Emily Peck (2:34)

So the debate news hook is there was a Democratic debate this week. All 3,000 candidates were on the stage, and Aaron Burnett of CNN asked a question about what's gonna happen when the robots take over everyone's jobs. What's your plan?

Felix Salmon (2:49)

Right. And this is. And this is a standard trope that A bunch of people have bought into, and I wanna say, like, Eric Ringjolfsson and people and the. And it kind of makes a certain amount of intuitive sense that a bunch of stuff that used to be done by humans is now done by robots. And this has been true for the past 200 years. And if it's been true for the past 200 years, why wouldn't it be true now?

Anna Shymansky (3:11)

Right?

Emily Peck (3:12)

So she asked that. She cited a stat that was like 25% of jobs. So then she asked, what's the plan? And like, it kind of was going as expected. Bernie said the plan is a jobs guarantee. But then Andrew Yang, who's one of the 3,000 candidates running for the Democratic nomination, you know, his plan is giving everyone $1,000 a month because robots. And then he had this, like, surprising little fight with Elizabeth Warren, who said, actually, the reason manufacturing is jobs are going away has nothing to do with robots. It's all about trade. Bad trade deals and bad trade policy that allow the US to ship jobs overseas, essentially. And they got to a little back and forth and Andrew Yang started talking about, like, c, check out kiosks and how they're going to take over the world or something.

Anna Shymansky (4:00)

What frustrated me a little bit about this debate is that, well, many things frustrated me about that debate, but is that both Elizabeth Warren and Andrew Yang are essentially right and wrong. Right. Is that it wasn't as though one thing we have. There certainly is no settled consensus about why we've lost many, many, many manufacturing jobs. We've also had manufacturing declining since about 1946.

Felix Salmon (4:21)

There are two issues here, and it's important to, like, take the big view and separate them. Number one is manufacturing employment, and number two is just jobs in general. Most Americans do not work in manufacturing industry, and manufacturing industry has this kind of political resonance that no other employment, with the possible exception of working on a farm has. So people care way more about manufacturing jobs than they do about any other kind of job. And it is undeniable that American manufacturing has seen significant productivity gains due to automation, which is basically what we're talking about here. That, you know, if you're a factory making a million widgets, you used to need a thousand people to make those million widgets. Now you only need 100 people to make those million widgets. And so in that sense, all of the machines which are helping those hundred people make the widgets have taken the jobs of those 900 people. And that's a productivity gain, which is real. But Elizabeth Warren is also true that if that was the case, you wouldn't see a reduction in the number of factories. You would see like the factories getting bigger because they're more productive. And in fact what you're seeing is the number of factories going down. Because she is correct, a lot of that manufacturing has gone to China.

Emily Peck (5:43)

Right. And you see there's like a steady decline in manufacturing jobs. If you look at the chart, I think you said 1947 or something, the charts, my hand is gesturing down, down, down, kind of like a steady decline. And then around 2000 when China entered the WTO and also around NAFTA time, there's like a sharp drop.

Anna Shymansky (6:00)

They're actually. You're mixing up two different charts. Now on a podcast I'm going to talk about two different bread charts. So one chart is where they're talking about total number of people in manufacturing. And basically until 2000 that kind of like went over the place but was reasonably stable. Ish. In terms of. However, then in 2000 and then again in like 2008, 2009 you saw significant declines. Now a few things to jump out of you about that, that obviously other things were going on around 2000 and 2008, 2009. So it's complicated to kind of say what exactly was happening. Now the other chart is the one that's showing manufacturing as a percentage of all labor. And that has been the one that's just been a very steady decline.

Felix Salmon (6:37)

And that is also the reason why you need to zoom back a bit. And I think this is one of the other big things. If you listen to Andrew Yang or the robots are eating our jobs people. And we had this conversation a little bit when we had any Lowery talking about his big thing which is universal basic income. They're not actually mostly talking about manufacturing. The thing which they always talk about is truck drivers.

Anna Shymansky (7:02)

Really into truck drivers.

Felix Salmon (7:03)

Truck drivers are to this debate what splitting the check is to like payments apps, you know, like it's the one thing that always comes up. The idea behind truck drivers, to be clear, is that eventually there will be self driving trucks and once trucks drive themselves, then you won't need truck drivers anymore. There is no evidence that this is true.

Anna Shymansky (7:21)

Right, Exactly. And I think this is the key. When you're looking right now and if we're thinking about policy that should be implemented right now, we actually can't find enough truck drivers. Like we can't find enough employees for.

Felix Salmon (7:33)

Just like intuitively like number one, I don't think anyone sees a future in the next like decade where there's going to be a bunch of driverless trucks driving around the freeways. But even if there are, there's going to be a human being in that truck to do things like, you know, refuel and what happens when it breaks down and blah blah, blah, blah. And like the chances of ever being in a world where there won't be a human who is doing productive work in that truck while it is moving from A to B seems very slim to me.

Anna Shymansky (8:05)

Although I agree with you 100%. Although I do think this is a. There is one part of this though where Andrew Yang has a little bit of a point. And of course it's that reason people kind of fetishize manufacturing jobs is being because for a period of time in America they were very well paid for people who didn't have like necessarily a college education. And so now obviously what we've seen as jobs have changed. You don't necessarily have the same opportunities you had in the past. You could think with truckers right now you actually are paid pretty darn well to be a long haul truck driver. That might not be the case if that changes. And what we're really seeing, I, I.

Felix Salmon (8:38)

Don'T know, if you become like basically a self driving truck tech, then that is a higher skilled job than, than Trump.

Anna Shymansky (8:45)

I completely agree. But you need more skills and that's the issue is that we're kind of getting this, you know, bifurcated labor market where we have, we're going to need people and even right now we need people with a lot of skills. Then we need people are extremely kind of low skilled and a lot of that in the middle, which is kind of what we used to associate with the American middle class. We don't necessarily need now. And that is a concern and it almost certainly will be a concern moving forward. I just think that the Andrew Yangs of the world are overstating it a bit.

Emily Peck (9:10)

I think also I feel like I've made this argument before, but this, this nostalgia for the high paid manufacturing jobs often overlook the role the unions played in making those jobs high paying. I mean people went out on picket lines and went on strike and fought to have those higher wages. And so, and yeah, unions are important.

Felix Salmon (9:32)

And the other big thing which no one ever mentions about high paid manufacturing jobs is that almost everyone who had one of those jobs was a man. Right?

Anna Shymansky (9:40)

It was. And often also that very often white man.

Felix Salmon (9:42)

What's interesting about the productivity numbers, and this is ultimately what we're talking about here is productivity, is that they're Kind of meh, this great technological revolution of the robots coming and doing amazing things where anecdotally we can see it all over the place. And there's like no shortage of slate money advertisers who will tell you that their great robot products will save you time and make you more efficient, but it doesn't really show up in the macroeconomic data. And unless and until US productivity starts picking up, there's like this whole thesis is something which is sci fi. It's something which is plausible in the future but does not exist in the present. And in fact, productivity has been going, or productivity growth, I should say, has been going down. And it would be awesome if productivity growth went up. It would make the United States more competitive. And the point which I really wanted to make at the beginning is that it's actually incredibly hard to the point of being impossible to disentangle the robots versus the human beings in China and other countries who are doing reasonably skilled jobs just cheaper than Americans do it. And I was talking to a clothing manufacturer recently who was talking about how the most high end clothing factories in the world are in China. You can't, you know, if you want to do like most clothes, you can get them manufactured just about anywhere, including the United States, but if you want super sophisticated clothes, you need to get them manufactured in China. And you think to yourself, well, that's because the Chinese have these amazing robots which can do amazing things and they can afford those robots because they have such more scale than anyone else. It's not that, it's that the Chinese have incredibly skilled and experienced sewers like human beings who can sew items of clothing that no one else can sew.

Anna Shymansky (11:35)

Yeah.

Emily Peck (11:36)

And I think that's what Andrew Yang was trying to say wasn't reality. And what Elizabeth Warren was trying to say is reality, which is that people used to make things in the US and now a lot of those things get made in China or Mexico or other places. It's automation didn't destroy those jobs, you know.

Anna Shymansky (11:52)

No, it's. Both of them did. I know, I'm, I just, I think that there are just too many competing.

Felix Salmon (11:57)

I do think there is a real question or a real concern underlying Aaron Burnett's question. And the real concern is ultimately whatever the number, whatever the demand is for sweatshirts in the world, whether it's higher than it is now, whether it's where it is now, whether it's going down, there is going to be a finite number of sweatshirts made and those sweatshirts are going to get Made by a combination of us humans, foreign humans and robots. And like, where do us humans stand in that world? Are they well placed or better? Battle.

Emily Peck (12:31)

HE PLAYS I think also, I mean, the age old that the robots are taking our jobs, technology is taking our jobs. This is not like a new thing. I mean, we don't know what the future will bring and whether the robots will literally take over. Yeah, VOX had this good little video where people were complaining about, you know, when the turnstiles were put in at the subways. Oh, my God. What about the ticket takers when cement mixers were invented? Oh, my God. But we're not going to use our hands to mix the cement anymore. And it's like, you know, elevator people used to open and shut the elevator doors for you. There was like stress over that. You know, car replaces horse. The number of jobs kind of holds steady. Yes. The people who rode the horses and mixed the cement by hand lost their jobs because of technology or whatever. I don't know. But the number of jobs in the economy stays the same. People get different jobs. Sometimes people are displaced entirely, which is what I guess Andrew Yang is worried about. But it's not really. It's probably not going to be that big of a deal except for those people who are displaced. And the question, I guess, is for that small slice of people, like, what do you do, like, what do you do when the Huffy factory closes and the only jobs are at Walmart while you just make the jobs at Walmart pay more money?

Felix Salmon (13:48)

And I think this is the standard neoliberal answer, which is basically we, you know, we want to maximize the total number of jobs and then to look after the people who have lost, you know, who are the losers in, in the turmoil.

Emily Peck (14:02)

But as Binnamin pointed out in his book, we never look after.

Felix Salmon (14:07)

We've done a very bad job of looking after.

Emily Peck (14:09)

The losers get nothing.

Felix Salmon (14:10)

The losers have got nothing.

Emily Peck (14:12)

Yes.

Felix Salmon (14:13)

And in, in, in that sense, it doesn't like blaming trade for the fact that there are losers is kind of a bad idea because it's trade that has help to increase the total number of jobs.

Anna Shymansky (14:25)

Exactly. And there's also.

Emily Peck (14:27)

Elizabeth Warren doesn't blame trade, she blames trade policy. It's the people who make the trade deals who don't think or don't take into account what's going to happen to the losers.

Felix Salmon (14:38)

And understand the neoliberal response is that's kind of correct. They shouldn't. Like when they're, when you're designing the trade policy, you shouldn't worry too much about the losers. Except for once you've decided. Once you can see who the losers are, then you look after them. And that's where we've done a bad job. If you try to prevent the losers from being losers in the first place, then you also prevent the gains from trade.

Anna Shymansky (15:00)

Yes. And it also suggests that if we hadn't enacted these trade policies, then manufacturing would have just continued exactly as it was. And I think there is very, very little evidence to suggest that that is true.

Felix Salmon (15:12)

Okay, let's talk about taxes. And I think we've touched on this before, but because there's a. I think it's 80 million words. It's massive on ProPublica piece is always.

Anna Shymansky (15:25)

Like 80 million words.

Felix Salmon (15:26)

ProPublica does not specialize in smart brevity. It's smart, it's just not brief. But there is a very big article in ProPublica which really does attempt and largely succeed to become the definitive story of how TurboTax has completely buggered the experience of filing taxes for all of us in America.

Emily Peck (15:52)

Right. It's a 20. It's basically a 20 year history of how Intuit, which owns TurboTax, prevented the IRS from doing any kind of like free file system.

Anna Shymansky (16:02)

So I mostly agree with this article, but I feel like there are a few things that. So number one, currently there are multiple ways that you can file your federal taxes for free. Right? And that's one thing. They actually even state in the article that there was the kind of system that was designed with the government and companies like TurboTax and then TurboTax designed their own free, and then there were other places that designed free. So it seemed like there was this idea that people are just getting screwed. And if TurboTax hadn't been there, then the government would have just designed this fabulous program and maybe they would have. And that might be better.

Felix Salmon (16:36)

But, but that, but their point is that is exactly how every other country in the world works. If you look at literally every other, not just advanced economy, but even like, you know, developing economies, it's. You don't even need to file anything. It just happens automatically. There's the whole idea that you need to go through an annual process of like adding up all of the income that you made over the year and deducting deductions and doing a mathematics and coming to a number and saying how much you owe and comparing it to how much you've prepaid. And all of that doesn't happen in any efficient normal tax system. A tax system which works well should not require that.

Anna Shymansky (17:15)

I completely agree with you. I mean I. One of the few things I agree with Paul Ryan about is that I think our taxes should be infinitely simpler and I think they should be like we do in every other country. My issue is that this isn't because TurboTax doesn't want it to be that way. It's because so many different politicians want the tax code to be very complicated because it benefits them in one way or another. Like this isn't just turbo.

Felix Salmon (17:35)

No, I see.

Emily Peck (17:36)

I think it's very telling to me that Grover Norquist is one of the big turbo tax.

Felix Salmon (17:40)

Yeah, he loves it now, now this is.

Emily Peck (17:43)

But I think it's because Grover Norquist hates, you know, taxes. His whole thing is never pay taxes. So it's in the interest of people who don't want to raise taxes to make taxes seem extremely complicated. And turbotax is really salience issue.

Felix Salmon (17:57)

Grover Norquist has said this explicitly that he wants the tax paying process to be as painful as possible. Because if tax paying is painful, then people don't like taxes. And if people don't like taxes and they're going to, then what they want to do is cut taxes. Now cutting taxes does not make paying taxes less painful. But he is right psychologically that if you associate taxes with like a complete amount of pain every April, then that's going to make you more well disposed to. People who say taxes are bad and.

Emily Peck (18:31)

Intuit according to this ProPublica piece basically exploits that pain. Right. They have all these, these dark patterns.

Felix Salmon (18:38)

That they use to get you fear, uncertainty and doubt.

Emily Peck (18:40)

Yes, fud. They use fud, fear, uncertainty and doubt to get you to pay to file your tax. They have all these little tricks like they do like a little animation of a timer like we are finding the best deductions for you right now.

Felix Salmon (18:52)

Just anxiety because everyone thinks the taxes are complicated. But I just want to push back a little bit on what Anna was saying about how politicians, it's all the politicians fault because they want more complex taxes and the tax code is complicated. That bit I think is true of Grover Norquist, but basically false of politicians. It is definitely true that there are many politicians who want very specific, specific little stupid bits of the tax code and they're pushing for like incredibly complex fiscal policy that is true in every country in the world that does not affect income tax, that does not affect the individual experience of paying individual income tax is true. It can be incredibly simple and easy even when the broader tax code is incredibly complex.

Anna Shymansky (19:42)

Part of the reason that our tax code is so complex is because historically we've had many, many different groups that want to get deductions for deductions for that. And one of the things, as I've said, I didn't like the Republican tax cut, but I do think increasing the standard deduction so fewer people itemized and didn't have to deal with all of that, I think is a good thing. I think that if you look at the history of the tax code, it is very hard to make the argument that it is, it is not complicated because of certain interests. I'm not saying.

Felix Salmon (20:07)

But my point is that the complexity of the tax code and the difficulty of filing taxes and the pain associated with filing taxes are two different things. And it is absolutely possible, even with a complicated tax code, to make filing your taxes incredibly easy and painless to the point at which you don't even realize that you're doing it. And every other country has worked this out, even ones with complicated tax codes. The problem here is not the number of deductions or the complexity of the tax code. The problem here is I think ProPublica has this right, that not just TurboTax, but even the IRS has explicitly said that they think that for some reason the tax preparation industry is an important industry which should exist, and they are doing the things to protect it.

Emily Peck (20:57)

That's really what comes across in the piece. I mean, even both George Bush and Al Gore, George W. Bush wanted to make Free File easier and encourage the IRS to do something about it. And Intuit worked its ass off, lobbied really hard to make sure that did not happen. And it seemed to have buy in at the irs like they, like Felix was saying, are really committed to keeping the tax preparation industry alive. And there's a lot of, you know, revolving door action going back and forth from the IRS to Intuit. It just seems like a whole rotten system. And then on top of that, you have an IRS that's like permanently underfunded, has recently openly admitted to auditing poor people more than rich people because it's like cheaper and easier. It just seems like the whole system is kind of rotten. And Intuit was able to really leverage that to make a lot of money and have Gene Simmons come to the Intuit party.

Anna Shymansky (21:50)

So I agree that I think that we have a very problematic tax system. I think the way we file taxes is silly. I think that it would be wonderful if we went to a far more simpler system. I think all of that is true. My issue with this particular article is just that I think it is incredibly one sided and I think it acts as though you have this one company that has so much power and I think they're overstating that tax preparation isn't even like 50% of how intuit makes its money. Like, I'm not saying they didn't play a role. I just think the role is overstated. No, I looked at their financial statements.

Felix Salmon (22:22)

No, no, no. What I'm saying is that what they do is cross selling. The turbo tax might not directly account for the profits. But TurboTax is how Intuit gets you into the Intuit ecosystem.

Anna Shymansky (22:34)

No, you want to use QuickBooks. That's why. I know, I'm sorry, like this. I'm just saying I think they have. I think ProPublica is right about certain things. I just simply think they're overstating their case.

Emily Peck (22:44)

But some of the things they found out are just.

Anna Shymansky (22:46)

No, they're gross. Don't get me wrong.

Emily Peck (22:47)

I mean, suppressing free file from Google search, the dark patterns. I just want to say dark patterns over and over.

Felix Salmon (22:54)

There are lots of dark patterns. They are deeply evil. And then.

Emily Peck (22:59)

I don't think you can say that.

Anna Shymansky (23:00)

Yeah, and one other thing, like, just to be fair, like, don't get me wrong, I think that a lot of the stuff they do is gross. So I'm not in any way justifying that. However, I think suggesting that there's some, like, if a company thinks that the government is going to put it out of business, it's not shocking that the company is going to start lobbying against like that's, that's not a company being evil, that's a company trying to stay in business whether you think it should or not. Like, I just think that.

Felix Salmon (23:20)

Well, no.

Anna Shymansky (23:21)

Evil company.

Felix Salmon (23:22)

Well, no, I mean, no. But let's look at what Intuit did right back in 2000. You know, they saw a massive opportunity and they lobbied hard to be able to maximize their returns on that opportunity. Whether or not Intuit ever faced a theoretical existential threat, the fact remains that their profits have been skyrocketing. It's not a case that like, oh no, we need to prevent our profits going to zero. In fact, their profits have not been going down, their profits have been going up. And that's the bit which galls me about this story is that they claim to fear this existential risk, whereas in fact there's no downward trend anywhere. And the only trend seem to be up in a world of software as a service and efficient competition and a tax code which is visible to everyone equally the Profits of the tax preparation industry should not be going up. They should be getting competed down to zero. And that isn't happening.

Anna Shymansky (24:28)

Right. And part of the reason that isn't happening. This will be the last thing I say is part of the reason that I think the IRS does not want to put these companies out of business is because the IRS does not want to do all of this themselves. They, in fact, want someone else to do it. So that's, that's why they're saying we're not a business.

Felix Salmon (24:42)

Well, no, but again, that's a straw man. No one's talking about putting them out of business. We're just talking about.

Anna Shymansky (24:47)

That's literally what was stated. Like, the, the ProPublic in their piece had PowerPoint like, slides that said that the company was worried that they were going to be put. I mean, like.

Felix Salmon (24:59)

And that stops. No, I am 100% agreeing with you that that is what Intuit is talking about rhetorically. They're like, if we don't fight this, then we will go out of business. But no one outside Intuit thinks that they would go out of business if there were, like, free options. And the fact is, there is no evidence to see them going out of business or what. My point is that their business isn't even declining. It's not even threatening to decline. Far from going out of business, their business has been doing better and better and better. So I understand that, like, you know, them getting put out of business tomorrow would be bad for them in some, like, weird hypothetical world where that could happen. But that is. But my point is that we're not even close to that world, and we never were. And every time the government puts, you know, tries to do anything that might bring us a little bit closer to that world, like in 2005, when the free file system first came out, a bunch of Americans started using the free file system, like 5 million of them. And Intuit got very worried. But even in that year, its profit still went up. Even when all of these millions of people started filing for free, TurboTax still made more money. No one is going out of business here. So I just want to add one thing to the competition point. Like, why is there no competition? Why is tax preparation not something that the private sector is competing down to zero cost? Well, which, and my, my answer is that the real way to make tax preparation easier and cheaper for Americans, given the stranglehold that Intuit's lobbyists seem to have over the irs, is. Wait for it, Amazon Prime. If Amazon prime filed your taxes for free. That would be a game changer.

Anna Shymansky (26:47)

That's, that's fair. Like, I know. Completely fair. Can I just say one last thing? And I promise I'm done.

Emily Peck (26:53)

Is that promising to be done?

Anna Shymansky (26:54)

I know, I'm totally.

Emily Peck (26:55)

Is that people want this.

Anna Shymansky (26:58)

If you look at Intuit stock price, I don't really actually think it started doing much movement at all until like 2014, 2015.

Felix Salmon (27:06)

So I'm not talking about the stock price, I'm talking about the profits.

Anna Shymansky (27:08)

Right. But I think all I'm saying is that from the ProPublica piece and what they stated the IRS was saying and why the IRS was saying they wanted to keep this, they wanted to keep the system they had with Intuit was because they were concerned about the long term effect it would have on the company.

Felix Salmon (27:26)

Yeah, we agreed that.

Emily Peck (27:27)

So, yeah, they want jobs there.

Anna Shymansky (27:29)

Right. And they also don't want to do it themselves. So I all I'm saying, I'm not saying that anyone thought they were going to go out of business tomorrow. I'm just saying that there is a reason that the IRS went along with the system. And I think that it's not just about like there's an evil company. I think that this is complicated. Like that's just what I'm saying. I think that a lot of this is accurate. I just think it is overstating the case.

Emily Peck (27:52)

I think if Intuit didn't exist, some other Intuit would have created to come along and take advantage of this situation.

Felix Salmon (27:59)

Well, no, I don't. I think. Okay, I disagree deeply with Anna, that like the IRS has a natural institutional reason to want Intuits to exist because as I say, in every other country on planet Earth, the tax authorities don't have that incentive. And America is not that different. Like it works so easily everywhere else, so invisibly everywhere else that it's entirely natural. Like there's this weird theme in the article of politicians saying, I just don't think that the institution that collects the taxes should also be preparing the taxes. I'm saying of course they should be the same institution. Like it's the most obvious thing and, and that's uniquely and weirdly American. And if, and no one seems to be examining that, I'll agree with you on that.

Anna Shymansky (28:47)

And I think that America is a bizarre place for many reasons. And I think that it's a larger story than just TurboTax.

Felix Salmon (28:55)

Okay, now let's talk about a story we can all agree it's completely bizarre.

Anna Shymansky (28:59)

There will be no arguments on this one.

Emily Peck (29:01)

The Mystery of the Trump Chaos Trades was a story that appeared Wednesday night, Wednesday night on the Vanity Fair website, written by William Cohen. And it is. What'd you say? Bullshit? Felix.

Felix Salmon (29:14)

I believe I might have used the word bullshit.

Emily Peck (29:17)

Felix broke it down on the slate.

Felix Salmon (29:20)

And I, like, soft peddled the problems with that story.

Emily Peck (29:25)

Basically, it is a story that tries to insinuate that people are insider trading on not only things that Trump does, but just other stuff going on.

Anna Shymansky (29:36)

They apparently knew that Saudi oil fields were gonna be bombed.

Emily Peck (29:39)

Yeah. And so it has a few examples and it makes this insinuation. But even to the layperson like myself who doesn't know what, or didn't know what an E Mini is, which is the things that are allegedly being insider traded, you read the story and you're like, I. Okay, I don't know. It doesn't make sense. The story didn't make very sense.

Felix Salmon (29:59)

There's a bunch of stuff about this story which doesn't make sense. But there's a bunch of stuff about this story which, like, makes just enough sense for it to have completely exploded on like Wednesday night and into Thursday. And for like, it's not just a former banker. Bill Cohen is a former banker himself. And like other former bankers like Stephanie Rule at MSNBC are jumping on this. And there's an important point to be made here before we like, and we can go into as much detail as we like about the problems with the story, but there's an important point to be made. We just saw this week Donald Trump announce that the G7 is going to be held at Doral, Trump, Doral. Like, he's literally hosting an international summit at his personal hotel. And, and that is, that is a level of like, self dealing that has become, we're almost becoming accustomed to on the part of the President. The idea that the president wouldn't want to like, insider trade, his, you know, international actions is weird. Like, everyone believes the worst of Donald Trump for good reasons because, like, he lives up to those bad expectations every day. And so it just seems plausible as a hypothesis that Trump might be insider or Trump might be like, giving tips to people who can then insider trade his actions.

Emily Peck (31:30)

All right. I asked my friend Mark at Bloomberg about this and he was like, well, given the hall of Fame grifter team in the White House, it is more plausible that they would do this than say, like, someone in the Bush administration.

Felix Salmon (31:41)

Right. However, there is no evidence that is actually.

Anna Shymansky (31:44)

And also, like, there are position limits. You can't just trade an infinite number of contracts. I'M not an expert on trading E minis, but I know they're one of the most, if not the most like, widely traded future.

Emily Peck (31:56)

We should explain exactly what the story said, what E minis are.

Felix Salmon (32:00)

So E minis are the main tool that people use to trade expectations of where the stock market is going to be. So when the stock market goes up or down, these E minis go up or down. It's the futures market. There are position limits. You can't hold too many of those. Most of the trades that Bill Cohen was talking about were smaller than the position limits. One of them was larger, which was a little bit of a red flag. And it's like, how can a trade be as big as he says it is? He's like, this trade made $1.8 billion. How can a trade be that big given the existence of these position lim. And then it turns out that he wasn't actually looking at trades. What he was looking at was total volume. And he kind of assumed that like one person accounted for all of the volume in a certain slice of time. And he was looking at like total volume at the end of the quarter.

Anna Shymansky (32:50)

And saying, of course it's going to be higher.

Felix Salmon (32:53)

And he assumed it was all one trade. And he assumed that people would then unwind that trade on the other side of the event. Which there's no evidence for. There's no evidence for any, any of this.

Anna Shymansky (33:03)

Yeah. To me, it's just indicative of a problem I have where I think that it is completely correct that the Trump administration has just kind of, at one time after another, engaged in all of these apparently extremely corrupt actions. So I get why people think that, you know, oh, it's anything but. I think sometimes the media will jump on the things that just make absolutely no sense. And then I think that's a problem.

Felix Salmon (33:25)

Because I don't think the media jumped on.

Anna Shymansky (33:27)

I agree with you. I mean, that's one.

Felix Salmon (33:28)

One story in Vanity Fair, which.

Anna Shymansky (33:30)

But I think.

Felix Salmon (33:30)

I think Twitter jumped on it.

Anna Shymansky (33:32)

That's a group. Yeah, I'll agree with you on that. I just think that it is a little bit of this Trump insanity of kind of making a huge story out of everything.

Felix Salmon (33:40)

No, but you see, I think I'm going to push back a bit on that. I don't think we made a huge story of it. We collectively, in the media made it, made a huge story of it. I think it trickled out a little bit to sort of talk radio and cable tv, but it never really became a story because a bunch of people looked at and said this doesn't make any sense. Where's the evidence? Who are these people who are allegedly insider trading? And, and Cohen's like someone. And then like his. What was the quote in the headline? Did you not write that? And it is.

Emily Peck (34:07)

I didn't write the quote.

Felix Salmon (34:08)

There was a hanky panky.

Anna Shymansky (34:09)

Yeah, exactly. Something else too.

Felix Salmon (34:12)

And then it turns out if you look at where that quote comes from, it's some guy who believes in the theory that Al Qaeda was front running the 911 attacks, which was completely debunked. And so there's, there's this conspiracy theorizing going on. But the, the fact that the conspiracy is even plausible in the first place, it touched a nerve with a bunch of people in the politically minded universe that everyone's like, yeah, Trump's insider trading and wanted to believe that and could believe that and did believe that is indicative of the degree to which the entire civil society and government has become degraded. Because if it was true, no one would be surprised.

Emily Peck (34:55)

Right? I mean this is just how conspiracy theories work.

Felix Salmon (35:00)

Like conspiracy theories are normally improbable and this one seems downright, you know, likely.

Emily Peck (35:05)

Improprable also I think because the financial markets are so complex and no one knows what an E Mini is or understands a lot of this. It's like you think it is kind of sinister, right? And some of the examples coincides in the piece were like when Trump lied about getting a call from China. You know, I think there were two lies that allegedly, he was allegedly able to insider trade on. It was like some two lies about China or something.

Felix Salmon (35:29)

He is 100% not capable of like getting his lies straight to make sure that his insider trading.

Emily Peck (35:36)

That's the other thing, like his Doral grift is it's right out in the open and it's obvious and easy like, oh, we're going to make a lot of. They need a hotel to stay at. I could make a lot of money, let's do my hotel. It's like very out there. But like Trump is not a global markets mastermind. He doesn't know what he's doing. I mean his one thing that he used to do back in the day, he wouldn't he go and say like, oh I'm going to invest in Pan Am or something. This is like a classic Trump thing.

Felix Salmon (36:04)

This Griff. It was amazing. He would put up, he would, he would buy stock in a company, put out a press release, say that he saying that he was interested in buying the company, the stock of the Company would go up and then he'd sell the stock and he's like, this is such a great deal.

Emily Peck (36:18)

That was his grift.

Felix Salmon (36:18)

And he tried it like one too many times to the point at which everyone, the minute the press release came out, everyone was like, yeah, we see what game we were playing.

Emily Peck (36:27)

But like, that's the level of his sophistication and market scam. I don't think he's capable of doing any of this. Maybe Steve.

Anna Shymansky (36:35)

I think literally no one is capable.

Felix Salmon (36:39)

I mean, yeah, that's the thing. Like predicting short term future movements in the stock market is the number one most reliable way to lose all of your money. Like, you can't, like even if you knew, this is the crazy thing, right? Even if you knew exactly what Donald Trump was going to say over, you know, in the next 12 to 24 hours and who he was going to say it to and, and you had like perfect advanced knowledge of that. Being able to trade that by like going long and short e minis would be basically impossible. It's super, super hard. And, and the idea that people are making literally $2 billion bets on like, like what Trump is going to say in a Rose garden impromptu press conference, it's like no one has that kind of risk appetite. No.

Anna Shymansky (37:29)

And also these are often.

Emily Peck (37:30)

Trump doesn't know what he's going to say.

Felix Salmon (37:31)

Exactly. Trump doesn't know.

Anna Shymansky (37:32)

And it feels. What you also mentioned your piece, which I think was the first thing that jumped out at me is like these are often used for hedging. Like it's not usually like you're just long, you know, it's usually because specifically as you said, because there is a decent amount of volatility and you're using these to try to reduce some of your risk.

Felix Salmon (37:46)

So most people, most people who invest.

Emily Peck (37:47)

In 1.8 billion someone.

Felix Salmon (37:50)

Well, number one, exactly. By definition, these are two sided trades. And Cohen always implies that the insiders are always on the right side of the trade. If you look at people who've done inside trading and people who have trading records that the SEC has subpoenaed to prove that they were inside trading, even they lose most of, not most of the time. If you win on your trades like 60% of the time, then you can make lots of money. But even they lose 40% of the time. And Cohen doesn't seem to, obviously he can't find losing 40% of the rates. What he did was he just looked at every time the stock market moved. He went back to the previous day's futures activity and looked to see whether there was a big trade somewhere. And he said, look at that. It must have been an insider. No, he didn't.

Anna Shymansky (38:38)

Look at all the times when you had big trades where it didn't move.

Felix Salmon (38:43)

So the story doesn't really hold up to scrutiny. But the fact that, you know, Vanity Fair would publish the story is indicative of the degree to which people are willing to believe just about anything of.

Emily Peck (38:55)

This president and write just about anything. Right. I mean, it's just the bar is lower than it used to be, I think, for saying wild things. I guess that's what literally what you just said. But it's worth repeating.

Felix Salmon (39:09)

Let's have a numbers round. Anna, what's your number?

Anna Shymansky (39:12)

So My number is 902 million. That is the amount of capital that has been pulled from Ken Fisher's investment fund. Now, while this, not. This might not be a tremendously high percentage of his overall aum, I still think it says something that a number of pension funds pulled their money because he made some really gross sexist comments at a conference.

Felix Salmon (39:35)

And allegedly.

Anna Shymansky (39:37)

Allegedly.

Felix Salmon (39:37)

Which no one. What he said, and no one seems to be able to quote him. But he does have a long history of making, like, lewd analogies.

Emily Peck (39:45)

And it's something about what.

Anna Shymansky (39:47)

Yeah, it was something about, like, getting client money, like getting into a girl's pants or something like that. And also his response to the backlash was just like, well, I've said stuff like this for years.

Felix Salmon (39:57)

Which is true.

Anna Shymansky (39:58)

Which is probably true.

Emily Peck (39:59)

New World Ken Fisher.

Felix Salmon (40:00)

And like, Warren Buffett is the same. Like, there's a lot of, like, weird sexual analogies that these very true nerds like to make.

Anna Shymansky (40:09)

Yeah, the, like, open kimono. I hate the term open kimono. It's both racist and sexist.

Felix Salmon (40:16)

And there's been this culture of making these sexual analogies for decades, and they've been making these sexual analogies for decades. And then eventually some new generation of fund managers comes along and says, no, you shouldn't do that. And I'm offended. And they go, well, why are you? Like, what changed? It's like, well, things change. This could totally. I mean, I feel like it couldn't happen to Warren Buffett because he's Warren Buffett. But in terms of what he says, it's totally here.

Anna Shymansky (40:40)

Something. A few years ago that was.

Emily Peck (40:42)

He wrote about it a few years ago. He.

Anna Shymansky (40:44)

He had a joke about, like, not being a lady if you're saying yes or something.

Emily Peck (40:47)

Something like that.

Anna Shymansky (40:48)

Yeah, I remember it bothering me. And.

Felix Salmon (40:51)

But yeah. And I Think.

Emily Peck (40:52)

I think he's a little bit untouchable because he's so, like, warm and fuzzy and Coca Cola and.

Felix Salmon (40:57)

But the big pension funds who have removed money, which, by the way, the craziest thing of all, include Fidelity, where you, like, give Fidelity a bunch of your money to invest on your behalf. It turns out that after giving Fidelity a bunch of money to invest on your behalf, Fidelity just turns around and gives a chunk of that to Ken Fisher. You're like, well, why am I even giving it to Fidelity if they're just going to give it to Ken Fisher? But these companies. I think there's been a point that Fisher Investments has $112 billion under investment, and no one really believes that. It's because it's a great fund manager. And I have spoken to Ken Fisher multiple times, and he is the first to admit that he does not pump his returns. His marketing has never been, we gave you. We get you excess returns. We're incredibly smart investors. He has always just been about, like, sales and marketing, but mostly sales.

Emily Peck (41:56)

This is bad marketing, apparently.

Felix Salmon (41:58)

Well, no, this is bad. Well, I mean, it was good until it was bad. Like, it worked until it didn't. But, like, you know, a whole bunch of people who are competing to, you know, gain assets in the asset management space do it a certain way, which is like talking about their performance and how smart they are investing. And Ken Fisher does it a different way, which is just finding rich people and saying, give me your money and I'll make your life easier. And he does a very different kind of sales technique. And. And he's the first to admit that. But the way he's became a billionaire is because he's a good salesman, not because he's a good investor. And so in that sense, it's quite easy to change your mind when you're invested with him and go, why am I invested with him anyway?

Emily Peck (42:42)

Would you like to know my number?

Felix Salmon (42:43)

I would love to know your number.

Emily Peck (42:44)

My number is 3.3lbs. That is the weight of one roll of Charmin XL Forever roll, the weight of a Charmin XL Forever roll, which is a massively large roll of toilet paper that Procter and Gamble has cooked up. And there is a whole article about it in the Wall Street Journal that I really enjoyed. It's meant to last for a month and comes with its own stand because it wouldn't fit in a regular toilet paper stand. And it's P and G solution to apparently a very common problem, which is that people don't change the role in Their bathroom. So P and G solution is giant toilet paper roll that almost never needs to be changed. Only once a month apparently, but contains the equivalent of 36 rolls of toilet paper. And you can, you can buy it two rolls of it with the dispenser and it costs $29.97. And that is all.

Felix Salmon (43:32)

I mean, that's glorious.

Emily Peck (43:35)

I did tweet about it. I tweeted a picture from the story of this massive. It's like the size of the roll.

Felix Salmon (43:40)

Is basically like, I'm pretty sure it would not fit in my bathroom.

Emily Peck (43:44)

Probably not. And it's maybe not smart enough to go with your smart toilet.

Anna Shymansky (43:49)

Yes.

Felix Salmon (43:50)

I do not have a smart toilet. I deny all knowledge as much, even if it does have a warm seat. My number is $425 million. Which is my favorite story of the week is this story of Deutsche bank, which was trying to basically securitize Helvetica. Like there's this company called Monotype.

Anna Shymansky (44:17)

What the miss Tranche?

Felix Salmon (44:18)

Exactly. There's this company called Monotype, which is, you know, the 64 pound gorilla of the font world. It owns Helvetica, it owns Times New Roman, it owns like the biggest fonts in the world. And there's obviously some kind of crazy PE backed buyout situation. And Deutsche bank was like, we will organize a $425 million loan which will be secured against your fonts. And. And they went out into the market and tried to market it and no one wanted to touch it. And Deutsche bank had to wind up like taking the entire thing onto its own books because, like no one, no one wanted a little piece of Helvetica backed debt, which I find so sad.

Emily Peck (45:03)

Why is that? Fonts just aren't what they used to be.

Felix Salmon (45:06)

Well, maybe, I don't know, maybe. I mean, font piracy is a major problem. People just use fonts without having the font licensing, font privacy, fonts appearing in places where like, they don't have, they haven't paid the right price. When you use a font, when you're putting together a, you know, a design piece, there's a very good chance that you don't actually have all of the licenses that you need in order to use that font. But I do think that fonts in general are still pretty profitable. If you have a successful foundry, you can make money. But Monotype, you know, can't borrow $425 million without running into difficulty. Or maybe that's just Deutsche bank being a bad syndicator.

Anna Shymansky (45:48)

Seems more likely.

Felix Salmon (45:50)

So, you know, Monetite you should have just gone to JP Morgan, man. On which fontish note I think we will we will wrap up this episode of Slate Money. We will have a Slate plus about David Shaw's latest misadventures. And for everyone else, thank you for listening. Thank you to Jasmine Molly for producing. Do keep us informed about everything you have questions about on sleepmoney.com and we will talk to you next week on Slate Money.