Felix Wrote a Book!

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

Speaker A: Hello and welcome to the Felix Wrote a Book episode of Slate Money, your guide to Felix’s book.

Speaker A: We will talk about the business and finance news of the week insofar as it comes up in this conversation.

Speaker A: But for the purpose of this show, I am not just Felix Hammond of Axios.

Speaker A: I am Felix Hammond, the author of The Phoenix Economy work, Life, and Money and the New Not Normal, available wherever good books are found, and even in quite a few places where bad books are found.


Speaker A: I am here with Emily Peck, my colleague from Axios.

Speaker A: Hi, I’m here with Elizabeth Spires of the New York Times and lots of other places.

Speaker B: Hello.

Speaker A: And I get to kind of sit back in this one, I think, and just answer some questions.

Speaker C: All right, Felix, I really liked your book, and congratulations.

Speaker C: This is so exciting.

Speaker A: Thank you.

Speaker C: Maybe you could start kind of how you start the book and tell people why you called it the Phoenix Economy in the first place.

Speaker A: The economy came to a halt in March 2021.

Speaker A: Of the things I’ve been saying is that one of the symptoms of trauma is memory loss.


Speaker A: We went through a very traumatic period in 2020, and a lot of us are already forgetting what it was like, which is not necessarily a bad thing.


Speaker A: But one of the things we forget is how deep and terrifying that 2020 recession was.

Speaker A: The entire global economy basically just stopped spinning.

Speaker A: It came to a screeching halt.

Speaker A: All supply chains were broken, massive international barriers went up.

Speaker A: We had the largest negative GDP prints of our lifetimes.

Speaker A: We had the highest unemployment rate of our lifetime.

Speaker A: It was terrifying.

Speaker A: My ex boss, Nariel Rubini, was coming out and saying we were headed into a greater depression that was even going to be even deeper than the Great Depression of the 1930s.


Speaker A: And there was a lot of real pain and catastrophe going on in the world.

Speaker A: And from those ashes, a new economy rose.

Speaker A: The Phoenix rising from the ashes.

Speaker A: We all know that story.

Speaker A: I think that one of the things we don’t realize is how different the new economy is from the old economy.

Speaker A: We really did reinvent things.

Speaker A: We Shook the Etcher Sketch is one of the chapter titles, and we built something new.

Speaker A: And we availed ourselves of this tragic opportunity to really revisit the decisions that we’d made up until then in terms of who we work for, where we live, what we value.


Speaker A: And we often changed careers, moved locations, changed the way we think about the world, changed our priorities.

Speaker A: And story came out this week about how people are much happier at work now than they were pre pandemic.

Speaker A: And I think that’s symptomatic of the way that people proactively and quite consciously reinvented, reconfigured the way that they were going to participate in the economy.


Speaker A: And I think that’s one of the main threads of optimism that runs through the book and one of the reasons why the Phoenix economy is fundamentally an optimistic concept.

Speaker A: Although obviously the new not normal has as much downside as upside.

Speaker C: Yeah, and we should get into all those threads.


Speaker C: I did want to note and you make the point that the world was a very different place pre pandemic and it sort of also was a world shaped by a trauma, in that case World War II.

Speaker C: And like the whole structure sort of of the global economy was based on not wanting that to happen again.

Speaker C: But you’re not saying in this book that this new world we’re living in now is based on no one wanting a pandemic to happen again.

Speaker C: In fact, it seems like no one really is thinking about that much at all.

Speaker A: One of the things I say is that there will be another pandemic and it will happen.


Speaker A: It won’t be another 100 years before the next one.

Speaker A: It was really randomly lucky and aberrant that it took 100 years from the between the last pandemic and this one.

Speaker A: Pandemics normally come much more frequently than that.

Speaker A: You can be better at pandemic preparedness than we were.

Speaker A: I mean, that’s obvious, but there’s a limit to how prepared you can be.

Speaker A: The one other silver lining is that having lived through this one and basically invented mRNA technology on the fly, I think we now have a playbook for how to develop vaccines and therapeutics that we didn’t have in 2021.


Speaker A: Of the things that really astonished me about this pandemic was the way in which therapeutics improved enormously over the three years.


Speaker A: A disease that was unbelievably deadly and terrifyingly deadly in its alpha incarnation became something that even unvaccinated people can get and be treated pretty efficiently with today.

Speaker A: And that enormous amount of learning that we’ve done in terms of how to treat this, we’re not like just wheeling out ventilators and hoping anymore.

Speaker A: We know what we’re doing much more now is going to serve us well when the next pandemic hits.

Speaker A: But, yeah, the long term consequences of the pandemic are not really about the way that we try and prevent a new pandemic and the way that the long term consequences of World War II were in large part, a really explicit attempt on the parts of the international community to make sure that we never have another World war.


Speaker A: But yeah, they’re going to be maybe not as profound like World War I reconfigured the nation states of Europe, world War II created the UN and the IMF and the World Bank and all of that kind of stuff.

Speaker A: I don’t think the Pandemic is going to have that kind of thing, but it is going to have international consequences.

Speaker A: And it is going to I think if you look at it through the frame of historical hindsight going to mark the point at which especially the US.

Speaker A: China relationship stopped being one of just, like, mutually beneficial commerce and started being much more antagonistic.

Speaker B: In the book you talk a lot about the conditions in the pandemic that laid the groundwork for the changes you’re talking about, in particular what you refer to as epistemic crisis.


Speaker B: Can you give us some examples of that?

Speaker A: So, yeah, the therapeutics for COVID are a really prime example.

Speaker A: We didn’t know how to treat COVID, and now we do.

Speaker A: That was.

Speaker A: We woke up in the spring of 2020 having become accustomed to a world.

Speaker A: I call it like the Google World, where if you wanted to know a fact, all you needed to do was take out your phone and type it into Google.

Speaker A: And then the fact would appear and we could all just know what all the important facts were.

Speaker A: Suddenly all of the facts that we wanted to know were unknown.


Speaker A: We literally didn’t know.

Speaker A: Anthony Fauci would come out on television and try and do the best he could to convey to the American population what we knew about the disease and how it worked.

Speaker A: And he would, as a scientist, learn new facts over the course of time and then Americans would get very angry at him for not saying this week what he said last month.

Speaker A: He’s learning new things, he’s saying new things.

Speaker A: He’s just realizing that masks are much more important than we thought they were or something like that.

Speaker A: And then people get very angry at him for not having said that masks were important back when we didn’t know how important masks were.

Speaker A: And that becomes incredibly important in the new not normal.

Speaker A: And I think this is going to be just a profound, semi permanent change, is that we are going to find ourselves in situations where we just don’t know what the facts are and we’re learning new things and we need to have that kind of epistemic nimbleness to be able to learn new things and to be open to that rather than doing what a lot of people did, which is just pick a set of facts that they were comfortable with and stick with them.


Speaker A: It is not healthy to live in a country where 40% of the population thinks Donald Trump won the 2020 election, which is just outright false.

Speaker A: But that seems to be where we’re moving, that we seem to have found ourselves in a place where we not only don’t have the facts, but we’re kind of okay with that, we’ll just choose our own facts.

Speaker A: And that kind of terrifies me a bit.

Speaker C: That’s one of the most interesting things about the book.

Speaker C: It’s this idea that we at some point had lived in a world where everyone was on the same ground and had the same understanding of facts because the world was pretty stable then once things sort of got shook up in the pandemic when we truly were living at the edge of facts, where people didn’t know anything.

Speaker C: And you talk about having to change your mind about what you thought was the truth all the time.

Speaker C: We all did.

Speaker C: It was like, masks don’t help.

Speaker C: Masks do help.

Speaker C: You have to wash your fruit.

Speaker C: You don’t have to wash your fruit.

Speaker C: Like, you need to quarantine your mail.

Speaker C: No, you don’t.

Speaker C: You can read your mail, blah, blah, blah, on and on.

Speaker C: You can go outside without a mask.

Speaker C: Every day was like a new lesson, and I think I don’t feel optimistic about the results of that, because it does feel like that was, like, one more reason for so many people, especially in the US.

Speaker C: To just stop caring about facts or just to forget it and say, no one knows anything.


Speaker C: And it’s just like a step on the road to nihilism, if anything, it’s.

Speaker A: Definitely part of this bigger crisis of institutional legitimacy, which began before the Pandemic.

Speaker A: And if you really want to mark an end to that sort of 70 years of peace and prosperity that followed the Second World War or at least 30 years, but you can basically trace it all the way through 2015.

Speaker A: In the case of the United States, I think we can talk about whether the 70s were aberrant and an exception.

Speaker A: But the idea that we all could have a set of shared institutions and understandings and shared facts that we agreed on and we would have a three winged system of government that we trusted and that we could trust.

Speaker A: In things like the dollar as, like the bedrock of American society, or even like apropos the debt ceiling crisis that is happening right now, that we could trust in the full faith and credit of the United States.

Speaker A: All of these institutions have become sort of uncertain in a disconcerting way, and the dollar has become eroded in the idea that it’s really important.

Speaker A: And I have a whole chapter about that.

Speaker A: And, yeah, I totally agree that this is dangerous and it contributes to this high volatility, fat tailed world that I call the new not normal.

Speaker B: Can we talk a little bit about the dollar in particular?

Speaker B: You make an argument that we don’t have faith in money anymore.

Speaker B: Sort of broadly, how does that apply to dollar hegemony and what we think of as still the strongest currency in the world?


Speaker B: Arguably.

Speaker C: Yeah, man dollar still rules.

Speaker C: Felix what are you talking about?

Speaker A: Dollar still rules.

Speaker A: Undoubtedly, the dollar is strong, right?

Speaker A: We think of the dollar as having a certain amount of political capital, and political capital is something you can spend.

Speaker A: And for many decades, what we were doing was we were building up the political capital of the dollar, the strength of the dollar on a kind of conceptual sense rather than a sort of foreign exchange rate sense.

Speaker A: And then we started spending that down, and there were good reasons for spending it down when most Americans suddenly just woke up one morning and discovered that they had $1,400 in their bank account that wasn’t there the previous day, that the money seemed to have just been magicked into their bank account.

Speaker A: That was a very important and very useful part of fiscal policy.

Speaker A: And I have a whole chapter about how Steve Mnuchin was like the unsung hero of the crisis.

Speaker A: But at the same time, what that does is people start thinking, wait, is this dollar really as real as I thought it was?

Speaker A: Then the US.

Speaker A: Government basically takes the hard won foreign exchange reserves of first Afghanistan and then Russia and effectively vaporizes them, freezes them, says, like, you know, you thought you had all of these billions, and in fact, you don’t.

Speaker A: And that was not fiscal policy, that was foreign policy, but it was still US.

Speaker A: Government policy.

Speaker A: Basically weaponizing the dollar for the purposes of what the government wanted to do.

Speaker A: And you can make a relatively strong case in both cases that it was the right thing to do.


Speaker A: I wouldn’t have done it in the case of Afghanistan.

Speaker A: I don’t know about Russia, but it was done.

Speaker A: And what this does is it marginally weakens that dollar hegemony.

Speaker A: The dollar is still by far the strongest currency in the world.

Speaker A: I do not anticipate that at any point in my lifetime.

Speaker A: It won’t be it’s not going to get overtaken by the euro anytime soon, and there’s no other currency in the world that even comes close to those two.

Speaker A: So, yeah, the dollar has a lot of strength, and it has a lot of political capital that can be spent down.

Speaker A: My point is just that we are now in the process of spending it down.

Speaker A: It is less strong, it is less of a hegemon than it used to be, even though it is still the hegemon.

Speaker C: How is it less strong?

Speaker C: And I really don’t understand, like, the US.

Speaker C: Showed its power, if anything, but how is it demonstrably weaker now?

Speaker A: It’s demonstrably weaker because okay, so you can go back to the global financial crisis when people saw all manner of things happening with money that didn’t make a lot of sense and was very explicitly that the sort of loss of faith in fiat currency was the thing that prompted Satoshi Nakamoto to invent Bitcoin.

Speaker A: He spells this out in his initial white paper.

Speaker A: If you look at how fiat currency was talked about pre 2008, it was in a very kind of matter of fact way.

Speaker A: This is how currencies work.

Speaker A: They’re issued by governments and so on and so forth.


Speaker A: Nowadays, if you come across people talking about fiat currency, it’s people who use the term almost pejoratively in the way that like, oh, this currency isn’t real because it’s at the whim of governments.

Speaker A: And I think what we’ve done certainly since 2008, but like, really very much since 2020, is underscore the degree to which, if you don’t trust the government, then you can’t really trust the currency and a lot of people don’t trust the government.

Speaker A: Those two go hand in hand.

Speaker A: Personally, as I say, the dollar is strong, but the more you spend it down, the more you take advantage of that strength to do things like vaporize the foreign exchange reserves of Afghanistan, the less of a kind of real thing it feels like and the more of a political thing that it feels like.

Speaker C: So you’re saying the US Peeled back the curtain a little bit and showed the world what the dollar really is, which is like, it’s our thing that we control and can use however we feel like it like if we want to print a bunch of money and send it to our citizens, f*** yeah, we’re going to do it.

Speaker C: If we want to punish a country by cutting off access to dollars, we’ll do that too.

Speaker C: And that sort of took away a little bit of the mystique of the dollar.

Speaker C: That kind of makes sense.

Speaker C: Yeah.

Speaker C: Without a substitute, it’s like, I don’t know, I guess you’re just saying reputationally, it’s weakened or something.

Speaker C: There’s more incentive for other countries to figure out something new.


Speaker C: Not that any of them have.

Speaker A: Correct.

Speaker B: Do you think some of the trust in the dollar is generational?

Speaker B: Because elsewhere you talk about differing investment habits post pandemic between Gen X, millennials.

Speaker C: And the years he’s so into the generations.

Speaker C: Elizabeth this shocked me because Felix seems like one of those people that when a story comes out and is like, millennials killed sheets or whatever, felix seems like he would be like, I hate this.

Speaker C: But then he has, like, a whole section in his book being like, millennials are like this, but Gen X is like, that right.

Speaker A: That’s so true.

Speaker A: And that’s my beloved chapter three, which was entirely inspired by a drink that I had with you at Grand Central Terminal.

Speaker A: And really, Emily, you are the genesis of chapter three.

Speaker A: And yeah, I do make these broad generalizations about the difference between especially when it comes to investing styles, the difference between boomers and Gen X and the millennials.

Speaker A: And obviously, as with all broad generalizations, they can be overly broad and simplistic.

Speaker A: But broadly speaking, I think there’s deep truth there, which is that the boomers were the preindex fund generation and that Gen X was the index fund generation and that Millennials are the post index fund generation who have at least during the pandemic, treated investing much more as a social game to play and as a way that they can try to get rich quick than as the passive investor.

Speaker A: Gen X types like myself would say, no, you’re doing it wrong.

Speaker A: You have to get rich slowly by just buying index funds and holding them for decades.


Speaker C: So does that mean that that’s a bad strategy now or it’s just out of fashion?

Speaker A: It’s out of fashion.

Speaker A: You’re asking a Gen X you’re asking felix Ammon whether passive investing is the best way?

Speaker A: No, I changed my mind on many things, but it is going to take a lot to change my mind on the merits of passive investing, and I certainly haven’t done that.

Speaker B: What did you change your mind about while you were writing the book?

Speaker A: The main one was that I believed certainly through, I would say most of 2020 and even into the beginning of 2021, I understood the syllogism that the virus was what had caused the recession and that therefore the only way to make the economy recover was to beat the virus.

Speaker A: And that epidemiological success was a necessary prerequisite for economic success.

Speaker A: And in fact, what happened is that the virus just kept on raging and we had huge amounts of deaths in the delta wave in 2021 and then in the micron wave in 2022, and the economy just reconstituted itself around those deaths.

Speaker A: And certainly by the time a micron came, those deaths were basically invisible in the economic statistics.

Speaker A: They were enormous and no one seemed to care.

Speaker A: We inured ourselves to a level of deaths that would have been terrifying just a couple of years earlier.

Speaker A: And so, yeah, the main thing I think I was wrong about at the beginning of writing the book that I came around to around the time that I was really in the heart of writing it in early 2022.


Speaker A: Was this idea that the way that the virus, the strength of the virus and the strengths of the economy were, like deeply intertwined and then the early 2022 just completely disproved that you could have an incredibly deadly virus and also a very strong economy at the same time.

Speaker C: We just go back to investing for 1 second.

Speaker C: I thought some of your theory reminded me of some stuff Kevin Ruse had told us back when he was on the podcast, probably like two years ago.

Speaker A: I named a whole chapter after him called From Ladders of Trampolines, which is his, which is straight from an article he wrote about the Dogecoin millionaire.

Speaker C: Right.

Speaker C: And can you talk about that a little bit?

Speaker C: It’s like this notion that millennials didn’t have.

Speaker C: Like it was very Yolo, you only live once and they didn’t really have very much money anyway, so they might as well take really big risks and bets with it.

Speaker C: Is that kind of the idea?

Speaker A: That’s exactly right.

Speaker A: You have Yolo and you cross it with zurp zero interest rates, which means that you can’t just put your money and let it compound because it’s compounding at 0% and that doesn’t get you anywhere.

Speaker A: And then you cross that with enormous student debts and what you end up with is a world where millennials, up until they were basically 40, just really didn’t have money to invest because whatever money they got would have to get spent to pay down student loans.

Speaker A: And even if they did have money to invest, there didn’t seem to be much in the way of attractive investments at that point.


Speaker A: Already, house prices were incredibly high.

Speaker A: You couldn’t do what your boomer parents and grandparents did and buy houses cheap or anything like that.

Speaker A: So they weren’t earning enormous amounts of money, and it was expensive to live.

Speaker A: So between paying down the debts and living, they didn’t find themselves with lots of money left over to invest in the markets.

Speaker A: So they were late to the markets.

Speaker A: And then when the stimulus checks arrived and the Pandemic arrived and they suddenly had a bunch of free money just turn up in their bank account, they weren’t in that mindset of, oh, I should slowly save over decades and hopefully get something at the end of it.

Speaker A: They were much more in a yolo mindset of I need to get rich quick and look at all of the money that people are making on GameStops.

Speaker A: I need to get in on that.

Speaker A: We need to take a quick break.

Speaker A: But when we come back, we’re going to talk about Steve Minuchin and whether he is the great unsung hero of the Pandemic.

Speaker B: I want to talk about Steve Mnuchin, because you almost convinced me we were lucky to have him, which I was not the position that I went in with.

Speaker B: So can you sort of recap your argument for why Minuchin did everyone big favor?

Speaker A: So, yeah, I have this extended metaphor in the book of Steve.

Speaker A: Minuchin, as we know, is a famous film producer.

Speaker A: He produced The Lego Movie and a bunch of Batmans and a bunch of superhero movies.

Speaker A: And I’m like, yeah, he kind of did that superhero thing that what we saw during the 2008 financial crisis was a major exogenous shock hitting the country and the onus of fighting that economic collapse really landing on the Federal Reserve.


Speaker A: And the Federal Reserve doing everything in its power to get the economy moving again.

Speaker A: So what that means is, first of all, cutting interest rates all the way to zero and then doing QE.

Speaker A: And at that point, the Federal Reserve kind of runs out of things to do.

Speaker A: There’s not much more the Fed can do beyond zero interest rates QE, and a little bit of, like, forward guidance of promising that we will keep zero interest rates at zero for years to come.

Speaker A: They’ve emptied their arsenal at that point.

Speaker A: That’s what they did in in 2008, 2009.

Speaker A: And it kind of worked like we eventually recovered, but it took many years.

Speaker A: It was a slow and painful recovery.

Speaker A: It made a lot of people very unhappy.

Speaker A: And it turns out that the Federal Reserve on its own, doesn’t really have truly awesome power.

Speaker A: It has a lot of power, but it doesn’t have overwhelming power.

Speaker A: And so when the COVID crisis hits and it’s a deeper and sharper and nastier recession than anything we saw in 2008, the Federal Reserve pulls the same playbook off the shelf and says, yeah, we’re going to cut interest rates to zero.

Speaker A: We’re going to do QE, we’re going to have forward guidance, all the rest of it.

Speaker A: But if it wasn’t enough in 2008, it certainly wasn’t going to be enough in 2020 because 2020 was worse.

Speaker A: And so we needed something else.

Speaker A: And the something else that we needed was fiscal.

Speaker A: And it was Steve Nuchin as Treasury Secretary who’s like, okay, I’m going to come in with a trillion dollars of stimulus and I’m going to use fiscal policy rather than just monetary policy to really get the economy moving again.


Speaker A: And without that we would be in a much worse place.

Speaker A: And it’s easy with hindsight to go, oh yeah, that made a lot of sense.

Speaker A: He did the right thing.

Speaker A: But if you look at other countries, look at the UK, for instance, look at most of Western Europe, look at most of the rest of the world, they actually weren’t nearly as aggressive in terms of using fiscal policy to fight the pandemic.

Speaker A: And as a result, their recoveries have been much weaker than America’s recovery.

Speaker C: Okay?

Speaker C: But Steve Mnuchin was not the only one arguing to use fiscal policy to avoid the slow crawl out of a financial crisis that we lived through in 2008.

Speaker C: Like all the progressive economists, I was still at the Huffington Post at this time.

Speaker C: Every progressive economist was talking about how we needed to do we didn’t have.

Speaker A: A progressive economist as Treasury Secretary.

Speaker C: He was their ally.

Speaker C: I’m just saying he didn’t come up with this.

Speaker C: This was all the I mean, like.

Speaker A: You know, ask us any, ask Paul Krugman, what should we do in the face of a recession?

Speaker A: He’ll always say, obviously, fiscal policy.

Speaker C: Right, right.

Speaker A: But the point is we didn’t do that in the last crisis when Obama was president.

Speaker A: We didn’t do that when Trump was president.

Speaker A: We did do that.

Speaker A: And the fact that the Trump administration turned out to be more fiscally aggressive than the Obama administration is, I think, worth noting.

Speaker A: And it was good for us, I.


Speaker C: Think it will never be repeated because we got so much inflation and people blame the inflation on the fiscal stimulus, forgetting that it was Steve Mnuchin and Trump who got us going.

Speaker C: Just they blame the Democrats on it because it’s more like falls under the paradigm of what Democrats should do.

Speaker C: And of course Biden spent more money.

Speaker C: So I have been worrying and wondering as of late if we ever face another big financial crisis, which surely we will, it’s not going to happen like that again, right.

Speaker C: It’s just going to go back to the old way.

Speaker A: What I said, that the fiscal armies, the armies of the public fisc are lying in wait.

Speaker A: They can be used to fight the next crisis, but whether they will be used is not at all obvious because it’s ultimately a political decision.

Speaker A: And it’s a political decision we’ve only really made once.

Speaker C: Right.

Speaker C: And it was anomalous I think there’s that on the Republican side and the conservative side, they never want to do fiscal stimulus because it’s like it’s poor people’s problem.

Speaker C: Like, we’re not going to help poor people, God forbid.

Speaker C: But COVID was this rare moment where it was everyone’s problem, and they really felt threatened too, I think was part of it.

Speaker C: But props to Steve Mnuchin.

Speaker C: Okay, fine.

Speaker A: Wow.

Speaker A: I can’t believe Emily Peck actually just said that.

Speaker A: The words came out of her mouth.

Speaker C: I think it’s hard to know, but if he hadn’t been Treasury Secretary, you wonder if some of these policies would have gone through because he was working with Nancy Pelosi on this stuff.


Speaker A: Absolutely.

Speaker A: And yeah, you can easily imagine a huge range of other Trumpy types who could have conceivably been Treasury Secretary and would never have done this.

Speaker C: Yeah.

Speaker C: At the same time, maybe those Trumpy types would have just refused to, quote, unquote, close the economy and push things to be more open.

Speaker C: Don’t you wonder about that, too?

Speaker C: A lot of counterfactuals.

Speaker A: No, but that’s really interesting, and I talk about this a little bit in the book, is that the federal government, in terms of directing the open, closed status of the economy, in terms of the lockdowns, was basically Mia the entire time that Trump was president, that all of those decisions were being made at the state level rather than the federal level.

Speaker A: Yeah.

Speaker B: I don’t even think that was strategic.

Speaker B: I think Trump had sort of catastrophically understaffed the government, and during COVID there were real problems with that.

Speaker B: And so I think Minuchin had more leeway, in part because Trump was not very sophisticated about what the Fed does or what the sort of role that it would play in a pandemic economy.

Speaker B: So he sort of left quite leave Minutian to his own devices, but he had more, I think, latitude than a lot of Trump cabinet members.

Speaker A: Yeah.

Speaker A: And one of the fascinating things about Minutian is that he was always one of the most vocal Trump defenders.

Speaker A: Right.

Speaker A: So after the Charlottesville riots, Minutian, who was Jewish, came out and defended Trump’s comments about there being very fine people on both sides.

Speaker A: Gary Cohen was absolutely appalled and came very close to resigning and actually did resign shortly thereafter.


Speaker A: Steve Mnuchin was like, yeah, I will 100% back all of the Trump crazy on anything that isn’t related to treasury, on anything that isn’t related to fiscal policy.

Speaker A: And I will go on all of the shows and I will be an incredibly loyal lieutenant.

Speaker A: And my prize for doing that is that he will let me run treasury without second guessing what I’m doing.

Speaker A: And that control that he had over treasury and that ability he had to run treasury without Trump interference turned out to be incredibly valuable.

Speaker C: I ask you about if you could talk about the debt ceiling through the lens.

Speaker C: Of your book because it’s on a lot of people’s minds now.

Speaker C: We’re spiraling towards the so called X date, when the US runs out of money and we have to decide what debts to pay and what debts not to pay.

Speaker C: And thinking about what you were saying about dollar hegemony, this seems to be actually a big test of the dollar, right?

Speaker C: That we’re sort of spiraling to in an atmosphere where no one trusts facts anymore and has higher risk appetite, which is something else you talk about in your book.

Speaker C: So explain the debt ceiling to me.

Speaker A: Yeah, it’s definitely one of those institutions that has suffered a major loss of faith.

Speaker A: This is the full faith and credit of the United States.

Speaker A: People are not sure that it will always come through.

Speaker A: Dollar is another, and that is dangerous, profoundly dangerous.

Speaker A: And a lot of the danger has already been done.


Speaker A: I feel like there’s this oversimplified view of the debt ceiling whereby there’s one specific thing that we call debt default, which is catastrophic, and then so long as we don’t do that one specific thing called debt default, we’re basically fine.

Speaker A: And that’s not true.

Speaker A: In 2011, when this happened, SMP wound up downgrading the US government from AAA because clearly there was a risk, and we have to worry about that risk, and the risk is a real and permanent risk.

Speaker A: In 2013, the government ended up defaulting on its obligations to federal employees and others because there was a government shutdown.

Speaker A: And the reason was something related to appropriations rather than something related to running out of money.

Speaker A: But the facts on the ground of, like, payments not being made were real.

Speaker A: Thankfully, we continued to make payments on bonds, so we didn’t have a bond default.

Speaker A: But all of these things erode faith in the government, erode faith in institutions.

Speaker A: And the fact that this particular debt ceiling debate is happening with an incredibly weak House of Representatives, which, with a negotiator in the form of Kevin McCarthy, who, it’s not clear, can actually deliver on whatever it is that he’s negotiating, just makes everything even more fraught than ever.

Speaker A: So one of the crazy, fattail, black swan events that could happen is that we have a catastrophic default.

Speaker A: Another weird unlikely event that could happen is that we have a bond default and nothing much happens.

Speaker A: And that you end up with this sort of paradoxical flight to safety of people buying the dollar and buying Treasuries, because even though they’ve defaulted, they’re still the safest thing there is, and we trust the government to make good on that money at some point.


Speaker A: There’s a bunch of huge unknowns in front of us right now, but that’s kind of the point, right?

Speaker A: We’re in this world where we’re careening at very high speed into an arena of deep, enormous unknowns, and that feels incredibly disconcerting.

Speaker B: How is our sense of risk perception changed by the Pandemic?

Speaker A: People realized that life is precious and short, and a million American deaths will do that, right?

Speaker A: It was a major mass mortality event, and that caused some people to become much more risk averse, and it caused some people to be the opposite and take on much more risk.

Speaker A: If you look at what happened to deaths of especially young men between the ages of 18 and 25, thereabouts they went through the roof in the pandemic years, and not because they were dying of COVID COVID accounted for almost none of those deaths.

Speaker A: But we had a huge spike in gun deaths.

Speaker A: We had car deaths, we had opioid deaths.

Speaker A: We had all manner of risk taking deaths.

Speaker A: People were drinking and driving.

Speaker A: They stopped wearing seatbelts.

Speaker A: This is a crazy effect of the pandemic, but you can actually see it in the statistics very clearly that people just kind of said, well, if I’m in this world where I could get felled by a bug tomorrow, why do I need to worry about wearing my seatbelt?

Speaker A: And they stopped wearing seatbelt, and then as a result, they died.

Speaker A: And that kind of risk taking was obviously very damaging.

Speaker A: We saw smoking go up for the first time ever, I think, since the 1970s.


Speaker A: There was a huge amount of deleterious increase in risk taking and the bad risks going up, but also there was a lot of positive risk taking in any capitalist society, it’s risk taking that creates wealth, it creates jobs, it means entrepreneurship.

Speaker A: We saw a massive spike in the number of new companies being formed.

Speaker A: We saw a spike in people, like, following their dreams, and we saw, as we mentioned earlier, like a spike in job satisfaction.

Speaker A: So a bunch of that risk taking was positive, a bunch of it was negative.

Speaker A: And what my thesis is, is we’re seeing both things happening simultaneously.

Speaker A: I call it the two headed risk eagle.

Speaker A: It’s not a phoenix so much as it’s just like, facing in both directions at once.

Speaker A: One more break.

Speaker A: When we’re back, we’re going to talk about lobster rolls.

Speaker C: Felix, I wanted to ask you about lobster rolls because they’re delicious.

Speaker C: Well, yeah, I’m actually kind of hungry right now.

Speaker C: But in the book, you have a lobster roll chapter, and I thought I was familiar with your stance on why lobster rolls are so expensive because you’ve talked about it before you’ve written about it for Axios.

Speaker C: But I read the chapter, and I have to say I was surprised your take had evolved.

Speaker C: So I’m hoping you can enlighten maybe.

Speaker A: I just changed my mind, because this is what one does during the pandemic, if you change your mind on many things.

Speaker C: Yeah.

Speaker A: What did you think?

Speaker A: I used to think?


Speaker C: Okay, so I think you used to think that the reason lobster rolls started costing even more money during COVID and in the inflationary period after was because labor costs went up, because it costs money to once you get the lobster to chop it up and make the salad, and that’s it.

Speaker C: And that’s just the reason.

Speaker A: Yeah, exactly.

Speaker A: And you’re absolutely right.

Speaker A: That was my thesis before I did some actual reporting for this book.

Speaker A: You’re welcome.

Speaker A: And talked to a lovely lobster old guy called Steve in Kennebunkport, and it turned out that Steve’s labor costs hadn’t actually gone up very much, but his prices had.

Speaker A: And the reason that his prices went up was a function of basically demand.

Speaker A: And if you have a finite number of employees boiling a finite amount of seawater and picking a finite number of lobsters and turning it into lobster meat, then you need to price that lobster at such a way that you don’t disappoint people who come to your lobster shack wanting to buy a lobster roll and being told that you’ve sold out.

Speaker A: So the only mechanism you really have to control demand for your lobster meat is price.

Speaker A: He sells lobster meat just on its own in plastic containers, but he sells it at $5 a pound more than his competitors.

Speaker A: Right, because he wants to control demand that way.

Speaker A: It’s absolutely natural in the capitalist economy to charge the most you can for your product, so you maximize your profits.

Speaker A: And right now, recently, we have seen another flare up of this greed fllation Meme right.


Speaker A: Which is like a huge part of the inflation that we’re seeing in the country is because companies are raising their prices, and it’s just corporate greed that is causing inflation.

Speaker A: And yes, sure.

Speaker A: But also those prices are a way of ensuring that you can provide product to everyone who can afford it, and you effectively discriminate against the people who can’t afford it by making them not buy it.

Speaker A: And that’s how you can make sure that you don’t have too much demand for your lobster rolls and make people go without.

Speaker A: One of the reasons that new cars are so expensive is because there’s a limited number of cars that manufacturers can manufacture right now, given supply chain shortages of chips and various other things.

Speaker A: And so what they’re doing is they’re deliberately only making the most expensive cars because that way they can balance supply and demand.

Speaker C: No, I’m going to push back a little.

Speaker C: It’s my understanding now that the chip shortage has gone away.

Speaker C: Supply chains are back pretty much to normal now.

Speaker C: But car manufacturers have discovered that they like charging more for cars, so they’ll continue to do so.

Speaker C: It’s more profitable to sell more expensive cars, so they don’t have an incentive to make more cars or lower prices.

Speaker A: But the point is that the price of new cars has gone up much more quickly than car price inflation, if that makes sense.

Speaker A: The cars that manufacturers make are overwhelmingly the expensive cars now, and they’ve basically stopped making the cheap cars.


Speaker A: So any given car, Ford F 150, say, is not massively more expensive now than it was pre pandemic.

Speaker A: But the average price of a new car is weighted much more towards expensive Ford F, much less towards Nissan Acuras, because people aren’t making so much of the Nissan Acuras and they’re making more.

Speaker C: Of the F.

Speaker C: Accurate.

Speaker C: The cheap ones.

Speaker A: I have no idea.

Speaker A: Do I know anything about cars?

Speaker A: I know nothing.

Speaker A: Are there any cheap new cars anymore?

Speaker A: Oh, here’s a good example.

Speaker A: The Chevy Volt.

Speaker C: Oh, yeah, they stopped making that.

Speaker A: Yeah, they just stopped making it.

Speaker A: It was the cheapest electric car on the market.

Speaker A: And they were like, yeah, we’re just going to stop making it because we can make more money making more expensive electric cars.

Speaker C: It seems so obvious, too.

Speaker C: You raise the price to control demand, and we’ll talk about Henry Greybar’s book in another episode of Slate Money.

Speaker A: But we should plug it.

Speaker A: He’s our Slate colleague who’s just written a great book about parking.

Speaker A: And yeah, the big problem in America.

Speaker A: One of the biggest problems in America is that parking has been underpriced almost everywhere for decades.

Speaker B: Right?

Speaker C: Exactly.

Speaker C: Parking is mostly free and demand doesn’t there’s too much demand for it.

Speaker C: And that’s like a huge problem.

Speaker C: And one of the big discoveries was, like, if you force people to pay for parking, you can control the frustration of feeling like you can’t find a space.


Speaker C: It’s so obvious.

Speaker C: But at the same time, it’s like, not obvious, I guess.

Speaker A: I mean, talk about new, not normal.

Speaker A: We have finally, just this week, hurdled the final obstacle to congestion pricing in New York City.

Speaker A: It looks like congestion pricing is going to happen and we can actually price this incredibly valuable resource of being able to drive around the streets of Manhattan in an effective and efficient way.

Speaker A: Fingers crossed.

Speaker A: Dutch wood.

Speaker A: This is huge.

Speaker A: With any luck, it’ll be a huge success.

Speaker A: I’m very optimistic.

Speaker B: It’s always fun to talk about how the workplace has been changed by the Pandemic.

Speaker B: What do you think is going to stick and what won’t?

Speaker A: The big thing that is going to stick for decades and it’s going to transform the economy for the foreseeable future, for many years is that whether or not you work five days a week in an office, america’s middle classes are going to want space in their homes that they can work.

Speaker A: And that is new.

Speaker A: When you look at the mook mansions that were being built in the 2000s, they had the cathedral ceilings and they had the three car garages.

Speaker A: And what they did not have so much of was relatively small private places where you could close the door and have privacy and do work.

Speaker A: And it’s not just work.

Speaker A: It’s also a place for your kid to do homework.

Speaker A: It’s a place for your kid to play video games.

Speaker A: It’s just like the way that we’ve rearchitected our lives so that a bunch of human interaction that we do, whether it’s with friends or with colleagues, is now done from our homes through screens has changed what we want and what we desire in our residential architecture in our homes.


Speaker A: And that has increased demand for square footage, because that’s extra space that we want.

Speaker A: And that extra space is basically called a bedroom.

Speaker A: And so we basically want, like, an extra bedroom compared to what we used to want pre pandemic.

Speaker A: And it’s changed the way that we configure that space as well.

Speaker A: We don’t want the big high ceilings and balconies and whatnot.

Speaker A: We want more private space.

Speaker A: And those changes can last forever.

Speaker A: I have the story in my book about the downstairs powder room.

Speaker A: If you go into almost any house in America, there will be a half bath somewhere near the front door.

Speaker A: And that was placed there in 1918, basically as a way to try and deal with the pandemic of 1918.

Speaker A: And people were like, yeah, people come into the house.

Speaker A: We’re going to make them wash their hands.

Speaker A: First thing they do when they come into the house.

Speaker A: It’s a way to prevent the spread of germs.

Speaker A: And then people realize once they put that in there, how useful it was to have a bathroom on the ground floor.

Speaker A: And then it just became a fact of life.

Speaker A: But absent the 1918 pandemic, that ground floor half bath probably wouldn’t be with us.

Speaker A: And so those kind of deep, profound architectural changes in the way that the change in how we want to live physically in our homes, that is with us, that is a permanent thing.

Speaker C: What about the architecture of the office?

Speaker C: Is that changing too?


Speaker C: I spoke to one company, I think, last year, who explained to me their whole new office setup and was all sort of arranged differently, like with more fungible spaces for people who come in for three days a week and more kind of like rooms where people can be zooming into meetings more.

Speaker C: I don’t know.

Speaker C: Clearly, we have a lot of unused office space right now.

Speaker C: Are there changes going to happen there too?

Speaker A: 100%, yes.

Speaker A: I have great certainty that the architecture of the office is going to change profoundly.

Speaker A: I have zero certainty or even really zero thesis of what the new normal of office architecture is going to look like.

Speaker A: I don’t really have a bead on what’s going to work.

Speaker A: I’m not sure that anyone really does.

Speaker A: We’re kind of muddling our way through to some kind of a solution, but we don’t quite know what it is yet.

Speaker A: People have attempted to do the hot desking thing for many years now because it’s obviously very efficient for corporations, and every attempt pretty much has failed.

Speaker A: Right?

Speaker A: It’s not just a post pandemic failure to try and get people to work from any desk in the office.

Speaker A: It’s just there’s a weird human need to want some space that you can call your own in the office.

Speaker C: Can we tell listeners that Axios kind of has a hot desking set up in New York.

Speaker C: But Felix has staked out a desk.

Speaker C: No one sits at it.

Speaker C: He leaves his computer there.


Speaker C: And if people try and sit at it, someone’s always like, That’s Felix’s desk.

Speaker C: But no other desk is treated that way.

Speaker A: But the weird thing is, right, you don’t keep stuff at the office in the way that I do.

Speaker A: You don’t keep your computer in the office in the way that I do.

Speaker A: But every single time you come into the office, you sit it at the same desk.

Speaker C: Yes.

Speaker C: And it’s upsetting if I can’t, for sure, but I really miss having a desk in the office with all my shoes under it.

Speaker B: Elizabeth, you could undermine the hot desking system by doing exactly what Felix does and put so much crap on your desk that no one’s possibly going to move it because you’re creating additional work for them.

Speaker A: My favorite documentary about this is the great BBC comedy W One A, which everyone should watch, and it’s all satire of the BBC, and I think it’s on Netflix.

Speaker A: And at the beginning of W One A, the new employee comes in and tries to find a desk, and there’s all these desks which look like they’re open, but they all have a pair of shoes underneath them or something like that, and they’re like, you can’t sit there, you can’t sit there.

Speaker A: Can’t sit there.

Speaker C: People like to stake out ownership of things they do.

Speaker A: It’s only natural and it’s only human.

Speaker A: And anyone who can solve the office architecture problem is going to have to work with that human desire.


Speaker A: Right?

Speaker A: You can’t tell people to act in ways that go against those desires.

Speaker C: We’ve exhausted my list of questions.

Speaker A: Okay, so we’ll have a Slate Plus segment on quarantines and monkeys, which is one of the amazing, wonderful facts I discovered when I was reporting this book.

Speaker A: But other than that, yes.

Speaker A: All I can say is, yes, I recorded the audiobook.

Speaker A: So if you really want to listen to Felix talk this book into your ear for 10 hours, you can do that at Libro FM or Audible or wherever you get your audiobooks.

Speaker A: I would love it if you bought the book, and I hope you enjoy it.

Speaker A: Thank you very much to Justin, Molly and Justin at SeaPlay Namada for producing the show.

Speaker A: And we’ll be back on Monday with you and relie on Slate’s Money Succession.

Speaker C: Monkeys, then.

Speaker A: So, do you guys know where the word quarantine comes from?

Speaker A: Elizabeth, did you know before you read my book?

Speaker B: I did not.

Speaker A: Emily, do you want to enlighten us?

Speaker A: Or if you’ve already forgotten that bit?

Speaker C: I forgot.

Speaker C: I read it, Felix, I swear.

Speaker C: But I don’t remember this at all.

Speaker A: So, yeah, the word quarantine, it comes from the Italian Qurante Giono, which means 40 days, when Venice was the primary capitalist center of global commerce.

Speaker A: What they would do is that any ship coming into the port of Venice with goods from abroad had to dock off the coast of Venice for 40 days and then they were allowed to bring in the goods.


Speaker A: And the idea was that 40 day quarantine would reveal whether any of the sailors on that ship had the plague.

Speaker C: Oh, I remember this now.

Speaker A: And if they did, then of course they wouldn’t let the ship in and then they would remain a plague free city.

Speaker A: And that deep psychological need to keep out people who aren’t like us, who don’t live with us, is not just human.

Speaker A: It has been observed in monkeys.

Speaker A: It is common among primates generally.

Speaker A: And when we looked at the barriers that went up when COVID hit and the way that people couldn’t travel around the world and it was the first thing that governments around the world did was they put up huge walls around their countries and they said, you can’t come in or out.

Speaker A: The government of New Zealand basically kept that wall up for two years and wouldn’t let anyone in or out.

Speaker A: Even the Americans, when the rate of COVID in America was higher than the rate of COVID in Europe wouldn’t allow Europeans to enter the United States even if they were vaccinated for a while.

Speaker A: And that was the Biden administration.

Speaker A: That was the globalists.

Speaker A: And what I do in the book is I explain that this is just so deeply seated in our biology, this need to keep out the other that it’s the first thing we do when a plague hits even if it doesn’t have any real effect.

Speaker A: I don’t think there’s really a case to be made that the entry and exit controls at US.


Speaker A: Borders had any effect on the amount of COVID in America.

Speaker A: But it was definitely the first thing that Trump wanted to do.

Speaker A: Right.

Speaker A: And it’s easy to sort of point to the racism and xenophobia that’s inside there.

Speaker A: But it, by the same token, is something that has existed in humanity and in primates generally for hundreds of thousands of years.

Speaker C: It still seems bad, though.

Speaker A: Yeah.

Speaker C: I’m not saying worst instincts.

Speaker C: Yeah.

Speaker A: It’s a real instinct and it’s a life saving instinct.

Speaker A: The reason it’s deep within us is precisely because it works or it used to work back in evolutionary history.

Speaker B: Right.

Speaker C: But it doesn’t work now.

Speaker A: Nowadays, it kind of doesn’t work anymore.

Speaker A: Although it doesn’t until it does.

Speaker A: I would say that it kind of worked in New Zealand.

Speaker A: If you’re a small country, maybe you can make it work.

Speaker A: They were very strict and they kind of kept COVID out until most of the population was vaccinated.

Speaker A: That kind of worked.

Speaker C: I mean, one of the consequences of COVID is this labor shortage we have now because so many people retired and because we got so scared of letting people pass the borders.

Speaker B: Right.

Speaker C: I mean, that still hasn’t gone away.

Speaker C: And that’s, I think, one of our biggest and most easily solved problems going forward.

Speaker C: If we just let some more people in, we’d probably be a lot better off.

Speaker A: I agree that it’s the obvious solution to the labor shortage problem.


Speaker A: Just allow in more humans and then we’ll have less of a labor shortage.

Speaker A: I disagree that it’s easy.

Speaker A: I think that’s exactly the problem, is that it’s actually really hard, and no politician on either side of the aisle seems to be pushing for it.

Speaker A: And there’s reasons for that.

Speaker C: I wonder what I would have to go back and study the history, what the impetus was at times in America when we did let a lot of people in.

Speaker C: Like, what was the case that was made for it?

Speaker C: Since people are sure really afraid of doing that, why did we allow it?

Speaker B: I think a lot of it was the Bureaucratic process for coming in was far simpler and it was easier to get in.

Speaker A: Yeah, but the question is, why did the Bureaucrats make it easy for pretty much anyone coming in through Ellis Island to just become an American citizen?

Speaker A: And then when did they change their mind on that?

Speaker A: And it is a fascinating history of American immigration policy over the years.

Speaker A: Sometimes we are more open to it.

Speaker A: The one through line has always been that family comes first, and especially white Americans.

Speaker A: If they’re here and they have family abroad, then it’s always been easy to bring that family in.

Speaker A: And that’s what’s now often called chain migration.

Speaker A: And then as the people bringing their family in from abroad stopped being white and started being brown, we made it harder and harder for them to do that.

Speaker C: Right.

Speaker C: And even before that, with Chinese immigrants, early on, Chinese men were brought in to build our railroads.


Speaker C: Because of that racism.

Speaker C: They didn’t allow any Chinese women to come in.

Speaker C: So, yeah, that’s interesting.

Speaker C: I guess it’s a different conversation from the monkeys.

Speaker A: It’s the same conversation.

Speaker A: We’re all basically just slightly jumped up monkeys.

Speaker C: But I guess didn’t we have a guy on the podcast once who was like, we should just let everyone come in the United States or something?

Speaker A: Was that Chelsea Kenny?

Speaker A: Oh, no.

Speaker A: That was Brian Kaplan.

Speaker C: Yeah.

Speaker C: I feel like I’m erratically come around to this point of view, but I recently had an argument with someone about it where they were like, that’s just crazy.

Speaker C: We would be overrun.

Speaker C: I don’t think we would I think there’s like a natural limit.

Speaker A: I don’t think we would be I’ve loki held this view for a while that a radically open borders policy would be amazing, would pay dividends, would really juice the economy, would increase employment, and yeah, the natural market forces would most of the world is now rich enough that you wouldn’t have just a huge overrun style influx.

Speaker A: Like, we have another border crisis right now.

Speaker A: But what we’re talking about is tens of thousands of would be migrants into the country.

Speaker A: We’re not talking about tens of millions.

Speaker A: We’re not talking about the kind of numbers that would actually really move the needle on the US.

Speaker A: Population.

Speaker C: And so much of the US.

Speaker C: Is empty space, right?

Speaker C: I mean, we live in a very crowded place, but actually, I don’t.

Speaker C: But a lot of the US.

Speaker C: Is pretty open.

Speaker C: Like, you could pull some policy levers, get everyone in here.

Speaker C: It could be, like, really amazing.

Speaker A: Yeah, I have the numbers in my book.

Speaker A: I think I calculated that even if you ignore Alaska, you have 280,000 people per however many square miles in Europe versus 100,000 in the United States.

Speaker A: There’s a lot of space in the United States.

Speaker C: There’s a lot of space.

Speaker C: We could all have our extra office somewhere.

Speaker A: Anyway, thanks, Slate Plus, for supporting Slate.

Speaker A: We appreciate it.