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- [00:10]
A
Hello, and welcome to the Inspecting Our Own Meat edition of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. I'm here with Emily Peck of the Huffington Post.
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B
Hello.
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A
And Anna Shymansky.
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B
Hello.
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A
And we have really been examining our bologna sandwiches today. No, we have not been. We are going to talk about why we feel perfectly comfortable eating bologna sandwiches without inspecting them. We are going to do that in the context of a little dive into the Consumer Financial Protection Bureau, which has.
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C
It's baloney.
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A
Is it baloney?
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C
This is America. It's baloney.
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A
I'm very bad at pronouncing American. Apologies to all the American listeners. Bologna sandwiches.
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C
Not to shame your pronunciation or anything, but I feel like, you know, when it's Bologna, it's Bologna.
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A
Bologna. You're right, it's Bologna. Because Bologna is disgusting. And Bologna is a town.
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B
I was gonna say that's a very different thing.
- [01:11]
A
Bologna is disgusting. And Bologna is a town in Italy which has the best food in the world. So if you want to go eat great food, go to Bologna. Anyway, we are going to talk about Pinterest and Zoom and Blackstone and public markets and a whole bunch of equity stuff because, hey, we're a money show. We get to do that kind of stock markety content now and again. And we're also going to talk about infrastructure, which is not boring, honestly. No, this is a good one. We're going to talk about the fire at Notre Dame Cathedral in Paris and how the reaction to it mirrors, like, the problem with infrastructure in every country in the world, especially the United States. All of that coming up on Slate Money. So let's talk about all of these IPOs. The Lyft one kind of fell off a cliff a little bit, apparently. It turns out that the massive optimism that people had about IPOs, which I remember IPO optimism from 1999, I am that old. Like, but it didn't last more than about a day or a few hours. It hasn't gone away. Like, it kind of dissipated in the case of Lyft. But then we had Pinterest this week. And even more interestingly, zoom, zoom, zoomed. The CEO actually went on Bloomberg Television, he said, the price, stock price is too high, which I loved. Which was like the most honest thing that anyone has ever said on IPO day.
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C
I'm telling you, this guy is great. Eric Guan.
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A
Eric Guan. He is, I think, the first Chinese CEO of a big US Corporation, publicly listed corporation. It's basically never happened. Before, like we've had a million Indian CEOs, but for some reason Chinese CEOs have not been a thing until now.
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C
Yeah, and he worked really hard to come over here.
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B
He couldn't get a visa.
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C
Couldn't get a visa. He kept applying, kept applying, kept applying. Came over in 97.
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A
And he, he came up through the engineering ranks, which again is quite rare for CEOs. But he worked on WebEx and he's like, yeah, that was crap buggy code that I wrote for, wrote for WebEx. And then they sold WebEx to Cisco for like $3 billion. And he's like, I can do better than this. And created this better version of WebEx and it is now worth $16 billion. Good for you.
- [03:20]
B
And it does something very controversial. It actually makes a profit. Yes.
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C
Amazing.
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A
I mean, this is one of the crazy things that it turns out that for all the investors seem to love all of these money losing companies, they like money making companies.
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B
What's even better, it didn't make a.
- [03:38]
A
Lot of profit, to be fair. It made like the grand total of $7 million last year or something. But like it makes a profit. And that's important not because you can back out a $16 billion valuation on a discounted cash flow basis from $7 million of profit, but if the money dries up at some point, which it almost certainly will, there will be a time in the future when there isn't infinite amounts of money willing to get plowed into these money losing companies. Zoom is going to be able to stay standing because it doesn't need more money.
- [04:11]
B
Right. With a lot of these companies, obviously they're growth stories, but you want some path to profitability, which was the question and left where everyone was like, where is that coming from? Yeah, exactly. Whereas obviously with Zoom, but also with Pinterest, I mean, Pinterest is not making a profit, but their losses are shrinking. And they, it also kind of makes sense as one of these platforms that could lend itself to profitability because you go to Pinterest usually to find products you want to buy.
- [04:37]
A
And what's more, the lesson of Instagram is, you know, Instagram became one of the most phenomenally profitable, you know, services directors of consumer services like in the world has ever seen. It's the most amazing advertising platform, an advertising product that has been invented in years. I think I've said this more than once on this show. And you know, if Pinterest is going to be even just a pale imitation of Instagram, it has the potential to make unbelievable Money, as opposed to Uber and Lyft, which, as far as we can tell, like, neither of them has really managed to lay out a path to profitability. I mean, they both. Lyft raised a bunch of money, but not enough to keep it going indefinitely. And then once they run out of money, what happens? One of the promises about IPOs, one of the implicit promises about IPOs is that this is my last round, basically, that you don't IPO and then do another big stock issuance. The exception to this rule being Tesla, but mostly companies don't IPO and then do a big stock issuance.
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C
I feel like Pinterest, though, I mean, the way I was looking at it this week was Pinterest versus Zoom. Zoom being like kind of like a sure thing kind of company. It's already making a profit and investors really rewarded that. And Pinterest, like all these tech IPOs is just. Is just IPOing on its potential, which, like you said, could be good. There could be advertiser dollars coming a la Instagram. But it's also sort of a test of social networking's kind of future. And at this point, I feel like there's a lot of doubt around social networking. It's really toxic. It's awful. And Pinterest has been. They're still growing, but it's slowed down considerably. And it's not a sure thing.
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A
They take a while to go public.
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B
And Pinterest has gone out of its way to say we are not a social network platform. They really have. They've kind of tried to set themselves apart. And it is interesting that when you think of all of the negative news around social media, you really often don't hear Pinterest in that discussion.
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A
Yeah, it's like TikTok. It's one of those good social networks.
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B
Yeah.
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A
Except for TikTok is, you know, not sure that's owned by like an evil Chinese AI company. But.
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C
But I mean, Anna uses Pinterest and she was just talking to me about it and it actually, I was like, maybe I should be using it, but.
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A
I used it when I renovated my apartment.
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C
Well, that's what she said.
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B
Exactly. And that's actually an interesting thing about Pinterest. You kind of dive into some of their numbers because they don't have the same frequency of use for their users as you would get on, like a Twitter or Facebook. But when people go on, it's usually because they're looking for kind of big ticket items, like they're renov place, they're buying furniture they're planning a wedding. That's a huge thing for Pinterest. So that's another aspect of the company when you're looking forward to say, how is this company going to be profitable? Well, it's interesting that you can target these people who are looking to spend a lot of money.
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A
And so what they did is they took this story to the world and did this initial public offering so that anyone could buy shares in them, which is like this revolutionary idea in a world where, you know, everything has been secretive and private for forever. And the public gave them a whole bunch of money, and now they have a whole bunch of money, which gives them Runway and time to work out how they're going to become profitable. And that's kind of how markets are supposed to work. Except for historically, no one's ever waited that long to go public. You know, Pinterest took way longer than companies used to. And so did Uber and so did Lyft. And. And I feel like maybe, just maybe right now we're having this kind of moment where people are like, okay, let's go back to public markets and give them their due. And the thing that makes me say this is Blackstone, weirdly so. Anna, do you want to explain what Blackstone just did?
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B
Well, basically, they're changing their structure. So they're no longer going to be a publicly traded partnership. They're now going to become a C.
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A
Corp, which basically means they're going to go from being a publicly traded company trading under the symbol BX on the stock exchange to being a publicly traded company trading under the symbol BX on the stock. Yes, but now, now they pay more taxes.
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B
Right? But now. Yes. And now mutual funds and indices can own them. That's the big thing. They really just want to expand the pool of people who can invest.
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A
And that's. And that's fascinating to me because it really shows you that they are willing to pay a 100% certain cost year in and year out in perpetuity, in terms of higher taxes, just in return for expanding their potential investor base.
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B
Well, and because they haven't been able to kind of their stock prices, which is honestly, this is the case in a lot of private equity firms, that stock prices have kind of been middling. You haven't been able to really see a jump that would. That when you're seeing how much money that's going into a lot of PE firms, you're not really seeing that in the stock price.
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A
Right. So the question is, like, the implication is, and this was borne out by like the immediate jump in the stock price when they announced this is that the stock price is not a function of any economics of the company and it's more a function of who's allowed to buy the stock, which is super interesting.
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C
Wait, so can you guys explain it to me? Because I read several articles on this and I don't get it. Why it was publicly traded partnership, but publicly traded didn't mean actually that most of the public could buy the shares.
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A
Most of the, like normal individuals like you and me, if we opened up our like, you know, online stock trading account, we could buy it. But a lot of big institutional investors for whatever reason are not allowed to buy.
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B
Yeah, and also. Well, yeah, and also because there's so much more paperwork involved, like you have to file these K1s. There's, it's, it's actually very burdensome.
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A
Yeah. And also if you do buy Blackstone up until, you know, yesterday, it turns out that when your broker sends you all of your tax documents, there's going to be a completely separate kind of evil tax document associated with Blackstone because it's not like other stocks. It was a basically a pain in the ass to own and a lot of people didn't own it for that reason and now it's less of a pain in the ass to own. And so people are more likely to want to buy it and it is more likely to be eligible to be.
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B
Yeah, and it could not. Yeah, you could not put it in.
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C
Indecis, but the other private equity firms who did this, which is KKR and Aries, am I saying that right? They saw a bump in their stock price, but then not much gain.
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A
There shouldn't be. I mean, logically speaking, even if it causes a bump in the stock price, that should be a one off thing. There's no reason why it should like persist. It should be like a one off step change and make everyone who works for Blackstone, that is Steve Schwarzman, a couple billion dollars richer and then that's a one and done. And in return for that one off increase in the stock price, he then, you know, his company then has to pay more taxes in perpetuity now.
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C
Okay, do we really believe so I read it as like the tax law change. It's much more favorable to be a corporation now because corporate taxes are way lower. So this company switched and is going to pay these lower taxes now?
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A
No, it's going to pay higher taxes, but the fact is that the increase in its taxes is much lower than it would have been pre Trump tax law. So a use. It used to be very costly to make this change and now it's much less costly.
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B
Exactly.
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C
So this is the big benefit of the Trump tax law. Steve Schwarzman gets a big boost in his stock price.
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A
Astonishingly, Steve Schwarzman has made a whole bunch of money from the Trump tax changes. Like who, who could possibly have guessed?
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C
And it's like a useless, like they sold the tax cut to us for corporations being like, it's going to create all this value and companies are going to create jobs, blah, blah, blah. But what it's really done is made a private equity firm go public to very little benefit to most people.
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A
Like, the benefit even to the private equity firm is not obvious and certainly to the rest of us is zero.
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B
Cool.
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A
Yeah. So, you know, is that cool? Just as long as you're cool.
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C
That seems totally expected.
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A
I guess the one thing that fascinates me, and again, I've mentioned this on the show before, but like the fact that this happens just a couple of weeks after the Lyft ipo, and this is a whole move to make Blackstone eligible to be in the S&P 500 even after Lyft IPO'd with a dual class share structure which guaranteed that it would not be eligible to be in the S&P 500. I do think we're moving towards, you know, a more sort of public and fungible and level playing field kind of set of corporations. But it's a lumpy, like move there. Reports have it that Carl Icahn sold his entire stake in Lyft to George Soros because he didn't like the dual class share structure. So I think that the private owners still have, you know, it's hard for them to give up control.
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B
And I think that that's kind of interesting if we're looking at maybe a shift from this kind of unique period of time where you had just so much private money flowing into these companies and so you don't need to have essentially any corporate governance. And I think that then bleeds into this desire for these owners to still have so much control and not think of themselves as like every other company. Whereas I think now as maybe we're starting to see a shift away from that, we're also seeing that in the way people are viewing Lyft.
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C
So what are these IPOs say about this new trend where companies stayed private for a really long time and amassed huge amounts of money and became unicorns that were maybe not supposed to be unicorns? Like, is this a valid thing to do and is it going to continue?
- [13:59]
A
I mean it could be that what we're seeing is the race for unicorns to go public and raise that last chunk of equity capital before the money just dries up. On the other hand, there does seem to be quite a lot of what's known as dry powder still in the VC world. Like there's and, and SoftBank still has loads of billions. You know, it's not like the private money is going away immediately.
- [14:25]
B
I think it depends on whether you're looking at this as more of like a short term cycle or whether you're looking for a longer trend. I think short term cycle, yeah, I mean I think most like we're kind of getting late cycle here, things getting a little frothy. But then if you look long term trend, I mean you just have, you still have this glut of savings. You have so much money in seven wealth funds and all of these other just like big institutional investors that need to go somewhere. And yes, some of that's going to public markets but you have a lot going into these private companies and I think that probably will continue long term.
- [14:55]
A
I guess my question is if I'm so I think I've actually answered my own question in a way. If I'm a big sovereign wealth fund and I'm interested in investing in fast growing money losing billion dollar corporations, why would I want to do that using venture capital funds and private equity funds rather than just doing it in public markets? And I think the answer is this convention that once you ipo, you don't do big follow on rounds. The way the private markets work is as a series A, series B, D, C, D, F, fq, you know, whatever. And every time you do a round it's still kind of expected that you will dilute all those investors in the future with bigger subsequent rounds. Whereas with IPOs that expectation is not there and people get very upset if you do a subsequent round. And so if you're losing money, weirdly it makes more sense to stay private because it gives you the opportunity to continue to raise more and more money.
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C
And to continue to lose money.
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B
Yeah, yeah.
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A
Emily.
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B
Yeah.
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A
The Consumer Financial Protection Bureau.
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C
What a sad tragic tale.
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A
Is it a shadow of its former self?
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C
Yeah, it is a hollowed out vessel of its Elizabeth Warren created self. I mean people know that CFPB was born out of the ashes of the financial crisis brainchild of Senator Elizabeth Warren, now running for President, Democrat from Massachusetts. And the idea was federal agency that would be beholden to consumers and not financial institutions. That was all going pretty well.
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A
And so what it did. I mean, she found herself, basically, the Republican dominated Senate.
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C
Yeah, they hated her too much to let her run.
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A
Very clear that she wasn't gonna be able to run it. She would have, you know, just gone ahead and run it and not become a senator. But instead, she was not about to get confirmed. So it got given to this guy Cordray instead, who turned out to do a pretty good job. And they wound up fining a bunch of, like, evil financial corporations billions of.
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C
Dollars, most famously Wells Fargo, I would.
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A
Say, and financial institutions. Republicans got genuinely scared of them. And then Cordray decided that he wanted to run for governor of Ohio.
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C
Well, he was basically forced out. When Trump was elected, the writing was on the wall.
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A
Well, but he. He was unfirable. I mean, that was by design. He couldn't be fired. But he resigned not because of Trump, but because he had, like, you know, elected ambitions.
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C
Well, then that was a huge mistake. And that. That wasn't clear to me.
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A
He tried to install his deputy as his successor, and that failed miserably. And Trump then installs this guy, Mick Mulvaney, who's like, the biggest friend of the financial industry in the House, as the new director of cfpb. And then. Well, we now can read this all in the New York Times. What happened then?
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C
Then Mick Mulvaney set about basically fogging up the enterprise, dismantling the enterprise, stopping enforcement actions, stopping a rule that would have required payday lenders, for example, to make sure that when they loan money to people, that they have the ability to pay back the money. So Mulvaney really worked hard to stop that rule from happening. He changed the way the organization was run so it was harder for CFPB workers to do enforcement actions, which is how Cordray ran it and which was why it was an effective agency. You know, financial institution does wrong. CFPB comes in and researches it, figures out what's going on, finds them. You know, all that just got totally dismantled.
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B
He also tried to change the name.
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C
Oh, yeah.
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B
Some inexplicable reason.
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C
$300 million.
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A
He was obsessed, absolutely obsessed with this idea that in the legislation, it was called the Bureau of Consumer Financial Protection rather than Consumer Financial Protection Bureau. He kept on calling it the bcpf. It was consumer completely.
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C
It's all just this sort of sinister way. This guy comes in and says, oh, I'm not trying to get rid of this agency. I'm just trying to make it run better. And then totally junks up the system and makes it run way worse. And it's like this is doublespeak. That's just so frustrating. It's like can't we just be honest about what we're doing?
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A
So then what happens this week? The reason that there's like a little news hook here is that his successor, Kathleen Kraininger, having been appointed and confirmed and having finished her three month list listening tour, then comes out with this huge speech this week explaining what she has learned on her listening tour and what she is going to do. And this speech is kind of exactly what you're talking about. She, you know, she makes a lot of vaguely positive noises about how important the CFPB is, although she uses the word stakeholder. I think I counted 4 million times. Like basically in Elizabeth Warren's conception, the CFPB has one stakeholder which is consumers. Like it exists to protect consumers of financial products. And in Krein inches there are a million of these stakeholders. And stakeholders like would include consumers but also include payday lenders and you know, the regulatees. And she's like, we need to work with all of our stakeholders. It's like no, you don't work with the payday lenders, you regulate the payday lenders and you make sure they are not, you serious? And forcing people into bankruptcy and poverty.
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C
She put the onus like the speech starts out with her talking about the importance of. And this is such a, this kills me. I mean everyone does this in the financial industry. The importance of educating consumers about financial products. And she talks about how 40% of Americans don't have $400 in emergency savings.
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B
Everybody's favorite statistic.
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C
And it's like, it's like she basically pins it all on us to protect ourselves from financial institutions. She tells us we're lazy and don't understand, you know, financial products. And that's the reason that people don't have savings, which is patently absurd. And putting it on us to like figure out what a financial product is going to do to us as opposed to requiring financial institutions to be clear about what their products do to us.
- [21:05]
B
Well, yeah, I mean it's like we don't ask people to inspect their own meat, you know, like, I mean, so I, yes, exactly.
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C
Thank you.
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B
Yeah, I mean I.
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A
So the, the original cfpb, I mean one of the very first things that it did was redesign the disclosure on mortgage loans so that instead of everything being buried in fine print, it was like all on one page and much clearer and that kind of very simple. Just like almost Typographic regulation can have significant effects. Whereas, you know, Kreininger seems more interested in saying, well, look, all of these payday lenders are going to be out there offering you loans, and then it's on you to try and work out whether you can afford to pay it back or not.
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B
Right. It's like, I'm. I'm all for treating people like they're adults, but I do think, like, you know, financial products are complicated. And just in the same way that, like, when you had the calorie count rules, like, they weren't saying you couldn't put items up there that had very high calories, but if you put that up there, it affects people's behavior. And I think if you're looking at something like payday loans, like, people are not going to be able to, like, well, if I annualize that rate, you know, like, it should have to. And it shouldn't even just be in percentages. It should have to be in, like, dollar terms. Like, this is how much money you will pay back if you don't like to make it extremely clear for people. And then I think even.
- [22:17]
A
And then. And then like, the whole point of the CFPB was that it was based on the Consumer Product Safety Commission. You know, they're. Basically. There is a federal agency, which absolutely no one hates, which says that, you know, if you're making toasters which explode, you're not allowed to sell that toaster. It's not like we should give consumers the option to buy exploding toasters. And then, like, you know, as long as it's well disclosed that this toaster discount explodes and you can buy it. No, we just ban the toaster. And a bunch of these financial products are like that. And it does seem, reading between the lines of Krein and just speech, that she has no interest in banning harmful products, which was kind of the whole point of this agency in the first place. Right.
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C
And she has no interest, it seems, also in true enforcement actions. I think at some point in the speech, she says something like, you can't do rulemaking through enforcement actions. Which is like, does she know how law works and how, like, if people are doing. A lot of people are doing a wrong thing, you. You go after one person to make it clear where you're al. Like, she totally goes. Runs past that example and says, well, that's. That's not how we do rulemaking. And she just, again, like, muddies up the water.
- [23:24]
A
She uses the word deliberative a lot, which is. Which is code for nothing. Will ever happen.
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C
And someone, someone from US Perg or something called the whole speech a dog whistle to the financial industry that's basically saying, like, don't worry, guys. Well, especially whatever you want now.
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B
Yeah. And I mean, if you're looking at especially the parts of the industry like payday lenders, like debt collectors, because I mean, those are really areas. And even in student loans as well, those are areas that the CFPB put a lot of focus on. And it's very, I mean, it's more, it's not even just a dog whistle, it's like a whistle whistle.
- [23:54]
C
Yeah.
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B
Those industries, like, you know, all of these things are going to be rolled back.
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C
I mean, I'll be interesting to see what happens when Elizabeth Warren becomes president.
- [24:03]
A
Well, as we have seen.
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B
Jk.
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A
No, but this is, I mean, it's super interesting. As we have seen, the President does not have the ability to fire the director of the cfpb. And she's in there now for five years. So, you know, this is going to be a pretty OTO's agency for at least the next four and a half years.
- [24:21]
B
This was perhaps a mistake Elizabeth Warren made when like, if I structure an organization so that essentially it's beholden to almost no one, it's great when you're in charge. It's not great when you're not in charge.
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C
I'm pin this on Cordray. Then, like, what was he thinking? He shouldn't have left. I mean, governor of Ohio versus head of like, federal agency that was keeping payday lenders in check. I'm just saying he should have just hung out for the five years.
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A
Yeah. And Ruth Bader Ginsburg should have retired while Obama was still president.
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C
That's a different situation.
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A
So let's talk about the fire in Paris and not the riots from the yellow Vests, but the actual big fire that burned down the roof of the. The Cathedral of Notre Dame, which is the tourist trap in the island in the middle of the Seine. Emily, you don't like me calling it a tourist trip.
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C
You're the first person to discuss this and everyone seems to be discussing it this week to refer to it that crassly. Most people are devastated. It meant so much to me.
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A
It is. I mean, architecturally, it's an extremely impressive building. And the good news is, we have to say, just for the architecture nerds out there, that architecturally, it's more or less unharmed. The big rose window is still intact. The flying brush is still. Are still flying. And the only thing that burned down was the roof and the spire. And frankly, the spire was this weird, like, Gothic addition from, like, the mid 19th century, which never fit in anyway. It's this big, bulky, impressive cathedral, and it had this weird spindly thing pointing up in the middle of it, and you're like, why is that there? So I think the pictures of it going up in flames were terrifying. And everyone started, like, crying at those images, which were very, very genuinely, very sad. And. And then what happened?
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C
Then the richest people in the world quickly found about a billion dollars to give for the restoration of Notre Dame. Quickly, like, was it two days before a billion dollars was raised mostly from France's number one and number two magnets, Competitive philanthropy. Yeah, yeah. And I just read today that Donald Trump is considering loaning money as well. Sorry, Giving money as well?
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B
Yes.
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C
But hasn't yet.
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A
Well, he can't give it from his foundation because that's been shut down.
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C
So I guess we're here to talk about what it says that the richest people in the world can be mobilized on a dime to give a billion dollars very quickly to solve this very specific, this issue of a building when there are, like, people starving in the world.
- [26:50]
A
Well, okay, so the first thing I want to say is that the French government, and especially the Macron government, I think, is entirely well placed to rebuild Notre Dame pretty well. I suspect that this renovation, and this is, by the way, what cathedrals do, is they burn down periodically. There's like, barely a cathedral in the world which hasn't burned down at some point, which is more than a few hundred years old. They're made of stone. So, you know, the wooden bits burn down, you replace them. The French government, I think, will restore this in a much better restoration than the previous couple of restorations, which were kind of cheap and shoddy. And I suspect this is going to be. Be a good restoration, and the private money will make it even better. And the French government will put in the slug of money and it will also be insurance money. And the new cathedral is actually probably going to be much better than it was ex ante.
- [27:39]
B
I think the French government, though, may have some trouble paying for it because this has actually been an issue. It's part of the reason that Notre Dame was actually, like, falling apart and they could not get money from the state to pay for it. Essentially, they went to these committees and were told is, I think there's a quote from, like, the Wall Street Journal, like, we have lots of Gothic cathedrals. The same people who are now being like, oh, it's a It's a symbol of our country. And they were told, like, the people who. I guess, clergy who are actually run Notre Dame, well, you should charge a fee for people to come in. And so this. They actually have had trouble raising money. Until the fire. They had a lot of trouble raising money to restore this.
- [28:21]
A
Friends of Notre Dame, like, they always cobbling together a couple dollars here and there, and it was never going to be sufficient. They didn't put in. They didn't even put in basic things like firebreaks and sprinklers and that kind of thing. And, yeah, that was what caused the fire.
- [28:35]
C
So, yeah, it's sort of the breakdown of civic responsibility for public goods that are very valuable.
- [28:41]
B
Well, this is something. And we've seen in France quite a bit, actually, in the last, I think, like, decade or so, we are seeing more and more private money coming in to pay for a lot of cultural institutions. And, you know, that's a. That's a larger story about what's happening with France's finances. But this is just kind of another example of that, which is why, to me, it wasn't surprising that you had two of essentially the. The wealthiest French businesses and families coming in and giving this money, because they've been doing that with other things as well.
- [29:07]
C
The other thing people were. Sorry, we're talking about was Macron getting rid of that, the wealth tax, when he came in. And I think he's known as representing rich people, basically. So a lot of the criticism was these rich people should have been taxed at a higher rate, so there would be public money to, you know, restore the church rather than them. Just, you know. And I think there's also a tax break involved with them.
- [29:27]
B
No, there isn't.
- [29:28]
A
Well, there was. There's this 60% deduction that you get for charitable donations. And then what happened was that Francois Pinault's advisor came out immediately after the fire and said, why don't we make it 90%? And then there was this huge background, so no additional. And then. And then they said, don't worry, we won't take the deduction. But the thing you find in philanthropy a lot, and I think this is the perfect example of this, is the philanthropists love to throw large amounts of money at major architectural projects. So if they. If you get to rebuild the most famous cathedral in the world, there is almost no limit to how much money you can make. On the other hand, if what you're trying to do is more or less invisible restoration work on the most famous cathedral in the world, which no one is going to see. And you're just trying to make sure that it doesn't fall down. There's no money for that. And similarly for arts and culture institutions, if you go along to a philanthropist and say, we are losing $10 million a year, will you give us $10 million a year so that we can continue this amazing work that we do, they're like, eh, no. But if you go up to the same philanthropist and say, can you give us $300 million to build a new building which would be very shiny and we can put your name on it, they'll be like, yeah, no problem.
- [30:44]
C
And this is why you don't rely on philanthropy to fund, maintain, restore your public institutions. And I guess that's the symbolism of these guys coming up with all this, this money in such a short amount of time.
- [30:59]
B
Yeah. The wealth tax though, did not help the Francis finances. It in fact hurt them. So that's why I think that's a whole other discussion we don't have to get into. But I think you see this though. It's not even just in private though. I mean, this is a big issue when it comes to infrastructure spending that everybody wants to build the new airport, nobody wants to spend the money to fix the airport that's already there or help with roads or bridges. So this is happening everywhere.
- [31:23]
A
Yeah, and obviously most urgently it's happening in the US where there's, you know, the infrastructure grade keeps on going down. It's like D minus or something. Now there's all of these bridges which are about to fall down. You know, there's no. If you ever talk to any Chinese people who visit the us they're genuinely shocked at how bad the, you know, state of the roads is and that kind of stuff, because you would never find roads that bad in China. And there is no money to maintain. And then what happens? Even when you do maintain the roads, you maintain them in a sort of very cheap way that lasts for about a year and then they get crap again instead of putting the money in to make sure that they last. On the other hand, as Anna says, if you look at people who are building new infrastructure, it's generally very shiny and new and high quality. And it's so much easier to build high quality new infrastructure than it is to maintain or restore old infrastructure. And I don't know, I mean, the United States is particularly bad on this front, but I don't think any country has really solved this problem. Like basically, the older you are, the earlier you industrialize, the more like rickety your infrastructure is. And no one's really worked out how to institutionalize the maintenance of that as opposed to building something shiny and new.
- [32:39]
C
I mean, one thing would be to take some money back from these super rich people so there's less of it to be spent on new stuff and more of it to be spent on the old stuff. Let the public decide.
- [32:51]
A
But this isn't a question of money. The point is here that this isn't really a problem that money solves, because the problem is that when money comes in, it goes to the new projects and it doesn't go to the maintenance project. So if you can say that, the answer is, let's raise more money. But if you raise more money, invariably that money will go to a shiny new airport and it won't wind up fixing the rest.
- [33:14]
C
The problem is maybe it's policy making on some level, making new, you know, rules and boring laws and stuff like that. Requirements for maintenance of. Of infrastructure.
- [33:22]
B
Yeah, it's tough. I mean, because the problem here is, are humans. Humans like new, shiny things. Humans do not like doing the work of maintenance.
- [33:30]
A
And there was one attempt, I recall from the financial crisis, one of the fiscal stimulus programs that the Obama administration started Talking about in 2009 was some kind of an infrastructure development bank. And it never really went anywhere. But I think one of the driving thoughts behind that idea was precisely we can create this development bank and which will raise a whole bunch of money to immediately go ahead and start fixing roads and bridges, because there's a whole bunch of roads and bridges which need fixing. And that's a nice little fiscal stimulus that the country needs, and it would make everything run better. But yeah, crisis is a terrible thing to waste. And we, you know, if we couldn't get that done in 2009, I doubt we'll be able to get that done ever.
- [34:19]
C
And I think the public, I mean, we're saying that everyone likes the shiny new thing, but I actually don't think that's true. Like here in New York City, we have this, like, kind of crap subway system that, you know, no one's put any money into. And then they built the Fulton Street. I think it's Fulton street subway station for like a jillion dollar.
- [34:36]
A
Really expensive. One was the new Hudson yards one on 34th street, which cost like $5 billion.
- [34:41]
B
Yeah.
- [34:42]
C
And it all got done and whatnot. It's all shiny and new. But like, most, most human people who live in the city think it's terrible that all this money went into this one Little project when we're sitting on a crumbling subway system. I think there's something in the coverage.
- [34:55]
A
The big, new, shiny infrastructure. It's interesting. That's a good point. In New York, you've got the Oculus at the World Trade center, you've got Hudson Yards. And these things are tourist traps. They're like Notre Dame. They're popular with tourists, but New Yorkers don't love them.
- [35:11]
C
Yeah, until they burned.
- [35:12]
B
Right? I guess I just say, though, I think, yet you're. I agree with you, but you still have those same people voting for politicians who keep doing the same thing over and over again.
- [35:25]
A
So, yeah, let's. Let's vote for the boring politician who says, I'm going to spend billions of dollars invisibly on stuff which already exists. That's such a. That's one of those slogans that will really rile people up and get them to vote for you.
- [35:40]
C
I guess from a personal perspective, like, now that I'm a. I feel the same way. Because it's like, you have to spend all this money on things that, like, materially. Like, we just got a new hot water heater and it was like a bunch of money, but, like, it was so unexciting, you know, it was like I had hot water then for, like a couple of days, it was all messed up, and now I have it again. But it's not like I come in and it's like a new. It's not like a new kitchen or I installed a smart toilet. It's just kind of like, meh. So I get it.
- [36:07]
A
Smart toilets make you happy. Yeah. I'm going to run for president on a platform of just smart toilets for.
- [36:14]
B
Everyone, of invisible infrastructure.
- [36:17]
A
So let's have a numbers round. Why not? Emily, do you have a number?
- [36:20]
C
I have a number.
- [36:21]
A
What's your number?
- [36:21]
C
31,000. That is the number of Stop and Shop workers who went on strike. The largest private sector work stoppage since 2016. So not that long. But, yeah, there's a strike going on here in the Northeast. It's sort of interesting because Stop and Shop, I guess, doesn't want to pay their workers anymore and wants to increase their health insurance costs, blah, blah, blah. And the strike seems to be succeeding in part because the unemployment rate is so low that Stop and Shop can't find other people to work there.
- [36:52]
A
I think I'm going to throw this in there. Why not? As a little coder to our IPO discussion. My number is 2,100, which is the PE ratio of zoom. You know, PE ratio of like 10, but no, no, 2,100. That's my kind of PE ratio.
- [37:16]
B
I have a Zoom related number that is even bigger. So 54,000%. That is the percent increase in the stock price of Zoom Technologies.
- [37:26]
A
Oh, yeah, that's. So if you so Zoom. This is, this is one of the crazy things about it does.
- [37:33]
B
It does.
- [37:34]
A
Is that I don't understand why Zoom Video didn't just buy Zoom Technologies. It had a market cap of like $3 and it had the ticker symbol of Zoom. And you would think that you would want to go public with a ticker symbol of Zoom. And if it cost you like a couple million dollars to buy Zoom Technologies to get that ticker symbol, it would be worth it. But no, they decided to go public under the ticker symbol of zm. And so everyone who got excited about Zoom just started like typing Zoom into their brokerage account and buying the thing with the ticker symbol of Zoom before the ipo.
- [38:06]
B
There are many things wrong with this, but I thought that was kind of amusing.
- [38:10]
A
So if you want to buy stock in Zoom, number one, it's very expensive, and number two, it is not traded under the ticker symbol Zoom. You see, we're nothing if not services here at Slate Money. So, yeah, I think that's it for us. This week. We're gonna have a little plus segment on Disney. Disney is. Is it going to be a Netflix killer? We will discuss for all of of you lovely, lovely Slate plus members. Other than that, many thanks to Jessamy and Molly for producing and many thanks to you all for listening. Keep the emails coming. We're on slatemoneylate.com and we will talk to you next week on Slate Money.