Slate Money: The Spinning Wheels Edition

Date: May 20, 2017
Host: Felix Salmon, with Anna Szymanski and Jordan Weissmann

Episode Overview

This episode of Slate Money, titled "The Spinning Wheels Edition," serves up a characteristically wide-ranging and witty weekly roundtable on major business and finance headlines. The "round" motif is literal and figurative, covering the cyclicality of the auto industry, the future-shaping possibilities of artificial intelligence (AI), and the strikingly circular new Apple headquarters. What connects these stories is the notion of industries and economies turning, reinventing themselves, sometimes spinning their wheels—and sometimes moving forward.

1. The Sputtering US Auto Industry

(Starts ~02:00)

Key Discussion Points

• Importance of the Auto Industry
  • Cars are central to the U.S. economy, both in manufacturing and retail, often being the largest consumer purchase for households.
    • "They're our biggest manufacturing industry. They're our biggest retail industry. They are the big purchase for most households." – Anna (02:05)
• Recent Trends
  • Record car sales of 17.5 million per year in the previous two years, but as of April, sales are down about 4%.
• Worries & Business Cycles
  • A decline in car sales often signals economic trouble and can even precede recession because of the industry's large multiplier effect.
    • "When you see car sales decline, you actually can have knock-on effects in the real economy. And that's why it's something to be a little bit nervous about." – Anna (06:23)
  • The auto industry’s employment multiplier is estimated at 5–7 (each factory job creates 5–7 additional jobs elsewhere).
• Durability & Market Saturation
  • Hosts debate whether the trend toward more durable cars (resulting in less frequent purchases) is a negative inevitability or simply technological progress.
  • Uncertainty about whether this is a cyclical or deeper structural issue.
    • "If we have lower highs and we don't peak as high as we used to... is that a bad thing?" – Felix (04:31)
• Credit & Subprime Auto Lending
  • A boom in subprime auto loans has supported sales, but with interest rates rising and defaults increasing, that trend could be unwinding (07:00).
  • "Auto sales have been fueled in big part by really cheap debt for the last few years. Now you have defaults rising, plus the Fed slowly raising interest rates..." – Anna (06:49)
• Ford Layoffs
  • Ford’s announcement of 20,000 white-collar layoffs (about 10% of its workforce in the US and Asia) is seen as less about short-term sales, more about repositioning for the future (e.g., investing in self-driving tech and R&D) (08:08).
• Automation & Labor
  • Discussion on automation: Germany’s more robot-intensive auto industry has actually maintained high employment, suggesting robots and humans need not be in competition (09:51).

Notable Quotes & Moments

• Felix's skeptical optimism:
  "If people are driving just as much as they used to and they're just keeping their cars for a bit longer... I can't get upset. I can't get worried about this." (12:07)
• Anna summarizes anxiety:
  "If you look at the way the auto industry impacts other sections of the economy, what is that going to mean going forward?" (12:20)

2. The AI Arms Race: Google, Amazon & the Voice Revolution

(Starts ~13:08)

Key Discussion Points

• AI as the “New Mobile”:
  • Google, Amazon, and Apple have invested heavily in voice-activated AI platforms (Google Assistant, Alexa, Siri).
  • The panel discusses Google’s claim that this is a technological transformation on par with the shift from desktop to mobile.
    • "Google says this is a huge, like, epochal shift of a magnitude roughly consistent with the shift from desktop computing to phones." – Felix (13:02)
• Beyond Voice: The Infrastructure Angle
  • Google is building not just consumer-facing gadgets, but foundational AI infrastructure: software, specialized chips, and cloud-based platforms.
    • "What Google's really talking about is creating this software and the chips that the entire AI infrastructure then is going to be built on..." – Anna (14:30)
• From Consumer to Enterprise
  • Google’s topline business is ads, but its AI ambitions pivot toward enterprise, with customers using their robust cloud and AI tools to build new products.
  • Create a “walled garden”: by providing free, advanced tools, Google locks in users to their cloud platform.
    • "They're going to enable other people to use [their AI chips], but... you'll be locked into the Google cloud system." – Anna (18:11)
• Technical Deep Dive: AI Chips
  • Next-gen chips (second generation) are 33 times more powerful than previous GPUs, necessary for large-scale machine/deep learning (19:04).
  • Google’s approach: not sell the chips, but provide access via their cloud platform.
• Potential for Productivity Revolution
  • AI’s benefits—from fraud detection to medicine—may finally produce the productivity growth economists have been seeking (16:53).
• Monopoly Concerns
  • If all this foundational tech is controlled by Google (and to a lesser extent Amazon), is that scary from a market power perspective?
    • "If we are going to enter this sort of machine learning revolution and there's only one and a half companies which are really benefiting from it... that's kind of monopolistically scary, right?" – Felix (22:37)

Notable Quotes & Moments

• "I think in the same way with AI right now, we just have no idea what the real possibilities are." – Anna (21:46)
• "Their CEO has made it very clear this is the future of the company, this is the identity of the company moving forward." – Anna, on Google (20:48)

3. Billionaire Whimsy: Apple’s $5B Donut HQ

(Starts ~23:22)

Key Discussion Points

• Corporate Hubris or Inspired Vision?
  • Apple unveils its new $5B, donut-shaped headquarters in Cupertino ("Apple Park"). Is this innovation or ostentation?
    • "Is this just the most ridiculous folly and sign of corporate hubris that we've ever seen and does it portend the beginning of the end of Apple..." – Felix (23:56)
• Silicon Valley’s Architectural Shift
  • Until now, the Valley’s been "drab as f***" (Anna, 24:46). Apple’s HQ is visually bold—if retro in its concept—a radical shift from the usual nondescript tech campuses.
• Symbolism: Old vs. New
  • Apple’s new campus, with its unified, fortress-like design, feels outmoded compared to Google and Amazon’s evolving, adaptable urban hubs.
    • "It actually seems more retro than futuristic... It doesn't seem like what someone now would think the future looks like. The fact that it's this isolated kind of suburban campus seems very old fashioned to me." – Anna (25:23)
• Challenges of Monumental Design
  • The building’s lack of flexibility (e.g., absence of childcare) could become a liability given changing workforce needs (26:27).
  • Apple’s perfectionist approach to both products and their new HQ is explored; is this sustainable? Does it reinforce or undermine the company’s brand?
• Broader Meaning
  • Apple's HQ as a monument—a "statue to Steve Jobs"—may be more about legacy than the future of work (27:47).
  • Other big tech companies are finally investing in more ambitious architecture, reflecting their maturation as dominant economic and cultural forces (31:49).

Notable Quotes & Moments

• "The technical term is drab as fuck." – Anna, on Silicon Valley’s historic architecture (24:46)
• "Strikes me as like a statue to Steve Jobs more than a what it portends about the future of the company." – Anna (27:47)
• "In a world where things are changing... you’ve made the decision that you would never want childcare facilities for the next 50 years..." – Felix (26:27)
• "Finally we are having some architecture in Silicon Valley..." – Felix (31:22)

4. Numbers Round

(Starts ~32:01)

Each host shares a notable statistic from the week, with context and explanation.

• Anna: "$1.45—the cost of the 'One Belt One Road' toothbrush set" (32:08)
  • Symbolizes China's massive global infrastructure initiative and its branding prowess.
• Felix: "40—the number of bitcoins paid out to WannaCry ransomware hackers (~$68,000)" (33:53)
  • Highlights the disproportionately small financial gain for massive, disruptive hacking attacks.
• Jordan: "$110.5 million—the price for a Basquiat painting at auction" (35:23)
  • Discusses art as an investment, rarity of Basquiat works, and their migration into public collections.

Notable Quote

• "It's a giant multicolored skull with heavy lines. Mostly blue. But it's great." – Jordan, describing the Basquiat (35:58)

Memorable Moments & Quotes

• "I failed my driver's test because I talked too much." – Anna (01:35)
• "Silicon Valley is architecturally one of the most miserable places on planet." – Felix (24:31)
• "Google's seeing their future in the cloud... they're creating the foundation that everything else will be built on and then it'll all come back to Google." – Anna (18:33)
• "I think the concern is this is a large part of America's economy... are we seeing a future where, with just statically fewer cars sold, we're not going to see the same levels?" – Anna (12:20)

Timestamps for Important Segments

| Topic | Timestamp | |------------------------------------------|-------------| | Auto Industry Worries | 02:00–12:42 | | Rise of AI (Google, Amazon, Cloud) | 13:08–22:55 | | Apple’s Donut HQ & Silicon Valley Design | 23:22–31:49 | | Numbers Round | 32:01–38:53 |

Tone and Style

The conversation remains sharp, skeptical, and self-aware throughout. The hosts needle one another with good-natured sarcasm but always circle back to thoughtful analysis and broader economic implications. They weave personal anecdotes, pop culture references, and economic theory together fluidly, making for an accessible yet deep exploration of the week’s topics.

In Summary

• Auto industry slowdown could portend trouble—or just reflect deeper shifts.
• AI advances by Google & Amazon are not just about talking speakers but about who owns the infrastructure of future progress.
• Apple’s monumental HQ is both a work of art and a possible relic of an older way of seeing corporate success.
• China, cybercrime, and art all get bite-sized, data-driven attention in the numbers round.

For listeners and non-listeners alike, the episode offers accessible takes on the cyclical, revolutionary, and sometimes downright quirky ways business shapes—and is shaped by—technology, design, and global ambition.