Slate Money: The World-Changing Edition (December 5, 2015)

Episode Overview

In this edition of Slate Money, host Felix Salmon is joined by regulars Kathy O’Neill and Jordan Weissman and special guest Adam Davidson (co-founder of NPR’s Planet Money and co-host of "Surprisingly Awesome") for a lively, in-depth roundtable. The episode’s main theme is: “What does it take to create media that truly explains world-changing economic events – and do the people at the center of these events change the world for good or ill?” Major topics include the film adaptation of “The Big Short,” moral ambiguity around financial crisis “heroes,” Mark Zuckerberg’s $45 billion charitable initiative, and a listener-fueled reexamination of McDonald’s place in modern society.

Key Discussion Points & Insights

1. The Big Short: From Book to Film

Segment: [01:49–23:39]

• Felix introduces Adam Davidson as a guest, and they discuss his role in the making of "The Big Short," a movie adaptation of Michael Lewis’s book about the 2008 financial crisis.

• Adam describes the challenge of turning a dense, technical financial book into dramatic cinema, especially when the central action is “pouring through prospectuses of mortgage-backed securities.”

• Intent of the Book vs. Film:

  • The book follows a group of financial outsiders ("four groups of men") who bet against the housing market.
  • Adam: “I see the movie as different from the book in a few key areas. I think the book has more moral complexity, moral ambiguity…” [06:31]
  • The film attempts to show these key figures as “complex figures who are confused about their own personal benefit, what their responsibility is.” [11:59]

• Moral Ambiguity of the Crisis “Heroes”:

  • Felix and Jordan press Adam on whether the short sellers in "The Big Short" were really heroic or whether, in fact, they contributed to the disaster through synthetic financial products.
  • Adam: "If we had more shorts, if we had more of a conversation about the decrepitude of these financial products, that would have been good.” [09:51]
  • Felix counters: "The act of creating these synthetic CDOs … just added fuel to the fire and made the whole thing worse." [10:16]

• Behind the Scenes: Technical Accuracy in the Film

  • Adam details his consulting role with screenwriter Adam McKay, working to ensure financial jargon and props were period-accurate.
  • “Every scene where there’s like a prospectus or research from a bank, that’s actual research that would have been on that person’s desk in that month of that scene.” [17:44]
  • Notable moment: "I had to like, sit with Brad Pitt, … Ryan Gosling, Steve Carell, Christian Bale, and be like, here’s what your character is doing, here’s what he’s saying." [17:49]
  • Ryan Gosling and Brad Pitt were described as particularly engaged in mastering the material.

• Media Explaining the Crisis: What Works?

  • Felix and Adam discuss whether books, movies, podcasts, or blogs do the best job of making complex economic events comprehensible.
  • Adam: “The key lesson… is not so much a specific technical understanding of what a synthetic CDO is …but to communicate that these are human creations, created by people with recognizable human emotions…” [21:12]
  • Kathy draws a parallel to the Occupy movement: “[Occupy] made clear… you don’t actually have to understand all the details to know it doesn’t work right.” [23:13]

2. Mark Zuckerberg’s $45 Billion “Charitable” Pledge

Segment: [24:52–39:06]

• The hosts analyze the structure and implications of Mark Zuckerberg’s widely-publicized pledge to transfer 99% of his Facebook shares ($45 billion) to the Chan Zuckerberg Initiative.

• Adam lays out the facts: “He shifted the ownership of his Facebook stocks to a taxable limited liability company … which can, if it so chooses, give that money to charities, [but] it also can not give that money to charities.” [25:21]

• Is it a Tax Dodge?

  • Felix: “It clearly isn’t a tax dodge because there’s nothing tax exempt about this LLC.” [27:03]
  • Kathy (counterpoint): “He’s basically saying, instead of giving money to the government through taxes, I’m going to get to decide what to do with this money. And as rich billionaires do that… they have much more and more power.” [29:49]

• Judgment vs. Systemic Critique:

  • Jordan: “The question isn’t so much, is he going to avoid some taxes… It’s what is he going to do with the money?” [31:46]
  • The panel debates the merits (and failures) of Zuckerberg’s past efforts, notably his $100 million Newark school donation: “It was just blind. He didn’t—he literally had never been to Newark… A lot of the money just got spent on consultants rather than actually helping students.” [31:46]

• On Philanthropy’s New Science:

  • Adam puts it in broader context: “How do you effectively spend charitable money or philanthropic money … We started truly systematically studying how money impacts the people you want to help them maybe in like 2005, 2003… We need... a venture capital model where we’re willing to make huge mistakes, but not arbitrarily.” [33:43]

• Philanthropy vs. Government:

  • Felix: “The idea that just because you’re rich, you can actually have an effect on anything is not exactly supported by the empirical evidence.” [37:43]

3. The McDonald’s Debate, Redux

Segment: [40:37–50:02]

• The panel follows up on a lively listener response to last week’s debate: "Is McDonald’s a force for good in the world?"

• Jordan: “We got more emails on this than any subject we’ve ever gotten… pro-McDonald’s 38, anti-McDonald’s 18 and neutral was 10.” [41:21]

• Thankfulness: Individual vs. Cultural

  • Kathy: “They were individually thankful for what McDonald’s had to offer them… That doesn’t mean that we are thankful as a culture.” [43:35]

• McDonald’s and Modernity:

  • Adam submits a broader historical defense: “The very fact that we can have this conversation…is a byproduct of companies like McDonald’s.” [44:59]
  • Felix counters: “What McDonald’s did do was create millions of deaths from heart disease and obesity. They engineered their food to… maximize various sort of atavistic pleasure receptors…” [45:11]

• International Perspective:

  • Jordan reads from listener Igor Pak (Moscow): “[McDonald’s] was unbelievably clean compared to other places we had at the time… The food smelled like food…” [48:24]
  • Adam: “We’ve grown past McDonald’s because of McDonald’s… There’s no alternate universe in which there was no McDonald’s or McDonald-like company.” [49:24]

4. The Numbers Round

Segment: [51:32–56:13]

• Jordan’s Number: 31%

  • The required menu price increase for NYC’s Eleven Madison Park and other restaurants dropping tipping. [51:32]

• Kathy’s Number: 5,000

  • The number of guns found in a South Carolina hoarder’s house. “This has completely changed our definition of an assload of guns.” – Sheriff J. Brooks [52:21]

• Felix’s Number: $62.5 billion

  • Uber’s latest post-money valuation after another huge funding round; now worth more than GM. “Uber can get away with [raising money constantly]… which is absolutely fascinating to me.” [52:57]

• Adam’s Number: Less than 20

  • The years of service required in the US military for a pension; Ash Carter’s proposed reform for more portable, fair pensions. [54:09–56:13]

Notable Quotes (with Timestamps & Speaker Attribution)

• On the Difference Between Book and Movie:
  Adam Davidson: “I see the movie as different from the book in a few key areas. I think the book has more moral complexity, moral ambiguity... I think the movie shades that a bit more.” [06:31]

• On Short Sellers’ Role in the Crisis:
  Felix Salmon: “The act of creating these synthetic CDOs, far from bringing down prices, actually just added fuel to the fire and made the whole thing worse.” [10:16]

• On Making Financial Details Cinematic:
  Adam Davidson: “I will say I’m fully biased, but …this is an amazing dramatization of doing things like reading bond prospectuses, reading the loan level data...” [05:25]

• On Storytelling About Financial Catastrophe:
  Adam Davidson: “[We try] to communicate that these are human creations, created by people with recognizable human emotions, including obviously greed and self interest…” [21:12]

• On Philanthropy vs. Taxes:
  Felix Salmon: "I think that it is really silly to start criticizing gifts to charity on the grounds of there's a charitable tax deduction. That’s two different things." [29:32]

• On the Limits of Billionaire Philanthropy:
  Felix Salmon: "It’s a lot easier to turn power into money than it is to turn money into power. The idea that just because you’re rich, you can actually have an effect on anything is not exactly supported by the empirical evidence." [37:43]

• On McDonald’s Global Role:
  Adam Davidson: “We've grown past McDonald's because of McDonald's. So to me, there's no alternate universe in which there was no McDonald's or McDonald-like company.” [49:24]

Memorable Moments

• Adam describes teaching financial concepts to Brad Pitt, Ryan Gosling, Steve Carell, and Christian Bale. [17:49]
• The trio’s vigorous disagreement about whether short-sellers in “The Big Short” were heroes or villains. [10:16, 11:10]
• Kathy’s evocative one-liner: “People in this country are processed corn. This is a problem. And McDonald's is contributing to that problem.” [45:53]
• Reader Igor Pak’s nostalgia for the first McDonald’s in Moscow, and the discussion of global food chains as "engines of modernity." [48:24]
• Sheriff J. Brooks’ immortal quote on gun hoarding: “This has completely changed our definition of an assload of guns.” [52:21]

Section Timestamps

• The Big Short and Crisis Media: [01:49–23:39]
• Zuckerberg’s Charitable LLC: [24:52–39:06]
• McDonald’s, Thankfulness and Modernity: [40:37–50:02]
• Numbers Round: [51:32–56:13]

This episode of Slate Money offers a deep and entertaining exploration of how popular culture, billionaire philanthropy, and corporate legacies all intersect with our economic lives – and how truly explaining world-changing events is always a challenge, regardless of the medium.