's basically what the AI companies have done. Like, I don't think that they're.

[Felix Salmon]

Well, I mean, I can see that in the court of a certain type of public opinion. I certainly can't see that in the stock market value. As we were saying earlier, the equity markets are all about storytelling. And as far as the AI story is concerned, they're doing a fantastic job.

[Mary Childs]

I think that's right, because you do see corporations, like all over the place adopting AI whether or not it serves them necessarily. And there's an enormous lump as they work through how to make it work for them. And their productivity kind of drops off until they get it right. But I think normal people who have been taking the good advice of just buy an index, don't try to day trade, don't try to time the market, just buy your index fund and go do your other job. People took that advice and now they're like, great. This thing that I'm investing in by accident, this thing that I'm going to have to invest in without my consent, basically with my implicit, like, preordained consent, now, is going to take my own job. Like, I don't like that.

[Felix Salmon]

But it's good. It's a natural hedge. It's like, at least you're invested in the company that is taking you a job.

[Mary Childs]

I don't think it works that way.

[Elizabeth Spires]

That is definitely not something people think about when they think about their own job loss.

[Mary Childs]

I talked to this guy once who was really mad at private equity and I was like, oh, yeah, like, of course, yada yada, we're all mad at private equity, whatever. And he was like, no, my mom, you know, had a city pension and she put money into that pension, which then put money into the private equity companies, which then bought her my dad's job or something and like, destroyed the. You know what I mean? Like, he drew the circle really tight of causality, of like, she was funding the very thing that ended up fucking us over.

[Felix Salmon]

Okay, but let's be clear about this. In the stock market, if you buy a stock, you are not funding the company. If you buy a stock, you are just buying a stock from someone else. You're buying it for some other one who's selling it.

[Mary Childs]

You're funding the. Yes. You're not directly participating in the ipo. But I think that there's. Those things are so closely related, I don't know how much I care about that difference.

[Elizabeth Spires]

If all of you have to put money into the equity of an AI company, you're not funding them directly, but you are potentially causing the value of the company to appreciate.

[Felix Salmon]

Yeah, but that's good because you're making money.

[Elizabeth Spires]

And I think the resentment is just like, we don't want to help these people.

[Felix Salmon]

Okay. I am old enough to remember when the larger largest company in America by market capitalization was ExxonMobil. Right. And ExxonMobil was like a bad company that people hated. And everyone in an index fund had a large chunk of ExxonMobil. This is an old story.

[Elizabeth Spires]

I think this is a different kind of.

[Mary Childs]

You're forgetting the China shock. We learned some lessons about distribution. Rich people have index funds, poor people don't. The gains, the profits from this will not be distributed to the poor people whose jobs are getting AI'd. We all see it coming. And we know that the overall societal outcomes from that kind of economic bomb going off are incredibly painful. And that's not exciting.

[Felix Salmon]

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[Felix Salmon]

that is the perfect segue to.

[Mary Childs]

Wow. I feel like I won one. Did I win?

[Felix Salmon]

Mary, you always win. You win every single segment by default.

[Mary Childs]

No, I don't want default. I want to actually win.

[Felix Salmon]

So you win every single segment just because you're smarter than the rest of us?

[Mary Childs]

No. Well, that's not it either.

[Felix Salmon]

And also funnier and also better looking.

[Mary Childs]

No, stop it. You're making it work. All right, segment three. Let's do it.

[Felix Salmon]

Segment three. No, no. But this is. Okay, explain the segue from what you were just saying to segment three.

[Mary Childs]

Well, I was just saying that the gains are not distributed evenly and. No, I don't. Can you do it? I didn't have enough coffee. I'm sorry, Felix. I take it back.

[Felix Salmon]

So the question is, in this world of labor and capital diverging more than they have in a very long time.

[Mary Childs]

Really good, good segue.

[Felix Salmon]

When you have capital going up and to the right and labor sort of going down into the right, how do you fix the labor problem? And Mary has her hand up.

[Mary Childs]

Can I just make a quick aesthetic objection? It's always going to go to the right. It's driving me crazy. Everybody's always saying it goes up. It makes it go up and to the right. The right is time. It's just the x axis is time. If it's not going to the right, you have much larger problems. Thank you.

[Felix Salmon]

No, no. If you can make time go backwards, then you can go back and buy Apple stock anyway.

[Mary Childs]

Much larger problemtunities.

[Elizabeth Spires]

If you're on the other side of the chart, it's going up.

[Mary Childs]

I loved Tenet. I did. But I'm just saying that saying pisses me off. Please go on, Felix.

[Felix Salmon]

I will just blithely continue here and say, let's concentrate on the labor side of things rather than the capital side of things. And one of the most interesting questions in labor economics is what happens to Wages. What happens to employment when you get a positive labor shock of like, more people entering the labor force, specifically from immigration? The Trumpist answer is unambiguous. They're saying, like, immigrants take our jobs. If we kick the immigrants out, then those jobs will have to be taken by Americans. There will be less competition for those jobs. So the price of that job, which means the wages will rise and unemployment will go down among Americans and wages will go up. And so immigration is bad for the existing labor force. If you look at Finland, this is arguably true. Finland has received a large number of immigrants from Ukraine. Those immigrants are finding it hard to get jobs and unemployment has risen as. So the labor force is looking worse and unemployment is over 10%, I think for the first time in recent Finnish history. On the other hand, if you look at Spain, this is categorically false. Spain imported 3 million immigrants from Latin America in recent years, which is just an astonishingly enormous amount of immigration. Way more immigration than appeared in the US On a sort of per capita basis. And the result of all of this immigration from Latin America is that unemployment in Spain has gone down quite spectacularly and is now lower than unemployment in Finland. It is still high on an absolute level, but it is lower than it has been in years. And Spain's economy is like the number one economy in the world, per the Economist, and it is booming and unemployment is falling. And all of this immigration seems to be really good, not only for the immigrants who are getting jobs, but also for native Spaniards who are also seeing better work opportunities as a result. One of the mechanisms that causes this anecdotally is that some of the lower skilled immigration is going into elder care and childcare, which is freeing up Spanish women to take jobs in like the white collar workforce. But Mary, you're going to broaden this out. I know, because you're. Mary.

[Mary Childs]

Oh, no, I'm just glad you made that point because there are these jobs that are so crucial to the economy and that are not AI able, interestingly, that enable more work, that grow the pie. And like you're saying, like these care based jobs enable the family member who has been doing it for free to kind of outsource. And that's just a lot more gdp. Okay, so Chloe east at the University of Colorado Boulder and her co author Elizabeth Cox just came out with a new working paper called labor market impacts of ice activity in Trump 2.0. And this basically look at what happens when Trump targets an area, the Trump administration targets an area for ICE deportations. And you can Kind of compare that to an area that hasn't been targeted because it has been so uneven across the country, right. And what they found is these mass deportations are actually shrinking the overall pie. It's not only obviously bad for the people being deported, but then that's bad for the companies that they were working for because those companies are like, oh shit, where did my people go that were working for me building these houses and like digging these foundations? And so then they're like, well, I can't deliver this house on time and they can't find the labor to replace them. So the overall industry is shrinking in these areas that were like higher percentage of labor of people who have been impacted by these deportations. And so that's just overall net fewer jobs.

[Felix Salmon]

And one of the things we should mention here in contradistinction to Spain, and I'm not saying that like caregiving is a low skill job, but I am saying that in the construction industry jobs that we're talking about are genuinely skilled jobs, right? It's masons and carpenters and people who are, who you need to be like trained up and you need a certain amount of years of training in order to be able to do these jobs. And if you deport those people who are capable of doing the jobs, there is no one left who is capable of doing the jobs. Native born Americans, just, for whatever reason don't tend to go into these trades in remotely enough numbers to be able to fill the demand.

[Mary Childs]

And they haven't had to because there was an enormous supply of people who wanted to do them and were doing them and had the skills and expertise.

[Elizabeth Spires]

So and the Trump theory is that wages would go up and then Americans would want those jobs. And that has not happened at all. But I do think the American situation is not dissimilar to Spain's in terms of how immigrants fit into the economy. Finland has problems because first of all, this sort of match between skill set and jobs that are needed is misaligned. The biggest demand for jobs in Finland is for very high skilled white collar jobs. And that's not true in Spain. I don't think that's really true.

[Felix Salmon]

I am a little bit confused as to why there isn't a bunch of demand for this caregiving jobs in Finland

[Mary Childs]

because there are only like 10 people there. They just don't, it's just like they've got, they're good, they've got their cup

[Felix Salmon]

of tea and their reindeer.

[Elizabeth Spires]

I think they've already got the care economy figured out. That's Part of the appeal.

[Mary Childs]

They're happier.

[Elizabeth Spires]

Also, Finnish is apparently a very difficult language to learn, and so that's another issue. Most of the immigrants are Ukrainian, apparently, and so learning the language and being able to fit into those high skilled jobs is just much more difficult.

[Mary Childs]

Germany has the same issue.

[Felix Salmon]

Can I just mention as an aside, here we are cribbing massively from this wonderful FT article that my wife actually requested that we talk about. But the author of the article, whose name I do not have in front of me, talked to the OECD analysts for Finland and Spain, and the OECD person covering Spain covers Spain and Chile, while the OECD person covering Finland covers Finland and New Zealand.

[Mary Childs]

No. What? By the way, it's Sarah o' Connor who is great.

[Elizabeth Spires]

Did they just draw countries out of a hat?

[Felix Salmon]

It's so wonderful. Finland and New Zealand, they're both.

[Mary Childs]

Are they shaped similarly?

[Felix Salmon]

Maybe longer than they are wide?

[Mary Childs]

Yeah. I think we should also cite the Atlantic piece called the Spanish Exception, which I really loved. It's also about how Spain has become this economic success story, which is so fun if you have a long enough memory to have been there in 2011 when everyone was like, Portugal, Italy, Ireland, Greece and Spain are so screwed and they're never going to get better. And they're awful and they're the bane of our existence in Europe. What? They're all good now. That's amazing. They did it. That's so happy.

[Felix Salmon]

As someone who's been spending quite a lot of time in Ireland, Ireland is booming. Ireland is doing great. Yeah. Thank you. There's one little wrinkle that I want to add to this though, which is to go back, Mary, to something you said earlier, which is that these caregiving jobs can't be replaced by AI. I have this theory that the real labor force revolution when it comes to AI is actually going to be in blue collar work and not white collar work. Right now everyone is worried about. AI is decimating the ranks.

[Mary Childs]

I got bad news for you. I don't know which collar is which color. I've never known.

[Felix Salmon]

Okay, so basically right now everyone is worried that, oh, you're saying it's a

[Mary Childs]

China shock for rich people.

[Felix Salmon]

Recent graduates can't find jobs because AI can do those entry level jobs better than the recent graduates can. That kind of stuff. So it's the rich and educated who are being disrupted by Claude.

[Mary Childs]

Get em. Sorry.

[Felix Salmon]

Which might well be true, but if you just go forward some number of years, and I don't know how many years it's probably more than 2, and it's probably less than 20. But you can see a world in the future which is almost certainly going to arrive when all of these humanoid robots that Tesla and everyone else is making are actually going to achieve their potential. And they're going to be able to load the dishwasher and they're going to be able to fold the laundry and all of the stuff that they can't do. Right. That they famously can't do right now. The famous test is, will it be able to walk into a kitchen, work out how to make a cup of coffee, and make the cup of coffee just by looking around and seeing what kind of coffee making equipment there is?

[Mary Childs]

I mean, I can't do that.

[Elizabeth Spires]

Yeah. I feel like the Jetsons set us up for disappointment on this. You know, I had expected us to have flying cars by now.

[Mary Childs]

It's just been a poor allocation of capital and innovation. We could have done it.

[Felix Salmon]

It's a really tough AI problem, but it's a tough AI problem that everyone expects will be solved at some point.

[Mary Childs]

When can you put a date on it, though? Because we can come back.

[Felix Salmon]

Oh, yeah, I did. Somewhere between two and 20 years.

[Mary Childs]

No, no, make it tighter so that we can actually come back and be like, Felix, tick tock. It's the time.

[Felix Salmon]

So no, I can't.

[Mary Childs]

And I'll buy you cashmere socks or whatever.

[Felix Salmon]

Okay. Well, yes, I mean, I like the idea of turning this into a bet.

[Mary Childs]

I knew that would work.

[Felix Salmon]

But.

[Elizabeth Spires]

Well, Elon says that we don't need retirement funds anymore because AI will be doing all of our work.

[Felix Salmon]

So Elon is one of the. Tesla is one of the companies that is. I mean, Tesla's basically become a robot company rather than a car company at this point. If you look at the valuation of Tesla, the stock market, in its infinite wisdom, you know, the wisdom of the crowds, is saying that, like, they believe these humanoid robots are going to be here sooner than, you know, pretty soon and making lots of money the minute that happens. At that point, it is incredibly disruptive to the caregiving economy, to the housekeeping economy, to all of these jobs. The minute that happens. I would actually be very happy having a robot nurse pick me out of bed and put me into my wheelchair or whatever, because they are less likely to drop me and steal from me.

[Mary Childs]

They have such a garbage bedside manner, no matter how you program them. Now, it's true that not all people have good bedside manners. So again, it is a. There's going to be a dispersion in talent and you have to be above average bedside warmness to really excel in these jobs. I think you're right. I think there's like a scale problem too where, like there will still be those jobs. If you look at car manufacturing as instructive here, those jobs were all very manual. Right. And I just am thinking guys on odd lots the other day, I regrettably called them human hands. Hand jobs. I called them hand jobs.

[Felix Salmon]

You know, Rana Faruha did that on Slate Money once as well. Did she? Yeah.

[Mary Childs]

Oh, I feel better. So let's just call them that.

[Felix Salmon]

She talked about the hand jobs and the hand jobs.

[Mary Childs]

She's right. Okay. We're standing by it. If you look at like the factory floor for cars, it used to be all people and now there are robots and there are people babysitting the robots. Are there fewer people? Yes. Do they make cars more good or faster by decay? Yes. There are definitely productivity gains and like cost gains, but probably from laying off those people. I don't know what proportion, but there are still, you know, you need a mechanic to come fix the robot. You need somebody to make sure the robot is doing whatever, you know, doesn't get like confused and go the wrong way. So there are still jobs. It's just fewer jobs and it's different skills and the skill transition sucks.

[Felix Salmon]

Right. But my point is just that the lower skilled jobs are the ones being the most disrupted in this scenario. On which note, we should really move on to numbers round. Elizabeth, you have a number?

[Elizabeth Spires]

I do. My number is 350 and that's dollars. And that's how much a T shirt from the 99 NBA Finals sold for on ebay. Because now there are a lot of people who are super excited about the Knicks and some of them, me included, are not long time Knicks fans. But we want to get in on this, right?

[Mary Childs]

Fair weather fans. I love it.

[Elizabeth Spires]

Admitting that if you have a vintage Knicks shirt, then you can sort of cosplay as a longtime Knicks fan die.

[Mary Childs]

That's so good.

[Elizabeth Spires]

So vintage merch is selling really well right now.

[Mary Childs]

Did you buy it? Are you the winning bidder?

[Felix Salmon]

Did you buy it? That's awesome.

[Elizabeth Spires]

No, I did not buy it.

[Mary Childs]

Elizabeth, you could have expensed it.

[Felix Salmon]

Yeah, if it's on the show, then that's a legitimate business expense. Right.

[Mary Childs]

Go do it real quick. And then it counts.

[Felix Salmon]

My number is 16.

[Mary Childs]

Good.

[Felix Salmon]

Number 16 is the number of American colleges where tuition next year is going to be more than $100,000 for a year worth it.

[Elizabeth Spires]

That's terrifying.

[Mary Childs]

And none of those kids are gonna get a job. Like, what are we doing?

[Felix Salmon]

And you know what? The one which I think is highest is one which I'm not sure I've heard of, called Harvey Muddy. It's $104,512 if you want to go there.

[Mary Childs]

Found a great. Is Washington and Lee on that list? Just wondering. Asking for an alumni.

[Felix Salmon]

Washington University in St. Louis is on the list.

[Mary Childs]

No, that's not me. Frequently confused.

[Felix Salmon]

And NYU and USC and Vassar and Wesleyan and duke and Claremont McKenna. But yeah, obviously not Harvard and Yale. Cause they have lots of endowments. They don't need to.

[Mary Childs]

That's nuts.

[Felix Salmon]

Yeah.

[Mary Childs]

This one time I got into Vanderbilt and they offered me a scholarship. Thank God. Cause it was really expensive. And of $1,000.

[Felix Salmon]

I mean, the one thing I would add here is that increasingly no one pays the rack rate. In order to pay that full $104,000 of tuition or whatever you need to be obscenely rich, they will always throw some kind of incentive at you. But on another level. Yeah, the RAC rate kind of matters somehow and normalizes things.

[Mary Childs]

Didn't we used to have a bunch of international students that were like the heirs to enormous fortune, paying the full.

[Felix Salmon]

Yeah, international students found it harder to get the discounts for sure.

[Elizabeth Spires]

When I was at Duke, they weren't eligible for any kind of financial aid at all. So that was. And I think Duke was like 25% international students. And they were all paying the RAC rate.

[Felix Salmon]

Yeah. But now, of course, all of those Chinese students have fucked off. So if you don't have to worry about, can the international students afford the RAC rate because there aren't any international students anymore, then you just make it, you know, more attractive by saying, well, the rag rate is 105,000, but you only have to pay 85,000. So really, you're saving $20,000 a year. It's a sale.

[Mary Childs]

Let's go to college.

[Felix Salmon]

Yeah. Anyway, Mary, what's your number?

[Mary Childs]

My number is 395, which is how many YouTube subscribers my new channel has.

[Felix Salmon]

Wing Bing, bing, bing. Is that a high or low?

[Mary Childs]

I know, right? It's confusing. So I was, until very recently, a host of Planet Money, where we had large numbers of downloads and subscribers and that listened and da da, da. And I left and I started something brand new. But yeah, it's. The numbers are smaller, but they're growing and it's really fun.

[Felix Salmon]

And we should add that we used to call this a podcast. Now we just call it a show.

[Mary Childs]

It's a talk show. You know what I mean? It's a video first interview chat podcast.

[Felix Salmon]

It's a video first interview chat podcast. But for those of you who are listening to this show on Apple Podcasts or Overcast or Spotify, you can also find it there. You can get marry in America wherever you find your podcasts.

[Mary Childs]

It doesn't matter to me.

[Felix Salmon]

Go out there and subscribe to Mary in America. Thank you, thank you to Jasmine Molly for producing and mostly thank you to Mary Childs for being amazing and brilliant and thank you for coming on.

[Mary Childs]

Thank you for having me. So fun as always.

[Felix Salmon]

Yeah. We will be back next week with more Slate Money. This episode of Slate Money is brought to you by Airalo, the world's leading ESIM brand. In this wonderful world of modern technology, you travel the world with a supercomputer. You can order a car, you can book a hotel, you can translate a menu, you can text your friends. But are you going to have any service when you're traveling internationally? You have to think about it in advance. It's complicated. It's often very expensive. That is where Airalo comes in. It's the world's largest travel ESIM platform. It's trusted by more than 30 million travelers worldwide and it lets you connect to mobile networks instantly in more than 200 destinations. So you don't need to worry about finding a SIM at the airport. You don't need to worry about roaming charges. You can just use your phone like a normal person. I spend a lot of time traveling around Europe and I can tell you having a second SIM and having a second number in Europe is just relaxing. And because Airalo offers as prepaid plans, there are no hidden fees, no surprise charges, no worries about what's going to happen to your phone bill when you get back home. In fact, travelers using Airalo can save on average more than $70 on a one week trip compared with traditional carrier roaming fees. So if you want to learn more or get unlimited data this summer, go to airalo.com that's a I R A

[Mike Townsend]

L O.com slate money is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's managing director for legislative and Regulatory affairs, takes a nonpartisan look at the stories that matter most to investors sectors, including policy initiatives for retirement, savings, taxes and trade inflation concerns the Federal Reserve and how regulatory developments can affect companies, sectors and even the entire market. Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and [e-mail] WashingtonWise or wherever you listen.