The Don’t Be Evil Edition

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S1: This ad free podcast is part of your Slate Plus membership.

S2: A programming note for Slate Money you’re going to get a little bit more Slate Money than usual for the next few weeks because there’s a mini season of Slate Money swag coming up swag is a term which tends to Silver wine aren’t gold.

S3: Basically things that people invest in that don’t have any cash flows. Are they asset classes. Should you invest in them. I’m going to be exploring that in a whole bunch of different things including art and Bitcoin all coming up midweek on Slate Money. Hell.


S4: No. Welcome to the Don’t Be Evil edition of Slate Money or guide to the business and finance news of the week.

S5: I’m Felix Salmon of Acciona. I’m joined by Emily Peck of Huff Post Hello I’m joined by Alan Schram Minsky of breaking news. Hello. And in the studio with the book out this week is Rana Foroohar of the Financial Times.

S6: Hello. Thanks for having welcome. And what is your book Don’t Be Evil. Wait that’s the name of the show. Is a coincidence. Thank you so much Felix. I can’t wait to tweet this. So you say your book is coming out this week. It is.

S5: It’s basically the tech clash. BURKE It’s all about Google and Facebook and all of these other evil tech clash.


S7: It’s 20 years how Silicon Valley went from Utopia to dystopia and what we can do about it.


S3: And we are going to talk all about the latest this week in dystopia. This we can take this though and talk about Facebook.

S5: Puzzling refusal to police false political ads on their platform and the trials of Mark Zuckerberg in Washington. We are also going to talk about Google and Fitbit in the Slate Plus segment and about whether that is also just in the way of trying to monetize people stay through in the way that the big tech companies have proved themselves so adept. We are going to talk about the NCAA. I’m going to learn what NCAA stands for. And a straw man. He’s going to explain the economics of collegiate sports and not only all that we are going to talk about wind and power specifically as regards the economics of California. It’s going to be a meaty and awesome episode with run off. Coming up on Slate Money run.


S3: Let’s start with big evil tech since that’s the subject of your book. And we were like Is there going to be big evil tech news on the week that run comes in on the week of her book launch and it’s such a stupid question there is never a week that there isn’t big evil terror.

S8: I think I took this topic. I knew there’d be a news peg.

S3: There’s always news bag. So Emily what’s the newspaper this week.

S9: Well most recently Twitter Twitter CEO Jack Dorsey did kind of a mega sub tweet to his rival Mark Zuckerberg and said that Twitter would no longer sell political ads at all. Facebook famously right now is for some reason clinging to the practice of running political ads and has also said it’s not really going to fact check that was not going to fact check them.


S3: It will fact check all other ads but it won’t check fact check political ads. And there was that wonderful bit when Mark Zuckerberg was up in front of Congress in Alexandria a coffee of quarters was like So Mr. Zuckerberg I can run ads on Facebook saying that my Republican opponent supports the Green New Deal and that’s OK. And he just kind of sat there and goes Well you shouldn’t do that. That would be wrong to say. But would you take that ad down. He’s like what we believe in freedom of speech.

S10: You know what. Yeah yeah. They’re confusing freedom of speech with freedom to sell ads. It’s not based but the freedom to buy ads. Absolutely not the same thing in my opinion.


S1: The only thing I’ll say and in others and I’m not trying to defend the practice just that obviously please and defend the right. No no I’m just saying that like this is where I think we’re getting to a place where one industry just we don’t have updated regulations because only broadcasters absolutely not allowed to discriminate against ads so even if they know something’s wrong they cannot take it down and so that’s kind of what Facebook is saying. However you can of course make the argument that Facebook is a different type of platform thus different regulation should apply.

S6: So let me let me ask that question to run it because you looked into this.


S3: We actually have an expert here so in an actual question for you if Alexandria calls your book court has put that question to say Jeff Zucker as CNN or broadcaster ABC or CBS and said can she run an ad on their broadcast network TV network saying her Republican opponent supports the Green New Deal.


S8: Is that would they be forced to run that they would not be forced to run that ad in fact he would likely not let her run that ad and that’s the point of a letter that Senator Mark Warner the senior Democratic senator who’s been a big tech critic and is pushing hard both in public and behind the scenes for Facebook to start policing ads. That’s what he wants them to do. He wants them to behave like cable companies and in fact he said that in the letter. But there is a deeper issue here and this is why Facebook in particular but all the big tech platforms have always fought so hard against having to be liable for anything they have this massive car about that was created in 1996 as part of the Communications Decency Act Section 230 or something I can’t believe you know that feeling that yeah. Yes CDI 230 to be giggly exact. And this is their golden good. I mean this is their get out of jail free. Cause they can’t have their business models if they have to be liable for anything and they are desperately trying to protect us. And if Zuck says okay you know what. You’re right. We should probably not take false political ads and in fact we’re gonna create transparency so that you can see what is being advertised how we’re going to open up our block box that could lead to all different kinds of carve outs. And it could really destroy their business model which is why.


S3: So this is so hard to avoid. This is like a slippery slope thing. That’s right. OK.

S8: And it’s the same reason do you remember a couple of years ago when there was a big push to force platforms to police child pornography and that you know there was eventually legislation pushed through that does make them liable for say something like Back Page You know trafficking in young girls. They pushed behind the scenes against that for a long time. Oh you know horrible as it is because they didn’t want this box to be opened up because once it is then it’s I think very quickly going to lead to regulation that makes them look a lot more like traditional media companies and they do look a lot more like traditional media advertising.

S7: Yes you and I both know they just eat our lunch over the last 20 years and they’ve gotten 90 percent of the advertising pie from print and they’re about to eat these lunches.

S9: And as our presidents out of office one thing I think about a lot is how these tech companies want to be treated like platforms you know they just put it they just put the information out there and there they have no discretion over it. But when it comes to copyright we’ll take they’ll take that stuff down like lickety split like they were. No problem enforcing copyright but what’s theirs is theirs and what’s yours is theirs.


S7: You know and this is this is actually I have a big section on the battle around copyright in my book because you know what I’m trying to do in this book is sketch the 20 year arc how do we go from Silicon Valley utopia to a dystopia. And if you remember way back when when Google said we’re going to put all the world’s books online but we’re actually not going to ask any of the publishing houses or the authors whether they mind us doing that move fast and break things you know and that’s what they’ve been trying to do sense is build through huge political lobbying and they’re now the largest lobbying entity in Washington. Build this sort of fortress around copyright data you know allowing them to do anything they want with content online without any of the restrictions that other people would have to follow.


S5: So let me ask you about this thing that Jack Dorsey said because I’ve never seen a tech CEO or at least a media tech CEO say this before. And I thought this is super fascinating which is that he came out against quote machine learning based optimization of messaging and microtargeting which is basically the entire business model of Facebook and Google and everyone else which is that in the old bad old days of media if you wanted to buy an ad in the financial times you would just buy an ad in financial times who would appear on page 14 and then everyone who bought the financial times would see that ad on page 14. Now there is no page 14 of the Financial Times. Everyone gets served up an individualized page. And on that page they get individualized ads and if the ads individualized obviously the CPM is the amount that you can charge for them goes up and Facebook you know famously allows you to target you know one legged women in Iowa or whatever and that kind of microtargeting has upended the advertising industry has made it very very difficult to sell old fashioned ads when just everyone sees the same ad and it has made you know Jack Dorsey a billionaire along with everyone from Facebook. Is this the beginning of the admission that maybe it’s not such a good thing after all.


S7: I think it is. In fact I I’m writing a column right now for the FTC saying this very thing advertising funded platforms were the industry knew from the beginning that they were going to be dicing its funding. I go back in my book to the 1998 paper that Larry Page and Sergey Brin did on search. And at the very end of that paper if you read through which I guess nobody did because it’s not reported they have a section called advertising and its discontents and they talk about how targeted a search engine funded by targeted advertising is very likely not going to be in user interest. Now think about that. These folks when they’re in Washington on the Hill say everything we do is for users they say very clearly in this paper. This business model can be manipulated by by companies but potentially by public entities and they actually recommend that because of that that it might be better to have some kind of open academic source search engine which is is really quite fast because it just belies everything that we hear when these folks end up on the Hill given us. So

S3: exactly. Explain that logic. When they wrote that 1998 What was the reason they gave for targeted advertising not being in use this interest.

S7: Because it just creates potential disinformation. If you if you think about the amount of traffic the amount of eyeballs the amount of users and the amount of content on these platforms. And if you’re not going to have liability for it and if you’re going to allow surveillance capitalism you know this kind of tracking of our data through usage and then hyper targeting of ads. Of course that’s going to be potentially misused to say sell Australian teenagers antidepressant drugs or you know swing elections or do whatever and they saw that in 98. This paper explains very clearly that they saw that in 1998 and I will add that Sheryl Sandberg now the CEO of Facebook was the person at Google that perfected the monetization of that model and they didn’t actually adopt that that model the hyper targeted advertising model as a business model. They were doing subscription for a long time but when they got close to IPO always happens the bases are like you know we kind of want to know what your your financials are going to be. That’s when they switched and that’s when I think they should have dumped the whole don’t be evil slogan.


S1: Well I guess I think we can probably all agree that you know we’re at a moment where the kind of bloom is off the rose. Everyone kind of thinks that we have some serious problems with tech with their power with how they’re structured with how they’re regulated. But I guess the question then is OK then like what is the next step. What don’t you know.

S7: Well I have a couple of thoughts on that one. I think you need and this is a no brainer. You need a basic paradigm which is our ad already exists say in the financial industry where platforms and commerce cannot be completely owned by the same entity. So let’s just talk about Amazon for example. Amazon is very much like a gilded area era railroad. So they own what is now the place with it we all shop but they also do their own commerce on that and compete against their customers which I put in quotation marks. And yet they have access to this black box of information so they are simply it’s as though Goldman Sachs could both own all the trading platforms and then own everything traded on them which you know they tried to do in that aluminum scandal trading scandal a few years ago and got caught up. So there is already a paradigm for shifting those two things and that I think is coming down the pike very very quickly because it’s something that the left and the right I think actually find it lonely.

S3: I feel like agreement doesn’t solve the advertising Microsoft doesn’t.

S7: And then so my second point is that I think we’re going to start seeing a real debate around whether we need a European model where data lives in some kind of a public data bank and that users themselves have more control. Government have more control if you just look actually interesting ruling just on Thursday in Toronto. You know the Google sidewalks project up there which is about creating a smart city in which people can be monitored via sensors that are placed around this 12 acre it’s very I find a very creepy. But you know you can argue hey this is going to create energy efficiency better traffic patterns whatever the city of Toronto finally and rightfully pushed back and said You know what Google you cannot own every bit of that data that data is going in a public databank where it will be totally transparent. It can be used and seen by anybody. And we’re going to decide as citizens and taxpayers what happens to it that’s happening in Europe too and so I think slowly we don’t know exactly what the model is going to be but I think slowly you’re going to start seeing more transparency which you know same again with financial regulation is always the way to a good thing. You don’t want an opaque transaction no matter what. That’s just not fair.


S1: And I think that that’s what you’re saying there I think is really important because I think that too often when people talk about tech it’s all this kind of like we’ll just break it up. You’ve got a slow. Exactly. Exactly because what is so different about tech obviously is this just monopoly of data and as you start to move forward into a I am machine learning and the data becomes even more and more valuable it becomes more and more important that this isn’t just held within three companies.

S11: All right. And the other thing that I’m breaking up with silver then be held within like 30 companies.

S7: Yeah but it’s even harder to regularly deal with the disinformation problems or the kind of fundamental asymmetry between capital and labor in that model if you know if we think most corporate value is going to live in data and IP which 80 percent of it already does. That’s a McKinsey Global Institute figure. Then you need to find a way to share that pie. But what I would like to see actually in this is a challenge I mean to issue this challenge here on your podcast. I would like to see folks like Hal Varian who is the chief economist of Google and basically invented the field of data econometrics and saw that we were going to be I mean you go back and read his books he saw exactly there was gonna be a winner take all phenomenon of a handful of companies we’re going to dominate this space. All right. Well you know now that we’re here and we have all these negative extra now tell us how to fix it. Help us out. You know these guys don’t communicate and help in this public policy process that’s going on right now. They just come and tell us Oh we couldn’t predict this we didn’t know.


S3: At times I was. I remember a conversation I had a few months ago coming to who was with trying to work out who is the richest economist in the world.

S12: Definitely Halle Berry definitely Halle Berry in hundred percent. Yeah so like it’s weird that like how Varian has become like dynastic be wealthy through like monopolizing data is not going to be the best who.

S6: Larry Summers Number two no flow. I mean all Jewish life is worth way more than Larry. Okay. But that’s mostly because his wife here’s here’s a question.

S9: So I’d like if we’re thinking that what did Felix say earlier tech is evil Facebook is evil. Do you think that Facebook would try. Maybe in some way to. They don’t want Elizabeth Warren right to become president and have a message to them. So he was she was an existential threat. So how would it not be tempting for a Facebook to give you know to push the election in another way like they have immense control over their platform. They have immense control over the algorithm and what people see there’s all kinds of ways they can tweak it that aren’t illegal. Are they.

S13: That could give her you know they’re not illegal because they can’t be seen.

S3: I mean it’s it’s it’s there even if they could be seen they still wouldn’t really.

S10: That’s right. That’s right. So they really good. Exactly right.

S7: Handicapper hundred percent and in fact that’s one of the reasons why she came out the other day and was slamming that you know they recently hired as a head of policy a former George W. Bush aide and they’ve ramped up their lobbying in a massive way which Pete mentioned.


S6: Nick Clegg Nick Clegg bless him. Exactly.

S7: Boy he yeah I mean the fact that he let just give that speech in Georgetown where he stumbled into comparing himself to MLK Frederick Douglass Facebook first amendment Vietnam. I’m like What why.

S3: Nick I mean it’s a Nick Clegg. Just the background for the people state money listeners who don’t know who Nick Clegg is.

S5: Nick Clegg with this kind of fresh faced with leader of the Liberal Democrat Party in the United Kingdom when he found himself going into a coalition government with the Tories with David Cameron which proved absolutely disastrous on a bunch of different levels and he wound up having to leave politics.

S14: And he in one of the reasons that it was completely disastrous was that he basically took David Cameron and his word on a bunch of things and entrusted David Cameron to do a bunch of things which they never did. And now he’s he it looks like he’s coming out and just blindly trusting Mark Zuckerberg who’s clearly only takes even less press.

S7: Plus why they didn’t David Cameron 100 percent. He’s also one of a number as you know British politicos that have gone over to the dark side and and you know are Rachel Whetstone you know becoming flacks for big tech. What’s interesting to me is I think that there’s actually a deeper challenge here. I think that Mark Zuckerberg and Elizabeth Warren the square off between them isn’t just about breaking up big tech. It’s about two economic systems. If you think about neoliberalism globalization as we’ve known it for the last 40 years Facebook is like the apex of that if you think about a company that can fly over the problems of any individual country it is Facebook and the people that run these companies were born and raised in an era in which government wasn’t good for anything but don’t mean cutting taxes. So they have no concept that things should be any different. Elizabeth Warren does she is about to admit she had her way I think we’d go back to having an economy that was a little bit Eisenhower era. But without the racism you know I mean she would like to see much kind of you know broader more insource supply chains local economic because it’s the exact opposite. And that’s the big conflict here. It’s this kind of 40 years of corporations prospering Labor not so much. And are we now. It’s going to see a pendulum shift back to more public regulation OK.


S15: Next up.

S3: And let’s talk about the NCAA and first of all because I am famously complete. I know nothing about sports. Well you’re gonna have to tell me what NCAA even stands for. They Hey the.

S6: National Collegiate Athletic Association. OK. So what does it do.

S1: So basically the end CWA overseas Division 1 Division 2 and Division 3 college sports. Now any team you’ve probably essentially ever heard of is a Division 1 team. That’s those are the teams that are giving out all of the athletic scholarships as the teams that are winning all of the championships that you’re seeing. And what happened this past week is that the end CWA came out and said that we maybe might in the future at some point allow student athletes to make money off of their name likeness and image. Didn’t they actually have a deadline in late 2021. But the reason I’m saying this is because this statement was written in such typical NC double a fashion which is like what any part of it actually means is so up for debate. What this was and I think this was a very good thing that happened. However this was simply a reaction to clearly what happened in California what happened in California governor Gallop Gavin Newsom came out and said that they passed a bill saying that athletes in California would be allowed to make money off of their name image and likeness so this is like if you’re in a.

S11: So this is like this is like auto emissions if you’re going to if you’re going to have to do something in California you may as well.

S1: Well and also because this has been something that you know has been kind of percolating for a while and in college sports you’ve been kind of increasingly seeing little changes here and there that are giving players a bit more power. And so this was essentially something that was going to happen eventually. And so they basically said OK we’re not going to fight this we’re kind of giving in to the inevitable. However they did come out with a very vague statement. And so there is still a lot of questions about moving forward. What is actually going to happen now.


S3: And just to be clear when when they’re talking about licensing name and likeness so so that basically means the what you can’t have is everyone on the team being paid the same amount. They all have to license their own names.

S1: This is more like so if you have if you have a video game if you have like Madden college football and you have a player from you know University Michigan and he’s his can see himself in that game His name is in that game but he does get a cent from that.

S7: That’s the kind of thing that is actually an interesting tech just to kind of connect the dots here. Interesting tech angle on this because Newsome in California is also behind California’s push to create a digital dividend system where that goes to this idea of you’ve got this huge amount of wealth living in brand intellectual property data personal information and so if that’s where all value is going to live you’ve got to split the pie more equally and I think that there’s an interesting corollary here I mean this is a very high profile kind of case everybody can kind of agree. You know our buddy Jonas Sara did this book indentured a couple of years ago looking at how ridiculous it is that these athletes come in and are complete exploited and I think that this is the tip of what is you’re going to see a trickle down effect where there may be other ways in which you know high level folks in in media entertainment get more rights over the use of their time.

S15: So yeah. OK.

S11: So I want to ask my first question here which is if this is about this University of Michigan football player getting paid for being in the Madden video game on the one hand yes he should just like all professional players get paid for that. I don’t have a problem with that tool but on the other hand doesn’t that create an insane amount of inequality within football teams on campus. Well I like the stars get the video game contracts and everyone else gets nothing.


S1: 100 hundred percent. And this is actually why when you look into paying college athletes it’s way more complicated than I think a lot of people think because the way the system currently works basically most of the players are kind of riding on the coattails of a very small number of players who would ever be able to make it to the NFL or the NBA. I know more about college football so I got to talk more about football and basketball even though the NCAA of L.A. actually makes most of its money off of basketball. So because currently right now if you’re like you know top 20 program the package that a student athlete will get especially if they stay for years is easily upwards of a million dollars. If you kind of factor in everything that they get.

S3: Wait wait wait. So explain that. That’s the scholarship package.

S1: It’s a combination of the scholarships they get the housing they get the kind of nutritionists and food that they get all of the facilities they get all of the trips that they get all of their a lot of things. And then that’s not even factoring in the present value of a college education. If you actually stay for years and get it. So there the current athletes. And again this is only if you’re at the top programs. This is not necessarily if you’re in a very low program you are getting a lot of value being there and if you compare that to what players get paid in like minor leagues which is nothing it’s not necessarily the worst deal. And especially it’s not a bad deal for the many many many players on these rosters because you can have like 125 players on a division 1 roster. Most of those guys would never be able to make anything close to this. Right. So that’s why when you talk about paying players it’s the numbers start to get really complicated. What we’re seeing here with what happen now with this NC to play this I do think is fair for those small number of players. However it most certainly will just continue to kind of create a bigger divide between the star players and everybody else.


S9: And why should colleges have what are essentially Karzai professional sports teams. It just seems like it goes against what academics is supposed to be and the values that they’re supposed to get us all hooked into and it skews admissions. If you like pull back a little bit like. All right.

S3: I really love you again Amanda and I can tell you like the closest thing. There’s no such thing as college sports in the UK I mean except for like the annual Oxford Cambridge boat race which I mean lovely.

S16: That’s about not risking head injury there.

S1: Exactly. So I’ll I’ll say this in two ways. One I’ll say in the way that I can’t justify it with any logic whatsoever but I’m just going to say it anyway is that if you are a college sports fan and you grew up with college sports it is like a religion. And if you’ve never been in it I think it is very hard to understand. And I’m not saying that that justifies anything I’m just saying that I think when people outside come times look and they like but I don’t understand you like because the fan bases and the alumni and look what this means to a lot of these universities is so huge. And I do think that you know it is a it is weird granted that though the way that college sports work. And again it’s a very small percentage of college sports right. It is weird and it’s not like anything you see anywhere else.

S5: And the other thing is things like private I mean the other thing which I come back to is the big difference between U.S. tertiary education and U.K. tertiary education is that the U.S. the top universities in the U.S. are private and the top universities in the UK public. And if you’re a private you have these incentives to want to maximize your revenues and it’s obvious that having a successful sports program is great for bringing in money from alumni and from ticket sales and from you know mostly from TV rights. So what. So that they the people running these universities have every incentive to do they do.


S7: But you know it also creates a build up in debt sometimes. There’s been a number of studies done recently that some of the second tier universities that are trying to create these programs they build these really expensive stadiums. They go into debt. Now that bubble is popping. It’s like German banks trying to make it in the U.S..

S16: And that is that I do agree with you.

S1: I mean I do because I think that’s the other thing when people think about college sports they think that every college sport makes so much money it’s like no most of the programs do not make any money.

S7: But there is an arms race that’s what you’re saying and there’s a real superstar effect not only on the teams but amongst the schools themselves. So there’s a handful of winners and then there’s a lot of people that are probably just breaking even or maybe it’s a financial and a bad financial mess.

S1: Yeah. And I honestly think that this is going to get worse because of a number of other changes that have been made recently. I think that this is actually going to get worse. And I wouldn’t be surprised if in 10 20 years a lot of those lower tier programs end up going away because they’ve chain. I won’t go into all of this but because I could go on forever they’ve changed some rules about how players can transfer and what that is doing is it’s allowing the best players on some of these lower tier teams to get picked off by the Better Schools. And that’s just going to make it so that there’s no depth at the skill positions in all of these kind of lower tier schools and so they’re not being able to compete.


S9: So and also there’s this kind of like affirmative action for athletes in the Ivy League where I mean we saw that statistic recently I think was at Harvard.

S10: Forty percent of admissions white admissions at Harvard involve like athletic scholarship of athletics or legacy or legacy. And I feel like at schools like that which aren’t even in the top tier that there and there are already there’s this big you know they can’t let in everybody kind of mentality and people are complaining about who doesn’t doesn’t get into Harvard or Yale or whatever and they’re letting in these athletes who wouldn’t get in.

S15: Otherwise it just seems like a skewed system that could go by the wayside and we’d all be a lot happier I want to talk about wind and wind power and we all get wind lack of power because I’ve been spending a bunch of time at axioms for random reasons looking into the economics of wind power.

S14: But what we have seen right now is the wind doesn’t just cause electricity it also causes blackouts.

S9: And Emily knows this because well I woke up this morning in upper Westchester to No no electricity because it was windy and we lost power have amazing amazing should have.

S5: My aunt is saying that yeah basically the way the way that this works is the America has not buried its power lines almost anywhere. And so every time it gets windy the power lines blow over. And then there’s no power. This is particularly bad in the hot dry season of California. Because if it gets wind windy and the power lines blow over. Not only do you lose power but you also spark fires. And so PG&E the big utility in California in a sort of a prophylactic attempt to prevent this has decided it’s just going to cut power to a couple of million people because that way at least when the power lines blow over they won’t have any electricity running through them and they won’t they won’t cause any fires. And again this is something where Europeans just look at America and go what on earth are you doing.


S12: Why can’t you just lay bare your power lines like We’ve been doing in Europe and a massive national infrastructure program.

S7: Felix I don’t know why you think that. But you know there’s that this is interesting. I think that this is not just about wind and it’s not just about PG&E. This is about corporate America and short termism PG&E knew for years that they had problems with those power lines and they needed to be upgraded and they made financial decisions because they didn’t want to put that investment on their balance sheet and upset the street. And it is now coming back to bite them and I see a lot of overlap between what’s happening there and say what’s happened to Boeing or what’s happened at G.E.. I mean there’s there’s I think we’re seeing a whole raft of you know to use my wonky word problems with financialization the topic of my last book I got a plug in.

S6: You can cut it if you want no more on the books more better.

S7: But but I think that this stuff is coming home to roost now and I mean we’re going to see more of it.

S17: And I think that’s a really good point. Now I think especially in the when you’re talking about PG&E because like when you’re talking about the difference between you know public and private utilities like of course like in theory or like well private companies should always be run better and sometimes they are. But I think you’re right that they’re not always run better.

S7: Well they can’t be because when they make the long term investments their shares go down. And if we continue with the current system I mean we’re well talking about moving to a stakeholder system. But frankly these companies still have a fiduciary duty under the system we have now to please the street. And so unless you change that they don’t have the incentive to make those investments.


S17: It’s true and I mean like an obviously on the public side to you sometimes do have the issue of getting people like getting taxpayers to also pay to do the mainland stuff which nobody wants to do so there’s no perfect situation. I mean it’s not like the MTA and I guess that’s what more I’m just saying is that I think that it’s easy for people on the right to always say that everything private always better it’s easier sometimes it left is everything public is always better and I think it’s really the reality is that they both can have issues where they can run things really well. Know it’s a great point.

S7: I think actually it brings up something else which is that when do markets work and when don’t they. Markets work a lot of the time and the right is is correct about that. But there are certain areas in which they don’t work very well I would say health care is one I would say things like investments in public infrastructure issues that only pay off two or three percent is one.

S3: I mean if I’m a developer do I want to fix powerlines or do on want to build you know high rise condos and the one place where everybody knows that markets don’t work is when you have monopolies and when utilities I mean suddenly PG&E is a monopoly and there’s no particular reason to believe the market forces can help in that sense because I know competing against anything granted they are obviously regulated utilities so that’s partly the idea that they’re given a monopoly and so thus the government is able to say like you basically they have to set a certain profit rate and all of that.


S17: So so yes they are in a very like you. They’re a unique type of monopoly. But then I also think you’re right that the government is doing some things right. But then they can’t force them to do other things because there’s not competition.

S9: So I feel like there are a few things left to talk about first is PG&E is in bankruptcy and no one seems to know what the hell to do with it.

S10: Newsome was out there asking Warren Buffett and Berkshire Hathaway to like take a stake and reach out that way like I’m done. I don’t really do rescue like that. And then you know I think San Jose said Let us owner let the let the people take take it back.

S12: As in the Californians are just the people who have a say. People of San Jose. I read the article correct.

S10: And then I thought Farhad Manjoo had a really interesting op ed in The Times where he said it was the end of California as we know it. Which maybe is a little overblown but maybe not. And he really pointed to just the lack of sustainability in the way people live in California and really all over the United States where you know because it’s so expensive to live in the urban core. This is kind of his mantra the past few months it seems like so people have spread out more and they have to drive more and electricity has to go out to more people and just the way the whole system is set up and public transportation is so weak. We have created a state where it’s now on fire in part because of infrastructure issues and the way we’ve kind of let people sprawl out. And and it was kind of a sad pessimistic piece because he was like no one’s going to take this.


S7: Okay sir I’ve got the optimistic answer that two words industrial policy. It’s like we actually need some planning at both the state level and it’s not just industrial policy.

S3: It’s very simple urban policy like the reason why California is sprawling is because there’s no density in the place where everyone wants to work which is the Bay Area. Exactly. And the reason there’s no density is because there’s this incredibly strong NIMBY lobby basically saying you can’t have more people in the Bay Area is enormous just in terms of like square kilometers. It’s absolutely huge.

S5: You could fit eight times as many people in there as currently live at. No problem. But everyone worries about their property values and wants to keep it looking like a strip mall and therefore it never changes. I mean this is a thing which drives me like it just baffles me. If you drive around Palo Alto or like you know that big neck of the woods it’s not like yeah this is some beautiful bucolic place that needs to retain its natural beauty Bailey you.

S6: I want to live like this.

S7: And also why did you build their buildings like circles. Well.

S17: You talk about the Apple HQ my theory behind that is that it looks like what somebody in the 80s thought the future would look like.

S16: My theory about that building I think very good.

S5: I mean honestly I think it’s quite hard to spend that much money on a building without doing something completely crazy like making a tortoise.

S6: You’re going to try and spend like five billion dollars on the building like it’s hard. You need to make a Trojan horse one of them.


S3: Let’s have a numbers round. I feel like this is this is an opportune time to come up with a number did you bring a number on. I did. What’s your number.

S7: Twenty two percent. That is the number of tweens in this country that read for pleasure more than once a month according to a census done by Common Sense Media which is Jim Steiner’s operation Tom Tom’s brother who is trying to get tougher rules around online media for kids because basically not only are they addicted to fortnight but they’re not cracking open any books ebooks or regular books. Well my kids are voracious readers. You know my daughter is but my my 13 year old is not for these very reasons and it does tend to skew a little bit more problematically towards boys apparently. Yeah I’ve been doing some research on this and I you know one of the reasons I actually did my big tech book was that my kid became addicted to an online soccer games like he fell into the game and spent over 900. Now you know in small small increments. And I boys tend to be very vulnerable to that kind of online media.

S17: Yeah. There’s actually really some interesting stuff about some of those games about whether or not they’re betting because of the money element. They those and especially those they do target kids it’s the ads issue.

S5: My number is 1 billion dollars which is the amount that good friend Joe Lowe friend of the park and the you have to refer to him in all news reports as the fugitive Malaysian financier. What.

S16: About that.

S18: I mean I have another that I remembered it’s a bit like you know when Domingo Caravaggio was finding this that he was always mercurial. You were there you’re never allowed to refer to him without the word material and you can ever referred to Joe without calling him a fugitive financier. But he is.


S14: No one knows where he is except apparently the Department of Justice in the US maybe knows where he is because they’ve managed to extract a billion dollars from him. They’ve seized all of his assets and they’re going to sell off all of his assets and they’re going to give the proceeds almost certainly back to Malaysia whence they were stolen. With the exception of 15 million dollars because his assets were all frozen so he couldn’t pay his lawyers. Poor guy. And so 15 million dollars is now going to get sliced off that billion not given to Malaysia after all but rather given to Joe Lowe’s lawyers and you know who the number one lead lawyer is.

S19: Is David Boies who is a.

S20: It’s Chris Christie. Oh come on.

S21: Are you serious. There is. A. Those first mistake right there.

S1: So my number is 913 million dollars. That is the interest and principal payment that PDVSA missed this week. So PDVSA which is the state run oil company. Venezuela basically is Venezuela. So basically one of the only parts of the Venezuelan debt that was not in default was this PDVSA 20 20 bond. And it missed its payment this week and it won’t go to the whole story even though it’s amazing because technically the person who missed the payment is one guy DOE. The Venezuelan leader not recognized in Venezuela because he controls Citgo which is in the U.S. which technically could pay the payment and it’s the collateral of the bond. So if you are curious is he. Well he’s I don’t know if he’s so mature. But he’s uh he’s flailing. That’s that’s his a.. Yeah.


S3: So anyway it’s it’s a fascinating story and we will yeah definitely talk more about Venezuela and Argentina. Oh yes. Yes. Slate Money because of course the there’s a default minded president just got elected in Argentina. Oh yeah. In case you haven’t had enough sovereign debt default one carry on Slate Money.

S5: There will be more to come. Emily what’s your number.

S10: I’m really torn right now because I want to just talk about it at Google but I’m going with my plan which was fifty nine point three okay. My number that is the current average critics score on Rotten Tomatoes which is the site that aggregates information about movies and tells you if they’re good or bad for oh for all movies horror movies is this number has been. So 60 is when something is fresh which is good tomato. Okay. And this number. So it’s fifty nine point three now husband creeping up there is grade inflation on runs. Meadows according to this piece in Morning Consult dot com and I hope I’m explaining it correctly and no one quite knows why the inflation is going on. People who make movies say it’s because movies are getting better but we can all longer know that that’s untrue. I’m not sure they change that. There is some tinkering no one exactly knows what goes into making the critic score like its critics. They gather ratings from critics but they don’t say exactly which ones. There were some complaints a few years ago there wasn’t enough diversity but the bottom line is the number is creeping up on how much is it creeping. Let’s see. It was in the 40s like back in the day like when this started in the 90s but it’s crept up I think from like 57 or something like that for some reason I didn’t write it down.


S3: I do I do have a light and there is an intuitive explanation that when Fandango bought them and times yes.

S5: So there were two two obvious explanations for this when one of them is just the you know if it’s owned by Fandango which makes all of us maybe selling tickets to movies and they had consented to try and increase that the propensity of people to want to go to movies by giving them fresh ratings. The second one is that as people consume more and more movies at home on Netflix and Amazon Prime and places like that the amount of effort and quality that you need in order to drag people out of their homes and into the movie theater goes up and you just can’t get away with crappy movies right now in the way that you used to be able to.

S1: You know I also wonder if partly it’s well because I’m thinking like ah if you have movies also that people are watching at home and it’s taking less of an effort to say there’s no way right.

S17: Whereas like if you’re like going to get your butt out to actually go to the theater and the movie is not good. I don’t know. Like I wonder if there’s something I think you’re doing. Just yeah.

S14: The other if that includes if that fifty nine point three includes all of those made for Netflix Adam Sandler movies that never make it into theaters then that would make no sense.

S10: Yeah. Our movie’s getting better right to us.

S16: Yes. Let us know.

S3: Slate Money at Slate dot com is the e-mail address. We love your e-mails. Keep them coming. Stay tuned and for a Slate Plus segment on Google and Fitbit which is the latest merger. Well acquisition and otherwise.


S22: Many thanks for listening. Many thanks to just mean Molly for producing many thanks to none of you for coming in and joining us. And we will talk to you next week on sleep.

S5: Emily you wanted to talk about Google but I just got a new Fitbit.

S10: You guys it’s a Versa light. Oh wow. It looks just like an apple. Yes. My son sometimes is like why don’t you just get an Apple Watch mommy and I’m just like we’re not that rich but yeah. So I just got this new Fitbit.

S9: And then today I’ve got the alert on my phone that Google has bought Fitbit.

S6: Did you get 1 billion dollars in Maine alone on your watch. No. For some reason I can’t get alerts to work.

S13: I’m still figuring out the new ad that I’ll be able to track your biological. I’m so upset about it and put them in the black box. This is the one of the bigger as you know we talk about surveillance capital and usually but think about it in terms of advertising and search and social media. Health care is the biggest area where this is coming. And boy I think that that is where you’re going to see if there is an Exxon Valdez of privacy. It’s going to be in in something horrible happening with people’s health care you know not being able to get insurance because they can see you have an a rhythmic heart right. I mean this thing knows my heart rate salute and how active I am and maybe how much I eat. And it’s by the way it doesn’t fall under existing health privacy regulations. None of this. Yes. So Google I guess this morning and Fitbit were saying like Oh we won’t use your data for advertising but you’re saying they could use my data for other thing they can pass your day at your health care data around currently in ways that ordinary health care companies would not be able to. Yes absolutely.


S3: So either you deny as fast as they can to do it before the regulators come and Apple Apple of course is at the forefront of this and they are trying to frame it as a wonderful thing because there’s all of these stories you see every week or two someone fell over and knock themselves out and they’re watched like called the emergency services and their life was saved.

S6: And this does not flower when it does happen in people’s life.

S3: I mean the Apple Watch has genuinely save people’s lives but it’s not clear how often that happens. Yeah.

S1: And you know there definitely are potentially positive uses of some of these I say this as someone who has a garment who runs who loves her men who like it. It definitely improves by running in many ways. So I don’t think it’s necessarily an issue of you know we just should have nothing that tracks data. I think it’s more just kind of what you’re saying like we need regulations to catch up with this like this is the kind of you know this is every industry. But I think tech because it’s like everything on steroids it’s just like in the obviously our government is so far behind.

S5: Yeah. And the thing which I worry about here is on the one hand there are all of these genuine questions about the data and how it’s being used. But the thing which worries me a little bit more than that is the fact that Google is buying Fitbit you imply like the reason the under capitalism you know the mergers like this happen when Fitbit is worth more to Google than it is on its own. And the reason that it’s worth more to Google is because Google is a data company and they make they monetize data. That is what they do. That is their job. And if you incorporate Fitbit into the Google Borg. Its ability to monetize that data goes up and it is therefore therefore make sense on a financial level for Fitbit to be part of Google. And that’s the bit that worries me because while I’m on some level okay with Fitbit as a for profit hardware device maker which people buy because they like the Nazi gadget it’s a little bit more problematic to think of Fitbit as a for profit data monetization company and that looks like that’s the reason for the acquisition.


S17: Yeah I think it has to be the reason because it’s not doing particularly well as a hardware company right like I mean it isn’t is just simply has been kind of overrun by all of these other better gadgets. And I think as you said the only reason you do this is because of the data. But I also think that’s frankly some of those other companies that are also doing well. The reason that they’re doing well is also because people think that the data they’re collecting is going to be useful later.

S11: Do you think that Apple is monetizing all of the health data from the work.

S9: Yeah that’s that’s my question because Apple’s whole selling point lately is that we care about your privacy and they know that.

S7: Well you know I kind of question that I mean yeah their core business model is different than a Google or Facebook they’re making devices they’re making money from devices. But if you look back there was a scandal maybe six months ago where Facebook had yet another privacy violation. And it turns out that Apple was unbeknownst to the higher ups sharing information across apps in ways that the top brass didn’t even know about. So you know I think I just keep going back to the financial analogy this seems so much to me I’m looking at Felix because he and I were there 2008 when even the risk managers at the banks didn’t know what the heck was going on. I feel like that’s a problem. And the more and more data and the more and more acquisitions get spun into these firms which by the way they all want to be the operating system for your life. That is the goal here. I think that that risk ratio becomes more problematic and I think in the case of Apple too.


S17: I mean they’ve been very explicit about the fact that they understand it they’re gonna be selling less and less hardware which we also just saw in their their last results. So their whole plan is to shift more and more into services. And to me I don’t quite understand how you do that and are trying to be able to stay as profitable as you currently are selling all this hardware unless you start monetizing more of this data. Just what I mean. They might.

S5: Yeah I for the watch though specifically for the health information on the watch I think just on some level I would be more comfortable trusting that my data is not being monetized if I owned an Apple Watch and if I owned a Fitbit and I think the reason for that is that no one apple is does have a certain degree of religion when it comes to private data. As

S15: you know every podcast knows and also that when they’re monetizing the watch.

S11: Number one it’s an expensive watch. They make quite a lot of money just by selling the watch. But number two they’re increasingly basically forcing you not just to spend a lot of money for the watch but also just bend to basically subscribe to the watch and spend money every month which is why like nearly all of the apple watches now have cellular capabilities and so you’re paying for that monthly cell phone bill for your watch. And then they can add in other subscriptions to the watch as well. And if they can turn that into a simple subscription revenue that’s a good way of like getting services revenues for them. But it also means that they’re less incentivized to monetize in more invisible ways.


S1: Yeah I completely agree with you and I think that is entirely what they think they’re going to do now. I just question whether that is actually going to work. And if you are going to see a point where that just doesn’t make sense for them and they’re going to have to go with the almost at least partly the same model everybody else has.

S9: I wonder if Google is thinking any of that about the Fitbit like using the devices to get people into their universe or is everyone already living in the Google universe anyway.

S13: Yeah but 100 percent I mean health care has always been an area that they’ve wanted to get into. They’ve been on that for quite some time and I suspect that’s just the beginning of it.

S3: Yeah they have an entire US healthcare subsidiary at the alphabet level right.

S21: And they already know about everyone’s health anyway because everyone’s always google exactly like paranoid does this cause brain cancer. Does this symptom you know die. Well might have my day.