The Munchkin Edition

Summary

Slate Money: The Munchkin Edition

Date: December 3, 2016
Host & Guests: Felix Salmon (host), Cathy O’Neill, Jordan Weissmann

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Overview

This episode of Slate Money, dubbed the "Munchkin Edition," revolves around the introduction of Donald Trump’s key economic appointees, notably Treasury Secretary nominee Steven Mnuchin ("Munchkin"), Commerce Secretary pick Wilbur Ross, and the political spectacle of Trump’s deal with Carrier to “save jobs” in Indiana. The discussion probes the apparent irony of Trump’s populist campaign rhetoric versus the reality of his Wall Street-centric appointments, the future direction of U.S. economic policy, and the economic substance (or lack thereof) behind these headline announcements.

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Key Topics & Insights

1. Steven Mnuchin: Wall Street Insider as Treasury Secretary

[00:35–13:57]

• Pronunciation Fiasco:
  The co-hosts comically discuss the media’s widespread mispronunciation of Mnuchin’s name as “Munchkin,” cementing the episode’s title (01:12–02:14).

  “Once you hear the Munchkin thing, you can't go back. It's really hard to unhear…” – Felix Salmon [01:43]

• Background & Experience:
  Mnuchin portrayed as “Wall Street to the core.” A Yale grad, former Goldman Sachs partner (as was his father), later a hedge fund manager and investor in failed mortgage bank IndyMac—acquired, rebranded as OneWest, and notorious for mass foreclosures (02:18–03:53).
  Connections run deep: George Soros, John Paulson, work for Stanley Druckenmiller.

• Contradiction with Trump’s Rhetoric:
  The pick seems to betray Trump’s anti-elitist, anti-Wall Street campaign message:

  "Then he goes and hires the ultimate Soros and Blankfein person as his Treasury Secretary. It's kind of hilarious." – Felix Salmon [03:53]

• Expectations for Mnuchin:
  The hosts anticipate a classic Goldman technocratic approach: hiring talent, maintaining low public profile, making the “trains run on time” (05:31–07:57).

  "He’s going to let Trump keep all of the limelight... Trump is going to be making the headlines... and he's going to be making the trains run on time in the background." – Felix Salmon [07:36]

• Mnuchin’s Role in Trump Campaign:
  Chosen due to personal/business ties and his role as Trump’s chief fundraiser—a promise apparently dangled to Wall Street donors well before the election ([07:57–08:46]).

• Good or Bad Appointment?
  Mnuchin offers technical competence about bond markets and serves as a stabilizing figure versus possible ‘bomb thrower’ options such as John Allison (08:46–13:57).

  “Honestly, the alternative here was that we'd get some crazy bomb thrower who wants to default on the national debt…” – Felix Salmon [12:48]

• Regulatory Outlook:
  Mnuchin’s history with foreclosures signals a likely rollback of Wall Street regulations—a “light regulatory touch” expected ([09:13–11:50]).

2. Trump and the “Carrier Deal”: Symbol over Substance

[14:01–19:55]

• Carrier's Deal Details:
  Trump “saves” 800 jobs in Indiana by offering Carrier tax incentives, but the company still ships 1,200 jobs to Mexico ([14:01–14:39]).

  “...he made it very, very bad deal with Carrier company with lots of tax breaks to keep them from moving 800 jobs to Mexico. They're still moving like 1200 jobs to Mexico though, I believe.” – Jordan Weissman [14:03]

• Economic Irrelevance of Small-scale Deals:
  The U.S. manufacturing sector loses/creates millions of jobs a month; focusing on 800 jobs is a political spectacle with negligible economic impact ([14:39–15:32]).

  "The economy creates more than 2 million jobs a month and destroys more than 2 million jobs a month." – Felix Salmon [14:40]

• The Complexity of Modern Manufacturing:
  Trump’s “simple” model of where jobs and factories are misses the reality of intricate, North American-wide supply chains enabled by NAFTA ([15:32–16:47]).

  “...the supply chain, especially in North America, will be incredibly complex. And you can't just point to one place and say, that is where the air conditioner's come from.” – Felix Salmon [16:26]

• Carrier as Realpolitik and PR:
  Trump’s intervention seen as about optics—“what can I have a press conference about or a rally around?” ([17:05]).
  In a "post-truth" context, a steady stream of jobs-related headlines may placate voters even as policy reality diverges from promises ([17:22–18:18]).

• Perverse Incentives and Deals:
  Carrier and other companies now have incentives to threaten offshoring to extract taxpayer-funded incentives. Such state-level “race to the bottom” tax breaks predate Trump but may be turbocharged by his direct involvement ([19:07–19:55]).

3. Manufacturing, Trade, and Tariffs: Myths vs. Reality

[19:55–22:29]

• State of U.S. Manufacturing:
  U.S. makes more than ever (by value) but employs fewer due to automation, not trade ([19:55–20:50]).

  “...the manufacturing industry of the United States is bigger and stronger now than it has ever been... What is true is there are fewer manufacturing jobs just because manufacturing is so much more efficient now than it used to be.” – Felix Salmon [19:57]

• Jobs, Offshoring, and Purchasing Power:
  Tariffs may retain jobs but at enormous cost to consumer purchasing power—i.e., high inflation and especially regressive impacts on the poor ([21:26–22:07]).

  “The people at the bottom 10th would actually lose 63% of their purchasing power.” – Jordan Weissmann [22:01]

• Trump’s Actual Economic Direction:
  Despite protectionist rhetoric, appointees appear more focused on lowering taxes/regulation than starting trade wars ([22:29]).

4. Wilbur Ross as Commerce Secretary: The Billionaire Cabinet Expands

[22:50–30:46]

• Who is Wilbur Ross?
  Private equity billionaire, famous for “reviving” dying industries by cutting costs and sometimes offshoring, but with more nuance about globalization and trade than a simple protectionist ([23:28–25:23]).

  “He did it in textiles, denim plants, things like that. And in the process, he would sometimes offshore jobs, but while also keeping an American plant running.” – Cathy O’Neill [24:11]

• Commerce Department’s Real Power:
  Often overlooked, the Commerce Secretary has real influence over trade enforcement, particularly on tariffs; in this administration, may be unusually important ([25:33–26:30]).
  Peter Navarro (co-designer of “Trumponomics”) and Ross are the top economic surrogates.

• Motivations and Concerns:
  Speculation that immense personal wealth drives a power-seeking turn—transitioning from “one who has everything money can buy” to seeking influence ([27:02–28:08]).

  “Once you have everything that money can buy, all that's left is power that you want.” – Felix Salmon [28:05]

• Ross: Plutocrat, Not Protectionist:
  While he may use tariffs as negotiating tools, he's described as a "market guy," not a straight-up trade warrior. His economic thinking, however, is criticized as unsophisticated ([29:13–30:46]).

  “His economic think is just not that sophisticated... back-of-the-envelope calculations.” – Cathy O’Neill [30:25]

5. Big Picture: What Kind of Administration?

[31:06–31:28]

• Plutocrats, Not Politicians:
  The hosts characterize Trump’s economics team as “market guys" and plutocrats, more than party ideologues, with little government experience and few actual economists ([31:16–31:28]).

  “They're even Republicans. They really are plutocrats. That's the thing.” – Cathy O’Neill [31:16]

• Policy Direction:
  Expect tax cuts, deregulation, and headline-grabbing deals, with little substantive benefit for average Americans.

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Notable Quotes

• "Once you hear the Munchkin thing, you can't go back. It's really hard to unhear..."
  – Felix Salmon [01:43]

• "Then he goes and hires the ultimate Soros and Blankfein person as his Treasury Secretary. It's kind of hilarious."
  – Felix Salmon [03:53]

• "If you look at the long history of treasury secretaries... there hasn't really been a sort of Democratic mold and a Republican mold. This hasn't been a very political job."
  – Felix Salmon [10:05]

• "He is going to be exactly the kind of high technocratic, Wall Street-friendly Treasury Secretary which both Democrats and Republicans have had all along."
  – Felix Salmon [10:36]

• "Trump’s model is... what can I have a press conference about or a rally around?"
  – Cathy O’Neill [17:05]

• "This idea that there's no manufacturing done in the United States is completely false... What is true is there are fewer manufacturing jobs just because manufacturing is so much more efficient now than it used to be."
  – Felix Salmon [19:57]

• "Once you have everything that money can buy, all that's left is power that you want."
  – Felix Salmon [28:05]

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Important Timestamps

• [00:35] Main Topic Intro: Trump's economic team announcement
• [01:30–02:14] The “Munchkin” pronunciation debacle
• [02:18–03:53] Mnuchin’s Wall Street credentials and controversial IndyMac takeover
• [05:17–07:57] Technocratic management at Treasury, Goldman Sachs tradition
• [07:57–08:46] Mnuchin’s role as Trump’s campaign fundraiser
• [09:13–11:50] Regulatory outlook under Mnuchin
• [14:01–15:32] Carrier deal: numbers and symbolic value
• [16:26–17:22] Complexities of 21st-century manufacturing
• [18:18–19:55] The new “incentive” structure for companies considering offshoring
• [19:55–20:50] U.S. manufacturing reality: more output, fewer jobs
• [21:26–22:07] Tariffs and purchasing power impact on the poor
• [23:28–24:53] Wilbur Ross background/approach
• [25:37–26:30] What does the Commerce Department do?
• [26:59–28:08] Personal wealth, power, and new ambition in the Trump cabinet
• [29:13–30:25] Critique of Ross’s economic “think”
• [31:06–31:28] Defining the administration: plutocrats, not economists

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Numbers Round Highlights

[31:49–35:17]

• $720: Cost of Nike’s self-tying sneakers (Jordan Weissman [31:51])
• 1,856,000: Number of Americans unemployed for 27+ weeks, down from a 2010 peak of 6.8 million (Felix Salmon [32:33])
• 1.2 million: Barrels of oil per day OPEC has pledged to cut output by January (Cathy O’Neill [34:13])

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Tone & Style

The conversation is lively, irreverent, and sharply analytical, peppered with inside jokes (the “Munchkin” gaffe), pithy critiques, and a healthy dose of cynicism about both the economic acumen and political motives of Trump's appointees. The hosts’ banter underscores their skepticism toward post-truth politics, media spectacle, and the “billionaireization” of government.

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Conclusion

This episode provides a brisk and skeptical briefing on what Trump’s economic appointments—and actions like the Carrier deal—signal for the future: a government run by “market guys” and plutocrats who favor lower taxes, deregulation, and business-friendly policies, under a president more interested in headlines than structural reform. The hosts urge listeners to look past the PR and focus on the substance—or lack thereof—behind the new administration’s actions.

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Transcript

[Kathy O'Neill]

The following podcast contains explicit language.

[Felix Salmon]

Hello, and welcome to the Munchkin edition of Slate 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 author of Weapons of Mass Destruction.

[Jordan Weissman]

Hi.

[Felix Salmon]

And Slate moneybox columnist Jordan Weissman.

[Kathy O'Neill]

Hello. Glad to be here.

[Felix Salmon]

And this week's topics were pretty easy and obvious for us because this was the week when Donald Trump basically rolled out his entire economic team, or at least the most important bits of it, Specifically the Commerce Secretary, the finance Minister, and. Oh, yeah, and he wound up doing exactly what he said he would do on the campaign trail.

[Jordan Weissman]

Wait, wait.

[Felix Salmon]

And saved a bunch of jobs in Indiana. We're gonna talk about all of this.

[Kathy O'Neill]

Wait, Felix, you just referred to the Treasury Secretary as the Finance minister. How Euro can you get right now?

[Felix Salmon]

He is the finance minister.

[Kathy O'Neill]

I know, but we're not sitting in the middle of Brussels right now. We're in America. This is Trump America. We're in Trump country. He's the Treasury Secretary.

[Felix Salmon]

So. Okay, so let's start with the Chancellor of the Exchequer, Mr. Steven Mnuchi, or whatever it is that you guys call him over here.

[Kathy O'Neill]

So, yeah, the joke is that, like, local newscasters were trying to pronounce his name, and there was just a super reel of them mispronouncing. And the best one by far was Stephen Munchkin.

[Felix Salmon]

Once you hear the Munchkin thing, you can't go back. It's really hard to unhear, is I went on various radio and TV shows to talk about this guy. And broadcasters care about how things are pronounced. And I can tell you that officially the pronunciation is not minutchin. It's minutian.

[Kathy O'Neill]

Like minutia.

[Felix Salmon]

As a wonderful email to Kai Rysdal once put it, the ch is soft, as in champagne or charlatan.

[Kathy O'Neill]

Jesus. On which note.

[Felix Salmon]

So, yeah, this guy is a second generation Google, Google partner. Goldman Sachs partner. His dad was a Goldman Sachs partner. He grew up arguably even richer and more privileged than Donald Trump. He did the whole Yale and Skull and Bones thing. He went to Goldman Sachs in his father's footsteps. He then he rose to become a partner and was in charge of government bond markets and mortgage bond markets. He left Goldman Sachs and became basically a financier. You know, one of those rich people. He had a hedge fund at one point called June Capital, which was named after the dunes outside his home in the Hamptons.

[Jordan Weissman]

Yep.

[Felix Salmon]

And he's probably, as far as the confirmation hearings are concerned, most well known for having bought this bank called IndyMac, which was a complete, I believe the technical term is shit show, renaming it One west and evicting tens of thousands of people and making lots of money in the process and getting the FDIC to pay for it.

[Kathy O'Neill]

Yes.

[Felix Salmon]

Is that more or less Stephen Munchkin?

[Kathy O'Neill]

Sorry, Mnuchin, I think you've got most of Munchkin's biography down there. Some other key details. I mean, this guy is in thick with the big players in finance. I mean, he opened his hedge funds with George Soros. He went into the IndyMac deal, he.

[Felix Salmon]

Worked for Stanley Druckenmiller.

[Kathy O'Neill]

Yeah, the IndyMac deal he did with Soros. And John Paulson, also a well known hedge funder who made a lot of money off of the housing collapse. I mean, he is Wall street to the core.

[Felix Salmon]

And while this is obviously in direct contravention of all of Donald Trump's campaign promises, and in fact, one of the very last ads in his campaign was wheeling out photographs of George Soros and Lloyd Blankfein from Goldman Sachs and saying, these are the people we hate and vote for Soros because we hate them. And then he goes and hires the ultimate Soros and Blankfein person as his Treasury Secretary. It's kind of hilarious. But, but by the same token, if you opposed what Trump was standing for in the campaign, then you should probably like Steven Mnuchin. Right?

[Kathy O'Neill]

So no, I'd be like, I'm jumping.

[Jordan Weissman]

Here because I feel like Trump, he never says anything consistently. Right. But I do think that he had a, a bunch of people convinced that he was gonna do things differently. At the very least, at the very least he was gonna be like, I'm not gonna be business as usual. And yet he's, he's, he brought someone in from Goldman Sachs. Now I'm not saying Munchkin is exactly like every other treasury secretary. There's, he's not, he's actually worse. But, but like that one way that, that you could have. I was, I was actually thinking he would do something different. I thought he was gonna bring in somebody random with no experience in finance at all.

[Felix Salmon]

Well, he did. He has brought in someone random. So at least that is in line with. No, no, but Munchkin, we have to stop calling him Munchkin. Mnuchin has no government experience.

[Kathy O'Neill]

Did Hank Paulson, I can't remember, did he have any before?

[Felix Salmon]

No, Hank Paulson didn't. But this is the thing about Goldman Sachs is that you don't become a partner at Goldman Sachs without being very good at hiring very talented and brilliant people who are often smarter than you are and giving them the ability to do their work with great success and professionalism. And that's the way that Robert Rubin ran Treasury when the first big Goldman guy to run Treasury. That's the way that Hank Paulson ran Treasury, another Goldman guy, and I suspect that's the way that Mnuchin is going to run treasury as well, is basically the same way that they ran things at Goldman Sachs, which is hiring smart people.

[Jordan Weissman]

Okay, so I'm not going to disagree with you. I think he is probably pretty good at that cultural concept of what smart means and what smart looks like. But that's exactly what Trump was trying to say. Yeah, I'm like, I don't want to be like, defending Trump here or like, or defending the idea that we thought Trump was going to follow through on his promises, but this idea that exactly that culture of like the smart guy deserves to be a billionaire, that is not what Trump ran.

[Felix Salmon]

No, we can, I think we can agree and I don't think it's worth dwelling too much on the fact that this is not in line with the Trump campaign at all. I think the more interesting question is, is it a good thing? Is it a bad thing? I think in terms of the sort of technocratic Davos man type thing, like, I don't think he's that far from. Okay, here's a quick quiz. Kathy o'. Neill. I know that Jordan can do this. Can you, can you name the current treasury secretary?

[Jordan Weissman]

Treasury Secretary. What's his name? Yes, I could imagine his name.

[Felix Salmon]

Louis Lou. Yeah.

[Kathy O'Neill]

Jack Lew.

[Felix Salmon]

Jack Lou. And no, it's not easy because he's pretty much in.

[Jordan Weissman]

He doesn't do anything.

[Felix Salmon]

Well, no, he does a lot of things. He just doesn't do things in public.

[Kathy O'Neill]

He's very quiet.

[Jordan Weissman]

So. Yeah.

[Felix Salmon]

And he also came from a big investment bank. He was a Citigroup.

[Kathy O'Neill]

And although often Treasury Secretary is more of a frontman, Lou is a little bit unusual in that respect, that he's behind the scenes.

[Felix Salmon]

So my gut feeling about Mnuchin is that he's going to be very much in line with the Jack Lew Treasury. He's going to, it's going to be like a professional organization. He's going to be low profile. He's going to let Trump keep all of the limelight. Trump is going to be making the headlines. Trump is going to be doing the tweeting and he's going to be making the trains run on time in the background.

[Kathy O'Neill]

So I have a Few different points. One thing I think we need to just mention as background key information is that Mnuchin was also Trump's chief fundraiser. That's the thing. You have to understand. He was the guy who showed up on the campaign to help raise money when it's not clear anybody else would. He knew Trump from back in the day, did business with him, apparently knew him socially, talked to him a little bit before the campaign, gave him some input on his tax plan. But that's why this guy was the pick. And also beyond that, why people suspected he was going to be the pick from back in the summer. They were. Donors were hearing back in, I think, July that if they gave money to Trump, Mnuchin would probably be the Treasury Secretary. So this was a little bit of a promise dangled. I don't know if it was like quid pro quo that way, but they were hearing, yes, this is gonna be your guy. So he was sort of a promise dangled out, I think, to Wall street in a way.

[Jordan Weissman]

So, I mean, my question, going back to Felix's question, is it a good thing, like, what do we want a Treasury Secretary to do?

[Kathy O'Neill]

For one, you want a guy who can give basic advice to the President on things like how the markets work. Right. Especially when the guy's Donald Trump. And so, like, in that respect, at least we know Mnuchin understands how things like bond markets function. Like, he has a.

[Felix Salmon]

He knows what a risk free rate is and he understands how that relates to the treasury bond market. And honestly, like, you'd think that would be table stakes. But with this administration, but in this.

[Kathy O'Neill]

Administration, it's not so, like, fundamentally, he's going to fulfill that part of it. But then also, a Treasury Secretary has limited direct power as a regulator, but he has a ton of influence in telling the President who to pick as the regulators. And so in that respect, I think we can expect Mnuchin, as a guy who did kind of sketchily foreclose on tens of thousands of people while he ran a bank, to have a light regulatory touch. And so he's not a great signal to consumers.

[Jordan Weissman]

For instance, that brings up my thing, which is like, I'm not somebody who follows these kinds of things that closely, but there was a moment in the recent past when the Treasury Secretary had enormous amount of influence. And that was right after the financial crisis. Yes, with Geithner. And he did all sorts of things that, as far as I can tell, Mnuchin would do exactly the same.

[Felix Salmon]

I mean, to be fair, the guy who did the most The Treasury Secretary who did the most important things during the financial crisis was Paulson, and then Geithner was his complete continuation of Paulson. There was really no difference there. And I think you're absolutely right. If you look at the long history of treasury secretaries going back from well before Paulson, there hasn't really been a sort of Democratic mold and a Republican mold. This hasn't been a very political job. And Mnuchin has given much more money to Democrats than he ever had to Republicans before Trump came along. And so I feel that in that respect, he is going to be exactly the kind of high technocratic, Wall street friendly Treasury Secretary which both Democrats and Republicans have had all along.

[Kathy O'Neill]

I disagree on that front because we are not in the financial crisis anymore. We're in a period where we're figuring out what financial regulations are going to look like in the future. And the Obama era has seen a careful ratcheting up of the amount of regulation on Wall Street. Some people don't think it's gone far enough, but it is still a lot more than there was previously. And what many people are expecting now, I think rightfully, is that Mnuchin is going to ratchet that down and you're.

[Felix Salmon]

Going to see an unwinding exactly like Larry Summers did when he was Treasury Secretary under Clinton.

[Jordan Weissman]

So we think the Volcker rule, for example, is going to be.

[Felix Salmon]

Volker rule will probably be weakened. I think most of Dodd Frank will stay. I think that.

[Kathy O'Neill]

But it's how interesting.

[Felix Salmon]

The really interesting thing is what he's going to do with Fannie and Freddie, no one really knows. But that's much more in play now than it ever has been during the Obama administration. And if you want to go back and listen to our fascinating conversation with Bethany McClain about Fannie and Freddie, you should totally do that because that all of those questions are now very much live fundamentally.

[Kathy O'Neill]

Also, you know, he wasn't attached, I mean, his name was not attached to a lot of Trump's policies during the campaign, whereas some other economic advisers were very prominent. It's come out now since his pick, that he apparently was deeply interested in the tax plan. And so that's apparently where his heart is. And that he, he talks about wanting to cut the corporate rate to 15%. He repeats that over and over again.

[Jordan Weissman]

We're going to talk about that in the carrier.

[Kathy O'Neill]

Oh, yeah. He talks about, you know, I mean, if you think his heart and soul is really in this tax plan, that means he's going to be pushing Trump hard on it.

[Felix Salmon]

And that's important because the Treasury Secretary, for all that, we love talking about the nexus of treasury and Wall street, which is an important nexus. The really important thing that the Treasury Secretary does is he's the person in charge of fiscal policy. He's the person in charge of raising taxes and borrowing money and that kind of stuff.

[Kathy O'Neill]

Well, telling them to raise tax. Congress raises taxes. But he is the person in charge of telling the President how he thinks that the, you know, where taxes should.

[Felix Salmon]

So, yes, I think you're right that he is going to want to cut taxes. That's going to be his priority. And he'll leave a lot of the nuts and bolts of treasury to the technocrats and the employees. And I think that's good because honestly, the alternative here was that we'd get some crazy bomb thrower who wants to default on the national debt. And, you know, there were some debt.

[Kathy O'Neill]

Ceiling, there were some crazy bomb throws.

[Jordan Weissman]

I'll agree with you that it's not the worst case scenario, but I do feel like we're getting it set up for a new bubble.

[Kathy O'Neill]

Can I just.

[Jordan Weissman]

That's not.

[Kathy O'Neill]

Can I just quickly mention the one worst case scenario who did get floated during this whole thing at one point, and I think almost it was just to scare the shit out of liberals. Trump was interviewing John Allison from BB&T bank, the former CEO, who literally, he's written, he used to be the head of Cato, which is libertarian think tank. He's written about how he wants to go to the gold standard, get rid of the fdic, get rid of the Fed and just have like free banking, 19th century style with guns. Yeah. And there is like, there was seriously a moment where every left wing, like lefty wonk was just like shivering at the thought that this was gonna. The Treasury Secretary.

[Felix Salmon]

So Steven Mnuchin, he's better than John Allison. That's what we can say about him. And Kathy.

[Jordan Weissman]

Yeah.

[Felix Salmon]

Since we're talking about taxes.

[Jordan Weissman]

Yeah.

[Felix Salmon]

Tell me what happened in Indiana.

[Jordan Weissman]

Well, so we've actually talked about this before. This company called Carrier is basically planning to move its jobs to Mexico in order to save a bunch of money. And what happened was basically it was a part of, of Trump's campaign promise that he was going to keep Carrier specifically and Jobs in general for moving to Mexico. So what he did was he made it very, very bad deal with Carrier company with lots of tax breaks to keep them from moving 800 jobs to Mexico. They're still moving like 1200 jobs to Mexico though, I believe.

[Kathy O'Neill]

Yes.

[Felix Salmon]

So my My, I mean, this is obviously insane. You don't want the President trying to negotiate 800 jobs because as I, you know, the economy creates more than 2 million jobs a month and destroys more than 2 million jobs a month. And you can't let, if you're worried about 800 jobs here and there, you're just going to miss the forest of the trees.

[Jordan Weissman]

I've got some numbers just to back you up on how stupid this is, just in terms of manufacturing jobs, which is what this stuff is, air conditioning and stuff. In the United States as a whole, there's been 5 million manufacturing jobs lost since 2000, which is a 30% of manufacturing jobs. And in Indiana, there have been 150,000 since 2000, which is 20% of Indiana's manufacturing jobs. So compare 150,000 jobs lost to 800 jobs not quite lost. It's not a good number.

[Felix Salmon]

And also, this is the other thing which always drove me up the wall when Trump was campaigning, especially when he started talking about nafta, is that he has this model, and I'm quite sure he genuinely does have this model in his, in his mind that you have a factory which makes widgets, and then those. That factory employs people. And then, so the widgets are made in United States, and then the owners of the factory go, we can pay that. We can pay people less in Mexico. So we're going to move the factory to Mexico, and then the widgets will be made in Mexico. And, you know, and that means that the jobs move from the United States to Mexico. It's a very simple model, and it is deeply, deeply false. Because the whole point of NAFTA is that what it has done is created these incredibly complex transnational supply chains which cross Mexico, Canada and the United States. If you buy an air conditioner with a carrier plate on it, you know, it might have its final assembly in Indiana, it might have its final assembly in Mexico. But the bits in that, the bits and pieces of that air conditioner will come from all over the world. The supply chain, especially in North America, will be incredibly complex. And you can't just point to one place and say, that is where the air conditioner's come from.

[Jordan Weissman]

I agree with you, but having said that, like, there is something relatively simple here, which is that the people in Indiana get paid $20 an hour, and the equivalent people, when they move the jobs to Mexico, get paid $6 an hour. And that math is actually pretty. Pretty simple and straightforward.

[Kathy O'Neill]

I think it's $11 an hour.

[Jordan Weissman]

Maybe I read a different Source. But I wanted to go back to this idea of what Trump's model is, because as I think about models a lot, I think his model has nothing to do with manufacturing at all. I think his model is what can I have a press conference about or a rally around?

[Felix Salmon]

So this is post truth politics. And what we have is a Treasury Secretary who will cut a lot of taxes and make a lot of rich people rich and. Or make a lot of rich people even richer. And we have a populace who voted for Trump, who on the face of it should be incredibly unhappy about having like, this Goldman guy and treasury, because this is everything they, they didn't want. And what you do in order to placate them is feed them a diet of tweets about saving jobs, carrier and, you know, wanting to remove citizenship from people who burn the flag. And so what you can do is by keeping the headlines coming, as long as you can generate a whole bunch of headlines about I saved 800 jobs. The fact that in reality, you're making things worse rather than better in a post truth society where people don't believe what they read in the media might actually work.

[Kathy O'Neill]

So I want to steer us back to the money and away from the politics and talk a little bit about the model. But I do think when you say that Trump's wrong about what a manufacturing supply chain is, I think you're like 80% correct. NAFTA really did create this kind of North American supply chain where pieces of cars and of air conditioners come up and down from Canada and Mexico and in the US and things that final assembly is done wherever it happens to be most efficient. But to some extent, NAFTA has facilitated the overall shift of manufacturing to Mexico to some degree. You know, there is a larger part of the supply chain there than probably would have been without, without nafta. And in some ways, that may have helped preserve some American jobs because it allowed us to keep making things relatively efficiently here in the States, part, at least part of the process here in.

[Felix Salmon]

North America, rather than just moving all.

[Kathy O'Neill]

The way to China. Exactly. But there is. I mean, I don't think it's totally crazy to think about ways that we could preserve more of the manufacturing supply chain in, in here in this country. I think that's. I think that is something important to analyze. The question is whether or not Trump is the one who is actually capable of doing that. And beyond that, if something like this with carrier is actually helpful in any way. And I think a lot of ways it isn't, because it creates this bizarre incentive now where if you're a company and you're thinking about moving jobs to Mexico, maybe you make a little bit of noise about it and Trump will show up and give you some incentives to stick around. I mean, Carrier's getting lots of money from the state of Indiana or $7 million from the state of Indiana.

[Felix Salmon]

But to be fair, like, this is a game which companies have been playing for decades. This is not new with Trump, but.

[Kathy O'Neill]

Trump is now playing it himself.

[Felix Salmon]

But because different states have had huge tax incentives for various manufacturing employers for years now, you know, there's been this game where, like, everyone moves to North Carolina because there's tax cut tax incentives there. Everyone moves to Texas or whatever. And this is just an extension of that game. The one thing I will say which is hugely important is that the manufacturing industry of the United States is bigger and stronger now than it has ever been at any point in history. This idea that there's no manufacturing done in the United States is completely false, or that there's less manufacturing done in the United States is completely false. What is true is there are fewer manufacturing jobs just because manufacturing is so much more efficient now than it used to be. And that's not a question of free trade or NAFTA or lower wages. That's just a question of automation and productivity enhancements.

[Kathy O'Neill]

Well, that's a.

[Jordan Weissman]

Some of.

[Kathy O'Neill]

That's also offshoring, too. I mean, so you're talking. What you're talking about is value added, right? We measure the amount of manufacturing done in a country by what's called the value add. And just keep that concept in your head. And part of the value add is just, like, how much profit do you. Or like, how much do you add to the finished product? Right? And one way you can do that is just by making fancier and more expensive goods. But another way you can increase that is by using cheaper inputs. So one way that the US has increased its value add, this thing that says we make more than we ever did, is by importing cheaper Chinese inputs. So, I mean, it's tricky. Like the, I think saying to that.

[Jordan Weissman]

Point and to the other point that you were making about, like, how can we keep manufacturing jobs while still be being a healthy economy? This is. This would be a very, very extreme concept. But I saw this statistic, which I wanted to share, that if we made it, if we just said we're going to stop international trade altogether, we could do that and we keep a lot of jobs, but our purchasing power would go way down. In particular, the wealthiest consumers would lose 28% of their purchasing power. The people at the bottom 10th would actually lose 63% of their purchasing power. In other words, poor people would not be able to buy stuff with the wages that they.

[Kathy O'Neill]

It's the reverse Walmart effect.

[Felix Salmon]

The other word for your purchasing power goes way down, which is a more common word is inflation. Effectively, what you would have is massive price inflation that, you know, your bottle of shampoo or whatever it is that you know, your air conditioner, which costs $500 now, would suddenly cost $1,500.

[Jordan Weissman]

So I want to go back to this idea of, like, what Trump is actually going to do.

[Kathy O'Neill]

Yeah.

[Jordan Weissman]

Because from all I heard, and it's not a lot of information yet, but everybody who he's surrounded himself with is very much into lowering corporate tax rates and lowering regulation in general. And it doesn't look at all like he's going to raise tariffs and cut off international trade. It looks like he's going to, in fact, incentivize people to move to Mexico.

[Felix Salmon]

Faster, which is the perfect segue into our next segment. But Jordan. Yeah, these international tariffs and whatnot. There is this random job and I mean, okay, here's another quiz. Kathy.

[Jordan Weissman]

Oh, God.

[Felix Salmon]

Can you tell me who the commerce secretary is?

[Jordan Weissman]

The commerce Secretary?

[Felix Salmon]

Yeah.

[Jordan Weissman]

I do not know.

[Kathy O'Neill]

Interestingly, Penny Pritzker.

[Felix Salmon]

Penny Pritzker is another one of those random billionaires. It's not just Donald Trump who appoints billionaire campaign donors to his cabinet, but to be fair, Obama does, too.

[Jordan Weissman]

I learned what a Commerce, like what the Commerce Department was this week.

[Kathy O'Neill]

Okay. So, yeah, I wrote an article about this this week because I've. So Donald Trump announced he was picking Wilbur Ross, who is this private equity tycoon, to be his commerce secretary. And typically no one gives a shit about the Commerce Department, just like nobody does. You couldn't name who Penny Pritzker was. I don't blame you. That was, for all intents and purposes, useless knowledge that I've had sitting in my head for a while. But in this administration, I'm pretty sure that the Commerce Secretary, Wilbur Ross, is going to be one of the most important economic advisers during the campaign. He was basically one of Trump's top two economic surrogates. Him and Peter Navarro from University of California, Irvine. They are the guys responsible for his infrastructure plan for, quote, the score where they explained Trumponomics defending his tax plan. Ross has Trump's ear and he's defended a lot of Trump's stances on trade. But he's an interesting guy because he, in private equity, got this reputation as a dude who would invest in these dying heavy industries like steel. And even though he'd cut a lot of jobs in the process, he would also revive the companies and sell them and make them function again. Right. And he did it in, you know, he did it in textiles, denim plants, things like that. And in the process, he would sometimes offshore jobs, but while also keeping an American plant running. And so in the steel industry, he benefited from tariffs in textiles, he offshored jobs and benefited from globalization and trade. So this is a guy who actually does have a fairly nuanced understanding of how trade works at the same time is saying we are willing to use things like tariffs as a negotiating tool to try and increase U.S. exports to bring down other kinds of barriers. So on trade, he's not an obvious classic, straight up protectionist trade warrior. I think there's some nuance there. My bigger concern with Wilbur Ross is his economics thinking is just like, awful everything else.

[Felix Salmon]

And what you're worried about is not Wilbur Ross quay Commerce Secretary, it's Wilbur Ross qua. Economic advisor.

[Kathy O'Neill]

Exactly. Yeah.

[Jordan Weissman]

I'm sorry, can we just back up? What does a Commerce.

[Kathy O'Neill]

What does the Commerce do? So the Commerce Department does a lot. I mean, like the census is at the Commerce Department.

[Jordan Weissman]

So they collect data.

[Kathy O'Neill]

Well, they do a lot of different things. But for our intents and purposes, the important thing Commerce does is it has plays an active role in setting like defensive tariffs. Like if there's like, if China's dumping steel into the United States and a company, you know, Nucor or someone says this is unfair, we're bringing a case. Commerce plays a role in figuring out what the tariff should be. And so Wilbur Ross is going to have some latitude there to kind of define trade policy. When it comes to negotiating trade deals. There's actually someone else who basically controls that. That's called what's known as the guy known as the U.S. trade Rep. And even though the U.S. trade Rep is technically at the Commerce Department, confusingly, they are also a cabinet level position. So that person's also going to be really important in all of this. The reason Ross is so important is because he has some direct levers over trade, but also because he has Trump's ear, those are the two things you have to remember.

[Felix Salmon]

And also just because he's, you know, part of the billionaire ization of the cabinet, I mean, you know, no one knows exactly how much Mnuchin is worth, but it's a lot and might even be more than Trump at Least for the time being. You know, Trump is not, is a wealthy man, you know, probably not as wealthy as he says he is, but a wealthy man. Ross is genuinely, like, monstrously.

[Kathy O'Neill]

Yeah, he's got 2.5 billion according to.

[Jordan Weissman]

So what's, what's his goal?

[Kathy O'Neill]

His goal, what do you think is going to really.

[Felix Salmon]

Well, he's 79, right? So, like, I think die rich.

[Jordan Weissman]

I mean, he's going to do it.

[Felix Salmon]

Well, I mean, it seems that Mnuchin gave a very revealing interview to Max Abelson in August when Max was asking him, like, why are you doing this? This being the whole Trump campaign thing? And he's like. And he was basically making a long odds bet. And he came out and said it, okay, this might look really idiotic if and when Trump loses, but on the off chance that Trump wins and I get a position in the administration, then no one will ask me that. It'll be obvious because it's very easy to turn power into money, but it's very hard to turn money into power. I've said this over and over again. Rich people don't become powerful politicians very often. And you see time and time again they run for office and they lose. This is a way for a rich person like Steven Mnuchin, who could never in a million years win an election to get an incredibly powerful job in the government. And that's what, once you have everything that money can buy, all that's left is power that you want.

[Jordan Weissman]

I'm living forever.

[Kathy O'Neill]

We've talked about that. And with Wilbur Ross, you know, I think he probably sees this as an opportunity to remake, to make America great again, as far as he's concerned. I mean, this is a guy who, if you take the darkest view, right, he's sort of the worst case combination of like an industrial, like an old school industrialist politicrat and a modern Wall street plutocrat. Because he's very much of Wall Street. He literally, you know, Kevin Rus said that classic article about him how, you know, Wilbur Ross was for a while the head of a secret Wall street fraternity, right? He was the grand swipe, as they put it. So he's like, deep in that world, but then he also is this private equity guy who buys industrial companies and, you know, fires people and cuts pensions, but also gets them to make profits. And so, you know, he is very much of this low regulation, low tax, let the free market work, let the free market do its thing, and everything will come up roses. That that is deeply embedded in his worldview, I think.

[Jordan Weissman]

Here's Here's. I don't understand about this. I'm really like cognitive dissonance.

[Kathy O'Neill]

Yeah.

[Jordan Weissman]

Which is like, how can someone simultaneously be like free market and also say, like, we're going to raise tariffs?

[Kathy O'Neill]

Well, that's the thing.

[Felix Salmon]

He's not saying that he's going to raise tariffs.

[Jordan Weissman]

Okay. So literally no one except Trump has said so.

[Kathy O'Neill]

What Ross is saying is that we will threaten tariffs as a, as a bargaining position in order to get people like, or like the Chinese government to make concessions that we want. And this is something that's not crazy.

[Felix Salmon]

Every administration does.

[Kathy O'Neill]

Yes.

[Felix Salmon]

And in this respect, I mean, I think that Ross honestly is not dissimilar from Mnuchin in that he, to a first approximation, is kind of what you would expect from a Republican government. If you're scared of Trump because he's completely outside the bounds of what is normal in US Political discourse and US Politics. And that he has broken the Republican Party and is completely different. What he's done with these economics posts does not look like he's breaking anything. I feel like any Republican president could have appointed people much like these.

[Kathy O'Neill]

Yeah, I think that's very true. I think what I find a little bit worrying about Ross is that again, he is at this point the closest thing to a true economic adviser Trump has. And his economic think is just not that sophisticated.

[Jordan Weissman]

Say, what's the worst thing about his economic think?

[Kathy O'Neill]

I mean, I called a paper, he put together a dog's breakfast of factual errors. He's bad at it. I mean, it's like back of the envelope calculations. Him and nar, when they did the infrastructure thing, they tried to claim with a straight face that would totally be free based on like, you know, some math.

[Felix Salmon]

They did some arithmetic on supply side Republican rhetoric.

[Kathy O'Neill]

No, I mean, it's. But like, he is no one better than this. It's like you don't. There's no one who's a really sophisticated thinker about actual economics. And maybe there will be eventually. Maybe they'll hire, like bring someone on, on the Council of Economics. But it just like you've got some markets, you've got market guys. That's all you have right now. You have market guys and someone who understands private equity. And that's who's in this administration.

[Jordan Weissman]

So what we're looking at, like, taking a step back is a bunch of really hardcore Republicans who are gonna do cut taxes.

[Kathy O'Neill]

They're even Republicans. They really are plutocrats. That's the thing. Cause like, plutocrats.

[Jordan Weissman]

And then we have Donald Trump who like, once a month is gonna find some way to brag about saving 800 jobs in some ridiculous deal.

[Kathy O'Neill]

Yes.

[Felix Salmon]

And we're going to have an administration without economists or and an administration without any real government experience. So that's going to be fascinating, especially among economists who are convinced that they matter and can add value. We'll see whether they're actually right on that. So let's move on to the numbers round because I feel there's got to be some good numbers this week.

[Jordan Weissman]

I have a ridiculous number.

[Felix Salmon]

What's your ridiculous number?

[Jordan Weissman]

I'm sharing with all of you. You're welcome in advance. 720. And I hope you guys don't have that number too. But it's the number of dollars that you can pay for self tying sneakers.

[Felix Salmon]

Oh, from Back to the Future.

[Jordan Weissman]

Well, actually for from now, Nike is now selling the Back to the future concept of self tying shoelaces.

[Felix Salmon]

I'm so.

[Jordan Weissman]

And I saw the video and it looks amazing. Slash, not worth $720.

[Felix Salmon]

Well, I mean, if you're Steven Mnuchin, right?

[Jordan Weissman]

I mean like for Christmas presents. For Steven Mnuchin's Mnuchin's.

[Kathy O'Neill]

For Minutian's Munchkins. For Minutian's Munchkins.

[Jordan Weissman]

Minutian's Munchkins.

[Kathy O'Neill]

Oh, my God.

[Felix Salmon]

So yeah, okay, so there you go. That's your holiday present this week. This year, rather is a pair of $720 Nike sneakers. My number is a little bit of good news is 1,856,000 thousand, which is, and it doesn't sound like good news when I put it this way, but there are 1,856,000 people in this country who have been unemployed for 27 weeks or more. That's the number. That's the long term unemployment number. And it sounds like a lot of people. And there is a lot of people. But here's the thing. Back in April 2010, that number was 6.8 million. So the overwhelming majority of the long term unemployment problem that we had back in 2010 has now gone away.

[Jordan Weissman]

Is that like people who just like left the workforce?

[Kathy O'Neill]

Yeah, some of those people did just leave the workforce.

[Felix Salmon]

Many of those people left the workforce. But, you know, this is a apples to apples time series here. You know, obviously, you know, 27 weeks is a lot shorter than five years. So it's people who could have been made unemployed 28 weeks ago. It's, it's a good, it's a really good thing. If you look at the chart, it's come down much, much more than any of the short term unemployment indicators. And that's what you want if you're trying to really work on unemployment. The unemployment rate is now 4.6% and that means we have full employment in this country, which is a good place for America to be.

[Kathy O'Neill]

My number is 1.2 million, which is how many barrels of oil per day OPEC has promised to cut by January.

[Jordan Weissman]

That was going to be my number till I found the self tying shoes.

[Kathy O'Neill]

Your self tying shoes is better. But I do want to bring this up because a no one was sure that OPEC could still get its act together to do this and act like the cartel it's supposed to be. So good job opec golf clap. But then also.

[Jordan Weissman]

Our Earth thanks you.

[Kathy O'Neill]

Yeah, well no, I mean my theory about this is that it's going to come to not because, you know, oil producers in West Texas are just going to shout yeehaw. And start, you know, fracking to their heart's content, especially with the incoming administration. And so it's going to be interesting experiment to see if OPEC really has any market power or if they're just going to find themselves being balanced on the other end by frackers in the.

[Felix Salmon]

US they do have market power as you can see by the market price of oil in the wake of the announcement.

[Kathy O'Neill]

Yeah, but that's short term. I mean over in terms of like long term pricing. Like because short term fluctuations aren't really what anyone's worried about. They're worried about, you know, keeping prices a certain level for a matter of years, not months. So that's.

[Jordan Weissman]

We'll see.

[Felix Salmon]

Yeah, we'll see. Okay, so on which note, we will wrap up this edition of Slate Money. Thanks for listening to us. Do subscribe to the show, press that subscribe button in whatever app you are using to listen to us. Write to us. Our email address, as ever, isslate money slate.com Many thanks to Verlan Williams who produced the show this week, and to Steve Lichti and Andy Bowers, the executive producers. Find all of the Panoply [e-mail] Panoply and we will talk to you next week on Slate Money. Sa.