The Limited Means Edition

Summary

Slate Money: The Limited Means Edition

Date: June 4, 2016
Hosts: Felix Salmon (Fusion), Kathy O’Neill (mathbabe.org), Jordan Weissman (Slate)

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Overview:

This episode, "The Limited Means Edition," explores the blurred boundaries of wealth measurement (prompted by the Theranos/Elizabeth Holmes saga), delves deep into the history and consequences of U.S. welfare reform, and wraps up with a rare union win at Verizon. The tone is lively, cheeky, and unsparingly analytical, with regular dives into economic nitty-gritty and social nuance.

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Key Discussion Points & Insights

1. What Does It Mean to Be Worth Billions?

Topic: The valuation collapse of Elizabeth Holmes’ Theranos stake (from $4.5 billion to $0)

Segment: [00:54–14:12]

• Felix is skeptical about the Forbes’ power to so authoritatively write down Holmes’ net worth from $4.5 billion to zero, pondering the ontological meaning of “worth.”
• Kathy O’Neill deconstructs the philosophy:

  “Can we actually scrutinize the concept of someone being worth [something]?” (04:20)
  People have value outside of their cash, but financial net worth is treated like a markets-based probability.

• On net worth as probability:
  Described as “a function of a probability distribution” – it represented the slim chance Theranos would be huge, therefore Holmes’ ‘worth’ was never tangible money, but an expectation (05:53).
• Jordan Weissman’s practical view:

  “You kind of want to be discussing it in terms of...if this person had to liquidate everything right now, sell off their basically illiquid assets...how much cash?” (06:52)

• Illiquidity, market valuation, and fire sales:
  The team compares this to how banks were valued during the financial crisis—valuations can be highly theoretical, especially for big, private businesses.
• “Billionaire status” as a social threshold:
  Felix says:

  “Billionaire is a certain status of having so much money that you will never be able to spend it all in your lifetime. And Elizabeth Holmes certainly never had that much money.” (11:40)

• Notable anecdote:
  Jordan:

  “Once upon a time, if you were a millionaire Wall Streeter and you walked into a club, you'd get all sorts of attention...now it has to be a straight B, otherwise you're just another guy in the club.” (13:04)

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2. Welfare Reform: From Safety Net to Deep Poverty

Topic: The 20-year legacy of welfare reform and what’s left of the social safety net

Segment: [16:43–30:24]

• Historical origins:
  • Welfare as understood in the U.S. was created after the Great Depression and always oriented toward families (children), not childless individuals.
  • Felix:

    “This welfare as we're talking about it here was never a social safety net for Americans...this is just for short people, basically [meaning children].” (18:33)

• Clinton-era reform context:
  • Welfare peaked in the early ‘90s, with significant racial undertones fueling debate and backlash.
  • Kathy:

    “There was just enormous undercurrent of racism...moralistic, oh, you know, we're breeding dependency, we're ruining the family structure.” (20:17)

  • Jordan outlines two lines of critique: one overtly racialized, the other a “progressive reform” lament about long-term dependence and generational poverty.
• The Earned Income Tax Credit (EITC):
  • Clinton’s signature expansion of the EITC shifted the program’s focus, supplementing low wages for workers but not helping those without jobs.
  • Felix clarifies:

    “Refundable tax credit...means you just get a check whether you pay tax.” (23:28)

• Block granting and the rise of deep poverty:
  • The 1996 reform (TANF) handed lump sums to states ("block grants"), removing the entitlement guarantee, leading many states to divert funds away from direct cash assistance.
  • Result: Growth in “deep poverty.”
    • Kathy: “Almost tripling of the growth in children who live on less than $2 a day since that bill.” (26:41)
  • Jordan’s assessment:

    “Most economists have looked at it [and] think actually poverty did decrease...but the problem...is this issue of deep poverty.” (26:54)

• Could welfare have been reformed without deepening poverty?
  • Jordan:

    “There were certainly ways you could have done welfare reform that ensured states actually spent the money on the people and the projects it was supposed to be spent on, and that didn't really happen.” (28:32)

  • Critique: The legislation allowed states too much discretion, undermined rigorous evaluation, and, as Jordan notes:

    “...the execution is just really terrible in a lot of ways.” (30:24)

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3. A Rare Union Victory: Verizon Strike Settled

Topic: Verizon strike and cautious optimism for labor organizing

Segment: [34:13–40:51]

• Background:
  • Massive strike by 39,000 workers—affected telecommunications and retail sides of the business.
  • Visible, impactful, and even affected national job numbers.
• Settlement:
  • The union won guarantees, especially against offshoring call center jobs and for adding more union jobs in the cable/internet part of the business.
  • Some retail workers (traditionally much harder to unionize) got their first union contract—a significant symbolic win.
  • Jordan notes:

    “This is a signal that this is possible...there's this big question hanging over the labor movement over whether you even really can unionize retail workers.” (36:31)

• Labor, offshoring, and politics:
  • Unions extract guarantees to keep jobs stateside—a significant campaign talking point in 2016.
  • Jordan:

    “A few years...the United Auto Workers did something similar... it's a very popular move by unions. They know it's a really good PR move.” (39:05)

• Stock market reaction:
  • Contrary to expectations, Verizon’s stock recovered after the deal—suggesting the market can live with labor victories.
  • Jordan:

    “By striking, they brought down the stock price and then by relenting and signing a deal, the stock price went back up. And so that's kind of the pattern you want to see if you are the communications workers.” (40:22)

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4. Numbers Round: Stats and Anecdotes

Segment: [41:32–49:23]

• Kathy: “7”
  • Urban kids in China are 7x more likely to get into college than rural kids, 11x more into elite schools, showing inequality despite the hyper-standardization of the Gaokao. (42:18–43:04)
  • Jordan remarks: Standardized test results from “China” often come from the urban elite. (42:31)
• Jordan: “116,000”
  • The average monthly U.S. job creation over the past three months—significantly down from the prior 224,000, suggesting an economic slowdown and policymakers should beware of blunt monetary tightening. (44:02–45:26)
• Felix: “2,520”
  • The median size (in square feet) of a new single-family house in the U.S. in 2015, a number that's continued to rise while income hasn't, reflecting shifting construction trends and perhaps catering only to wealthier buyers (46:02–47:34).
  • Snarky banter about huge houses, private schools, and rich-people “hate-reads” in the media (47:34–49:23).

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Notable Quotes & Memorable Moments

• On “billionaire” meaning:
  Felix:

  “If billionaire means I can fund whimsical experiments into artificial intelligence and space travel or decide to bankrupt Gawker Media because I feel like it on a whim, then Elizabeth Holmes was never even close to being a billionaire.” (11:40)

• On the effects of welfare reform:
  Kathy:

  “The people who didn't make it back to work went into deep poverty. That's basically understanding now. So we have almost tripling of the growth in children who live on less than $2 a day since that bill.” (26:17)

• On labor wins and Wall Street:
  Jordan:

  “By striking, they brought down the stock price and then by relenting and signing a deal, the stock price went back up. And so that’s kind of the pattern you want to see if you are the communications workers.” (40:22)

• On signals from demographic test-taking in China:
  Jordan:

  “Those [international] tests are typically based on students in places like Shanghai or even Hong Kong...urban centers, which are extremely rich, basically first world standards...the kids are test prepped to die.” (42:31, 43:06)

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Timestamps for Key Segments

• Theranos and Wealth Ontology: 00:54–14:12
• Welfare Reform Deep Dive: 16:43–30:24
• Verizon Strike/Union Organizing: 34:13–40:51
• Numbers Round: 41:32–49:23

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Tone and Approach:
Wry, skeptical, and deeply engaged with economic nuance; the hosts play off each other's expertise and snarky humor. While critical of policy failures, they admit shades of complexity. Even somber news is balanced by irreverence and entertaining asides.

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Summary Takeaway:
The episode traces the uncertain reality behind headline “net worth” numbers, exposes the real (and ongoing) costs of welfare reform—particularly “deep poverty”—and, in a rare upbeat turn, spotlights a labor victory at Verizon, suggesting that pro-worker advances are still possible with enough collective effort. Listeners receive an engaging education on why numbers aren't always as solid as they appear, and why money, poverty, and labor in America are loaded with caveats both statistical and philosophical.

Transcript

[Kathy O'Neill]

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[Jordan Weissman]

The following podcast contains explicit language.

[Felix Salmon]

Hello, and welcome to the limited Means edition of Sleep Money, your guide to the business and finance news of the week. I'm Felix Salmon of Fusion. I'm joined, as ever, by Kathy O', Neill, the blogger and data scientist mathbabe.org.

[Kathy O'Neill]

Hello Felix and everyone. Hello.

[Felix Salmon]

Hello Kathy. And as ever, there's also Jordan Weissman, the Moneybox columnist at Slate.

[Jordan Weissman]

Hello, y'. All.

[Felix Salmon]

Jordan wrote something massive for Slate about welfare reform, which is a fascinating topic. Okay, I'm slightly being snarky here, but it is a fascinating topic. And because you don't have time to read Jordan's 8 million-word article on welfare reform, we are going to talk about it on the podcast and you can just listen to us talk about it instead. We are also going to talk about a victory for the unions. When was the last time we ever heard such a thing? But, but first I am going to talk a little bit about an ontological question. I would say one of the more curious pieces of news of the week. Not quite as curious as the fact that Tribune has changed its name to Tronk, but curious all the same.

[Jordan Weissman]

Are you a Tronk hater?

[Felix Salmon]

I am a Tronk hater. I think Tronk is the most ridiculous thing I've ever heard.

[Jordan Weissman]

I think it's the first time in years that anyone has given a shit about the Tribune Company.

[Felix Salmon]

Yeah, but they only give a shit because it's stupid. Anyway, we are not gonna talk about Tronk. We're just gonna drop the word tronk randomly into our conversation because no one knows what it means. Instead, we're gonna talk about, well, we're gonna talk about Elizabeth Holmes, who we've talked about a few times on this show before the founder of Theranos, what Matt Levine calls the bl.

[Kathy O'Neill]

And now the Bloody unicorn.

[Felix Salmon]

And the fact that Forbes magazine, which for some reason seems to have been granted the power by consensus to determine net worth of anyone rich, has written down her net worth from $4.5 billion to $0 on the grounds that there's a bunch of preferred stockholders ahead of her who've put in about $850 million, and the value of the company is probably around $850 million. So there's really nothing left for her in the event of a liquidation or going public or anything like that. Now, I don't really want to talk about Theranos here because we've talked about Theranos in the past and we have nothing new to add. What I want to talk about is this whole question of how much are you worth? As being an interesting question with an actual answer. And what I want to talk about is this Elizabeth holmes being worth $4.5 billion last year. Let's assume for the sake of argument that Forbes is right, that she's worth zero right now. Does it make sense in any real way to say that last year she was a billionaire and this year she's not? Or have we just kind of discovered that Theranos was a crappy company and therefore she was never a billionaire?

[Kathy O'Neill]

Well, listen, first of all, if you were going to be philosophical about this, then can we even. Can we actually scrutinize the concept of someone being worth?

[Felix Salmon]

Yes, yes, that's exactly what I want to scrutinize. I don't.

[Kathy O'Neill]

I mean, I'm just saying, like, people are worth. They have value outside of their. Their cash flow.

[Felix Salmon]

I'm sure she's a lovely person.

[Kathy O'Neill]

Okay, Well, I actually.

[Jordan Weissman]

Well, first of all, personality capital.

[Kathy O'Neill]

Well, just as a human being, like, we don't say, oh, you're worth. You don't have money, so you're worth nothing.

[Felix Salmon]

If you remember the. Was it. Ken Ouleta wrote a big profile of Elizabeth Holmes in the New Yorker, which was full of various Silicon Valley venture capitalists trying to set her up on dates because they were all like, you're such a nice person, but you don't seem to have any life outside work.

[Kathy O'Neill]

Well, look, I mean, from my perspective, if you're going to think about things in terms of money and payoffs, this makes absolute sense in the following. And it's actually a victory for science that it's now worth zero, because we thought that there was a lot of shifty science going on. It wasn't evidence based, and now people have lost faith in it. That's a Good thing. The reason we had a high value before isn't because we knew there was going to be payoff. It was because there was like a distribution of possible payoffs. And the high end of that distribution was extremely high because it was expected in that case, which the probability was low. But it was possible that it would disrupt this extremely large industry of testing. Now the distribution has changed. It's gotten very, very unlikely for that to happen. So the, the expected payoff is very low now.

[Felix Salmon]

Okay, so. So what you're saying is that one year ago, Elizabeth Holmes net worth was a function of a probability distribution, which was a real thing one year ago. And even though the probability of Theranos being worth hundreds of billions of dollars was low, it was non zero. And therefore, because that probability distribution was a real thing, Elizabeth Holmes really was worth $4.5 billion.

[Kathy O'Neill]

I mean, it makes as much sense as any sort of option in the market. It has value. There's always a possibility that the world will be destroyed and there will not be a payoff for anything. But. Yeah, I mean, exactly.

[Jordan Weissman]

I do think there's some question about even if the future payoff was potentially worth something on that probability distribution, what she could have actually extracted from her shares at that moment. Right. There's the question of.

[Felix Salmon]

Yeah, I mean, no one saying that she had four and a half billion dollars of liquid wealth which she could spend on billionaire whimsy.

[Jordan Weissman]

Exactly. And I think to some extent, and not totally, but when we're talking about someone's net worth, you kind of want to be discussing it in terms of, okay, if this person had to liquidate everything right now, sell off their basically illiquid assets, just sell off everything for a market price. How much cash.

[Felix Salmon]

Are we talking about market price or are we talking about liquidation? Because those are two very.

[Jordan Weissman]

That's true. Yeah, I'm sorry, that's actually true. Because a liquidation, a fire sale, you're going to lose. But I think especially because we knew.

[Felix Salmon]

That the four and a half billion dollars was actually based on the market price.

[Jordan Weissman]

Well, yeah, it's based on the valuation from their investors. But I think that you want to assume if a person was going to try and sell their shares on the market at that moment and in their, you know, in their business and whatever, if they're going to sell their home at that moment on the market, how much money would they end up with? Assuming that they're not, you know, being they're not losing cash because of a fire sale situation, and there's a reason for that, you just want to know how many resources somebody has available to them. It's a very. Speculation is some utility.

[Felix Salmon]

So I want to ask you the question then. So Kathy's come down in favor of the. Yeah, she was worth 4.5 billion. What's your answer to the question of how much was Elizabeth Holmes worth last year?

[Jordan Weissman]

I haven't sat down with my calculator and Green Shade to do the numbers, but I think in the end, it depends on. Could she have actually sold her own personal stake in Theranos at a given moment for, you know, something akin to what the. You know, something similar to what the valuation or other investors were giving it? And I don't know that. I don't know that answer.

[Kathy O'Neill]

I'll jump in here and say, I didn't actually say, yes, she was worth four and a half billion last year. I didn't personally build that probability distribution even of no, but her.

[Felix Salmon]

The value of her state, and we're trusting her.

[Kathy O'Neill]

And let's look at. Assuming that. I do think there's a little bit more nuance, if you don't mind me going into it, between the difference between a liquidation and the market value of something. Even when you don't have liquidation, when you're just simply selling your stock, there's impact on the price. When you're selling your stock, it goes down a little bit, even if people aren't, like, worried about a liquidation sale. So there's like. It's a real. It is a philosophical question, what does it mean to be worth something because you own things that are, quote, unquote, on the market worth something?

[Felix Salmon]

This is. This is. I mean, without changing the subject too far, this is very similar to the question which we ran into every day during the financial crisis of, you know, is this bank solvent?

[Kathy O'Neill]

Yes.

[Jordan Weissman]

Yeah.

[Felix Salmon]

And. And you have a bu. Bunch of assets and a bunch of liabilities, and the assets are worth. And then the big question is, how much are your assets worth? And then the next question is, what does that mean? And if the assets are only worth what you could get for them if you had to sell them into a plunging market where no one really wants to buy assets, then you're insolvent. But these things all mean different things at different times. And I think that when you're talking about something like, you know, dynastic wealth, Dynastic wealth by its nature is not something which can or should necessarily be able to be liquidated in the space of a couple of months. It's a permanent thing.

[Kathy O'Neill]

And you Know, and when you're talking about selling it, you're talking about, you're just assuming there is a market for it. And so it comes up to the other question. We talk pretty frequently about how a lot of these startups don't even go ipo. They have no plans to go ipo. So it's not even clear what market it would be selling into to sell these shares.

[Jordan Weissman]

Yeah, it's true. I think, I mean, I mean as a rule this kind of philosophical question gets harder. I think a lot of ways the richer people get, because a lot of extremely wealthy people have either their, their wealth comes from privately held businesses, closely held businesses. The Koch brothers are an example. You know, they, Koch Industries is their wealth. You know, how do you value that exactly? Is it, you know, a.

[Felix Salmon]

Well, I mean, that's something valuable. I'm sure that, you know that if you gave Warren Buffett the numbers, then he would be able to put a decent number on the valuation of Koch Industries.

[Jordan Weissman]

Yeah, and you can look at the income stream they get every year. But I'm just saying that when your wealth is bound up in a non public company, as a lot of very rich people's fortunes are, it does get a little fuzzy and you do run.

[Kathy O'Neill]

Into these questions and I like your point of the larger it gets, the fuzzier it gets. Because at some point there are things that are actually so large that the number of possible is very limited. So the question becomes like, who would buy this unless you can break it up into very small bites.

[Felix Salmon]

Exactly. Which is one of the interesting things about something like Mike, Bloomberg's net worth is basically the value of Bloomberg and there's almost no one who's rich enough to buy Bloomberg. So then you're talking about hypothetical stock market valuations.

[Kathy O'Neill]

We used to say that the Saudi Arabia, Saudi Aramco.

[Felix Salmon]

But let me just tie this up with the other thing here which we haven't really touched on, which is not so much the question of net worth but the question of billionaire status. Because it seems to me that billionaire has a certain meaning, which is not just, well, if you add up all of your assets and you subtract all of your liabilities, then the answer has three commas in it. The billionaire is a certain status of having so much money that you will never be able to spend it all in your lifetime. And Elizabeth Holmes certainly never had that much money. If billionaire means I can fund whimsical experiments into artificial intelligence and space travel or decide to bankrupt Gorkomedia because I feel like it on a whim, then Elizabeth Holmes was never even close to being a billionaire. And so there are very different types of billionaire in that sense.

[Jordan Weissman]

I think one of my favorite descriptions of the distinction between billionaire and millionaire was a few years ago in an article about the New York club scene. And it was talking about how once upon a time, if you were a millionaire Wall Streeter and you walked into a club, you'd get all sorts of attention lavished on you and, you know, you'd have, you know, the models coming left and right. And now it has to be a straight B, otherwise you're just another guy in the club. And I think that is that actually.

[Kathy O'Neill]

You have to be a straight B.

[Jordan Weissman]

Straight Bill. Yeah, you have to have a B.

[Kathy O'Neill]

I don't know the lingo.

[Jordan Weissman]

And so like, and that was the idea is like if you, you know, there's, there's a certain social cachet now that you have to have this ludicrous sum of money to have, otherwise you're just another hundred millionaire.

[Kathy O'Neill]

I guess it just begs the question, like, of the people that are, you know, that kind of billionaire that you just discussed that can, like bankrupt Gawker, for example, what was the moment that they went from the whole Elizabeth Holmes status to their current status?

[Felix Salmon]

And I think that's a really good question. But it normally happens. You know, in the case of someone like Peter Thiel, I think it basically happens the day that Facebook goes public.

[Kathy O'Neill]

Well, that's what I'm thinking. So why are they avoiding going public?

[Felix Salmon]

Because. Yeah, that's a really good question. Well, it wasn't up to him anyway. If we have any billionaires listening to this podcast, do write in the email.

[Jordan Weissman]

Go public. Just go public.

[Felix Salmon]

We email us on slatemoneylate.com and tell us what the hell it means.

[Jordan Weissman]

Also tell us why you're listening at this point to us. I'm curious if we have any billionaires who are tuned in anyway.

[Felix Salmon]

All right, we are going to move on to Kathy's favorite subject, Uncle Jordan's favorite subject. But before we do, I am going to tell you that I really honestly could do with a nap right now.

[Kathy O'Neill]

I'm with you.

[Jordan Weissman]

Yeah, that was evident from the moment you walked in.

[Kathy O'Neill]

It was a rainy, heavy day outside. Can we just all go take a nap?

[Felix Salmon]

I feel like if you're driving a car and listening to this podcast right now, don't start feeling sleepy because bad things can happen. We don't have self driving cars yet, but generally naps are good things, sleeps are good things. Try and get more rest. And you know where I'm going with this, don't you?

[Kathy O'Neill]

It's either mattresses or sheets.

[Jordan Weissman]

I don't know. Yeah, there's actually, given our sponsors, there's pretty range. There's pretty wide ranges, a distribution of probabilities here.

[Felix Salmon]

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[Kathy O'Neill]

Amazing.

[Felix Salmon]

So use my promo code, which is slate money, to get $50 off your Casper mattress. They're cheap to begin with. You know, there's little as $500 for twin and up to $950 for a king, but you get $50 off that. So they'll start just at 450 bucks, which is super cheap. For this incredibly good Mattress. Go to Casper.com slatemoney Use the promo code SleepMoney. Get your $50 or Sleep well and then just feel superior to all of the rest of us who can't seem to get enough rest. Kathy?

[Kathy O'Neill]

Yeah.

[Felix Salmon]

Tell me about.

[Kathy O'Neill]

Listen, I don't. Would you say 9 million words? It was wonderful, Jordan.

[Jordan Weissman]

I think you did a great job. It was exactly 4,500 words. It was great.

[Kathy O'Neill]

I had to pare down my notes to one page. So it contains a lot of information. And I'm kind of just going to ask, if you don't mind, interview you about it.

[Jordan Weissman]

Yeah, sure.

[Kathy O'Neill]

So as I Understand it like welfare. And you know, people say welfare, they mean all sorts of things. What we're talking about here started in the Great Depression, right?

[Jordan Weissman]

Yeah.

[Kathy O'Neill]

Or right after the Great Depression.

[Jordan Weissman]

Exactly.

[Kathy O'Neill]

Can you tell us how it started?

[Jordan Weissman]

Yeah. So I mean, typically when we talk about welfare, I mean, like you said, people kind of lump all sorts of different things into it. But for this discussion, we're talking about the program the federal government uses to send cash to the poor. Right. Especially poor mothers.

[Kathy O'Neill]

In fact, it has that in it. Right. Families with Dependent Children. It's only for families with children.

[Jordan Weissman]

Yeah. And during the.

[Felix Salmon]

So poor people who don't have children, like, fuck those people. Basically, this is just. If you've spawned.

[Jordan Weissman]

Basically, this is kind of a feature of America's safety net. We've focused on sending cash to families with children. In fact, we can think of it.

[Kathy O'Neill]

As focusing on poor children.

[Jordan Weissman]

Yeah, you can, in a lot of ways. And so during the Great Depression, the Social Security act passes and you get this program that became known as afdc. Aid for Dependent Families. Sorry, having a brain fart. Aid for Families, Dependent Children. Actually, if I'm recalling right, even before it became called that, it was just aid for children or something, there was no families part, but really it was for widows. It was for widows to take care of their kids. And then over time the program shifted and it was. The money was going less to, you know, widows and more to single moms.

[Felix Salmon]

So just to be clear here, here the focus is on kids. This welfare as we're talking about it here was never a social safety net for Americans to say, if you have no money, then we will make sure you have enough money to live. This is just for short people, basically.

[Jordan Weissman]

Families. I mean, it was for families. And in a sense, money's fungible. That's the thing you have to remember. So if you're giving money to the child, in a lot of ways, you're giving it to his or her mother as well. And there were some married couples also on the program. They don't get talked about as often, but there were some two parent families that benefited as well.

[Felix Salmon]

But it's not for everyone. And specifically it's not for childless adults.

[Jordan Weissman]

Yeah, exactly. And so that's the. Exactly. And so now we don't talk a lot about welfare. Right. But it doesn't come up a lot. And in fact, that's because of welfare reform, which passed 20 years ago, back in 1996. And that's why I was writing this article, kind of looking back at what's transpired since then. But if you look back at the 90s, I mean, welfare was just this huge issue. Bill Clinton, you know, his signature campaign promise was ending welfare as we know it. As we know it. And that's what he said he was going to do. He was going to limit it so that after two years, you were out of the program, you had to go find a job. And that kind of, in a way, defined him as this new Democrat.

[Felix Salmon]

Okay, so this is something which I can't imagine any current Democrat saying. And this kind of, for me, cuts against this idea that the Democratic Party is just moving inexorably to the right. Can you just go back in time a little bit and explain to me what was so bad about welfare that Bill Clinton wanted to end it?

[Kathy O'Neill]

Yeah, let me jump in here because. And you can correct me if I misrepresent, but as I understand it, there was a huge surge in welfare recipients in the early 90s. Like, the welfare actually peaked in 1994 at 5 million families, 9.6 million children, and almost 5 million adults. And the main point of it is that almost half the recipients were black or brown people. And there was just enormous undercurrent of racism. It's just because it wasn't simply like, oh, we're going to help children. There was this kind of moralistic, oh, you know, we're breeding dependency, we're ruining the family structure. People aren't getting married. Even the charges of people aren't getting married so they'll be eligible for this stuff. And. And there was racism.

[Jordan Weissman]

Yeah. So there was this sort of sweet discussions going on.

[Felix Salmon]

What was Bill Clinton's stated reason for ending welfare?

[Jordan Weissman]

Yeah. What's interesting is there were sort of these two conversations about welfare going. Lots of conversations. And there was one that was sort of driven by race. And if you looked at studies at the time, you know, people's opinions of welfare were kind of tracked to their opinions about black people more generally. And, you know, there was this idea that somehow giving single mothers checks was convincing them not to marry and just have more children and breed. I mean, there was really a lot of awful rhetoric.

[Felix Salmon]

But that wasn't coming from Clinton, right?

[Jordan Weissman]

No. So Clinton. There was this other kind of, you want to say, kind of strain of progressive reformer thought. And the idea was that if you looked at welfare, it actually did have a lot of problems. The program, about a quarter of the women or the families on the program would end up on it for 10 years or more. And. And a lot of people just didn't think that was healthy, in part because the benefits weren't that great. It wasn't a wonderful way for a child to grow up if that was most of their resources. And they weren't really getting much of an example of someone in their household working things along those lines. And so there was this idea that not only were there inherent flaws in the program, but eventually just the public's kind of disgust with people being on the dole would just overwhelm it and eventually welfare would be eliminated. So there needed to be some kind of reform to make this more geared towards getting people onto work work.

[Kathy O'Neill]

So the way you said it, and I think this is to Felix's question, there are the carrots and the sticks. And the progressives were more in favor of carrots, which was like job training and even sometimes job guarantees. That didn't make the final bill.

[Felix Salmon]

Although what did happen, to be fair, is that welfare reform, a large part of it involved this thing called the earned income tax credit, which went on to become much bigger than welfare had ever been and has transformed the lives of the poor. Not the poorest of the poor, but has transformed the lives of the working poor.

[Jordan Weissman]

So what's interesting about that. And yeah, so this kind of comes back to what Clinton was trying to do when he showed up in office, right? And he had this idea that he was going to reform welfare. And people talk about this in the entered income tax credit as part of welfare reform. And I mean, this is a huge social policy. It does not get talked about often enough. Essentially it just supplement. It's a refundable tax credit that boosts after tax wages for low earners. Right.

[Felix Salmon]

And to be clear, refundable tax credit is this weird school jargon, which no one really means. It's a check.

[Jordan Weissman]

Yeah, it's a check.

[Felix Salmon]

You don't even really need to pay tax to get it. That point about refundable means you just get a check whether you pay tax.

[Kathy O'Neill]

But you do need to have a.

[Jordan Weissman]

Job, you have to be working.

[Felix Salmon]

The earned income thing is important. Yeah, you need an earned income and.

[Jordan Weissman]

So it makes low wage jobs much more lucrative. And this was one of the idea like this had been around for a bit. The idea of expanding this had been part of the sort of notion of progressive welfare reform for a while. And one of the first things Clinton did in Office back in 1993 was double it.

[Felix Salmon]

It.

[Jordan Weissman]

So this was before you actually had the real welfare reform bill. He had already expanded this tax credit, which now is worth about $70 billion a year. Welfare as it exists now is worth about 16.5 billion. Right. Just to give you a sense. And the EITC is bigger than welfare ever was. So Clinton comes In, he expands EITC, and then in 1994, he puts forward sort of a progressive vision of welfare reform after his health care attempts had failed. And it involved things like saying, okay, after two years, you have to leave the welfare program. You can't keep getting regular check from the government, but we're gonna guarantee you a job or some sort of government subsidized job, and if we can't get you a job, then you can kind of stay on the program. There are all these exceptions. The problem was, eventually Republicans took over. Democrats were already split on this. Republicans take over. Instead you get this totally different vision called tanf. And TANF is. Gets rid of the old welfare program, and it creates something called Temporary Assistance for Needy Families. And you can talk a lot about what TANF did to try and encourage work. But, you know, I mean, it did things like put time limits on how long you could get welfare to, you know, for five years in a lifetime. It did things like require states to ensure that a certain percentage of their welfare recipients are working. But the thing I focus on in my article and I think is really key to understanding kind of where welfare is now and where it may be going in the future, is they do this thing called block granting. Right, Right.

[Kathy O'Neill]

So it's the budget of how TAF is paid for. So whereas the original welfare system was federal.

[Jordan Weissman]

Federal government payments, it was an entitlement. And it was, you know, if you were poor, the federal government and the states were guaranteed to give you a check. They paid for it together. But that safety net, if you were poor enough, was always gonna be there. You had a legal right to it.

[Felix Salmon]

Well, as long as you had a kid.

[Jordan Weissman]

As long as you had a kid. Exactly. Which is. I mean, that's a lot of families. You know, people tend to have children. And so.

[Kathy O'Neill]

So post the Clinton bill, we have basically lump sums going to states.

[Jordan Weissman]

Yeah.

[Felix Salmon]

And then the states spend those lump sums on a bunch of stuff, which is not cash payments to families with.

[Kathy O'Neill]

Depending on the state.

[Jordan Weissman]

Yeah.

[Felix Salmon]

And the result of this. Because we do need to start wrapping this up, the result of this is that we have created an underclass of families and individuals who are extremely poor and who are getting essentially zero government.

[Kathy O'Neill]

Yeah. So I have this. I have a couple statistics. So Clinton's bill basically incentivized people to go back to work, but the People who didn't make it back to work went into deep poverty. That's basically understanding now. So we have almost tripling of the growth in children who live on less than $2 a day since that bill. And we have 700,000 more children living below half the poverty line than we did then.

[Felix Salmon]

And that should be zero. To be clear, the poverty line is a really nasty line, which you should never ever want to be below half the poverty line is just unspeakable in an advanced country like the US 0 people should be living on half the poverty line.

[Jordan Weissman]

I should say the legacy of what TANF did is. Is a little bit complicated in the sense that most economists have looked at it think actually poverty did decrease partly as a result of these reforms that regular poverty, like medium poverty, I hate using that term, but people who are at the threshold, there were fewer people who were right around that threshold because more women went to work, did not rely on welfare checks whatnot. But the problem that now people are seeing is this issue of deep poverty. And so you have this split. And that's part of the reason why welfare's legacy is so contentious. Now on the one hand, it may have actually done some good, but at the same time, it left the people who lost, really lost to get into.

[Kathy O'Neill]

Distribution thing I hope all our listeners like.

[Felix Salmon]

So I mean, I want to just. Let's just finish here with this question for Jordan, which is these two sides of the same coin in order to take as many women out of poverty as welfare reform did and the ITC and all of that, in order to create the positive effects of welfare reform. And did you somehow have to create this new incredibly deep poverty underclass, or could you have done the former without the latter?

[Jordan Weissman]

So this is sort of this kind of wonky historical debate now, but I think, no, you didn't have to. I think one of the issues was that the way the funding mechanism works, it gives states so much free realm just to use, quote, welfare money for almost anything they want. I mean, a lot of welfare money now gets spent on things like child protective services, not on things that in any way help the poor.

[Felix Salmon]

And it helps poor children, doesn't it?

[Jordan Weissman]

I mean, we're talking about like adoption agencies and things like that, like, you know, things like the foster care system that should be funded through state money anyway instead of helping poor families get to work. And there were certainly ways you could have done welfare reform that ensured states actually spent the money on the people and the projects it was supposed to be spent on. And that didn't really happen. And so part of my message in the end of this article is just that even if you thought that welfare needed to change and you needed to get more women to work, there were better bills to write. And this kind of legislation we got from Clinton that he basically kind of caved to the Republicans on was one of the worst ways to go about it.

[Kathy O'Neill]

I just want to jump in and one last thing, because the economist, the researcher in me, thinks, given that the states did different things, that we could actually look into this question. Some of the states did really crazy things. Some of them sort of kept on doing other. The things that were happening beforehand. So we could probably answer that with data.

[Jordan Weissman]

This is actually one of the most sad parts the. Of. Of the bill itself, of Clinton's welfare form. Before Clinton passed welfare form, there was this thing called the waiver system where states. And he gave out a lot of these, where states were allowed to start experimenting with different ideas for how to change their system. But they had to do some sort of evaluation. And often, typically that was a randomized control trial. So they had to do a real experimental evaluation. When TANF passed, when new welfare came about, that was no longer required. So you didn't need to evaluate it in the same strict way you had before. So. So a lot of the opportunities to try and look at what worked were just passed up. And so there are a lot of separate tragedies to the way welfare reform was executed. And I just think the fact that a lot of people talk about it as a model for reforming other parts of the welfare state, like food stamps, is kind of frightening because if you look closely at it, again, even if you agree with the goals, the execution is just really terrible in a lot of ways.

[Felix Salmon]

Okay, on which note, we're going to move on to a slightly happier story about paying working class people more money. But first, I'm going to talk about Trunk Club, which is for, I would say most of the men listening to this podcast don't like shopping for clothes.

[Kathy O'Neill]

You're an exception, though.

[Felix Salmon]

No, I am absolutely amazing.

[Kathy O'Neill]

I'm looking at the incredible outfit you wear.

[Felix Salmon]

I am wearing an incredible, incredible. I am wet. Well, I am wearing a linen suit, which I have not just any linen suit. Made in Singapore. No, sorry. In Shanghai. Sorry, that. That's most obnoxious thing anyone said for a long time. I am wearing a linen suit which I got made for me in Shanghai. But no, it was. There's something very personalized about going to get a suit made for you, which Is a completely different, different experience from walking into a store or shopping mall and looking at racks and trying to work out where you can try things on and trying to work out whether they fit. And it's, it's, it's unpleasant. And then you get those weird, like pushy sales people who always tell you that you look good even when you don't and you're second guessing and it's expensive and, and it's, you always. There's something you'd much rather be doing. And here's something better, okay, which is basically that you get a very friendly person on the Internet who's only just on the Internet so they don't pester you in the way that the store assistants can. And they will just ask you, what kind of things do you need? You know, I need a new pair of pants, jacket. I, you know, up to and including, I will say custom tailored suits. They will actually, you can, you can go in and have a proper tailor like bespoke, make you exactly what you want. If you want a linen suit, you can have a linen suit made and it'll look great. But the core of what they do is off the rack clothes, really good ones, high end ones, which they just talk to you, they get to know you, and then they put them in this little beautiful cardboard box, send it to you in the mail, and you try them all on and you get to wear them around at home, see whether they're comfortable. Think about it for a couple days, Put them on, take them off, you know, oh, maybe I should. Maybe I want a different color, you know, and then whichever ones you want, you just keep. And then the other ones you just put back in the box, send it back. The shipping both ways is completely free. And it's easy and it's in your own time. It just kind of fits into the interstices of your time. People always have more free time when they're sitting around at home than they do when they're out and about. And the idea of going shopping is just this thing, which is which. We don't need that anymore.

[Kathy O'Neill]

Yeah, I get like, I gotta tell you, if I'm in a department store for more than 10 minutes, I get like a coma. I'm in a coma.

[Jordan Weissman]

I like shopping.

[Kathy O'Neill]

Wow.

[Jordan Weissman]

Just saying.

[Felix Salmon]

Okay, so Kathy, you should. You and me, we're like, just for.

[Kathy O'Neill]

My kids, I have like, I live with four men who hate shopping.

[Jordan Weissman]

Yeah, this is good.

[Felix Salmon]

So what you do, if you want to try this out and you should give it a go because it's kind of a fun experience is you go to trunkclub.com and you just sort of type in your measurements, share your likes and dislikes, and you get your very own personal stylist who will send you a bunch of clothes, and that's it. It's easy, and it's no harm, no foul. If you don't like any of them, just send them all back. But you will, because it's great. It's backed by Nordstrom, so they'll have super high quality, super high customer service, the whole thing. Trunk club.com money. Give it a go, Jordan.

[Jordan Weissman]

Yes.

[Felix Salmon]

Victory for the working man or something like that.

[Jordan Weissman]

It was a victory for some working men. No. So the.

[Felix Salmon]

The Workers United have suddenly won something.

[Jordan Weissman]

I was gonna say the labor movement had a victory this week, which is a preciously rare thing, although less lately, maybe, depending how you define it. But anyway, so Verizon struck a new contract with its unit. There had been a massive strike. It was big enough that it actually impacted this week's. This month's job numbers. But they.

[Kathy O'Neill]

It was very visible. I mean, every time you walked anywhere, all the presidential candidates talked to the Verizon strikers. Not all of them.

[Felix Salmon]

And suddenly walking around downtown New York, every Verizon store had pickets outside of it.

[Kathy O'Neill]

It's a big deal.

[Jordan Weissman]

I mean, it was like 39,000 workers were striking. Right. And, you know, this was. It was by the people who install your landlines, install your cable, and your Internet.

[Kathy O'Neill]

So there's really two different classes of workers at Verizon, we should mention.

[Jordan Weissman]

Yeah. What's interesting about this is they were striking essentially. Well, they wanted a new contract, and they wanted to prevent Verizon from doing things like offshoring call center workers, things along those lines. But Verizon really has kind of two businesses, Right. It's got its job, like, giving you cable, getting it to your apartment so you can watch Game of Thrones or whatever on hbo. And then it's got its other business that you're familiar with, which is, you know, wireless service services. It's got Verizon stores. And the labor costs for that cable and Internet business are a lot higher because they have all these unionized workers. And so it seemed like Verizon was investing a lot more money into its wireless business, which is not unionized or had not been unionized. This new contract is kind of a victory on two fronts. One is the obvious one is that they've gotten all these guarantees now for the cable business. And so they feel like, you're going to end up adding jobs, and that's good as far as the, the union's concerned. But then also, this is a little smaller. But really an interesting point is that they've managed to also cover a few of the retail store workers in their new contract or with a new union contract. And so it seems like maybe this is a victory in the long and difficult and often failed struggle to unionize retail.

[Kathy O'Neill]

So there's actually only a couple hundred or a few hundred, like, like Verizon, like cell phone Verizon workers that are now unionized.

[Jordan Weissman]

Yeah, it's a small number, but does.

[Kathy O'Neill]

It open the door for all of those workers to become parts of the union?

[Jordan Weissman]

I mean, I don't know if it does that, but I mean, it's a step, right? I mean, that's how you have to. These things are incremental. You don't expect it overnight. And, you know, this isn't like, oh, well, Verizon workers are now unionized, so we're suddenly going to see this at the Gap, at McDonald's and everywhere else. But, you know, it's just a, a, it's a signal that this is possible. There's this big question hanging over the labor movement over whether you even really can unionize retail workers because they tend to, you know, go in and out of jobs so quickly. They tend, you know, they're temporary, they're part time. Yeah. They don't have the same commitment to a day in, day out job like a factory worker does. So at least, you know, this is.

[Kathy O'Neill]

Well, maybe that's because they're not unionized and their jobs suck.

[Jordan Weissman]

Yeah, maybe. And so, like, this is, you know, it's, again, it's a step in the direction that labor wants to see.

[Kathy O'Neill]

One of the things I find interesting is that one of the victories of this new contract is they basically forced Verizon not to offshore jobs. And that's obviously a big deal in the presidential race right now. And it happens from union.

[Felix Salmon]

I'm beginning to think that the reason why I've not been able to get Verizon fios at my, my home is precisely because Verizon had offshored all of the FiOS installers, and they're all in France. And then they're like, yeah, we'd love to give you FiOS in your home, but unfortunately, all of our work, not.

[Kathy O'Neill]

Every single kind of worker can be offshore. You're right, Felix. So the people that install the wires.

[Felix Salmon]

Although to be slightly more serious here, people have spent a huge amount of time looking into this question of why, given the. Given the degree to which it's pushing this FiOS service, and given the degree to which everyone wants FiOS, why is it so difficult for people like me to get FiOS? And no one really knows the true answer, but a lot of the answer does seem to be that the senior management of Verizon just doesn't like investing in the unionized pits of the business nearly as much as they like investing in the UN Unionized wireless.

[Kathy O'Neill]

I'm just, look, I'm just trying to say, and I know we're not allowed to say his name, but.

[Felix Salmon]

No, no, we're not allowed to say his name. So let's not hear it.

[Kathy O'Neill]

I'm just saying some presidential candidates are saying, you know, you can count on me to not let jobs leave the US and maybe what we should be thinking is you can count on unions to help prevent that.

[Jordan Weissman]

So this is interesting. I mean, you know, Verizon's not the first company that struck a deal like this with the unions. A few years. I Remember back in 2011, 2011, the United Auto Workers did something similar where they said, okay, you're going to keep X number of jobs in the US and the way they do it is saying you have to add X number of jobs, jobs to American plants over. And so it's similar with Verizon. You have to add X number of jobs. That way, you know, even if you do send some things overseas, you still have to build off the US Worker base. So it's. They're not the first ones to do this, but it is a. I think it's a very popular move by unions. They know it's a really good PR move. You know, part of the problem that organized labor faces is in parts of the country, it is deeply unpopular. There are a lot of corners in the US that hate unions for rational reasons and irrational reasons. Mostly irrational, in my opinion. But this is one thing that they can do and show that they can do that I think is probably going to pull really well.

[Felix Salmon]

So let me ask you, in the great eternal fight between capital and labor, if this is great for the unions, if this is great for labor, is it fair to assume that the stock market hated it?

[Jordan Weissman]

No. If I recall, right, no, they did not hate it.

[Kathy O'Neill]

In fact, the stock price was going down during the strike.

[Jordan Weissman]

Yeah. Because they were like, Verizon's just losing customers, losing opportunity right now because their, their service is crippled, which is kind of what, you know, the best of all, this is kind of the best of all possible ways the market, as the market could react as far as labor is concerned, because basically by striking, they brought down the stock price and then by relenting and signing a deal, the stock price went back up. And so that's, that's kind of the pattern you want to see if you are the communications workers. But maybe America.

[Kathy O'Neill]

Win, win, win, win.

[Jordan Weissman]

As far as they're concerned. Yeah.

[Felix Salmon]

Okay, so we are going to move on to the numbers round.

[Kathy O'Neill]

Great.

[Felix Salmon]

First of all, I need to bring you a message from our sponsor.

[Jordan Weissman]

Slate Money is brought to you by Goldman Sachs. For answers to the world's most pressing economic questions. From the industries at risk of disruption to understanding bouts of market volatility, tune into Exchanges at Goldman Sachs, the firm's podcast. Each episode features in depth discussions with some of the firm's leading experts on the market, evolving industries, and the global economy. Subscribe to Exchanges at Goldman Sachs on iTunes, Stitcher or SoundCloud, or [e-mail] podcast.

[Felix Salmon]

All right, Kathy, what's your number?

[Kathy O'Neill]

My number is seven. So I am fascinated by the sort of the standardized test system in the United States, the various standardized tests and all the test prep and how we think it's fair because it's standardized. But then there's. There's inequality that's seeping in because of test prep and other things. Well, we ain't got nothing on China, So there's a 2000-year-old test called the High exam. Also, Gaokao. I don't know if I'm pronouncing that right. It's very competitive to the point where kids will spend about two and a half years or more just doing nothing else except for preparing for the exam.

[Jordan Weissman]

It's how you get into the civil service, right?

[Kathy O'Neill]

Yeah. It's basically your opportunity to go to be really educated. You have to do really well on this test.

[Felix Salmon]

How old are you when you take this test?

[Kathy O'Neill]

I think you're at the end of high school. So I want to say 18. Anyway, it turns out that an urban kid is seven times more likely to get into college than a rural kid and 11 times more likely to get into an elite college.

[Jordan Weissman]

So this is interesting.

[Kathy O'Neill]

So there's cutoffs, and the question is, who passes those cutoffs?

[Jordan Weissman]

I'm going to do that thing where I extend the numbers around way longer than Felix wants me to. But anyway, so this is interesting because you always hear about how good Chinese students do on the international tests, like peaceful. Right. That tell. Oh, Chinese kids are like whipping American students. They're so much smarter. And. But the thing is, those tests are typically based on students in places like Shanghai or even Hong Kong.

[Kathy O'Neill]

Which school?

[Jordan Weissman]

Separately. But they're based in the coastal urban centers, which are extremely rich, basically first world standards in a lot of ways. And so I think this is a really.

[Kathy O'Neill]

The kids are test prepped to die.

[Jordan Weissman]

Exactly. And this is. Okay.

[Kathy O'Neill]

Oh, my gosh.

[Jordan Weissman]

I just want to say. So Felix's suit is bright, bright orange. I'm sorry, it's burnt. It's like almost burnt orange with some pale orange pinstripes. I think it's gorgeous. I love it.

[Kathy O'Neill]

He's a peacock.

[Jordan Weissman]

This is the purest expression of Felix's personality, given that this is custom made for him by those students in Shanghai who didn't get into college.

[Felix Salmon]

Who didn't get into college. But no, I mean, I think this is a clearly sign of why China's urbanization policy makes sense. If you want. Want people to do better in exams, the thing that you do is you move the population from the rural areas into the cities, which is exactly what China is doing.

[Kathy O'Neill]

You know what's interesting about that is that the place that the kids have to take the test is based on where their parents are from. So you have a bunch of urban youths actually having to go back to the country to take the test.

[Jordan Weissman]

Oh, fascinating.

[Kathy O'Neill]

It's really weird. Yeah.

[Jordan Weissman]

Number two, my number is 116,000. We had the jobs report this week for May. It was not good. Nope. The number of jobs added was 38,000. Although that was dinged a little bit because of the Verizon strike. But even if you double that, like say 70, 80,000, it's still not good. Over the past three months, we have averaged 116,000 new jobs per. Per month. The three months before then we averaged 224,000.

[Kathy O'Neill]

And that was healthy.

[Jordan Weissman]

But now that was healthy. So we are everyone's kind of looking at this and you're not supposed to take month to month changes in the jobs report too seriously. But the trend looks like we're slowing down. And really I'm just hoping the Federal Reserve is watching this because one wrong move and I feel like they are accidentally going to make he who Must not be Named into the other president. And like Janet Yale if she does. But like there's even an argument at this point they really should be cutting interest rates because it looks like the economy is slowing down. And if you the, you know, it's this thing called passive tightening. If the economy is slowing down and you leave Interest rates where they are. You are effectively tightening interest rates. Some, you know, academics blame the great this, on the Great Recession, on this kind of an effect. I think that's a little overboard, but nonetheless they do. So right now I really feel like the Fed should be very, very thoughtful about how they're handling the economy.

[Kathy O'Neill]

I was the one who said that the Fed is not going to raise rates again this year.

[Felix Salmon]

And what. Yeah, the one, one thing that seems certain in the wake of this jobs report is they're not going to raise rates in June.

[Kathy O'Neill]

Yes.

[Felix Salmon]

So we will see what happens after that.

[Jordan Weissman]

I want them to drop money on the economy. Like confetti at this point.

[Felix Salmon]

From helicopters.

[Jordan Weissman]

From a helicopter. Seriously, Just through the canyon of heroes in New York. Just drop money?

[Felix Salmon]

Yeah, that's the last place we need money. Maybe we should just.

[Kathy O'Neill]

Yeah, let's not do that.

[Felix Salmon]

Give money to poor people.

[Jordan Weissman]

How about.

[Felix Salmon]

That is an idea.

[Jordan Weissman]

I literally just said it. Dropped money on Wall street by accident. That was not my intention, listeners. It just kind of. I was thinking of a sports parade with confetti. Anyway. Continue, Felix.

[Felix Salmon]

2000, 520.

[Kathy O'Neill]

What's that?

[Felix Salmon]

Is the median size in square feet of a new single family house sold in 2015. This is a number which has been going up and up and up for 30 years and hit a new all time high in 2015, as it does pretty much every year. Why the. A typical family in America needs two and a half thousand square feet. I really don't understand. But this is, this is where we're going. This is.

[Kathy O'Neill]

How many people are living in these households? Is it like, do you still have.

[Felix Salmon]

I don't think households are getting any bigger in terms of.

[Jordan Weissman]

Can you imagine what I thought they were though?

[Kathy O'Neill]

I thought like, nobody's ever leaving home.

[Jordan Weissman]

Imagine what like an Irish family from like 1908 New York would think. Like one of those families that like packed like 16 into some like tenement house. Like if they saw one of these homes, they'd be like, I mean, I.

[Kathy O'Neill]

Guess the other question is who's buying it? These homes? It's not, probably not the same people that are, have all their relatives anyway.

[Felix Salmon]

These are new homes and people who buy new homes are richer and you know, they. But the point is the time series. The new homes that people are building are getting bigger and bigger and are being built for richer and richer families, I guess because like, it's not like the median income has been going up over those, over those years. So I guess what this says to me is that the Home construction industry is just going after like a bunch of people who are not normal.

[Jordan Weissman]

Yeah.

[Felix Salmon]

And normal people are not buying.

[Kathy O'Neill]

I think we can all agree on that.

[Jordan Weissman]

There was this theory that I and other people wrote about after the recession that in order to cater to millennials specifically, home builders are going to have to cut back on size just because millennials could not afford homes this day.

[Kathy O'Neill]

Developers were like, we're not listening to you.

[Jordan Weissman]

No, instead they were just like, like, fuck the millennials. No, no, no, no.

[Felix Salmon]

The home builders. The home builders are one step ahead of you. The home builders are saying, we're going to sell to people who realize that their kids are going to be living with them into their 30s.

[Jordan Weissman]

That's true.

[Felix Salmon]

You need a whole extra wing just for your kids.

[Kathy O'Neill]

Oh, my God. There was such a despicable Wall Street Journal article about, and Shane retweeted it about these people who are like, their second home is also in Manhattan.

[Jordan Weissman]

Oh, God. It's like a home away from home.

[Kathy O'Neill]

It's like, fuck these people.

[Jordan Weissman]

So. Oh, God.

[Felix Salmon]

Yeah, that's up there with that. That was the other big hate read this week was the one in the FTSE about the poor family who's struggling by on £200,000 a year, which is like $300,000 a year.

[Jordan Weissman]

There was, wasn't there? I mean, there were a lot of those around the Romney campaign where, you know, people were talking about raising taxes on people who made above $250,000 a year. So everyone who made $250,000 wrote a personal essay about how cash strapped they were and how their kids private school was really draining their finances.

[Felix Salmon]

What I want to find is I want to find one of these essays. And these essays come around on a pretty regular basis of I'm making a six figure salary and I'm just scraping by. I just want to find one, just one, which doesn't mention private school or school fees. It's always about this incredibly elite thing that rich people do, which is send their kids to private schools and take that away. In all of these stories, just go up in smoke.

[Kathy O'Neill]

You still have rent to worry about. But yes, private school is expensive.

[Jordan Weissman]

Yeah.

[Felix Salmon]

Okay, that is it for us this week. Thank you for listening to Slate Money. Do subscribe to us by searching for Slate Money in the itunes store. Leave us a review there. Write to us slatemoneylate.com Many thanks to Jason De Leon, who's recorded the show this week, as well as our producer Audrey Quinn and the executive producer Steve Lichti and Andy Bowers. And the whole panoply of Panoply Podcasts, iTunes.com Panoply for all of them. We will talk to you next week on Sleep Money. Ra.