The Space Bees Edition

Summary

Slate Money: The Space Bees Edition

Date: March 24, 2018
Host: Felix Salmon
Guests: Tim Fernholz (Quartz writer and author of "Rocket Billionaires"), Anna Rothschild

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Episode Overview

This edition of Slate Money delves into three main themes:

1. The privatization of space and the role of "rocket billionaires."
2. The Facebook and Cambridge Analytica scandal, exploring how data misuse intersected with business models and regulation.
3. Robo-advisors and recent controversies, using Wealthfront as a case study.

Throughout, the team maintains a light, witty tone while offering sharp insights into the intersection of technology, finance, and regulation. The titular “space bees” serve as a memorable example of the unexpected legal and technical challenges that come with commercial activity in space.

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Key Discussion Points & Insights

1. The New Space Race: "Rocket Billionaires" (00:36–18:52)

A. Evolution from State to Private Space Exploration

• Space, once dominated by governments, is now a site for private enterprise.
• Tim Fernholz explains, “[Space] is definitely at a weird transition point where it’s cool because a lot of different outcomes could happen right now.” (03:10)

B. Apollo and Public Spending

• Apollo represented geopolitical, not economic, value:

  “It was arguably very geopolitically valuable and scientifically important. But ... loss, economically, because it wasn’t intended to be profitable.” – Tim (03:51)

• The shift began as technological advancements reduced costs and billionaires like Elon Musk and Jeff Bezos gained wealth and developed personal interests in space.

C. Private Companies' Business Models and Public Dependency

• SpaceX and Blue Origin stand out, but Musk’s success leans heavily on NASA support.
• “In the very early days, it was almost all NASA contracts ... But now ... they are dominating the commercial launch market and making a lot of money from private companies, too.” – Tim (06:18)
• The old marketplace lacked innovation due to incumbents’ guaranteed contracts. Musk disrupted this by pushing for lower costs and successfully forcing government competition.

D. The Potential and Pitfalls

• Primary profit is still in Earth orbit—communications and imagery (09:18).
• The next phase: Moon prospecting—water and fuel for further missions, and space tourism.
• Concerns include a lack of global legal framework, possible “colonial style land grab” as in Antarctica, and the “geosynchronous orbit” crowding and resource grab (11:13–12:19).

E. Notable Quote

• Fernholz’s book thesis:

  “There is a revolution in space technology ... led by private companies ... giving individuals and private companies the opportunities to do stuff in space that has never before been possible and maybe even is kind of frightening.” (08:51)

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2. The Tale of the Space Bees (13:39–18:52)

• "Space Bees" as a Legal and Technical Quandary:
  • Swarm Technologies, led by Sara Spangelo, launched clandestinely tiny satellites (smaller than a 10-cm cube) from India, defying the U.S. FCC, which had denied permission over tracking concerns.
  • “It’s more like the Uber of space because it works, but it may just not be legal.” – Tim (14:49)
  • Root legal issue: Small satellites may be undetectable by standard radar, raising collision risks (16:23).
  • The industry sees both rapid innovation and legal gray areas; "weird twist" is startups building radar to track tiny satellites (17:20).

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3. Facebook & Cambridge Analytica: Data, Ethics, and Fallout (18:52–32:00)

A. Scandal Mechanics

• Cambridge Analytica enticed ~275,000 users with quizzes, accessing their data and that of ~50M friends under outdated Facebook terms, then used this data for political ad targeting (20:20).
• Key issue: Users did not consent to friend-data harvesting. “That feels like a Facebook fuck up.” – Felix Salmon (22:15)

B. Business Model Critique

• The real outrage: Revelations that Facebook’s normal business model involves extensive, poorly regulated data sharing (22:59).
• Anna notes, “I think this is less about what Cambridge Analytica did or did not do ... and more about this year of people getting angrier ... at tech companies.” (23:16)

C. Market Effects and Regulation

• Facebook stock fell ~10% ($50BN). Investor fear is not just immediate fallout, but anticipated regulation and waning user growth (23:53–24:37).
• EU’s tighter data regulations loom large, possibly preventing Facebook from using already-collected data (27:20).

D. Questioning Effectiveness of Targeted Ads

• Panel debates whether targeted ads, and thus the entire model, actually work. “Does targeted advertising or even advertising work at all?” – Tim (28:15)
• Multiple references to Cathy O’Neil’s skepticism about ad impact.

E. International Perspective

• “In a lot of countries around the world, Facebook is the Internet ... if Facebook goes away or if its model changes entirely, what happens to those communities?” – Tim (31:18)

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4. Robo-Advisors & the Wealthfront Debacle (32:00–44:21)

A. Wealthfront’s Controversial Change

• Wealthfront, a leading robo-advisor, unilaterally shifted >$100k client accounts into its own costly, proprietary fund (35:19), raising red flags for both increased fees and potentially circumventing US fiduciary rules.
• Panel criticizes the lack of transparency and the opt-out (not opt-in) format, especially given the target demographic’s preference for hands-off investing (35:19–36:15).
• “You’re forcing people to make an active decision about how their money is managed, when your entire unique selling point ... has been you do not need to make active decisions.” – Felix (35:46)

B. Passive Investing vs. Complexity

• Discussion about whether robo-advisors add value versus simple Vanguard target-date fund investing.
• Anna: “I think sometimes people think [passive products] are all the same and ... all low risk. And that’s not necessarily the case.” (36:26)
• Passive investing still considered the gold standard for most individuals.

C. Notable Quotes

• “The gold standard is and always has been, just buy a Vanguard target date fund and end the story.” – Felix (44:07)

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5. Numbers Round (45:27–51:10)

(46:05) Tim’s Number: ~$60 billion
Represents the Trump administration’s target for recouping losses from alleged Chinese IP theft, kicking off a trade skirmish through tariffs.

(47:20) Felix’s Number: 2,202
The number of deaths from the Fukushima evacuation (not radiation), suggesting overreaction and unintended consequences of mass evacuations.

(49:59) Anna’s Number: $7.1 billion
Turkey’s current account deficit in January, tied to credit downgrades and local conspiracy theories about Moody’s motives.

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Memorable Moments & Quotes

• “Who knew that space bees were going to be a running theme on Slate Money? But space bees are a running theme on Slate Money.” – Felix Salmon (00:43)
• “The fundamental design [of Virgin Galactic] is flawed or very challenging to get off the ground. He’s been able to raise a lot of money ... from Middle Eastern sovereign wealth funds.” – Tim (07:57)
• “[Swarm Technologies] couldn’t get permission from the FCC ... and they launched them anyways. From India. Because it’s pretty cheap to launch tiny satellites in India.” – Tim (15:24)
• “I just want to get rid of all targeted advertising altogether. ... It’s deeply undemocratic, especially when it’s political advertising, but it’s damaging in a whole bunch of ways.” – Felix (27:44)
• “The efficacy of a lot of political advertising ... is often measured as just canceling out the other sides.” – Tim (30:06)
• On Wealthfront’s abrupt change: “This is basically a way for Wealthfront to increase the fees it’s getting from those taxable customers by 40% overnight on an opt-out basis.” – Felix (39:17)

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Notable Segment Timestamps

• Space privatization and Fernholz’s book: 01:52–08:51
• Legal/technical issues with space ‘bees’: 13:39–18:52
• Cambridge Analytica/Facebook breakdown: 18:52–32:00
• Robo-advisors/Wealthfront controversy: 32:00–44:21
• Numbers round (trade war, Fukushima, Turkey): 45:27–51:10

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Tone and Style

The conversation is lively, irreverent, and insightful. The hosts regularly interject humor—“Slate Money does math”—and pop culture references while dissecting complex issues. They probe not just the mechanics but the philosophy and unintended consequences of new tech models in both space exploration and financial advice.

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Summary: Value for the Listener

This episode is a whirlwind primer on the current state of private space ventures, the importance and pitfalls of oversight (from both regulators and algorithms), and why both matter for our economic and social lives. The “space bees” parable exemplifies the unforeseen risks in both space and tech. Meanwhile, the Facebook segment grounds the conversation in pressing questions about privacy, ethics, and regulation. The Wealthfront discussion is a cautionary tale on the difference between innovation and faithful service—timely for anyone with assets or data in the digital ether.

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For more:

• Rocket Billionaires, Tim Fernholz’s book (officially praised for its subtitle debate)
• The full “binary options” nerd-out in the Slate Plus bonus segment

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End of summary.

Transcript

[Tim Fernholz]

The following podcast contains explicit language.

[Felix Salmon]

Hello, and welcome to the Space Bees edition of Slate Money, your guide to the business and finance news of the week. If you are a Slate plus listener, you will remember from last week we had a discussion of space bees as they pertained to Anna. What was it?

[Anna Rothschild]

Adam Smith and capitalism.

[Felix Salmon]

Adam Smith and capitalism. So this week we have a special guest, Mr. Tim Fernholz. Hi, Tim.

[Tim Fernholz]

Hello.

[Felix Salmon]

Tim Fernholz is here to talk to us about space bees as they pertain to capitalism.

[Tim Fernholz]

Once again, Capitalism.

[Felix Salmon]

Once again. Somehow, space bees are a running theme. Who knew that space bees were gonna be a running theme on Slate Money? But space bees are a running theme on Slate Money. Welcome, Tim. You are not only a writer for Quartz, you are also a published author.

[Tim Fernholz]

Still feels weird to hear someone say that.

[Felix Salmon]

So we are going to talk about your book. We are also, of course, going to talk about this whole Facebook and Cambridge Analytica meshuggas, because much as we have talked about these things in the past, I feel like this week is the week to revisit, for obvious reasons. If you don't know what I'm talking about, you should probably, like, turn on the television or read the news or something, because you have clearly been living under a rock for the past week. We are also going to talk about Wealthfront, which is a robo advisor, which made some interesting changes last month. And I feel I need to get. I need to get a couple things off my chest. So that's going to come later. But first, let's talk the final frontier. Tim, tell me about your book.

[Tim Fernholz]

My book? It's called Rocket Elon Musk, Jeff Dzos, and the New Space Race.

[Felix Salmon]

So I feel like this is where.

[Tim Fernholz]

I'm glad I got the title in before Felix started.

[Felix Salmon]

No, no, this is where. This is where the little rule about nonfiction books that they all need subtitles is just. I'm not gonna.

[Tim Fernholz]

Do you think I could have put it out there with just Rocket Billionaires?

[Felix Salmon]

I think Rocket Billionaires is an awesome name for a book. And then, like, some long thing with the subtitle, just like it makes it sound like.

[Tim Fernholz]

I will inform my publishers.

[Felix Salmon]

Rocket Billionaires. Just call it Rocket Billionaires. And for the paperback, just call it Rocket Billionaires. We don't need long subtitles.

[Tim Fernholz]

Noted.

[Felix Salmon]

Okay. Rocket Billionaires, which is an awesome title because it combines two things we love, which is rockets and billionaires. I mean, that's like the awesome way of looking at it. The really nerdy Slate Money way of looking at it is it's all about public Private partnerships.

[Tim Fernholz]

Absolutely.

[Felix Salmon]

And so this is. You are going to tell me all about your book and we're gonna discuss crazy things about space bees. We are going to get there.

[Tim Fernholz]

We will.

[Felix Salmon]

But before we do that, you're gonna explain how space used to be a public sector thing and now it seems, with Elon Musk, to be a private sector thing. But really it's maybe not as private sector as it looks.

[Tim Fernholz]

Yeah, I think that's a fair analysis. I think it's definitely at a weird transition point where it's cool because a lot of different outcomes could happen right now. I guess the short story is that everybody remembers the moon program, Apollo 1970s.

[Felix Salmon]

Even people who weren't born yet remember.

[Tim Fernholz]

It'S like a weird cultural artifact and it's totally absurd. It's never going to happen again. But up until very recently, space was the province only of governments because you needed a huge amount of money to get there and you needed sort of a reason to go that wasn't making money. And you know, humans don't end up really doing a lot of things.

[Felix Salmon]

The Apollo program wasn't hugely profitable.

[Tim Fernholz]

No. It was arguably very geopolitically valuable and scientifically important. But it was a loss, I would say, overall, economically, because it wasn't intended to be profitable. No, of course not. And that's what we didn't wind up. Trading with the moon people unfortunately didn't.

[Anna Rothschild]

Work out so well.

[Tim Fernholz]

And ironically, just because of the way the missions were planned, we didn't even find out some of the most salient facts about the moon, like there's water there. Which is something that has the current space companies all hype.

[Anna Rothschild]

But we stepped on it.

[Tim Fernholz]

We stepped on it. We left the flag. There's very cool footage of moon buggies going around. It was really important, but it was mostly about geopolitics. And after Apollo, when the government was deciding what should we do next and a lot of people were like, let's go to Mars. Richard Nixon was like, let's not spend money on that right now. And that was when sort of there was an inflection point of the space program. And for a while it just went on sort of as a self justifying exercise. We had, you know, the space shuttle was created to do everything for everyone. For the military, for NASA, for private sector. But the Challenger disaster changed that suddenly became very restrictive. Then the next 15 years were about making the International Space Station. And then now we have that. But ultimately we didn't really get anywhere. But two things happened. One was technology improved. A lot. Things became smaller and cheaper and we had an Internet revolution where networks and communication became really valuable and also put lots of money into the hands of people who thought space was cool.

[Felix Salmon]

And specifically into the hands of Elon.

[Tim Fernholz]

Musk and Jeff Bezos, specifically because they are the two who have actually made this work and accomplished things. But the other side of this is that history is littered with billionaires who started space companies and failed.

[Anna Rothschild]

And it doesn't it seem like now a lot of these rocket billionaires are trying to make the argument that this time is a little bit different. And it's kind of like with the Internet, where the government laid the groundwork and then once it got to a certain place, then that was where private industry, private enterprise could come and really, like, make money off of it.

[Tim Fernholz]

That is absolutely the pitch.

[Felix Salmon]

But if we look at the revenue which has gone to, say, SpaceX, Elon Musk's company, or Jeff Bezos company, which is blue Origin, how much of that comes from the private sector and how much of that comes from governments in one way or another?

[Tim Fernholz]

It's two very different stories. SpaceX was designed to bootstrap itself and earn money because Elon Musk is not as rich as Jeff Bezos. I would say probably I don't have the numbers in front of me. I should have thought of this. It's about half and half. In the very early days, it was almost all NASA contracts. NASA paid SpaceX and really got them off the ground. But now, because NASA helped them develop their rocket, they are dominating the commercial launch market and making a lot of money from private companies, too, and sort of putting existing rocket companies out of business or in a lot of trouble.

[Anna Rothschild]

And isn't this also a potential good thing for the market in general for these smaller players to come in? Because I know in your book you kind of described this old marketplace where Boeing and Lockheed Martin just didn't have any incentive to innovate, didn't have any incentive to do much of anything because they got paid regardless.

[Tim Fernholz]

Absolutely. And that was sort of a gift to Elon Musk when he came in. It was hard, but it was not that hard to offer a cheaper competing product. But what was difficult was convincing the government to buy it. And he ultimately had to sue the Air Force to let him just bid on the contracts in the first place.

[Felix Salmon]

And before we move on to the heart of the book, I just need to do my little Brit thing here.

[Tim Fernholz]

And say, please get it going.

[Felix Salmon]

What happened to Richard Branson?

[Tim Fernholz]

He's doing great. His Company Virgin Galactic still exists. They are going to try and fly a person or two people probably in their spacecraft this year. But they've had a lot of trouble. They've been trying for 14 years to build a space plane that can take tourists up into space. Richard Branson predicts that it will be ready to go about every three months.

[Felix Salmon]

For the past 10 years.

[Tim Fernholz]

Yeah. And so there are engineers who say that it has some. The fundamental design is flawed or very challenging to get off the ground. He's been able to raise a lot of money, he says, from Middle Eastern sovereign wealth funds, which has kept the whole thing going. He's got a really incredible team of people there. We'll see what happens. But the problem is that Jeff Bezos has unlimited money and a much bigger team. And his rocket, the new shepherd, could eat their lunch.

[Anna Rothschild]

But if we have Richard Branson and Mohammed bin Salman teaming together, essentially, yes.

[Tim Fernholz]

I mean, Richard Branson is going to open a spaceport in Saudi Arabia. So he's in Neom.

[Felix Salmon]

And what's more.

[Tim Fernholz]

And that's the non Saudi, Mohammed, Mohammed.

[Felix Salmon]

Bin Salman, I can think, I'm sure, has a whole list of people he would love to send into space.

[Tim Fernholz]

Yes.

[Felix Salmon]

So, Tim, what for you is like the main message of this book, what's the heart of the book?

[Tim Fernholz]

Oh God, please read all 90,000 words of it. The heart of the book is that there is a revolution in space technology that's happening right now. It's led by private companies and it is going to give individuals and private companies the opportunities to do stuff in space that has never before been possible and maybe even is kind of frightening.

[Felix Salmon]

And when you say space, do you basically mean in Earth orbit or does that include things like going to Mars?

[Tim Fernholz]

So the only way we know how to make money in space right now really is in Earth orbit and with satellites either sending signals to Earth or taking pictures of Earth at its most productive. But all of these companies, and even like the stodgy companies like the Boeing, Lockheed Martin joint venture, are trying to come up with a way to go to the moon. That's the next thing for these private companies. And Donald Trump wants to do it too.

[Felix Salmon]

Done that already.

[Tim Fernholz]

We have done that already, but now we're doing it with capitalism. Won't it be better?

[Felix Salmon]

Yeah. What's the capitalistic to go to the moon?

[Tim Fernholz]

So the reason to go to the moon is basically this, that you can get water there. And because we don't have any here. Well, it turns out water is very valuable if you're in space, but very difficult to get there. You can make all the things you need to live, plus rocket fuel from water. So if NASA wants to go to Mars, which hypothetically it has said that we would do, you're probably going to want to make as much propellant in space as possible to go there. So the business model, according to a bunch of these very far reaching space engineers, works out. And what's more, Japan just announced they're putting a billion dollars into startups that are going into space. Blue Origin is doing it. NASA is now investing hundreds of millions of dollars in private companies going to space. The European Space Agency is behind it. There is money going into this idea that once you can make it cheap enough to go there, you can do things like make fiber optic wires in space. They're much more efficient if you make them in zero G and sell them back on Earth, you could take incredibly wealthy people there. I mean, ultimately a big part of Jeff Bezos's pitch is space tourism the.

[Felix Salmon]

Same as Virgin Galactic.

[Tim Fernholz]

Yes. But his rocket works would be the critical difference.

[Felix Salmon]

And also, I mean, we all remember.

[Tim Fernholz]

The point that I think is important is that as you're kind of hinting this is all highly speculative, this is extremely recent, but the video of the.

[Felix Salmon]

Falcon boosters coming back down and landing perfectly, that was awesome.

[Tim Fernholz]

And that's why you, you should take it kind of seriously. And maybe that's the message of my book, is that like this sounds very kooky, but they are building the tools you need to do this stuff.

[Anna Rothschild]

So what could be the potential downsides?

[Tim Fernholz]

So there are a bunch of them. One is there's not a great regime for legal activity in space. There's an international treaty and international law is full of gray areas and not that enforceable.

[Felix Salmon]

So this is like space is a bit like Antarctica, basically, except.

[Tim Fernholz]

Yeah, yeah, sure. Except there's probably people think you can make money in space, and I don't think they figured that out about Antarctica yet. But if it turns out the space is valuable, and it is valuable from like a strategic geopolitical point of view, you know, there could be a kind of colonial style land grab thing, except with space resources. One of the reasons the US is interested in going to the moon is that China is interested in going to the moon. So you might get some of those Cold War dynamics again, where we go there just for political reasons.

[Felix Salmon]

And the most valuable space resource is space in geosynchronous orbit. Right. That's already pretty kind of full up for now.

[Tim Fernholz]

So the real thing that will make people money in this, in the near term probably are huge constellations of low flying satellites. Richard Branson is doing this with a company called OneWeb. He's on their board. They want to fly 3,000 satellites in space to send Internet down.

[Felix Salmon]

Right now I'm old enough to remember Iridium, which did this at great cost and went bankrupt.

[Tim Fernholz]

They did, but they still exist. They're a going concern today. But yes, in the 90s, how is.

[Anna Rothschild]

This better than what we currently have? Why is this profitable?

[Tim Fernholz]

So we currently have satellite Internet, but it's really expensive and it's also very slow because it's these satellites in geosynchronous orbit that Felix mentioned. They hang over one place on Earth. Hypothetically, if you did it with lots and lots of low flying ones, it would be cheaper because the satellites are cheaper, the connection would be faster, and because you could sell it for a lower price, you'd have more demand. And also they will say the amount of demand for connectivity now versus the late 90s, wildly different. But cell phones killed all those companies in the 90s, and 5G is coming into play in the next few years.

[Anna Rothschild]

Is there any evidence that this would be better than 5G?

[Tim Fernholz]

I honestly don't know.

[Felix Salmon]

So, but we need. So but we do need to talk about the space bees.

[Tim Fernholz]

Yes. So this is actually where it gets. Because I. Because the one thing I should mention is, like right now, space is really important to us. Almost every single financial transaction is timed by gps. All militaries are.

[Felix Salmon]

GPS is a space network.

[Tim Fernholz]

Yes.

[Felix Salmon]

Remind us all it was a space network which was built by the US government and we all use every day.

[Tim Fernholz]

Yeah. Where would we be? Where would Uber be? I guess Uber used to be a fun example for this. Now it's a sad example. But think of something you like that involves GPS in your phone and thank space for that. But right now it's getting so cheap to go into space. You could launch something accidentally or without permission. And if your tiny satellite hit another satellite and they all blew up and it was like the movie Gravity, it could be very expensive and bad for people on Earth. Even right now.

[Felix Salmon]

Even with a ghost George Clooney.

[Tim Fernholz]

I mean, what would be bad about. I guess George Clooney's passing would be sad. But otherwise, what could be bad about his?

[Felix Salmon]

Okay, so tell us about the Space Bees.

[Tim Fernholz]

So the space Bees are sort of what happens when Silicon Valley comes into space in a certain extent.

[Felix Salmon]

The Space bees. Could we call them like the Theranos of space?

[Tim Fernholz]

No, because they might work. They actually like. No one has questioned the technology here. It's more like the Uber of space because it works, but it may just not be legal. This is a startup company where they want to launch extremely tiny satellites that will control Internet of things objects. So maybe like delivery drones for Amazon or self driving cars or I don't know, oil rigs in the middle of the ocean. They couldn't get permission from the fcc, which is in charge of letting people fly satellites into space, and they launched them anyways.

[Felix Salmon]

From India.

[Tim Fernholz]

From India, because it's pretty cheap to launch tiny satellites in India. This is a very global industry.

[Felix Salmon]

But does the FCC consider itself to have jurisdiction over Indian satellite launches?

[Tim Fernholz]

Well, this is what's very interesting about space law, which is, does it. What the FCC has jurisdiction over is transmissions from the ground in the US to satellites flying above it. So if they use the satellites, the FCC definitely has jurisdiction over that.

[Anna Rothschild]

So they could potentially send them up without getting in trouble. But if they're having contact back with the ground, then they get in trouble.

[Tim Fernholz]

Yes, I mean that's the clear cut.

[Felix Salmon]

The place in the ground is in the continental. Is in the United States. Yes, but if they just like ran over to Tijuana, then they'd be fine.

[Tim Fernholz]

Well, presumably the Mexican telecom regulator would have some concerns about that.

[Felix Salmon]

Huh? Okay.

[Tim Fernholz]

Yeah.

[Anna Rothschild]

And isn't also part of the concern here is that they are so tiny that they also can't easily be detected?

[Tim Fernholz]

That is why the FCC said no, these next generation satellites are so small that the radars we use to track satellites and make sure they don't bang into each other may not reliably be able to.

[Felix Salmon]

So how small are these satellites?

[Tim Fernholz]

These are. Picture a 10 centimeter cube and then picture a quarter of that cube and that's how small they are.

[Felix Salmon]

So like a two and a half.

[Tim Fernholz]

Centimeter cube, it's still 10 centimeters on the.

[Felix Salmon]

Oh, I see, it's ten by ten by two and a half.

[Tim Fernholz]

Yes.

[Felix Salmon]

Okay.

[Anna Rothschild]

Slate Money does math.

[Tim Fernholz]

Please don't make me do math. I'm like the least technically minded space reporter there is.

[Anna Rothschild]

This is where the Theranos of space makes sense though, because this could actually be dangerous.

[Felix Salmon]

And this is also like the little blood pinprick of space. This is like the Swarm.

[Anna Rothschild]

Yes, that's true. Yeah. And it's a female entrepreneur who's running it.

[Tim Fernholz]

Yes, it's Swarm Technologies. I don't even know if I've said the name yet. The woman is Sara Spangelo and she's very interesting. She's a PhD, she's a licensed pilot.

[Felix Salmon]

She is not returning a phone call.

[Tim Fernholz]

She is not returning my phone calls. I wish she would, but. So the other weird twist about this is even though the government thinks it can't see them, there's another space startup that's building radar stations to track small satellites. And they are like, we can see them fine, we can track them, it's okay. But it's not clear if that will matter ultimately.

[Anna Rothschild]

Interesting. So they could also be like, yeah, yes, we can see them. So now by our equipment.

[Tim Fernholz]

Yes. I mean, that is their ultimate pitch down the line.

[Felix Salmon]

Yeah. You know those two companies are going.

[Tim Fernholz]

To merge at some point, probably, if they survive.

[Anna Rothschild]

The teeny tiny space company.

[Felix Salmon]

Has there been much like M and A in the space business?

[Tim Fernholz]

Actually, yeah. So the leading company like space startups is called Planet.

[Anna Rothschild]

It's not a very exciting name.

[Tim Fernholz]

I got to tell you, the naming conventions in this, I guess they're as bad as any other industry. But yes, Planet takes this picture of the whole earth every single day, which is really cool. They operate the world's largest commercial satellite constell. They sell all that data and they have succeeded in part by buying a ton of other small satellite companies. There was this company called Skybox that Google bought for $500 million that later Google quietly sold the planet. There was a company called RapidEye that is in Germany that they bought. And there was another company they bought. They bought three companies, which was smart because what kills satellite companies is when there's too many of them and there's. They over supply the product. So consolidation makes sense right now.

[Felix Salmon]

Amazing.

[Tim Fernholz]

That's one way to react to that.

[Felix Salmon]

Come to Slate money for consolidation in the satellite industry. News. I feel like we don't cover that nearly enough. Tim, you're an expert on Cambridge Analyticate and Facebook. You just wrote a book about all of that.

[Tim Fernholz]

My other forthcoming book.

[Felix Salmon]

Okay, let's start with the news, because I have to admit, for all that there's been huge amounts of chatter and talk and delete Facebook hashtags on Twitter. Which one of you two is going to tell me what the news is here?

[Tim Fernholz]

To me, the most important news that came out in all of this was that Steve Bannon is the person who came up with the name Cambridge Analytica. And that is so perfect. It's like such a distillation of Steve Bannon.

[Anna Rothschild]

I agree with that.

[Felix Salmon]

So Cambridge Analytica is the company which kind of sort of stole 30 million profiles, which it had no right to 50 million.

[Anna Rothschild]

Yeah. So basically, this company that is like a voter profiling company, essentially, that was created by the Mercer family, and Steve Bannon used a academic and had him essentially pretend that he was just doing an academic study and have this quiz that was on Facebook that people could take download. But by taking this quiz, not only was their data able to be transferred, but all of their friends data was. And that's why, even though not a huge number of people took the quiz, a lot of people's data was transferred.

[Felix Salmon]

So I think there are two things which are getting conflated here and are important to separate. The first thing was what Cambridge Analytica did, which was that it basically it gave 275,000 people a personality quiz and said, we will actually pay you money. They paid them cash to take this quiz. They took the quiz, they handed over all of their personal Facebook data, and then using that set of, like, training data, basically they said, well, people who have this kind of constellation of Facebook likes and, you know, have this kind of personality, and people who have that kind of constellation of Facebook likes have that kind of personality. So they could work out, basically, they came up with this secret, like, decoder ring which would turn your Facebook likes into a personality profile. And then what they did was they took 50 million people who are like the friends of these 275,000 people looked at their Facebook likes and then created a personality profile for each of those 50 million people. And this was the brainchild of, I guess, Steve Bannon and various people like that. If you could, then you would then target ads at people according to their personality profile and they would be more susceptible that way.

[Anna Rothschild]

Yeah, and kind of taking advantage of people's psychological weaknesses.

[Felix Salmon]

And so that's the first thing that people are getting upset about, is that Steve Bannon was taking advantage of people's personality weaknesses without their advantage. And then the second thing, which is very separate thing, was that they had no right to access these 50 million profiles in the first place. And the fact that they, well, could.

[Tim Fernholz]

Do they not have any? Yeah, because I believe that was a service offered by Facebook.

[Anna Rothschild]

Facebook had changed their terms of service. So they could initially access only for academic purposes the original data set, but they could not access the friends. That was something you used to be able to do. And then Facebook changed that.

[Felix Salmon]

And then. And then, in any case, Cambridge Analytica couldn't access it because it had no right to use the academics data set that had been produced by this Russian researcher at Cambridge, Dr. Spector. Dr. Spector, as he's Known. So that feels like a Facebook fuck up. Because, like, Facebook should not make it easy to allow, you know, for data for that kind of level of granular and massively huge data to make it out into the wild like that.

[Anna Rothschild]

Right. They can't just say, well, we're changing our terms of service, but you can still do it. And then we'll just tell you to delete it and we'll assume you did.

[Tim Fernholz]

Well, you know why people are outraged about this, I think, is not really any of the Cambridge Analytica or Trump stuff. I think it's just people are realizing that this is Facebook's normal business model. They didn't even pay for these for this data. It was sort of given away as a loss leader.

[Anna Rothschild]

Yeah, I agree. I think this is less about, you know, what Cambridge Analytica did or did not do, what effect it potentially had on the elections, and more about this year of people getting angrier and angrier at tech companies.

[Felix Salmon]

So here's my question. We have seen a significant decline in the price of Facebook stock over the past week. It has gone down by 10%. Ish. $50 billion. Ish. Anna, why is that? Is that just because people don't want to hold a stock which people are angry about, or is it because they reckon that, like, this is actually going to affect Facebook's cash flows?

[Anna Rothschild]

Yeah, I think the fear is that this could lead to additional regulations which could then almost certainly affect Facebook's business model, which would certainly affect their future cash flows. And I think this is something that not just Facebook, but a lot of tech companies. There's concern right now that because we're seeing more of this public and government kind of backlash about how tech companies are operated. So I think with Facebook right now, it's not just this specific scandal, it's that what this scandal could lead to in a broader context. Also, I think it's important to note that Facebook's had some not fantastic numbers coming out even before that, where they've been like, losing younger users. So this really didn't come at a good time.

[Tim Fernholz]

I think that's one interesting aspect of this because it does seem like the world is primed for Facebook regulation. You know, I think if the Democrats win Congress next year, regardless of what they will do about Donald Trump, I think there will be a big push to investigate and change the way that, you know, we let these companies do things with our data.

[Felix Salmon]

But.

[Tim Fernholz]

But that regulation often comes too late. And I wonder, is Facebook already a diminishing property? Are the next generation of teens either savvier about social media to not use Facebook, or is there another thing?

[Anna Rothschild]

Well, the good thing for Facebook is that a lot of them are just going to Instagram.

[Felix Salmon]

I do think, but.

[Tim Fernholz]

That'S partially an active choice about how much data they want to reveal about themselves. A lot of it on their cell phone.

[Felix Salmon]

There's a huge difference between using Facebook and having a Facebook account. And I think this is what people. I think this is where Facebook is actually relatively safe is that even if people start using Facebook much less and even if teens barely use Facebook, they barely use it, they don't use it. Zero. And they have an account. And so long as you're logged into Facebook somewhere and you're surfing the web and you're like, there are little Facebook pixels, like following you around everywhere. The fact is that the data that Facebook has about you and the ability that advertisers have to reach you and to target ads at you, because it's not just ads on Facebook. We have to remember this. You could be reading Slate and you will get an ad targeted at you because you're logged in, you're reading Slate while logged into Facebook. And then Slate knows who you are, who your Facebook profile is. And then advertisers will buy you individually through like dynamic ad targeting and serve you an ad just because of your Facebook profile and that kind of thing. You don't even. You don't need to be on the app. I think a lot of people don't realize this. That kind of ad targeting is going to continue even for teens and people who don't use Facebook very much.

[Anna Rothschild]

Yes, but if your user engagement is lower, that is going to. Advertisers are going to know that, and that is going to affect rates. Now, I agree.

[Felix Salmon]

No, no, I mean, what I'm saying is that it doesn't matter how much you use Facebook, so long as you're logged into the system. Like, you can be visiting Slate, you can never be visiting Facebook at all. And advertising, well, I think there's a.

[Tim Fernholz]

Reason that investors care about like monthly average users as a major metric for these. They're using the data, but like I said, it's a loss leader. They're selling the eyeballs. They're selling the specific eyeballs.

[Felix Salmon]

Right.

[Tim Fernholz]

You need those.

[Anna Rothschild]

I think it's also important to note regulations that are coming in other countries because the EU right now, one of their kind of large data regulations that is coming through actually could stop Facebook from using data they've already collected because it gives people a lot more say, over how their data is used.

[Felix Salmon]

Right.

[Anna Rothschild]

So I think if that kind of thing starts happening not just in the EU, but in the US that then changes Facebook's business model.

[Felix Salmon]

And this is the thing which I want, which I want to see Facebook do, which is like pie in the sky and will never happen. But ultimately, I just want to get rid of all targeted advertising altogether. And I just hate. And I feel like it's deeply undemocratic, especially when it's political advertising, but it's damaging in a whole bunch of ways, even outside the political realm. And what happened was that we wound up with this tool, which no one really thought about, and it turned out to be incredibly dangerous, and we should basically just mothball the entire thing.

[Tim Fernholz]

Well, two things. One is kind of at the heart of the Cambridge Analytica scandal, too, and Facebook and Google's business model is, does targeted advertising or even advertising work at all?

[Felix Salmon]

This is where the ghost of Cathy o' Neill comes in and says, well, actually, there's no evidence to believe that it does.

[Anna Rothschild]

This was one thing I thought interesting about Cambridge Analytica, too, was that this video comes out that, you know, looks horrible because the, you know, the head of the company is making these wild claims about how they were using, like, Ukrainian prostitutes with politicians. I mean, things that, you know, probably don't want to be saying. But it also seemed like he's probably making claims that are larger than what they actually did, which doesn't mean it's still not bad what they did. But this, I wonder. This with a lot of our concerns about targeted political campaigns, about how useful they actually are.

[Felix Salmon]

I believe that targeted campaigns, and I believe we learned in Obama 2008 that, like, if you get people to buy into targeted campaigns, they can be effective. So, you know, if you know that there's someone in a swing state who you want to get out and vote, the best way you can get them to get out and vote is to find out who their friends are on Facebook and get their friends to ask them to get out and vote.

[Anna Rothschild]

No, it's true. And I'm not saying that this has no effect. I just think right now it seems to me like maybe it's being a little overstated. I think this also in line with, like, the Russia scandal, this idea that this was what tipped the election to Donald Trump.

[Felix Salmon]

I think that so narrow, just about anything could have, of course.

[Anna Rothschild]

But yeah, yeah, but just in general, I think we sometimes think that, and I think Kathy would probably say this, is that we think these algorithms are smarter and more powerful than they may actually be.

[Tim Fernholz]

So this is actually interesting because the real sort of interesting subplot. Well, a subplot.

[Anna Rothschild]

There are many subplots.

[Tim Fernholz]

Is this going to be the Al Capone tax fraud thing that gets Cambridge Analytica or the Trump campaign in trouble? Because ultimately, it does help answer a question of. Throughout the campaign, we were all wondering. Donald Trump was not spending a lot of money on advertising and digital stuff, except towards the end of the campaign, and especially he was not buying voter information. And it was always like, where is he getting his voter information? And so the efficacy of a lot of political advertising, even targeted stuff, is often measured when political scientists research it as just canceling out the other sides. So it is really interesting to think about how much that information played in canceling out what Hillary Clinton's insanely enabled tech team was trying to do at that moment. But what's interesting about it is, is it a violation of federal election law because of A, foreign nationals and B, data that was not appropriately obtained?

[Felix Salmon]

Yeah. And that little campaign finance subplot is going to be very fascinating.

[Tim Fernholz]

Well, I don't know. One other thing I just wanted to mention on the international front, because we often forget about it when talking about Facebook, is that in a lot of countries around the world, Facebook is the Internet.

[Felix Salmon]

I mean, the Philippines is a great.

[Tim Fernholz]

Example, and there are various nations in Africa, in Brazil, and it's like, if Facebook goes away or if its model changes entirely, what happens to those communities of people?

[Felix Salmon]

I should also plug right here the Slate plus segment for you Slate plus listeners. We have a very long and very detailed segment about binary options, which I can tell you is going to nerd out. Like, it's so awesome. You have to. You have to listen to it. It's with this guy called Mario Christadoulou from Australia who knows more about binary options than, like, anyone else. And the Philippines does have a walk on roll. So there you go. So stay tuned, stay tuned. If you're a Slate plus listener, let's talk about Wealthfront, because I feel like there's actually a segue here when it comes to people handing over, whether it's money, personal data, people, like, get excited about shiny new objects and apps and they go, oh, my God, this is awesome. And they hand over their personal data or they hand over their retirement funds or whatever. And then they wake up one morning and they're like, wait, what are you doing with this? And this is. This is what happened with Wealthfront last month, which is one of the two big Robo Advisors, which isn't part of an existing large brokerage. So, like, Vanguard has them, Charles Schwab has them. But the two big independent ones are Wealthfront and Bezeman. And what Wealthfront did was it basically quietly changed its entire investing mechanism on everyone with a taxable account over $100,000. And they were like, okay, from now on in, unless you opt out, we are going to put 20% of your money into our own expensive Wealthfront mutual fund. Something something, Risk parity, Something something, you know, total return swap, total return swaps. And then like, you know, finance. Twitter kind of exploded on this one and said, like, what on earth are you doing? This makes no sense. Everyone started phoning them up and saying, what are you doing? This makes no sense. They haven't returned anybody's phone calls.

[Tim Fernholz]

Oh, is a good sign. Actually, I hadn't realized that it was people over $100,000 invested in the company or in an account. Right? Is that what you said?

[Felix Salmon]

Yeah.

[Tim Fernholz]

How many people do you think that is at Wealthfront? It's gotta be small.

[Anna Rothschild]

Yeah.

[Tim Fernholz]

The Millennial's Robo advisor.

[Felix Salmon]

That's a very good question. And also, yes, that's another question they're not answering.

[Tim Fernholz]

But if you're a millennial with $100,000 invested, maybe that's optimal risk allocation.

[Felix Salmon]

Wealthant has historically been the place for the bigger accounts. Betterment has historically been the place for the smaller accounts. Betterment is based in New York and has, like, people living in Brooklyn. Betterment Wealthfront is based in Silicon Valley and has a whole bunch of people who cashed out of Google and, you know, wound up making money that way. And they've always been sort of more tech based. And so who knows? I think they do have quite a lot of people with accounts over $100,000. One of the interesting parts about this story is that their mutual fund, this risk parity thing which they've implemented, is only being offered in the taxable accounts, despite the fact that it involves a huge amount of taxable trading. It's basically a short term trading strategy which you would think intuitively would make more sense in a tax free, free account. But the Department of Labor has these fiduciary obligations on anyone running tax free accounts. And basically it looks like they're not allowed, like it's, it's kind of.

[Tim Fernholz]

You think it's an end run around the fiduciary rule?

[Felix Salmon]

Yeah, yeah.

[Anna Rothschild]

I mean, this. I very much agree with you that the idea of changing how you're investing other people's money and not letting them know and you know, and making it an opt out as opposed to an opt in is a very bad idea. Especially when you are targeting investors who by going to you are essentially saying, I don't really want to, like, I don't want to be too involved in this.

[Felix Salmon]

Right.

[Anna Rothschild]

You know, I.

[Felix Salmon]

You're forcing people to make an active decision about how their money is managed. When your entire unique selling point from day one has been you do not need to make active decisions about how your money is managed.

[Anna Rothschild]

Right. And I'm not opposed to well run risk parity funds, but the ones that are well run are run by very smart, knowledgeable people. I don't know who's working at Wealthfront and I not saying they're not smart and knowledgeable, but these are incredibly difficult to run.

[Felix Salmon]

And the one and they don't run automatically by algorithm, which is the way that Wealthfront wants. They're like, we've created an algorithm which can outperform Bridgewater by 300 basis points.

[Anna Rothschild]

Yeah. When you start to hear the whole like, yeah, yeah, like it's like hedge fund strategies for, you know, ETF prices. Not that anyone would really want most hedge fund strategies right now, but, but still you have to be concerned. And I think this is something with a lot of passive products. Like there is a huge range of passive products. And I think sometimes people think they're all the same and I also sometimes think people think they're all low risk. And that's not necessarily the case. It in fact is not the case.

[Felix Salmon]

And I mean, there is a case to be made that the risk parity fund might be lower risk than the pure equity investing that you would get if you just bought etf.

[Tim Fernholz]

Yeah, the case is the strategy, but.

[Felix Salmon]

It'S not an easy case to make. And a lot of people who just want to do passive investing, they don't want it because it's low risk. They want it because they just don't want to be paying enormous fees and financial technology that they don't particularly want or understand. And the minute you start getting into these total return swaps, which are expensive by the way, I mean, they could, you know, wealthfront is charging 50 basis points just to run the fund, but then over and above that is the cost of the swaps, which could easily be two and a half, 3%, no one really knows. You're like, do I understand why I'm doing this? Do I understand how this works? And wealth fund is like, here's a white paper which you won't understand. And so you're like, no, okay, just put me into the stock market, broadly at a cheap rate. This is the passive investing gospel. And over the long term, I'll probably outperform people who are doing clever active manager kind of things. That's what Wealthfront was selling for years until suddenly one morning it woke up and changed its mind.

[Anna Rothschild]

Yeah. And it seems that part of the reason it changed its mind is because not that many people have actually been investing with them.

[Felix Salmon]

The. Yeah, well, their growth rate has gone linear. Let's just say they're still, they're still growing.

[Anna Rothschild]

Never good in finance.

[Felix Salmon]

They're still growing. And it's fine in finance once you, once you have, you know, a couple of hundred billion dollars under management, if it's still growing.

[Anna Rothschild]

Well, well, actually, interestingly, I mean, it depends what you're talking about here. If you're talking about assets under management, sometimes actually having fewer can be better. But if you're actively managing or even doing like smart beta funds, sometimes actually having less AUM can be better. But if you're doing pure passive, it's by scale, Right?

[Felix Salmon]

Wealth funds and betterment. And the robos in general are passive investors, where you make money from scale. And the big question has always been, how long will it take these companies to get to the kind of scale they need to start making real money? And when there was a hope that they could grow exponentially. Any kind of exponential growth gets you to any kind of scale you want pretty quickly.

[Anna Rothschild]

When you work that into your model, all the numbers work out and then.

[Felix Salmon]

They stopped growing exponentially and they started growing linearly. And now everyone's like, oh, that's a problem. And so now they need more revenues, more quickly because they can't get them from exponential growth. And so they're saying, hey, this is, I mean, this is basically a way for Wealthfront to increase the fees it's getting from those taxable customers by 40% overnight on an opt out basis. And that seems, you know, because they used to just charge 25 basis points.

[Anna Rothschild]

I mean, the fees are still relatively low. Right.

[Felix Salmon]

So they used to charge 25 basis points flat fee. Now they're saying, we're going to continue to charge you a 25 basis points flat fee. We're also going to put 20% of your money into our proprietary fund which charges a 50 basis point fee. So basically that's another 10 basis points which comes to us.

[Tim Fernholz]

Well, I think you made a good point in your story about this, Felix, is that they are Caught between a rock and a hard place where the people who have decided they want a passive investing strategy are probably just going to buy ETFs themselves and not pay for an algorithm to do it. If that is the case, then these companies are never going to be able to recoup the expectations of their. Remember, these are venture backed companies, so the expectations for their returns have got to be huge. The fact that they're shifting into this dubious model, or at least shifting into a model that they're doing very dubiously, it doesn't look very good as it relates to how finance operates via V its customers.

[Anna Rothschild]

Yeah, I think I've always wondered why you would use some of these robo advisors when you could just through your 401k go into index funds or different ETFs and that's what you want to do.

[Felix Salmon]

And that's a really good question and there is an answer. And basically this is part of a bigger question which is, is passive investing for relatively sophisticated people like, say me? And I'm a great believer in passive investing and I know what I'm talking about most of the time. And if I wanted to, I could probably go into a brokerage account and put together a passive portfolio. And you're right, Tim, the people like that, most of them, that's exactly what they do do. They'll open up an account with Charles Schwab or some other cheap account online, they'll buy a bunch of S&P 500 index funds and then they'll go to bed and they'll wake up 30 years later and it'll be worth what it's worth. And they'll be like, okay, that was easy, ideally. And then, and then there's the less sophisticated people who are like, I don't know anything about finance, I don't know. I don't want to know anything about finance. I don't want to be in charge of this myself because it's not something which I feel expert enough to be able to do. I want to give it to experts who do know what they're doing, who are very clever and they work at places like Wellfont and Betterment. And I want, and everyone assures me that passive investment is very smart and simple and easy to understand. So I'll just give my money to them and they're going to do it for me. And those people, I think are a huge and important part of the market and they should be served. And that's the answer to your question.

[Anna Rothschild]

Couldn't they just go through Their bank.

[Tim Fernholz]

Well, by the way, just the reality of that impulse, that thought that you just described is why there should be a fiduciary rule for brokers.

[Anna Rothschild]

Agreed.

[Tim Fernholz]

Like that is 100% of why that rule exists. And this example with Wealthfront is like, that is why this rule should be in place.

[Felix Salmon]

And. Yeah. And yes, so long as that's the answer to your question, Anna, which is like, can they do that through the bank? Maybe, but only if their bank is a fiduciary. And right now the bank is not.

[Anna Rothschild]

They could still tell their bankers that. That's, I mean, they could. I mean, it depends, I guess, on how much money you have. But you could usually go through the kind of wealth management part of the bank and just say, this is what I want to do. They may try to sell you other things.

[Felix Salmon]

No, but that's the whole point. We, that's the whole point. If you know what you want to do, you're.

[Anna Rothschild]

No, I see what you're saying. Yeah.

[Felix Salmon]

If you know what you want to do, you're me, you've got your Charles Schwab account, then it's easy. The question is what happens to the people who don't know what they want to do and just want to just be able to.

[Anna Rothschild]

Although I will just say a lot of what these robo advisors do are essentially like, like age based funds. The idea that like this is a fund that I would think I would take out in a certain year and then it changes the allocation between that.

[Felix Salmon]

Is what a lot of those target date Ish. Yes, but it's, it's more related to risk profile than it is to age.

[Anna Rothschild]

Right. But still what they're doing is very similar to what most target dated funds. So if you just, you're, you know, set up your, you're setting up your 401k at your company and you just say, okay, I'm going to go with these target date funds. It's going to be very similar.

[Felix Salmon]

And this is what I, and I think this is a good place to end it, which is that the gold standard is and always has been. Just buy a Vanguard target date fund and end the story.

[Anna Rothschild]

Yeah. If you're a small time investor, do.

[Tim Fernholz]

It in your disclosure here.

[Felix Salmon]

Do it, do it.

[Anna Rothschild]

I mean, I will say Felix Salmon.

[Tim Fernholz]

Is not a registered investor.

[Felix Salmon]

So here's the thing. Like, if that's the goal, can you do better than the gold standard? You know, arguably, yes. You know, will people all do that? Arguably, certainly not. Like, you know, are there reasons not to do that? Absolutely. Are there really fun, like, cool, clever, behavioral things, reasons why, like, someone, like, betterment might be better than that? We can totally go into that. But, you know, a little bit like in philanthropy, the. The. The base level, which you judge everything against is just like, well, wouldn't it be easier to just give people money in investment, the base level, you. You know, it's always like, well, is this better than just putting all of your money into a Vanguard target date fund?

[Anna Rothschild]

Yeah. So even though we can, on another date, get into the larger conversation about some of my concerns with what's happening with so much passive activity, I agree with you. Of course, for the vast majority of investors, simply investing passively and waiting is going to be the best thing.

[Tim Fernholz]

I want to come back for that episode.

[Felix Salmon]

Yeah, come back for that. And let's move on to a numbers round. Tim, did you bring a number?

[Tim Fernholz]

My number is approximately 60 billion, which is 10% of the losses the administration wants to recoup from intellectual property theft in China.

[Felix Salmon]

Oh, good. I'm glad we get a Chinese trade war in here.

[Tim Fernholz]

Somehow I figured we had to. It's literally roiling the markets as we speak. Or at least it was yesterday. I haven't checked this morning. Yeah, the Trump administration started a trade war this week. Trade skirmish, maybe. Let's not get into hyperbole, but they've unilaterally imposed a lot of tariffs on Chinese imports.

[Felix Salmon]

Why did they do that?

[Tim Fernholz]

There are levels to this question. There's like an expanding brain meme.

[Anna Rothschild]

Right, yeah. Yes. I mean, I think. And most. A lot of, frankly, both Democrats and Republicans would agree in. There are a lot of legitimate concerns and issues with Chinese trade policy and Chinese economic policy. But most people would say that the way to deal with that is to work with our allies and to figure out ways to kind of combat the threat with others, not to do these unilateral tariffs, which are just a horrible idea.

[Tim Fernholz]

And you can see it in the markets, because especially, you know, half of the revenue for The S&P 500 is from foreign sources. Exports drive the US economy, and these companies are cratering because they're expecting, one, China to retaliate against their supply chains and two, maybe other countries as well.

[Anna Rothschild]

Also, China is the linchpin of the global economy. So I think this is something that, not surprisingly, is, like, not thought through in Donald Trump's policy. This idea that even if he achieved what he seems to want to achieve, that wouldn't be good.

[Felix Salmon]

But it's all okay, because John Bolton is gonna look after National.

[Anna Rothschild]

He and his mustache are gonna keep us safe.

[Tim Fernholz]

Oh God.

[Felix Salmon]

So on sticking to the international theme, I'm gonna move over to Japan. My number is 2202 2, which is the number of disaster related deaths which the Japanese government's reconstruction agency attributed to Fukushima in Japan. Not from the earthquake itself, but from the evacuation. They evacuated the area and because of the various stresses associated with the evacuation, there was interruption to medical care, there were suicides, there was a whole bunch of deaths which could be attributed to. And 2,202 is how many people died because they evacuated the area. The number of people who died from radiation poisoning or any kind of exposure to radiation from Fukushima is zero. And there's a very, very, very strong case to be made that basically the Japanese government killed 2,000 people by forcing the area to evacuate and they should have just done nothing. And those 2,000 people would be alive.

[Anna Rothschild]

Today, I guess, wouldn't. I mean, I don't, I mean it's interesting to say because the idea is maybe if more of those people were there then I don't. Yeah, but if you're saying that no one essentially has died from the radiation, then yeah, I mean that's a, or.

[Felix Salmon]

Even really got sick. Like there was a huge amount of fear and panic and fear and panic is dangerous thing, especially when it's associated with long term evacuations. It wasn't like move out of here for a week and then you can move back and return to your lives. It's like move out of here for months and wind up in a city which you don't know and wind up getting unemployed because you can't find a job.

[Tim Fernholz]

And you know, I guess I would just, I mean it's, it's quite a statistic. I just wonder one like how much of that has to do with the fact that it was also like a national disaster from the earthquake and tsunami going on at the same time.

[Anna Rothschild]

You know, if that could have led to additional deaths as people were leaving.

[Tim Fernholz]

Yeah.

[Felix Salmon]

The wider death toll was 15,895. Those are the people.

[Tim Fernholz]

Is the lesson that you're trying to suggest, like don't evacuate the area the next time there's a nuclear meltdown.

[Felix Salmon]

Yes.

[Anna Rothschild]

Cuz I think the fear strikes me.

[Tim Fernholz]

As it may be a facile conclusion.

[Felix Salmon]

Yeah.

[Anna Rothschild]

Because it just seems like that that may have worked that one time, but that other time then if it doesn't, you know, that I don't know, that's a tough bet.

[Felix Salmon]

I think evacuations are tough things, it's hard for them to be done right, especially after the fact. But Anna, do you have a number? I do.

[Anna Rothschild]

And it's also international. So mine is 7.1 billion. That is. Or that was Turkey's current account deficit in January. It occurred to me this may be the second time I've used Turkey's current account deficit as my number. But the reason I'm saying this is because that is part of the reason that Moody's downgraded Turkey's sovereign debt and some of their banks further into junk. But the reason I am bringing this up is because some government related newspapers and in Turkey started issuing these, these headlines that were just amazing. They were like Moody's love for Fertula Gulen. And they were trying to make the argument that Moody's this report was like written with Fethullah Gulen and that this downgrade was a Golenus conspiracy. And I've heard a lot of things, but Moody's being a golemous conspiracy is a new one.

[Felix Salmon]

I mean we, they did create the financial crisis so I wouldn't put it past them.

[Tim Fernholz]

You know, ever since it came out that Mike Flynn was working to like kidnap Gouled on behalf of the Turkish government, there's no story that I will not believe.

[Felix Salmon]

Is there any connection that we know of between Mike Flynn and Moody's? I mean he takes money from a whole bunch of.

[Anna Rothschild]

It's true, it's true. Not that I've heard.

[Tim Fernholz]

Yeah.

[Felix Salmon]

Okay, I think that's it for us this week. Tim Fernholz, many, many thanks for coming on Slate Money. It was awesome to have you here.

[Tim Fernholz]

It has been a privilege and a pleasure.

[Felix Salmon]

Viralyn Williams, thank you for producing this week, stepping in for the normal Dan Trader and doing a much better job if I do say so myself. Do all you folks listening also listen to Hang up and Listen, which is a weekly podcast coming out on Monday afternoons where Josh Levin and Stefan Patsis look at sports and society and the intersection and basically, yeah, if you know anything about sports or care anything about sports, that's the podcast you listen to. And do keep the emails coming slatemoneylate.com stay tuned for nerding out on binary options. If you're a Slate plus subscriber and otherwise, we will talk to you next week on Slate Money. Sam.