The Meritocracy Trap Edition
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S2: Welcome to the meritocracy rat edition of Slate Money Your Guide to the business and finance news of the week.
S3: I’m Felix Salmon of axioms. I’m joined by Emily Peck of Huff Post Hello. I have been informed by Emily his boss that it is no longer the Huffington Post it is now just huff.
S4: I have always meant to tell you that but then I figure everyone knows it is Huffington Post so I just go with it anyway.
S5: It is Huff Post and most excitingly we have in the studio. Daniel Moskovitz of Yale Law School. Hi. You came to fame when when was your commencement speech four years ago maybe four years ago in 2015 there you go. This is honestly the only commencement speech that everyone should read and or listen to. It’s fantastic. And you have basically turned it into a book which is called the meritocracy trap and like all nonfiction books in America it needs some long subtitle which says everything that’s in the book right.
S6: Yes it says everything. I think that’s exactly what it says. So we’re not going to say what the subtitle is because that would mean that you wouldn’t buy the book.
S3: So yeah. Daniel is here to talk about meritocracy and why it’s not nearly as good of a thing as you might think. We are also going to talk about the M.I.T. media lab. Jeffrey Epstein and the nexus of academia and money which I wrote about a lot this week. And just for shits and giggles We’re going to talk about how VO FFA if you wanna know what if is. Keep listening.
S5: All of that is coming up on Slate Money. So Daniel you have written a whole book about. I was thinking about this on my way over here. Basically it’s a little bit a book about the nature nurture debate. You’re saying that never mind nature that is swamped by the amount of genuine advantage that children can get if they if you throw a huge amount of money and privilege at them and if you do that they will become what you call super ordinary workers and they will wind up running the world into the top sort of 1 percent of kids. This is what happens to them. They get millions of dollars worth of educational like headstart on everyone else and then no one can ever catch up.
S7: Yeah. I mean look I’m an educator so I obviously have a professional commitment to the view that education works.
S8: But I also think the evidence overwhelmingly shows that it works because you see in the data the way in which the kids whose parents put them into certain kinds of schools get them certain kinds of tutors get them certain kinds of additional training then fly when it comes time to test taking and achievement and totally dominate the top ranks of educators you’re not just saying education works.
S5: You’re also saying that there’s a very strong positive correlation between price and quality in education and that more expensive education works better.
S8: Yeah. I mean one of the things that’s happened in Elite Education in the United States both in the elite public system and it’s important to understand there is an elite public system so that rich school districts spend two or three times as much per pupil per year as middle class ones but also in the elite private system is that whereas these schools used to be sort of playing fields for the privileged what they now do is they try in the most rationalised way they can to get all the latest education science research to direct the way they teach their children in order to maximize the output of what it is that they do. And you get results like the gap in the S.A.T. between kids whose parents make over two hundred thousand dollars a year in kids whose parents have the median household income is now twice as big as the gap on the S.A.T. between median household kids and kids at the poverty threshold. So that shows you just how powerful the effect of that kind of training is.
S9: So we’re saying that education can be bought that education must be bought. If if we want our kids to grow up and get these fancy jobs that you talk so much about the super ordinary jobs that pay the best that get you into the 10 percent of the 1 percent you essentially have to be called a meritocracy. But it’s really just a mask for the aristocracy. You basically need money to succeed and you have to work hard. And that’s kind of the rub right. But you have to still in the old days you could just be rich and kind of glide. And now you’re saying it’s not enough to be rich you have to be rich still but then you have to apparently work right.
S8: So there are two claims in this arguing exactly and they go together I think. But they’re not usually put together. So the first is that education is real. That is to say these schools actually deliver training that makes people good at things. And then the second is that education can be bought. And what that means is that while we typically think of meritocracy and equality of opportunity is going together actually they come apart because if education is real and can be bought and some people are rich and buy more of it then a system that measures actual achievement will block equality about opportunity because only the rich can get the thing you need to have in order actually to achieve. And that’s the system we have now.
S9: Right. And that’s actually maybe I’m getting ahead of the argument but that is actually hurting these kids in the long run hurting everyone. The fact that only a few people can afford to become educated and can afford to be in this higher class of worker that hurts them because they have to work longer hours. And that’s bad for them.
S8: Yeah I mean first of all it hurts all the people who can’t buy the education. So it hurts them by excluding them. We don’t have a lot of social mobility we have less social mobility in this country than in other rich countries in the world so it hurts them by excluding them. It then hurts them a second time by insulting them because it characterizes what is in fact a structural inequality as an individual failure to measure up so that if you’re in the middle class or the working class in this country you don’t have a shot at real success. But the system says the reason you didn’t succeed is that you weren’t very good or you weren’t very virtuous when in fact that’s not at all the reason you didn’t succeed because everybody else paid for their kids to get something you didn’t have. So it hurts people on the outside it also hurts people on the inside because to live a life in which at every moment your own person your skills your effort your training is your biggest asset is sort of to manage yourself almost like you’re a business you’re the manager of yourself as a business. And that’s not a way that a human being lives a flourishing life. It’s a way a human being alienates herself from much of her own life. And that shows up in practical ways that the elite works hours it never used to work so elite lawyers today build twice as many hours a year as they did in 1960 for example but it also shows up in kind of existential ways that you have this sort of mechanical and instrumental view of your own life rather than its being your life. It’s an asset you trade in and that’s not good.
S5: This is a bit where I felt a bit weird about this because for all that you are right about a certain sort of subset of the 1 percent of children doing this thing and winding up you know working crazy hours at McKinsey or Goldman Sachs like most of them don’t. And the what you you know we all know lots of rich and privileged kids who wind up actually having perfectly pleasant lives and having happy families and making low six figure incomes and they actually seem to win this hope. Yes.
S8: So. So I think there are two questions here. First is just in the numbers in the present. If you add up the professionals who work in finance vice presidents and above at S&P fifteen hundred companies doctors and specialist practice lawyers at law firms whose profits per partner are over about a half million dollars a year and professional management consultants you get paid between half and two thirds of the 1 percent. So that just shows you how many of these people who work these hours there are but of course it’s also true that there are lots of people who have enough inherited money that they can opt out of this system and lead more modest professional lives but still have a very high standard of living. And one of the big questions for our society going forward is how much of this sort of ground out earned income that people have now is going to pass to their children as inherited income. And then we’re gonna have an old fashioned aristocracy again rather than the thing I’m describing and that’s an empirical quote I guess when things are going go.
S5: I guess I’m saying I’m talking not so much about the inherited income. I’m talking about you know if you’re a typical member of the 1 percent have two kids and one of them goes to Harvard and then McKinsey and the other one goes to the Williams and becomes a teacher. Williams say you know Professor Williams and haven’t I felt a pleasant academic career and can support themselves perfectly happily on the perfectly good upper middle class income without having to do this crazy miserable working all the time life then you know that’s not. I mean in one sense that the privilege and the education is inherited but the wealth isn’t inherited. You don’t need to inherit money.
S8: Good. So. So I think it’s not a coincidence that when you were trying to describe the other one’s professional life you kind of paused and said and becomes you know I don’t know a professor at Wellesley.
S6: I’m just looking at everyone in coffee shops in New York City. I get in the afternoon. Who are these people. Yeah exactly no mystery exactly no.
S10: Totally right. Totally right. But when you try actually to identify the jobs that have the features that you describe high social ideas that you know high social status enough income to pass status down generationally through the family.
S8: There are fewer and fewer of those jobs and more and more of the jobs that you need in order to be a member of the economic and cultural and social elite are jobs that are grinded out high wage jobs. And that’s happening because the way we educate people is changing the way we work and hollowing out the middle of the labor market.
S9: I want to talk a little bit more about that because reading your book I mean you start out by saying meritocracy is a sham and I’m with you. And but you also throughout the book talk about these really well-trained highly skilled super ordinary workers who make multiples multiples multiples more money than everyone else and implicitly and explicitly. My conclusion was oh these people are smarter than me and all the poor people and all the middle class people they’re better trained they deserve million dollar salaries and that these other jobs the subordinate jobs they’re not working as hard. And I just. That troubled me because they are working as hard. They’re just not making as much money and the reasons they’re not making as much money is because we have these elite well-trained people who have been led to believe that they won a meritocracy. They know better and they want to cut those corners and keep those subordinate workers making less money. Maybe sometimes working fewer hours. But like the value judgment that you know that the person who went to Harvard Law School has an MBA is like working harder and smarter. That’s just that’s like a false. It’s a false creation. It’s not in my to my mind it’s not actually true at all.
S7: So. So I agree with you that the value judgment that the person who goes to Harvard works all these hours is smarter or more deserving is false. I completely agree with that. But I think we may have two points of disagreement one is descriptive and then one is more sort of argumentative. The descriptive point and this is important and it’s sort of a clinical way to describe something that’s not at all clinical is that we’ve created I think the first society in human history in which in fact those who are in the bottom half of the income distribution don’t work as hard as those at the top.
S8: If you look at all the data about average weekly hours worked it turns out that over the past 50 years the bottom half of the income distribution is working fewer and fewer hours labor force participation is going down even in boom times. And the problem that we have in every other society the problem that people decided had was that those at the bottom were working too long and too much was being extracted from them. And the problem we have is that we’ve constructed an economy in which that group doesn’t have enough to do productively and so they don’t have enough work. Now it’s also the case that some of them work very very hard because the jobs that are available to them are terrible jobs and don’t pay a lot. Both those things can be true at the same time. But fundamentally we have to come to terms with the fact that we need to restructure our labor market to create more jobs for middle and working class people which are good jobs which they would then work harder at and that would be better for everybody. So that’s that’s the sort of descriptive part the more argumentative part is I agree that the whole thing is a sham as I say right at the start of the book. But it’s a sham in the following way within the existing system. It is true that the manager at a large company the CEO is adding a lot of value to that company but the only reason she’s adding so much value to the company is that we’ve stripped every other employee of the company of discretion and the management function and concentrated all the managerial aspects of running the firm in her. And so what she’s done is she’s stripped everybody else of the thing that she’s now hogging and when she hogs it she gets a lot of income. And so that’s the way it’s a sham it’s it’s kind of a circle she’s created a world in which she is essential and now claims to deserve it but that doesn’t mean she’s not essential in this world.
S9: One quibble I would say is back in sort of the halcyon days that you talk about that everybody talks about when middle class people and working class people actually made more money. It wasn’t because they’re necessarily because their jobs were more interesting and their CEO hadn’t stripped away the value of the job it was because of like we had a really strong union presence in the country and workers with kind of crap jobs fought really hard and were paid very well for them. And that’s kind of you know kind of vanished right now union membership is low. The the low skilled jobs don’t pay as well as they used to used to not have to be a super ordinary kind of person to have like a decent a decent job. And that wasn’t because of any meritocracy was because of hard you know it was workers fighting for their rights and fighting to be paid well.
S8: Well partly what unions did is they got workers to be paid better for doing the same work but a lot of what unions did actually is they changed the kind of work that workers did. So unions got lifetime employment they got workplace training they got some measure of worker control over the local production process and in Germany of course they got seats on the board seats on the board right. And in the U.S. even at mid century in non unionized jobs. So if you look for example at retail retail in the U.S. in 1960 was a mid skilled middle class sector. And if you were a retail worker you had discretion you were probably the order for your firm you were the starkest for your firm you were the advertiser for your firm you did some accounts for the firm. And what that meant is you had a job that demanded things of you and you were paid accordingly.
S3: I think about bank managers you know once upon a time bank managers would like underwrite loan right now they’re just all. All they can do is type pieces of information into a computer and see what they write you to spit it back out.
S8: Exactly. And those guys were not unionized at mid century. But the way in which we did lending required those people to have skills and discretion. And what we’ve done now is we’ve stripped them of all their skills and discretion concentrated everything in the securities traders and derivatives constructors who are super ordinary workers. And now they’re getting all the surplus because they have all the relevant skills. So that’s the kind of story I want to tell. So unions are a big part of it. I totally agree. And the decline in private sector unionization has been a catastrophe for the country.
S4: But part of it is because it’s trained the way in which we make things to the detriment of the union members and the way in which we sell them had an absolute variance last week where I spent the beginning of the day I was at the Apple Store where every three feet I walked someone else asked me if I needed help. And like finally someone did you know I did need help and I said oh how much do the airports cost. And you just rattled off the number off the top of his head and then showed me different chargers blah blah blah. He was obviously very skilled and knowledgeable and then at the end of the day I went to Kmart and wandered around for like 15 minutes never encountered a human person that worked there and then I finally did. They didn’t know where I could find anything and I was just wondering what’s the difference in how much they’re making.
S3: I bet it’s not that much blazingly little. Yeah it’s amazing how little apple store workers get paid like they have this thing called the Genius which is stocked with geniuses and these geniuses are making like seventeen dollars now.
S4: Right. So I mean while I I agree with you that’s a very compelling argument how sort of the skill and discretion has been stripped away from the subordinate workforce. I’m just thinking about those Apple workers who only make a couple bucks more than the Kmart workers and it just kind of thing. Why is that happening. Yeah I think it’s because the super rich people at the top of Apple pulling the money away for themselves. I think there’s a lot of that. Why would they give it up.
S7: Yeah I mean there are other companies. So Costco for example pays its workers substantially more than other retail firms hires them for longer trains them more and produces much more selling productivity per worker. So there are models that are economically viable for the firm and have workers who have more discretion more skill and are treated better. And I don’t understand exactly where and when they rise up and where when they don’t.
S11: Right. The whole Ursula Burns story at Xerox if like you know you start at the bottom it’s the sort of janitor work your way up to CEO. It kind of feels like that’s a thing of the past. No. Yeah.
S9: Another thing I was wondering that is sort of bad about meritocracy and the elite training these people get is sort of the attitude that you walk away with when you get your Yale law degree like I was watching your commencement speech and you’re saying such nice things to the graduates and and commending them on how hard they’ve worked and like how skilled they are and how proud they should be. I don’t take away from any of that but I wonder when you then get out into the workforce and you’re overseeing people who didn’t you know do all those great things they didn’t get to Yale and they didn’t have all these great accomplishments and how they perceive those people and how they then treat those people I feel like it’s all kind of playing together and it’s it’s not good.
S7: I think that’s totally right. You know Dryden has this line about he who most achieves alone should rule or something like and that’s terrible. And it’s made worse by this is the fact that this is a system in which the elites know only one another they live in enclaves they send their kids to schools where nobody else goes they stay married everybody else is having a marriage crisis. So there’s this way in which the elites have constructed this sort of idealized world for themselves which puts them in bad faith with respect to sort of the human condition actually. All right they give themselves credit for things they don’t deserve credit for. They sneer it’s not a good situation.
S5: I mean and talk about the narcissism of small differences. We are both familiar of the sneering you know where even sort of the sneering between Yale Law School and Harvard Law School.
S9: You know it never ends. They’re sneering between Yale Law School and Harvard.
S7: Yes. Ever since since you have the accent that enables me to put in this little dig. I was I was once it at Oxford in a seminar on Marxist thought and somebody observed that it was ironic that we should hold the seminar and all souls college because of course the egalitarian college was Lincoln.
S11: Which is the perfect segue way I think to talk a little bit more about academia and I had a piece in my access newsletter this week about the M.I.T. media lab which followed up from some amazing reporting done by Ronan Farrow in The New York hills about the M.I.T. media lab and the connection it has with money and one of the things that is interesting about the M.I.T. media lab is that it was built from day one with purely private sector money. There was never any kind of hint of public good or university dollars or then going into this it was built on this idea that you’d get a bunch of massive corporations to sort of subscribe to the media lab and brilliant things would go on in there and it wouldn’t really be an academic institution but it would create amazing things. And then the companies would somehow benefit from this. And it’s a very American institution I don’t think. And I don’t think it could exist in any other country. And now we are beginning to see this sort of dirty underbelly of what happens when you wind up being beholden to much you know private donors and money in that sense you should maybe pull back and explain why you’re talking about the M.I.T. media lab so why am I talking about reality.
S3: I mean the ultimate name that it seemed the Voldemort name. Exactly. So there was this guy Jeffrey Epstein who I’m sure we’ve all heard of who you know was a really really really nasty piece of work who was known as Voldemort within the M.I.T. media lab development department because his name could not be uttered and he would funnel millions of dollars into the department through various channels mysteriously as a result of quote unquote favors that you know people owed him.
S9: And this was after he was officially banned from giving money by M.I.T.. Yes.
S11: And this was after he had been tried and convicted in Florida and sent to jail. You know and all of this stuff. And and this was after by the way Harvard had completely stopped accepting money from him. This is really interesting the president of Harvard came out with a letter this week saying yeah we took nine million dollars from Jeffrey Epstein the last donation was in 2007. Then he goes to jail in 2008. After that he continued to try to donate money to us and we said no. And this in no way excuses what may or may not have happened at Harvard before 2008 but it does look as though. And I’m not you know I’m doing a little bit of reporting about this it might not be entirely true but it looks on the surface as though the Harvard Epstein connection at least people can see our expressions right now. Yikes. After after 2008 whereas the M.I.T. That was when that’s when he just like moves across town to M.I.T. and starts buttering up Joey Ito who’s the director of the media lab. And Joey just bends over backwards for him. He makes and he gets his star professor Neri Oxman to make one of these precious orbs for him and he gets the full VIP treatment he gets flown out to Palo Alto to have dinner with Reid Hoffman and Mark Zuckerberg and Elon Musk and Peter Teal. And like what is this.
S4: So that’s my question and maybe Professor you could help answer it. So Epstein was giving this money ostensibly anonymously so he wasn’t doing it to burnish his reputation it what I’m understanding. Maybe he was doing it to sort of keep in the game.
S3: So if this is this is fantasies I think a really important misuse of the word anonymous. OK.
S11: Because there’s the high highest form of anonymous giving if you read your mind my of these you know is basically where the recipient doesn’t know who you are. In this case this was in no way anonymous in that sense the recipient knew exactly who Epstein was. And then when Bill when Epstein asks Bill Gates to give two million dollars to the M.I.T. Media Lab you know the letter arrives on Bill Gates letterhead saying Hi I am Bill Gates his two million dollars. Can you please make sure this isn’t an anonymous gift. The gift is not anonymous to the media lab. It’s just that the media lab doesn’t publicize it to the outside well but everyone within the media lab knows who the gift comes from. And Jeffrey Epstein is then invited into the media lab. This money is ostensibly unrestricted. Joey can use it as he likes. But Jeffrey Epstein is invited into the Media Lab to meet with professors and help choose what the money gets spent on.
S3: So he has all of the influence. He just doesn’t have the sunlight.
S9: So who’s buying the influence and the power and the connections.
S3: So what’s doing. So what I’m really keen on is that we’d stop using the word Anonymous for these donations and start using the word secret like that.
S7: Yeah. So it’s a manipulation of the work of the media lab. That’s at least one thing it is. And it’s also a continuing insertion of Epstein the donor into the circles of the great and good whatever that is. Without telling the public and I’m not.
S3: This is also interesting in what sense is it a manipulation if the work of the media lab insofar as all of the work of the media lab is funded by you know private sector contributions and they all get a say in one way or another over what happens to that money.
S7: So this I think is an incredibly important point which is that the way in which American universities private but also to some degree public fund themselves through these kinds of donations in which the donor sticks around and is associated with the gift dramatically distorts what American scholars work on and what kind of research universities produce. And to my knowledge these things don’t happen in lots of other rich countries. You know I was having lunch a couple of years ago with a guy who is the provost of a major German university and he told me he had received a 20 million euro gift to fund research into a particular disease. And then the donor had asked whether the institute that it funded could be named after his father who had died of the disease. And the provost looked at me with shocked angered and of course I said we have to give the money back.
S10: That’s totally unethical. How could the donor think he has anything to say about this. Right. That’s tame compared to what exactly you know. Harvard University Yale University will sell a bathroom if somebody like the following the men’s room. Yeah. No really. I mean I can tell you a story. Yeah exactly. So it’s completely different. And it distorts things in a in a big way. So this is speculation but I think you know one reason why didn’t Obama following the financial crisis fill up the leading economic policy jobs in the U.S. government with left wing radical economists. So there are lots of reasons why. But one reason why he didn’t is that there are no U.S. left. Whereas there are French or German left wing economists and one reason for that is that the way in which American universities are funded is through capital and finance which bends the economics profession in this country in a neo liberal direction. And so it has huge consequences to what the state and society can do that we’re funded in this way. And Epstein is as it were the you know the fulcrum of the crucible that sees this. But the problem is so much bigger.
S9: There’s also we have to say that the gender dynamics here are so interesting because I imagine in academia the academics who can pull in the money the Joey Ito’s who who can e-mail Epstein and say we need 100000 more notes it’s coming like those those academe by the way this is considered this is considered small.
S3: I love this. This little factoid so much is that Joey Ito was like oh I need to read up this professor’s project for another year. And I have one hundred grand to do that. Jeffrey it’s like sure no problem.
S11: And he has like this slush fund where he can just ping one hundred thousand dollars into the media lab and it’s all you know quote unquote anonymous so that no one can see that it’s coming from Jeffrey Epstein although of course Joey knows that it’s coming from Jeffrey Epstein and that somehow fine even though Epstein is barred from giving money to the university because it’s such a picayune amount of money it’s like he picks a quarter up off of the it’s only when it’s only when you start getting into the millions that you need to do what the M.I.T. Development Officer Richard McMillan called quote unquote the Leon Black route where like somehow this is money that Jeffrey Epstein wants to give but it can’t be seen to be coming from him so it was somehow winds up being seen to come from Leon Black who may be owed that money to Jeffrey Epps you know wind up wound up giving it to M.I.T. instead. No one really knows or understands how that works.
S4: Just to finish my gender thought it was the academics who have the power to get the money from the powerful people are elevated in status and those academics in the Epstein case the Jo Ito the whole circle it’s all men. Well they’re all on it.
S11: One prominent example. What those on academics Dean. Well there’s two academics that. Relevant but there’s one prominent counterexample at the M.I.T. Media Lab which is the professor at the M.I.T. media lab who’s probably most closely associated with Epstein money as far as I can make out is Neri Oxman. And she is a force of nature and wonderful but she is definitely not a man. But other than that you’re absolutely right.
S9: Yeah. And I think it all these circles of influence are very male especially when we’re talking about big big donors millions of dollars and I think it it again it influences what gets research what’s considered important and who gets a seat at the table and all these female academics aren’t getting the seats at the table and there’s that that part of the Ronan Farrow piece in The New Yorker where you’ll say her name talks about how I’ve seen comes into the lab with like these two women in tow and Mrs. Wilson you know maybe the women aren’t there voluntarily and they feel so uncomfortable.
S4: It’s just what kind of sign does it send. Does it signal that we’re OK that the Media Lab was OK with Epstein.
S11: Yeah the gender dynamics of Epstein walking into the Media Lab with his you know very young Eastern European assistance in tow and assistance asked to sit in the waiting room outside and there’s lots of talk among the women at the Media Lab that maybe they should try and effect some kind of an intervention and rescue these women if they’re not there on you know voluntarily.
S7: But I would say again it’s so important that the fact that Epstein sort of was personally vicious about gender is you know part of this but the problem is much broader and structural. Yes you know if you have money being given by finance which is overwhelmingly male dominated.
S10: If you have money given by CEOs was it. Forbes this week who released the 100 200 people one of them is a woman right. So. So you know if that’s who’s giving out the money and these are people who are not just in male dominated fields there are also people who by and large don’t deal very well with women. Of course female professors are gonna be substantially damaged by this quite apart from whether any of them is individually a sleaze. That’s that’s in some sense the least important thing about extreme example right. This shows what’s going on.
S11: Also like attitudes become entrenched among the powerful. Like Marvin Minsky who is you know basically the godfather of the Media Lab was named by Virginia Jeffrey as someone that Epstein with farm girls out to sex you say have go have sex with Marvin Minsky even though you’re like underage it’s like super rapey and disgusting. And yet there was just an e-mail this week from Richard Stallman who’s this you know huge name in open source computing and that kind of stuff and he was like defending Minsky.
S3: And there’s this feeling I get emails like after my email went out on Thursday talking a lot about this I would get replies but from me but from my all always male readers saying well you know whatever. Epstein did which was I’m sure a very horrible in his private island that really shouldn’t be allowed to detract from the fact that he was a philanthropic man and he in the money was put to good use M.I.T. and I mean I think that is an argument that people make like what does it matter the money is going to good use what does it matter where it came from I read that Harvard Law School was started with slave money maybe I think all these universe.
S10: Yes well look there were started at a time when the whole country was slave money right. Right. You can figure out how close it is. But yes but.
S4: But that’s like that is the argument that people make.
S7: But I feel like with this latest story that M.I.T. story Farhad Manjoo had a really good column sort of breaking down why actually yes it does matter where the money comes from an especially in the I’ve seen his how the money came which was secret and then it has all these kinds of effects that we’re talking about and this year and this goes back to where you started which is and I know what I know about this from listening to and reading you but the M.I.T. Media Lab was not a traditional academic department which means it didn’t have the forms of institutionalized professionalized scholarly control over its work product that could possibly resist the distortions that come from donors. It was designed to serve to embrace the distortions that come from donors as I understand it right. And that’s a completely different model and much danger.
S3: Well I mean I think ostensibly the idea is that the corporations subscribe to the school and in return they get nothing but like who would do that.
S4: I don’t understand what it is. The Media Lab I still read the article.
S11: It’s such a good question and I’ve been there and it’s an amazing building. Is this this former high school marquee like crazy gleaming white building and you walk in there and if you get a tour of it it’s all manner of fascinating things going on and people are creating you know musical instruments and and robots and beautiful really printed glass orbs and you’re like who isn’t this fascinating and amazing. But what it is on some kind of fundamental level is you know I’ve never really been able to get my brain where I really thought you were going to say what it is don’t like for example they did x y z and I’d be like Oh thanks. So one of one of the interesting things about my T is they had this very famous. It was basically what it was like a very very temporary building code building 20 which was put up in the Second World War and it was designed to last until six months after the war and then it would get torn down and replaced by a real building. And it was just like it had like drafty windows and it was just made out of wood and plywood and basically every single major invention in the history of America happened within building 20 and building 20 lasted until the mid 1990s. In the end because it was just this sort of blank space that if you wanted to drill a hole in the ceiling and you know grab some electricity you could you could do anything you want. It was very like open to invention that way and it had this it became the most legendary building in the history of American academia and somehow the M.I.T. Media Lab is like a super expensive super glossy version of trying to recreate that.
S7: And it’s not clear that they have but so can we go back to your question is there something that we use every day that was made or invented in the M.I.T. media lab. This is an incredibly good question.
S6: Yeah yeah.
S11: Listeners right and I wouldn’t be at all surprised to learn that like some kind of clever you know voice recognition software or something like that might might have come from that at some point. There probably is you know buried in your iPhone somewhere but I don’t know what it is. Let’s talk about Bill Gates and Slate Plus.
S12: Oh OK. Because we do want to talk about. I’m just I don’t we’ll talk about it.
S3: We’ll talk about it in Slate Plus. But first let’s talk about Volvo Hefei because this is a fun little thing. But I think also weirdly important I am old enough to remember many years ago in Slate Money when Donald Trump was elected there was a brief period when everyone was terrified of his tweets and his one tweet can move the stock market and everyone was like oh we have to really worry about who’s going to tweet about some company and the stock’s going to go down and this is going to be bad for shareholdings. And then after about five minutes he just tweeted a lot and everyone sort of said oh he’s tweeting a lot and ignored it. And now what’s happened is that Citigroup and JP Morgan have independently come out and said wait hang on a sec. That was true in sort of the first year or two of his administration. It is no longer true. And now his tweets are actually making incredibly big differences too especially the fixed income and the affects market right.
S9: So so JP Morgan unveiled the Volt. How do you say it volt CFA index to look at his tweets effects on the market and they found of 4000 non read tweets since 2018 that Trump wrote 146 move the market and they’re more likely to move the market if the tweet includes like the word China in it then it’s even more likely to move the market although someone pointed out in China they ignore the tweets and they don’t really do much.
S4: But yeah I guess and the other fascinating thing they found out about Trump’s tweets I’ll just add before we get into our deep analysis of this is that Trump tweets the most between noon and 2 p.m. peaking at 1 p.m. but also based on his tweeting activity.
S12: He sleeps until 10:00 in the morning. No he doesn’t. That’s all he got up at like 6:00 in the morning they say. Based on that there’s the fewest tweets between 5:00 a.m. and 10:00 a.m. I don’t believe that. I know I have someone who’s really late.
S3: As someone who has the misfortune to be subscribed to a slack channel way every single Trump tweet gets tweeted in automatically right.
S12: Whenever I wake up in the morning that’s a huge right like well being of Trump they said it’s likely that he tweets at 3:00 a.m. Then he tweets at 3:00 p..
S11: I think what they’re talking I think they’re only talking about the market moving tweets. I don’t think they’re talking about all of his tweets and the market moving tweets. I think that’s true. But the big he’s he’s up and tweeting at crazy hours like suddenly when I’m asleep.
S4: All right well I’m not letting this belief that he sleeps.
S7: Can I ask you one more question about the market moving tweets these move the market in the very short term and then there’s a reversion.
S5: Is that is that the story or is that not the story that’s so this is why it’s called The Vault Hefei index is because what they do is they increase volatility. Right. So it’s not a directional thing but it’s a it’s a you know first derivative thing. Right. And the market’s being you know highly abstracted at these points. People don’t just you know buy low and sell high anymore they’re trading volatility. And so if Donald Trump is contributing to that volatility that is something you can trade.
S7: But does the volatility diminish. Shortly after the tweet.
S5: For how long after the tweet is the volatility that the volatility is showing a secular up. Okay. Got it as the. Got it.
S3: Influence of Donald Trump’s tweets has become great and greater on the market. And when I say the market I need to be very specific about this because this is also not the market that people expected. The stock market has actually been quite good at ignoring trump all along. The markets that are moving here at the effects markets and bond markets which of course are much more important right now.
S9: Also this looking at the vol CFA index took me back to May 2017 when you did that covered CFA tweet.
S3: Which is why yes named it that.
S9: And it was a different time because there were so many articles about the cover Pfeiffer tweet and what could this. It was just a typo but there were. I mean I think as a country we’ve really we’ve gotten used to the tweets by now is what I’m trying to say. So it is actually surprising that they would have this effect now like you were saying but they were also saying that the the tweets where he mentions trade or China whatever the least engaged tweets they make analogies.
S3: His Twitter audience does not care about. No not at all. It’s the markets who care about this. And I think what we’re seeing here is this weird thing that you can say about most presidential administrations. They come in with a clear vision of what they want to achieve and they go at it hard and then eventually they kind of run out of momentum and in the back half of the four year term not much get will not much happens with this administration. Like he came in with a bunch of vaguely normally sensible Gary Cohn types you know surrounding him. You know Reince Priebus and these kind of people. And and he felt frustrated and at this point he’s pushed all of those out and it’s just a bunch of crazies and he’s becoming more dangerous and more volatile and less predictable and the effects of his actions are greater than they were in the first half. And I think I can’t remember the last time you could say that of any presidency.
S7: Do you think that’s actually true in the policy space that he’s also proved himself relatively ineffectual. So in the first half of the term there was the possibility that he might actually achieve with some of the things he had to do with the tax cuts.
S4: Yes he did that and all those charges and the Supreme Court. Yeah the Supreme Court and yes the other judge.
S7: Yes I should say I may be a self hating lawyer. I am very dubious of the long term impact of judicial appointments. That’s another conversation.
S6: Well I mean interest. No I think I mean that now you’ve said it like I think we need to do a little sidebar.
S5: Explain given given how terrified every single BNP on Sun liberal I know is of having a Supreme Court dominated by very Republican judges and how bad it is again according to everyone who knows about such things to have a politicized Supreme Court. Explain the other side of that.
S7: Well I think there are two other sides. First of all there’s the backlash story which is what happened when we had a progressive Supreme Court which mobilized the mass politics against it. And that’s happening again now I think. And the second part is you know if the left wins two presidential elections in a row the Supreme Court will largely fall in line. I predict now the wise is that like demographically just according to like the ages if the Conservatives know I think we hardly some people will get replaced but partly someone like Roberts has shown he doesn’t want to undermine completely the legitimacy of this court. And there’s a limit to how far the court can be away from the center of the country on core questions.
S9: But what about all the A do judges he has put into you know under the Supreme Court and to the federal judiciary.
S7: So they’ll be I think significantly disciplined by the structure of precedent and doctrine. Now again there’s the one thing I haven’t anything about is this body of judges is also giving at least cover to and possibly more a massive effort at voter suppression. And disfranchisement and the one way that I think this can really go south is if that effort is powerful enough to stop the Democrats from winning elections then it will been a very consequential part of our overall strategy. But if the Democrats win elections I’m much less worried about what the courts do than that most people on the left. Well that’s right. For what it’s worth anyway.
S3: But back to involve effort I think I think that’s a good place to leave it. Let’s let’s have a numbers round. Emily you can go first on this one.
S4: OK. My number is two hundred and forty dollars. That is the amount that women get for passing go in a new version of Monopoly.
S9: Called Miss monopoly Miss monopoly s which is an effort by Hasbro to be. I don’t really understand this.
S3: This is the Pinker and shrink version movement.
S4: Instead of buying property players invest in female created inventions such as Wi-Fi and chocolate chip cookies. Wow. Yeah. This really annoyed me so then of course I. I did my reporting on this which is I googled Hasbro’s board and it OK it’s fine it’s 40 percent women I was like Okay I can’t tweet about that it’s not that’s not egregious but then I googled their C Suite and lo and behold there’s eight people in the C suite and one woman.
S12: So if they want to fix the gender pay gap is C Suite is that the chief people officer it’s always the chief people look it might have been I didn’t write it down I think oh it was the C CFO actually. Oh yeah. Oh right yeah. Not in the H.R. person was a dude I couldn’t believe.
S3: Well my number is 6 which is the number of inches long that the gash was that was caused by the guy who attacked the Wall Street bull with a metal banjo. You might have missed this story in engravings but this guy like walks up to the famous bull on Wall Street with this metal banjo and just wailing on it. And leaves this gash which is six inches long and three quarters of an inch wide and it’s just a hole in the bull. I mean obviously is just you know a shell and now no one knows who’s gonna pay for it because of course the whole point about this bull is that it was placed there like as a piece of guerrilla art by the artist many years ago and then it became beloved and no one pulled it away. But it’s not really owned by anyone. No one’s really responsible for it and apparently it’s going to cost one hundred and fifty thousand dollars to fix this and is the art it’s going to pay into. Just leave the cash it’s. You forgot all right.
S13: Oh did I mention that while he was wailing on this bull he was just shouting Fuck Trump fuck oh my Yeah.
S7: Well my number is eleven point eight percent which is the poverty rate in the United States. That was just reported by the Bureau of the census this week which on the one hand is a lot and a disgrace. Given how much less poverty is in other rich countries in the world but on the other hand is near historic lows for the U.S. and right thinking opinion for decades has had the view that as long as poverty is getting less bad who cares about concentrated wealth. That would just be envy. And we’re in a time now where poverty is nearing historic lows but there’s enormous agitation about inequality which just goes to show that wealth is a problem.
S3: Well I mean I looked at the data series two ways and it’s true that eleven point eight percent is near historic lows but it’s also true that we were pretty close to that at the end if the LBJ war on poverty. You know it’s kind of been going sideways for the past forty five years or so. What’s more interesting to me is that the and you actually mentioned this in your book the impetus for the war on poverty which began in 1964 was a book and a new york review of that book all about like how many poor people there were in America and how dreadful this wasn’t how important it was to do something about it. And if you look at the number of people in poverty in 1964 and compare it to the number of people in poverty today it’s actually higher today now as a percentage of the population it’s lower but we still have 38 million people in America living in poverty. That’s the population of California.
S9: Are there any issues with the way we measure poverty which is we haven’t broadened it enough like it’s it’s a very very it’s hard to get measured as poor.
S3: I mean so there’s a couple of weird issues about that. There’s that they do a lot of work trying to set the levels that free every year. Right now it’s about if you’re a family with We’d like two parents and two kids I think it’s headed about twenty four thousand dollars something like that. But I think one thing you can say is that if you are right on the poverty line today you are probably objectively better off than if you were right on the poverty line in 1964.
S8: I think that’s right. And deep poverty is much less. There are a thousand issues about how this is done an adjusted every year but there’s one maybe nice story which is that we have the poverty threshold and the way of measuring poverty we do on a kind of a woman a molly or Sandusky who is an economist in the Department of Agriculture and had become interested in poverty long before anybody else was at a time was quite gendered so that she had a woman’s interest at a moment when that interest was not highly respected partly because of his gender. But then LBJ came and things changed and suddenly she became one of most important economists in America. So that’s a sort of a nice story.
S11: She should be on the Miss Monopoly board she should indeed be on the 10 dollar bill. Okay. I think that’s it for this week unless you’re a Slate Plus member in which case you get to learn about the connection between Bill Gates and Jeffrey Epstein click.
S2: Other on that many thanks for listening. Many thanks to Jeremy Molly for producing and most of all.
S1: Many thanks to Daniel Moskovitz for coming all the way to Brooklyn. I think most of all thank you for letting me come.
S3: So Emily what are your questions about Bill Gates.
S4: Why was Bill Gates giving money on Jeffrey Epstein’s behalf a little too much. Like I I really don’t understand the connection. Why is Bill Gates involved in the story. What’s going on. If Bill Gates wants to give two million dollars which is the equivalent to any one of us here giving two dollars why does he need Jeffrey Epstein to do it. Why does Jeffrey if Jeffrey Epstein owes him money. He owes Jeffrey FC. Why does Bill Gates owe Jeffrey Epstein money Bill Gates. I feel like when I heard Leon Black was somehow involved I was like Yeah OK fine. I’m sure he’s shady probably did stuff he used to work for Michael Milken.
S12: I was for him I’m sure. But when I heard Bill Gates was involved I mean I know he was bad in the 90s. But like since then he has really acquired this like saintly or greatly respectable or on which now his wife Melinda. I what is always was Bill Gates involved. Felix please tell me what’s going on.
S3: It’s an incredibly good question. And Sidney Swinson who was the whistleblower who used to work in the Development Lab at M.I.T. told me that she used to you know have these conversations that Peter Cohen who is the development officer who was kind of closest to to the Epstein route and source of funds would say Yeah these people like Gates in black they owe Epstein papers. And so Epstein can call them up and say give money to the M.I.T. media lab and the next thing you know the money arrives. And that’s exactly what happened in the case of gates that Epstein wrote little one sentence email to Joey Ito the director and said Can you just give me like a quick thing about some project we are doing in the media lab in North India onto Bill and I’ll give you a bunch of money. And Jerry is like OK here’s the thing. And then next thing you know two million dollars arrives completely unrestricted from Bill Gates personally not from the Gates Foundation and Bill Gates of course you know at that point in 2014 I looked it up. He has the Gates Foundation gave away four billion dollars that year and it spent over two hundred and fifty million dollars just on salaries for professionals who will you know looking at where the best place to spend money was. And he kind of ignores all of that and just says oh his two million bucks the Jerry spend it as you like. How often does he do that. Very good question. I talked to two Swenson and he was like This is unheard of this does not happen you don’t. Oh and by the way did I mention Joey at least if you believe the e-mails from Peter go and never once talked to Gates like Gates didn’t even speak to anyone at the Media Lab before making this donation.
S9: We should say it doesn’t Gates deny any involvement with Epstein or anything we should have.
S3: Did you say this. Yes. Gates has vehemently denied that. Epstein in any way influenced his giving decisions. So maybe it was all just a huge coincidence. Maybe he was making it up but what certainly seems to be true is that after the two million dollars arrives Epstein walks into Jerry’s office and starts talking about how to spend it. So EPSTEIN Even if there’s no connection between Gates and Epstein the gates and there’s certainly a connection at the M.I.T. and everyone at M.I.T. believed that this was effectively money that had come in through four by somehow associated with Epstein.
S9: Whoever figures out exactly why Gates was giving money to Epstein That’s the biggest story of the year the decade.
S5: I think if it shows something bad about Bill Gates who said like he met him once or twice to talk about philanthropy. He doesn’t like to talk about the fact that he flew on Epstein’s jet to go down to Florida but it is a genuine mystery did Gates have other connections with the media lab.
S7: None none at all.
S5: Well I mean so the Gates Foundation gave a bunch of money to M.I.T. Central one of those donations was to a joint venture between M.I.T. central and the media lab. But that was not an unrestricted net donation. According to the Ronan Farrow report Gates personally gives personal money out of his Gates Ventures thing anonymously all the time.
S9: But like we have no way of knowing whether that stream is normal in the world of academic philanthropy for like one rich guy to be it it almost seems like to be like like a bundler like it.
S3: How in campaign finance will be like one guy and the guys and those and that can sometimes happen with like the chairman of the board or very very major board member who is closely affiliated with the institution. It is absolutely unheard of for someone who’s unaffiliated with the institution to act as a kind of freelance unpaid fundraiser who can who goes off and raises millions of dollars from billionaires. That just doesn’t happen.
S4: So without those billionaires even talking to anyone in the institution I was listening to Stuart Varney complain this week about how Elizabeth Warren is going to make billions of dollars disappear from from rich guys because her wealth tax will cut their wealth in half hour and then I was reading your newsletter and just thinking like great they’re giving away money but they’re doing it in like the worst way is possible like just better to just tax them and not have to do any of this other stuff and use the tax money to fund university is let more kids into the universities who have less money and more solve everything.
S7: That’s the solution. There we are.