Ban Facebook

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S1: Hello, welcome to the band Facebook edition of Slate Money, your guide to the business and finance news of the Week. I’m Felix Salmon of Axios. I’m here with Emily Peck of Huff Post. Hello.

S2: I’m here with Anna SHYMANSKY of Breakingviews. Hello. And we are going to talk about banning Facebook, which Emily, you think is a good idea, right?

S3: I maybe maybe just temporarily, but I. Yeah, you know what I do? I think it’s a good idea. Hatake There it is.

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S2: We are going to have a whole segment on why it’s a good idea to ban Facebook. We are going to have a whole segment on the Snowflake IPO, which was the big IPO of the week. It raised more money than any software IPO in history we are going to talk about. The Invidia attempt to buy arms, which might sound like a boring M&A deal, but in fact, it winds up being all about regulation and the politicization of capitalism and Chinese regulations.

S4: And we have a whole sort of thread running through this show about tick tock, which, of course, is the big story that everyone’s talking about this week. But we’re not going to have a whole segment on tech because we’re going to wait until Donald Trump comes out and makes his decision on that before we have the whole segment. But that’s a fascinating story. There’s lots of stuff to talk about this week.

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S5: And we have a slate plus about immigration and just how much of it we can have in this country and how else we might be able to increase the population. All that coming up on Slate money.

S4: Emily, you can tell me what Snowflake does, because you were recording on a microphone, which is called a snowball, therefore, anything snow related you are an expert on?

S3: That’s true. And Felix, I can tell you what Snowflake does because I read about it in your newsletter and which you said it was perfectly appropriate to mumble something about cloud data analytics. So I mumble, mumble, it does something like cloud stuff that competes with Amazon Web Services, which also does cloud stuff and also competes with Oracle that does data stuff. How’s that?

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S4: I love the fact that Snowflake, it competes with Amazon by doing cloud stuff, but it is all built on Amazon like they built an Amazon. They’re using Amazon to compete with Amazon, which is glorious.

S6: Well, know what they’re allowing people to do is not be locked into the Amazon ecosystem because they enable you to move data in between cloud servers and better analyze it.

S4: And yet somehow, according to the snowflake bulls in the stock market, because now Snowflake is a publicly listed company, one of the reasons why a snowflake is worth and I believe the latest thing if I call up on my phone here is 77 million dollars is because it’s incredibly sticky. And once you sign your snowflake contract, you never unsign it and you’re going to be a customer for life. And in fact, you’re going to they have this customer churn thing where they, like every customer, just increases the amount of money they spend on Snowflake every year. And so people are extrapolating wildly. They’re saying, well, if the number of customers grows as fast as it’s been growing and each customer grows their total spend as fast as they have been growing it, then something, something, something. And the company should be worth 30 times as much as its revenues in 10 years time or some crazy multiple like that.

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S3: But let’s just back up to yeah, we should probably say what happens and say that the reason we’re talking about this company that I now know what it does, because Anna said and I won’t repeat it, the reason we’re talking about this company is because they went public this week and it was a blockbuster. They did amazing. The snowflake was a snowball and a snow storm, whatever analogy you want to make about snow. This was a huge IPO and it does seem a little puzzling. And yet we’re going with it. We’re going to explain why it was so big.

S4: Yeah. Tech IPO, it’s the largest software IPO of all time. They raised three billion dollars and they could have like if they sold the same amount of shares at like twice the price, which they could easily have done because that’s where open that they could have raised six billion dollars. It’s amazing the amount of money we’re talking about here.

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S3: And the reason is because Warren Buffett is an investor and because these guys are from Oracle and Oracle is in the news right now. That’s the reasons I came up with.

S4: Apparently, Oracle is a little bit distracted with something called tick tock. This is going to be a theme in this week’s episode of Slate Money. We’re going to talk unperson in passing about tick tock, but we’re not going to devote an entire segment to tick tock because we want to be able to do that once we know what the hell is going on with tick tock. But Oracle is betting on tick tock. We know that. And so apparently that means it’s got its eye off the cloud. Data analytics, something mumble, mumble, bull, and therefore Snowflake can come in and steal a bunch of future market share from Oracle.

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S6: I think I think also it’s not like it’s a horrible name, but it’s a decent company, like its revenue has been growing fairly spectacularly. And there is a lot of desire to buy growth and yield right now.

S4: So it has no yield because it has no profit.

S6: No, but that’s not what you mean by yield in terms of return.

S4: I thought you meant earnings yield.

S6: No, no, no, no. So with the idea that you’re attempting to buy something that has a significant amount of growth, seems like there is a stable business there, even though, yes, they like everything right now, are not actually profitable. The idea is because that customer base is sticky, that that should give them more pricing power moving forward.

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S4: So the interesting thing, as Emily says, one of the super interesting things about this deal is that Warren Buffett bought into it. And I wrote in my newsletter that it was the first time he’s invested in an IPO since nineteen fifty six when he bought into Ford Motor Company, which IPO in nineteen fifty six. I was then informed by the Wall Street Journal’s Peter Ruediger that in fact there was another IPO, I think in the 80s of some Latin American finance company or something where Warren Buffett also participated. But in any case, Warren Buffett is on the record saying an IPO is the worst possible time to buy a stock because it’s when everyone is out hyping it. Warren Buffett loves to find the unloved companies. And the whole point of an IPO is you go public when everyone loves you the most. But he not only participated in the IPO, he also bought, like, half of. The shares of one of the former CEOs sold half of his stock to Warren Buffett in a private transaction that the IPO price. So that was super out of character for Buffett. But people think that maybe it wasn’t actually Buffett Buffett. It was his new the two Todds who are kind of like going more and more in charge of investments these days. And they’re showing that they are hip to this new fangled tech thing.

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S6: Yeah, I think you always want to be careful about saying Warren Buffett did when you’re talking about Berkshire Hathaway, because very often it’s not necessarily him. However, when you’re talking about an investment of this size, you are probably going to have some of Buffett’s input in that. So I think it is indicative of the fact that there is a real company here. There is a real business model here. And while I think you’re right and I think that Warren Buffett in the past was right, that buying into an IPO is not always the best time to buy. It’s understandable why they would do that. If you’re looking at Berkshire Hathaway’s performance and what has actually done well, that they’ve owned Apple, they’re clearly seeing that a lot of the investment that they had, especially they were very bank heavy financials. Have you been doing horribly? So they’re clearly shifting their strategy. They’re not necessarily shifting how they analyze a company, but they are shifting what type of companies they look at.

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S4: One of my favorite data points is that Apple now accounts for 40 percent of the value of all of Berkshire Hathaway stocks. They’re an incredibly diversified mutual fund at this point.

S7: Just more evidence to me that this whole Warren Buffett thing is overblown. I’ll say that every time we talk about him, I’m inclined to agree.

S4: And we have said that on the show. In the book, I will say it again. But I want to get into this question of valuations, because in February, Snowflake did a series G capital raising around the rates, a few hundred million dollars at a valuation of thirty seven dollars per share. That was in February, which wasn’t that long ago while it was a million years ago. Pre pandemic, but like it was in February, we are now in September. It’s not that many months. Then later in the summer, if they came out and said, well, we want to go public like twice our last valuation, which was kind of crazy, but they thought they could do it. So they were like seventy five dollars a share, up from thirty seven dollars a share. An amazing profit for people who bought in as recently as February. And then there was so much demand they raised that seventy five to like one hundred and then one hundred and ten. And then they eventually went public of one hundred and twenty and then when they started trading it was like two hundred and fifty and on the first day it traded at three hundred and nineteen and I don’t know where it is now, somewhere in the two hundreds. But as I say, like yes, it has revenues, it has revenues of like three hundred million dollars. This thing is worth you know what, seventy five billion or something. It’s just like it’s so beyond any kind of actual revenues that the company has that you have to start wondering, like for all the analysts. Right. And there is a business here, like is it remotely conceivable that someone could rationally assign a valuation of seventy five billion dollars to a business that barely exists?

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S6: Yeah, I mean, I agree that I think that the multiple of being used here is is slightly insane, but it just shows you that we’re at a moment where the markets are so frothy and there’s so much appetite for these IPOs right now. And so you have a lot of firms where you have because they want to get out, they’re all doing these IPOs. They see that people will just bid up these prices to crazy levels. So No. One, it’s not surprising why you’re having all these IPOs right now. And when you have this much liquidity in the system, we have all this money just flooding into these number of IPOs that are coming out. This is what happens. It’s often what happens when you’re potentially nearing a I don’t want to say at the top of the market, but a very frothy market.

S4: I want to say that this is also a failure on the part of Goldman Sachs and the book nets of this deal for all that they raised three billion dollars and that’s a lot of money. I think they failed to place enough of the stock with people who are actually willing to trade it. Like if you sell a bunch of stock in an IPO to Berkshire Hathaway, you know what Berkshire Hathaway is going to do is going to sit on that stock and do nothing with it for years. That’s what Warren Buffett has done his entire career. And in general with IPOs, that’s what companies like to do. They like to allocate stock to long term buy and hold investors. The problem with that is that it makes price discovery basically impossible, because if you give a bunch of stock to people who don’t want to sell it, then there’s no stock in the market to trade. And it’s very hard to work out what the market clearing prices and talking to people in the markets about Snowflake in particular. It seems that the number of shares which are actively being traded in the market is tiny, that there’s like a bunch of Wall Street bets, Robin Hood types who are desperate to get their hands on it. No one really wants to sell, and that’s artificially raising the price of the shares. And what’s going to be fascinating to me is to see what is the share price six months from now when the lock up expires. And everyone who all of the people who own shares, who are investors in the company and employees of the company are allowed to start selling those shares. What happens to the price then once there’s actually more supply of stock in the market? I think the Goldman Sachs, if they didn’t want to look like such fools and leaving so much money on the table should actually have allocated more stock to traders and less stock to buy and hold investors.

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S6: I think you’re right in terms of what we’re seeing partly is because there’s not a lot of people that are actually selling the stock that retail investors are more apt to sometimes buy into these bubbles. But I don’t necessarily know if I would say that that means Goldman didn’t do what they want to do. Goldman wants to create strong relationships with its institutional clients, that this was an incredible day for those who were able to buy into that stock at one hundred and twenty dollars.

S4: Well, maybe if it just goes down for the next six months, I mean, do you think it’s going to go down for the next six months? It was a good day. You’re right. It was a very good day for the people who bought in at one hundred and twenty dollars. And they can sell whenever they like. They’re not locked up. And that is one of my big problems with IPOs in general, is that Goldman Sachs gets paid by snowflake, whatever it is, probably the standard seven percent of the IPO price goes to Goldman Sachs and the other banks for organizing the deal. And that is how people think that banks make money from IPOs. But there’s this whole other area and this whole other way that banks get paid for IPOs, which is actually they get paid much more, which is they allocate hot IPOs like Snowflake to their favoured client. The favored clients make billions of dollars in profits in one day when the stock opens at twice the IPO price and then the favored clients wind up in one way or another, thanking Goldman Sachs for that allocation by feeding various stock trading mandates and other kind of mandates to Goldman Sachs. You know, soft dollar commissions, all manner of stuff. Goldman Sachs winds up being paid by the people who bought the IPO, as well as the people who sold, as well as the company. I wrote about this a while back in relation to a notorious IPO called EA Toys, back during the dot com bubble, which wound up in litigation. And Goldman Sachs was clearly in the wrong then. And probably these things aren’t as explicit today as they were back in the day, but it still happens.

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S3: And what’s the why is it why is it bad, Felix?

S4: It’s bad because it creates a conflict of interest for the bank running the IPO. The company wants to raise as much money as possible, which means they want the highest IPO price possible. The investors want the lowest IPO price possible because that creates the biggest one day for them. If Goldman Sachs is making more money from the investors than it is in the company, then it’s actually working against the interests of the company rather than for the interests of the company, even though officially its is the company.

S7: So in this case and the snowflake snowballs into such a bigger price that that’s an indicator that in this case specifically, Goldman really was working more for investors than for this company.

S6: Kind of looks that way right now. Well, look, you always want there to be a one day pop.

S4: Yeah. A one day pop of maybe 10 percent, but not like one hundred percent.

S6: Yeah, no, I agree with you. I mean, this is is fairly crazy, but I would probably say that there is no type of valuation work that anybody’s going to do. It’s going to get you to that price of two hundred and forty.

S4: That’s actually not true. Goldman Sachs itself had an IPO on Friday, I think it’s called unity, where they’re doing a Dutch auction or some kind of an auction mechanism to find out what the IPO price rather than just like pulling a number out of thin air and doing it the snowball snowflake. I don’t know if you can do it by auction, but that Dutch auction is with institutional investors.

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S6: So you’re going to get the exact same. You’re not getting retail investors in there, which are the ones that are pushing up these prices. So I actually think that Dutch auction is probably gonna end up with a very similar multiple that you’re using, as you would have gotten if you had just had Goldman working with these institutional investors. I actually doubt it’s going to be that different.

S4: I wish we were recording a little bit later on Friday because we could see where unity opened and whether the pop on unity is as big as the pop on Snowflake. I suspect it’s going to be a lot lower.

S6: Well, to be fair, the bad stuff is a little insane. But I’m just saying that I actually think when people are talking about that Dutch auction mechanism, when you’re only using institutional investors, I don’t know if you’re going to be really making that big of a difference.

S4: OK, let’s talk about Facebook, because it’s a day of the week that ends in Y. So there’s another Facebook scandal. But this week, Facebook’s scandal or Facebook’s scandals, I should probably say, seem to be even bigger than normal. People are realizing that the kind of interference that Russia had in the 2016 election and the way that Russia abused Facebook in the United States in 2016 is one thing which we’ve litigated a million times. We don’t need to go back to that. But governments, you know, for all that they like interfering around the world, really like to interfere domestically with their own electorate. And they have enormous power to be able to do so. And what we discovered this week was that governments around the world really have been doing that a lot and have been using Facebook to basically bamboozle their own electorates and that Facebook has been absolutely atrocious, reacting to that and has kind of ignored it because they’re not America. So it doesn’t matter.

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S3: Yes, that’s what we learned this week. But we already should have known that.

S7: So BuzzFeed published a story about a memo that a former Facebook employee wrote, basically saying she saw all this unrest in all these different countries. And when she alerted superiors, they didn’t seem that concerned. And she seemed to be worried that she had blood on her hands, essentially in many different countries around the world. And Facebook, she said, and this has been reported in so many stories. Facebook only really cares about these issues. If there’s a news story about it or if, you know, they’re brought to light in some way, they’ll go wherever the sun shines, but they’re not proactively fixing their network. And we already knew this because, I mean, in twenty eighteen, it was revealed that in Myanmar there was genocide because people were posting stuff on Facebook that was inciting violence against the Rohingya there. And we know that even still in the United States, postings on Facebook lead to killing. We saw that in Kenosha, right when Facebook failed to take down posts from a militia group. Then eventually, yada, yada, yada, led to three people dying in protests. And I’ve just been thinking a lot this week, like it’s been four years since the Russian propaganda stuff Felix mentioned. It’s 20, 20. We’re heading into an election. There’s very little evidence that Facebook has gotten that much better at this stuff. These stories come out every week now, it seems like. And I just feel like maybe it’s time and this is maybe crazy, but maybe it’s time to shut down Facebook until we can figure out what’s going on to kind of borrow the words of the president. It’s ruining democracies around the world.

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S4: Exactly. Donald Trump has been talking about shutting down Tock, which has no real no real damage to any democracy anywhere, whereas Facebook is doing a lot of damage to democracies everywhere. And I just want to pick up on what you are saying about the way the Facebook only seems to respond to press rather than to activity. The important thing here is that really they only respond to American press. Right? So when the American press started talking about Myanmar, Facebook did something in Myanmar. But if you are in Guatemala and you know the government is abusing Facebook and then maybe a Guatemalan journalist finds out about this and write something about it, Facebook doesn’t care because it doesn’t affect their business, because the US Congress doesn’t look at that or care about that. You know, if you read the big Sara Freyja piece in BusinessWeek this week, it seems obvious that Facebook really does let its policies on this kind of thing be driven by US Congress and US press coverage.

S6: So I think that there is a lot of valid. Criticism of Facebook, I agree with you that what happened in Myanmar was horrible, No. One, I don’t think this is an issue of Facebook not caring. I think it’s they do not have the capacity to be reading the news in every single country, every day.

S4: They shouldn’t be reading the news. They should be reading their own internal logs of activity in those countries to be able to catch what’s going on there. And the whole point about this internal memo was that they had like one person doing that in her spare time rather than the media team devoted to that.

S6: Well, I’m a little wary about giving too much credence to this memo because I thought this memo actually be super overwrought and had a lot of errors in it. Well, I haven’t read it. Have you read it? Well, I should say the parts that were quoted in the BuzzFeed article were super overwrought and self-important. And also the person who wrote it seemed to not actually know a lot about the situation she was describing. So I think that clearly, yes, there’s an issue where Facebook has become so enormous and there is just so much volume that it is going to be very hard for any company to accurately monitor all of that. And I’m not saying that means that we should say, OK, well, whatever. But I don’t think this is about saying all bad Facebook. Oh, those people, they’re just bad. It’s like, OK, well, what mechanisms can you try to figure out to make the process work better?

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S4: That Ottos, they’re worse than bad. They are. What you’re saying is actually supports what Emily is saying. On the one hand, Facebook is a gazillion trillion dollar company, which is global, and it really does have the resources to do much more about this than it currently is doing. I don’t think anyone is really denying that. Yes, it’s hard to do that. But Facebook does hard things every day, and it’s a question of how much you care and how much priority you put on this. The reason they don’t care is because it doesn’t create press in the United States and because it doesn’t create revenues and it doesn’t create users and it doesn’t create growth, which are the things they care about. So they prioritize these things which are deeply important for democracy around the world. And if you look at everything that Facebook has done about keeping up post from Donald Trump, which had direct attacks on democracy and not just Donald Trump, like leaders around the world, Facebook is responsible for an erosion of democratic norms. And that is bad. And I honestly don’t care whether that means that Facebook itself is bad or whether that means the effects of Facebook are bad. The ultimate end in both cases is the same, which is that this is unacceptable. And if Facebook won’t fix it, then I think Emily is onto something. We have to step in and fix it for them, basically.

S3: Yeah. And I think one thing was clear to me reading the the stories this week, first sort of what Ana was saying was like, Facebook isn’t devoting resources to keeping post in check around the world that that foment a political unrest because maybe they don’t care to devote the resources. And sorry, one thing was, was clear to me reading the the stories this week, first sort of what Ana was saying was like, Facebook isn’t devoting resources to keeping post in check around the world that that foment political unrest because maybe they don’t care to devote the resources. And when Facebook is aware of politicians and governments posting under fake names or using bots or whatever to foment unrest, it can be swayed by political pressure of whoever is in power in that country, whether it’s the United States and and leaving up Donald Trump’s posts that are, you know, lies and trying to sow unrest about voting or violence there. They’re prone because they want to please whoever’s in power. They’re kind of prone to not doing the right thing depending on who’s in charge. And I think it was Business Week also had an example in India where they were going to take down posts from an Indian politician who was saying really hateful things about Muslims in that country. And they didn’t take down those posts either because they wanted to please the people in power. So it’s this weird, dangerous combination of kind of neglect and not caring and then kind of like bowing to political pressure of whoever’s in charge. And right now in the United States, the person in charge happens to be an anti-democratic figure. So that means Facebook has become anti-democratic.

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S8: I don’t think Facebook is trying to please Donald Trump. Of course. Of course.

S4: They I mean, look at the way they look at, you know, Mark Zuckerberg having dinner with Donald Trump and telling him that he’s number one on Facebook. I mean, I think this is actually absolutely right. The BusinessWeek cover showing Mark Zuckerberg in a magazine that there’s absolutely no evidence that Facebook is.

S2: He has done anything against him, like Facebook is really bending over backwards to try and mollify the criticism it’s getting from Republicans, is not meeting with Democrats. He doesn’t care about them. They’re not they don’t have any power. And Zuckerberg himself, you know, remember Peter Thiel, who’s a huge Trump supporter, is on the board of Facebook like there’s no evidence. I know that everyone thinks and just kind of assumes that California Bay Area is all like very liberal. And certainly a lot of the employees of Facebook, a liberal. But at the top levels of Facebook, I think there’s a very strong libertarian slash. Republicans maybe just cynical. We will do whatever the party in power wants us to do, tendency.

S6: I think that they probably don’t want to be in the crosshairs of the government. Yes. I mean, I think that’s probably the case with almost any company. But I just think it’s overstated to say that they’re making all of these decisions based on whether or not it is or is not going to please the president.

S3: I don’t think they’re making all their decisions, but certainly some of their decisions. And I think I mean, there’s just no question that Facebook has become an anti-democratic force in the United States and and around the world.

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S1: And also, it doesn’t matter why they’re making these decisions.

S2: The fact is they have made these decisions. It’s clear that they have left the Trump post. You know, they have allowed these governments around the world to subvert their own democracies. Like that’s just how it is. And you can, you know, try and look into Mark Zuckerberg soul if you want, and try and work out whether he’s doing it because he’s a Republican and like Trump or whether he’s just doing it because he doesn’t care. But either way, the result is the same.

S3: And we haven’t even talked about like the Kuhnen conspiracy theorists who flourish and thrive on the platform. I mean, Facebook has become a place where conspiracy theorists thrive and Facebook hasn’t done enough to shut this stuff down. And it is poisoning democracy. And we’re six weeks away from an election. And I really am afraid for the future of the country right now, actually. And I just think it’s become a dangerous place.

S2: We should also mention as well that whatever the reason, whether it’s neglectful or deliberate, the top posts on Facebook are overwhelmingly right wing and have been for years. You know, like the Kevin Ruths at The New York Times has been doing this thing where almost every day he posts like these are the top 10 posts on Facebook today. And it’s Breitbart is daily wire of Ben Shapiro. It’s you know, it’s really hard, right? Kind of like make Fox News look like liberals kind of posts are the ones which have it, just like getting millions and millions of engagements every single day.

S8: I mean, look, I’m not a particular fan of the platform or Facebook. I don’t really use it because I do find it to be kind of a cesspool of old people complaining about things. But I guess you do get into some difficult territory. And while, yes, there are certain things that I think we can probably all agree are hate speech or should be taken down, I think you do get into complicated territory when you start to get into what is a allowable political opinion and a non allowable political opinion, because you could have some very, very hard left things if if those were polling very well. But we also say, well, yes, we agree with you, Anna.

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S2: And the point is, we all agree that these things are difficult. We all agree that it’s very hard for a tech company to start having the responsibility to make decisions that can affect the future of entire democracies. These things are hard. It’s not like there’s an easy answer to these questions, but Facebook is so big and in many ways it’s more it’s bigger and more powerful than almost any government in the world, with the possible exception of the US government and maybe China. It is so big and it’s so powerful that the well, that’s really difficult. You’ve got to feel sorry for these hard things that it’s doing that just doesn’t hold water anymore.

S6: No, I’m not saying you should just feel sorry. What I’m saying is, if you want to actually say, OK, well, what is the outcome that we want? Well, we want an outcome where we can potentially have a platform that people can use to do what they want with trying to eliminate some of the most extreme things. So then think, OK, well, what are the steps one would go to achieve that? Is this something that’s being done through government? Is this something that’s done internally? My point is that I think the discussion around it tends to become this very emotional. Facebook is evil. These companies are evil as opposed to like, OK, well, what could we actually do to try to achieve change?

S2: Well, I mean, Emily has a proposal, right, which has shut down Facebook.

S3: Yeah. Until we can clean it up, I think it needs to be shut down, if not forever, then temporarily, because they’ve been. Missing for four years to fix the stuff that we all know is wrong, and I’m not talking about borderline cases where we could have an argument about free speech versus, you know, inciting violence edge cases. I’m talking about militants in the Midwest using the platform to organize, which results in a 17 year old boy killing people with a gun and stuff like that was flagged two hundred times and nothing happened. Or the New Jersey attorney general apparently alerted Facebook because there was a group saying things like, we need to get rid of Orthodox Jews like Hitler did and complain to Facebook and took 10 months for the company to get rid of that group. I mean, I just think I’m not no one talking about edge cases anymore. This is a company that is allowing governments and troll farms and militants to use its platform to organize, to incite hate and actually is getting people killed. And why on earth would we let that continue? I don’t I honestly don’t understand. And we let this like young man Mark Zuckerberg. We let him say things like we’re working on it. We care about democracy instead of fixing the problems. He’s just like, we’re going to give you a center where you can get more information about voting. It’s like, dude, no one stop like other people do that work. You don’t need to do that work. All you need is to clean this up like that. Should that it should just be it could be government regulations or it could be the government saying enough already. Like I don’t understand why the trump. Well, I do understand. But like the Trump administration is focusing on Tic-Tac when, like, they have this, like, time bomb in our own country right now, I feel like everything else is inconsequential to talk about.

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S4: My favorite bit about that, we had Facebook initiative of like we’re going to give you information on how to vote, which came out in the Sarah Fryer story. Is it apparently a bunch of Republican congressmen complained to Facebook about it, giving information on how to vote. And so then Facebook, in response to those complaints, pulled back on that and said, oh, well, maybe we won’t give you quite as much information on how to vote.

S5: After all, they were like, we were going to do it on Instagram, but now we’re just going to do on Facebook. We’re not going to keep it off the ground because, you know, the grandmas were the young people that we don’t want them to know how to vote. It’s it’s malignant.

S2: Let’s talk about big deals. We have a big semiconductor deal this week where Invidia, which is the chip maker that makes. A lot of the graphics chips that are probably in your computer has announced that there’s going to be my arm, which is a chip designer in the U.K. from Softbank, which is Japanese. This is a classic bit of global capitalism going on right here. It’s interesting on a bunch of levels. But the thing which was most interesting about it to me at least, was that the Chinese came out and said we might want to block this deal. And we’ve talked a lot about the antitrust process in the United States and how it works and how it should work. We’ve talked a lot about the antitrust process in Europe and how it works and whether it works. And now I’m beginning to think, where should we be looking? We should we start looking at China and Chinese regulators as a potential obstacle to big M&A transactions as well?

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S6: Well, I mean, this isn’t the first time this has happened. You had Qualcomm and XP. I mean, what China tends to do is they just they don’t necessarily come out and say, you cannot do this. They just have never ending delays that become very costly and then things just fall through.

S4: Well, I mean, they did come out and say, Turbit, that you can’t give any control of your algorithm to Microsoft. And the result of that was Microsoft pulled its bid for tick tock. And that was a very clear decision, which had a very clear consequence.

S6: Yeah, I mean, I would say that by Dance’s probably and the tech deal is a special case because it is this incredibly political issue in the United States that is specifically targeted at China. And you are you’re right that I do think that as this kind of tech Cold War builds between the US and China, I do think we’re probably going to see a more potentially publicly aggressive Chinese opposition to some of these deals. But I’m just saying, this isn’t the first time China has blocked potentially blocked a deal.

S3: Is this is it really is the blocking related to the tick tock situation? Is this just like one upmanship in the in the is the trade war spilling over into a deal?

S4: I think I think it’s related to the Weiwei situation. Remember how we’ve been talking about Huawei quite a lot and the United States is doing trying very hard to prevent American companies from dealing with one way. And the United Kingdom quite famously didn’t do that. And the US was very pissed off at the Boris Johnson administration for not being quite as tough on Huawei as the Americans wanted him to be being a UK company. But what the Chinese are saying is basically if Invidia winds up being R.M., becoming a US company and then Invidia will stop Huawei from being able to use any arm designed chips, and that will hurt Huawei. So it does have a direct effect on Chinese companies.

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S6: Yeah, I mean, the arm architecture is in everything. It’s in like every smartphone. So this could potentially be a very large deal if the video were to say that other countries couldn’t license this. Now, to be fair, at this stage, there was actually no indication from the video that they would do that, especially because they’re the arms business in China is so large and the videos business in China is very large. It seems unlikely that they would really try to piss them off just because they now have a US company. But but they have to.

S4: Right. If the Commerce Department tells them to sell technology to the way that’s the end of it, they have to.

S6: Yes. And I was gonna say yes. That is the other side of it. Yes, of course.

S8: If you continue to have a Trump administration after January that continues to engage in this type of very, very political action related to companies related to China, then, yes, I could see that that that is a legitimate concern the Chinese might have.

S3: So in other words, the Trump administration has so politicized deal making and companies and businesses that now it’s it’s hurting US companies because they’re essentially being prevented from doing deals because of the worry that they will become politicized, because of the worry that Trump will step in and say X, Y, Z and Vidia, you have to do you can’t work with these Chinese companies anymore. You can’t use this Chinese tech anymore. So it’s like the politicization, politicization of dealmaking is kind of infecting everything. Basically that.

S4: Absolutely. And this is what Trump I mean, weirdly, this is what Trump ran on, right. He was like, I’m going to politicize all of this. And every every time an American company makes a deal, I’m going to take credit for it if I think it’s a good deal. And famously, he wanted a cut of the ticktock proceeds. He’s like, China has to sell tech talk and I want to get some of the money because I’m forcing them to do it. And then the Treasury Department came up to him and said. Mr. President, in order to do that and went on the record, said at a press conference, he was like, I’m very disappointed to hear that I can’t get out of this. And you know what?

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S8: Yeah.

S2: And again, with the tick tock thing, we are just all waiting right now. As I say, we’re recording on Friday and we are just waiting for him to come out probably this evening sometime. And whatever whoever the last person who spoke to him or whatever he happens to read on Twitter or whatever it is about, Tick is probably going to be the decision he makes. And it’s one person making and deeply uninformed decision. He just came out on Thursday saying that Microsoft was still in the running for Tick-Tock, which they are not. You know, he’s just he doesn’t know what’s going on. He’s not informed, but he’s making these deeply uninformed decisions anyway. And yet, like, dealmaking has become politicized to a degree that I would not have thought possible, you know, in twenty sixteen.

S8: And just the idea that you would have a US president basically engaging in such overt crony capitalism and crony capitalism is definitely something that has existed for a very long time.

S6: But this is the kind of thing you see in countries that have very, very weak institutions. This is not normally something you think of as existing in the United States.

S3: And I would like to just remind people that Donald Trump is a member of the Republican Party. And I had been told my whole life that these people, these Republicans, are into the free market. And this is not anything like what I’ve been led to believe.

S9: He has never been a free market Republican. No.

S2: Like he is. He is he he ran. And that was actually kind of how he won the Republican nomination. Right. Was he? That was his one sort of inadvertent insight, really, was that the free market Republicans were a tiny minority of the Republican Party in blue states. And the actual Republican base is the opposite of free market. They don’t want free trade deals. They want the trade deals wrapped up. They don’t believe in free markets. They want the president to come in. And just like men, they thousands of more coal mining jobs, whatever it was that he promised and didn’t deliver on. And that’s how he won by basically saying, yeah, you thought the Republican Party was about free markets. No, it’s not. I’m going to really politicize markets to a degree that they’ve never been politicized before.

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S3: And now I feel I’m on the side of free market somehow.

S6: No. One, this shows you that at this stage, the Republican Party is functioning much more like a personality cult than a party that has an actual platform. Whatever Donald Trump says on that day is what he believes.

S4: That is literally what the Republican Party platform. They didn’t come out with a platform at the convention this year and they literally just said, yeah, whatever he said.

S6: Yeah, exactly. But that’s not good for business. No. And I think this is and it’s funny to me, because this is when you’re someone who doesn’t always love to have so much government involvement in business. This is one of the things you say because you don’t want corrupt politicians to pick winners and losers. And this is something that traditionally Republicans say. And so it is very ironic that we are seeing this so blatantly.

S5: OK, I think it’s time for a numbers round. Emily, do you have a number?

S3: Oh, I really has so many different numbers that I wanted. Do you have many numbers? I mean, I’m just going to go with a fun one, I guess. Yes, that’s what I will do. Not about the fun one. Yeah. Seven billion. Seven billion. That is the number of excess paper prize tickets from Charki teams that they are going to or that they are seeking to have destroyed because Shacochis is in bankruptcy, because it is cheaper to destroy seven billion excess paper prize tickets from each year than it is to have them like go through the supply chain. It’s like a million dollars cheaper. And they’re phasing out the paper price tickets and Chuck E. Cheese right now because of the pandemic, they’re going to e tickets or something. And I think that’s a little sad because paper prize tickets are super fun.

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S9: You know, you go and Feliks probably doesn’t know about this, but you go. I have no idea what you’re talking about. Oh, OK. So you go to Chuck E. Cheese and you play like dumb games or fun games, I should say. And then when I’m going, some games are more or less the same thing.

S3: Yeah, you get a bunch of these, like little paper tickets. They look like the tickets you get at a raffle and they come out of a machine. And if you win a lot, it’s like exciting. It’s like tick, tick, tick, tick, tick, tick, tick. And then you hand in the tickets at the counter and you like for five hundred tickets, you can get a tiny stuffed animal or something else that breaks almost immediately.

S9: But it’s very exciting for children and like it’s just fun because you get all the tickets and you I have so many and now the kids need to do this all on their smartphones, I guess, or maybe on a on a card or something like you get you know, those. Yeah, I’m with you. That’s cool devices. I’m going to channel my inner boomer here and say, oh yeah.

S4: In my day when you had tickets. Yeah, I think I think you’re right. Anna, what’s your number?

S6: My number is three thousand dollars a month. That is what a city group director of I.T. was pulling in for running a Q and on website, he claims it was just to cover the costs of hosting it.

S4: Yeah, it’s this is the craziest story, so.

S6: Well, yeah. And so my favorite detail of this that when he was put on leave, he was put on leave not because he was running a Kuhnen website that was saying, you know, there was this child sex ring. But because he didn’t get approval from compliance for outside business activities, if you want to be accused on crazy, that’s fine. Just don’t ask your Q and then go into compliance actually through compliance.

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S3: When he was making three thousand dollars a month running a Q and on website, just to be sure he would, he was bringing in three thousand dollars in various charges related to cover the costs of running the website.

S2: It was a big website which had costs. Whether he was making any money is not clear who knew. But you can be assured that his salary was extremely in excess of three thousand dollars a month.

S6: I imagine. I imagine you should have gone to compliance.

S4: I’m something I would love to have a number about Travis Scott and McDonald’s to rhyme with Emily’s Chucky Cheese. No, but I don’t because I am too old to understand what is going on with Travis and MacDonald.

S2: So if any of you guys who are listening today can explain the whole Travis Scott McDonald’s phenomenon to me, do right into sleep money dot com and explain it to me. In the meantime, my number is three point seven percent, which is the amount that the Federal Reserve now says that the US economy is going to shrink in twenty twenty and three point seven percent decline in US GDP in one year is enormous and it is bad and it’s a terrible recession. But the last time the Fed had to forecast the forecast was that it would shrink by six point five percent, and that was back in June. So somehow between June and now, expectations for the economy have really improved substantially. That’s been a three percentage point improvement effectively in expectations for total GDP in America this year, which is a huge difference that, you know, the difference between a crappy one percent growth and a really healthy four percent growth. That’s the kind of difference that we’re talking about here. I don’t think people really appreciate how much better the economy is doing right now than we thought it would be doing just a couple of months ago.

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S6: I mean, I think partly there was this belief that even if you had this initial surge in economic activity when people started reopening, that then everything was going to start closing again. And so that was a. Going to continue, and that’s just not really what we’ve seen, we we continue to see numbers for the most part, continue to get better and much faster than most people thought, except for the only numbers, which matter which are the covid numbers which continue to get worse.

S4: And we’re closing in on two hundred thousand covid deaths now. And the one thing we all agreed on earlier on in the pandemic, if you’ll recall, was that so long as the covid pandemic is raging in the country, the economy is going to be in the shitter.

S2: And that doesn’t actually seem to be the case.

S6: I mean, I think this is something you’re seeing globally, though, that I’m not saying it’s a good or bad thing, but it just is that I think people don’t have the appetite for the severe lockdowns anymore.

S8: Now we are seeing so I think Israel is going back into a lockdown. I know the UK was potentially talking about it, but it just seems like. We’re probably people are probably going to be leaning out of prioritizing economic activity over potentially health and safety. I’m not saying that’s a good thing, but it does seem to be what we’re saying.

S4: But what you are saying is that it’s an either or choice because, again, like back in the early days of the pandemic, it was very much painted. And even today, I hear people say this the whole time. I mean, Jay Powell, the Fed chair, said this in his press conference this week. He’s like the future of the economy is going to be determined by the future of the pandemic. So long as the pandemic is bad, the economy is going to be bad. If the pandemic clears up and goes away, that it’s going to be good for the economy. We all understand that. But you’re saying that while that is true, there’s also.

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S2: This idea of the trade off, which Donald Trump was very early on, he’s like, don’t shut down. Get the economy moving again, open up, and the idea that you can have more deaths and more economic activity is actually true.

S8: And so, yeah, I mean, I think that, yes, it is probably almost certainly true that if everyone were to do what they needed to do, which is wear masks, stay away from other people, we probably could actually have both. We could, in fact, have fewer deaths and we could have more economic activity. But if people aren’t necessarily doing that, we are still finding that you probably can have a bit more economic activity if you’re willing to accept. These deaths and yes, that’s not the ideal solution, but that does seem to be what we’re seeing.

S3: I’m not sure where this is going, but I have this thought that there’s like there’s a racial component here that is over. It’s discussed. But like, for example, my other option for a number today was the black unemployment rate, which is 13 percent, which is only one percentage point lower than when the shutdown first started. For everyone, it was like fourteen point six or something. The black unemployment rate is 13 percent and the white unemployment rate is seven point three percent. And black people and brown people are disproportionately dying of covert and black people and brown people are disproportionately starving. And as the states start to run out of money, they’ll see more death, they’ll see more illness and they’ll see more unemployment. And I kind of feel like the resurgence of the economy is is super racialized. I guess that’s just the point I wanted to make. I think there’s something weird going on with inequality. I think there’s like a lot of people recover. I think that’s a good point. Sense of a lot of people that are not going to recover for a long, long, long time, right?

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S4: Yeah. Now, that’s important if the recovery. Sorry, and that very sad note, we could cut it on that very sad note, we will. We will. It’s a good point. We will. We will keep it. We’ll keep it in. Because who who needs to end on an upbeat note? We’ll end this podcast. Thank you for listening. Thank you for Jessamine Molly for producing at Seaplane Omada Studios in Brooklyn.

S1: Thank you for writing in Slate money at Slate dot com. And we will talk to you next week on Slate Money.

S4: OK, so the other thing I published this week was a review in The New York Times about Matthew Yglesias, his new book, One Billion Americans. We are not going to invite him on the show to talk about it unless you really want us to. If you really want us to let us know, sleep money and maybe we will. But, Emily, what do you think of the idea? That one billion Americans is like a really good goal that we should be working towards.

S3: Wow. Well, let me just start by saying I did not read the book. I only read your review of the book.

S9: Well, the book you just come out. So that’s fair enough.

S3: I mean, I think I think it’s a good goal to have more immigration to the United States. I think we definitely could use some more immigrants, especially now with our cities kind of floundering around. We absolutely could use more immigrants and economic the economic productivity that immigrants bring. Do I think we need a billion more people? I mean, I, I don’t know. There is a story in the Times that said climate change will displace a billion people in the coming years. I don’t remember the length of the time span that the billion people will be displaced in, but I think climate change is going to mean a lot of people will need somewhere to come to move to. So why not the United States? But I feel like a billion as kind of an arbitrary number.

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S6: Yeah, I mean, I think you definitely want to have significant immigration.

S8: You want to have also population growth in terms of people actually having children. You want all these things? Both. It’s very good for economic growth. You created even larger domestic market. These are all very good things. Of course, immigration now is probably different than it was when you had these, you know, when we think of the periods of the 19th century when you have enormous immigration to the United States, because the skill sets that are needed now are obviously different.

S2: So, yeah, so so the thesis of the book is that we need a billion Americans for the sake of, like, keeping up with the Joneses, basically that America is the global hegemon and the. There are already a billion Chinese people and there are already a billion Indians. And pretty soon those Chinese people and Indians are going to be almost as rich as the Americans. And that means that China and India are going to be more powerful than America. And we can’t have that now, can we? So in order to be able to keep up with China and India, we need more people. That’s the main argument that has for why we need so many Americans. But whether or not you buy that argument, I think you’re absolutely right that we do need more immigration.

S4: I don’t think immigration really moved the needle nearly as much on total population as Azmat seems to believe it could. There were very few countries in the world where, you know, loosening immigration policy has a serious effect on immigration, on population and the countries where it does tend to be very small countries. So it might make a difference in like the United Arab Emirates or conceivably even in Canada. But I can’t see it making a difference. But we already have three hundred and thirty million. You know, you can let in another three million people and that grows the population by less than one percent. So so I 100 percent agree with the need for more immigration.

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S2: I also, by all accounts, believe that it doesn’t really make that much of a difference how skilled the immigrants are. Like skilled immigrants have a huge effect on the economy. Unskilled immigrants also have a huge effect on the economy. It only takes like one generation for these immigrants kids to grow up growing up as Americans and they always seem to outperform. And yeah, like and there’s a lot of need for less skilled labor. I mean, I can tell you, if you have a restaurant meal in New York, which is an important part of what makes New York, New York, there’s an extremely high chance the person making your food is Ecuadorian and not necessarily, you know, coming in on some kind of an H-1B visa. Right. For skilled immigrants like you need a broad mix of immigration and you need more of it. And I think we we all more or less agree on that.

S3: The other thing I maybe we could talk about where you had criticisms of Iglesias’s book was this idea that if we have better social policies, we’ll have higher birth rates. And you seem to think no. And he seems to think yes. And I think that’s interesting conversation to have.

S2: Right. So he does this thing where he looks at opinion polls and when Americans are asked, how many kids do you want to have? And then he compares the answer to that question, to the empirical question of how many kids they actually have. And there’s a gap generally, if you aggregate an average and do all of that kind of statistical legerdemain, you wind up with the conclusion that people have fewer kids than they want. And so his conclusion from that gap in the opinion polls between opinion polls and reality is that if only it was easier to have kids, if only there was a better social safety net, if only it was less of a burden to bring up kids, then people would have more kids and the birth rate would go up and that would increase the population. And I just don’t see a lot of evidence for that. Like he might be right. But he doesn’t really adduce any evidence to support this thesis.

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S8: The evidence is a bit mixed because I know I’ve seen people look at different European countries and those that have the strongest protections for parents versus those that don’t. And those that have stronger protections often do have higher birth rates. But then I think you can potentially look at other countries where you don’t necessarily see the same pattern. So I do think it’s complicated. And we also know that the wealthier countries get in. The more women are educated in, the more women have access to birth control. It tends to be the fewer children you have. But I do think there is a difference between, you know, if people are saying if women are saying that they want to have more children and they are not having those children, I do think it is reasonable to assume that part of that is because it’s so challenging to have any children at all, let alone more than two. So if that were made easier, it is reasonable to assume that people would have more children. But I agree with you that the evidence for that is not overwhelming.

S3: Yeah, I think because the the social project of making it easier to have kids really hasn’t been taken far enough, possibly.

S2: I do think that Anna’s point about the more than two kids is a very important one. The replacement birth rate is two point one. So basically, in order for population to grow rather than shrink, assuming no immigration, you do need a substantial number of women having three or more kids. And and so on some level, I think the. Interesting nativities, policies, if you will, would be the ones that make it easier to have a third kid, and I’m not sure what that changes, but I think that’s a super interesting question, which doesn’t really go into it.

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S3: But I think you give people like twenty thousand dollars to have a third kid.

S2: They’ve tried that in Singapore. It really didn’t work really.

S4: I think try bribing bribing people to have kids is is not very effective.

S3: Are you sure? Didn’t they do that in Japan? And it worked a little bit. Am I wrong?

S6: I feel like now I don’t I don’t think it worked out really well. Thanks. I think I.

S3: No more money then try again. Why not?

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