Slate Money – The Pushing People Out Edition

Date: March 26, 2016
Hosts: Felix Salmon (Fusion), Cathy O’Neill (mathbabe.org), Jordan Weissmann (Slate’s Moneybox)
Theme: An exploration of the economic and social forces “pushing people out,” featuring deep dives on free trade, gentrification, and the imploding chaos at Credit Suisse.

Episode Overview

This episode of Slate Money tackles the ways economic policy and corporate decisions trigger sweeping social changes that, intentionally or not, "push people out." The hosts focus on the impact of free trade on American workers, gentrification’s double-edged effect in cities like New York, and the unfolding meltdown at banking giant Credit Suisse. Throughout, they question not just the economics but the lived realities for those displaced or caught at the bottom of these transitions.

Key Discussion Points and Insights

1. Free Trade — Winners, Losers, and Political Fallout

[03:00 – 13:45]

• Trump and Trade: The hosts highlight that Donald Trump’s campaign is heavily fueled by trade grievances, not just the oft-cited racism or sexism.
  • Cathy O’Neill: “Trade is really his number one issue.” [03:08]
  • Felix Salmon: “There’s a news hook and then there’s this incredible academic study…1400 jobs moving from Indianapolis to Mexico.” [03:31]
• Carrier Closure Example: United Technologies moving its profitable Carrier Air Conditioner factory from Indianapolis (where workers earn ~$20/hour) to Mexico (~$19/day) illustrates modern offshoring.
  • Companies are not losing money; “This is a profitable air conditioning company which is now going to become an even more profitable air conditioning company.” – Cathy O'Neill [04:32]
• Who Loses in Free Trade:
  • Losses are not abstract—towns may “never ever recover.” Adjustment periods for displaced workers are rarely sufficient.
  • “Especially once you reach kind of middle age, people don’t really move to where jobs are.” – Cathy O'Neill [07:44]
• Winners and Global Perspective:
  • Trade’s benefits are often diffuse (cheaper products, iPhones), while harms are concentrated (factory closures).
  • “No one talks about all of these great jobs which are being created in Monterrey... that’s really good for Mexico and Mexicans. But somehow…we can...consider them to be the enemy.” – Cathy O’Neill [10:55]
  • Felix points out the global perspective: “It makes me question whether I’m a citizen of the United States or...of the world.” [11:35]
• Data and Inequality:
  • There’s an entire segment of the US population (non-college-educated, often older) not bouncing back from these shifts. “[Those] are the losers of, from free trade.” – Cathy O’Neill [12:10]
• Automation Adds Complexity: Even absent NAFTA/WTO, globalization and automation would still have moved jobs away. “Jobs are like water. They kind of manage to flow around to where they’re cheapest.” – Cathy O’Neill [13:26]

2. Gentrification and the Complex Math of Housing Policy

[16:06 – 27:35]

• Parallel to Free Trade: Cathy observes, “I feel like gentrification and, like, the US–Mexico thing, it’s kind of the same conversation... Overall it’s good, but there are certainly losers who we have to figure out how to compensate.” [16:06–16:29]
• NYC Rezoning and De Blasio’s Plan: Jordan discusses New York’s controversial affordable housing initiative, passed over significant protests despite De Blasio’s progressive image.
  • “Developers worked with de Blasio, that’s the reason people protest.” – Felix Salmon [18:59]
• Affordability Sleight-of-Hand:
  • De Blasio’s plan calculates “affordable” housing as a percentage of city-wide median income ($86,000 for a family of four), but neighborhoods like East New York have median incomes of ~$35,000.
  • Felix: “They’re only going to be able to afford part of that luxury tower, and the rest of it is going to be actual gentrification.” [20:43]
  • “He’s actually gentrifying East New York.” – Felix Salmon [21:37]
• Supply & Demand is the Real Elephant: Cathy insists the fundamental issue is “supply and demand—we need more supply.” [23:14]
  • Jordan hedges: “You need more supply...but if you do just build and you don’t have some set asides to affordability, you’re probably not ever going to get to…where you just have so much housing that everyone can afford a place. It’s just not going to happen realistically...” [23:40]
  • Public housing as a possible solution is floated, but “never really gets much of a hearing anymore.” [24:13]
• Why Care About Keeping Poor People in Cities?:
  • Felix muses: “Why do we want anything but rich people in a city?”
  • Jordan: “It’s not just about cultural richness...it’s about making, giving everyone opportunity.” [27:10]

3. Credit Suisse: The Systemically Important Hot Mess

[29:00 – 38:43]

• Leadership Chaos & Hidden Risks: New CEO Tidjane Thiam admits to major mismanagement and surprise over the investment bank’s exposure to illiquid distressed securities.
  • “He’s like, they never told me that they had this massive position in Illiquid Distress Securities. Basically, he is screwed up this thing enormously.” – Cathy O’Neill [29:11]
  • “Back in October he was like ‘we have this awesome Distress desk...’ and then fast forward about six months and he’s saying...‘no one told me that we had this.’” – Cathy O’Neill [32:38]
• Livelihoods and Ongoing Risk:
  • Felix: “Credit Suisse...wants to stop being an investment bank and start being a wealth manager in Asia and the Pacific for all those rich Chinese people...” [30:25]
  • “It’s not at all obvious that anyone is really capable of managing an institution of this kind of complexity and size and geographic disbursement.” – Cathy O’Neill [35:41]
• Desperate Innovations:
  • Use of Palantir (big data/spying firm) to track rogue traders.
  • Selling operational risk insurance against their own incompetence: “They are literally buying insurance against their own incompetence…and then...sold back to Credit Suisse’s customers as a security.” – Cathy O’Neill [37:23, 37:47]
  • Felix, aghast: “Anybody who, like, defends finance as being a useful industry is going to have to listen to me talk about this.” [38:11]

4. Numbers Round – Memorable Statistics and Commentary

[40:30 – 46:13]

• Felix’s Number – 100:
  • “100 mysteriously missing concussions” – referencing the New York Times’ revelation that NFL-health studies omitted games where teams didn’t report injuries, intentionally understating concussions.
  • “They just conveniently forgot to mention that a whole bunch of these games were played by teams which simply didn’t report concussions...obviously there were no concussions...” – Cathy O’Neill [41:29]
• Jordan’s Number – $25.6 Billion:
  • Yale’s endowment, the subject of a proposed Connecticut tax.
  • “This is kind of an academic super PAC” – suggesting Yale would just create offshore shadow endowments to avoid the tax [44:01]
• Cathy’s Number – 1.5 Million:
  • Valiant Pharmaceuticals and the Sequoia Fund selling 1.5 million shares at rock bottom.
  • Sequoia’s evasive justification: “This was an effort to reduce investors’ taxes by booking capital losses.” – quoted by Cathy O’Neill [45:45]
  • “That’s the nicest way of saying we lost money I’ve ever heard.” – Felix Salmon [45:54]

Notable Quotes

• On Free Trade:
  • “The benefits you get from free trade are a little bit harder to notice...the downsides are extremely, extremely evident to the people who suffer from them...”
    — Jordan Weissmann [10:00]
  • “No one talks about all of these great jobs which are being created in Monterrey...because Mexico and Mexicans aren’t allowed to vote, we can kind of just consider them to be the enemy...”
    — Cathy O’Neill [10:55]
• On Gentrification:
  • “We need more supply. And the main thing that any zoning change does…the only way that you can really address that issue is by building more.”
    — Cathy O’Neill [23:14]
  • “It’s not just about cultural richness...it’s about making, giving everyone opportunity.”
    — Jordan Weissmann [27:34]
• On Credit Suisse:
  • “They are literally buying insurance against their own incompetence...and then...selling it to their own customers as a security.”
    — Cathy O’Neill [37:23, 37:47]
  • “Anybody who, like, defends finance as being a useful industry is going to have to listen to me talk about this.”
    — Felix Salmon [38:11]

Timestamps for Major Segments

• Free Trade and its Discontents: [03:00 – 13:45]
• Gentrification and NYC Housing Policy: [16:06 – 27:35]
• Credit Suisse’s Systemic Chaos: [29:00 – 38:43]
• Numbers Round: [40:30 – 46:13]

This episode offers a thought-provoking, at-times irreverent journey through harsh economic realities—always spotlighting the real people left behind and the institutions that rise or stumble amid inexorable change. It’s essential listening for anyone hoping to understand the ground-level impact of headline-grabbing economic forces.