“Good News Is Good News” Territory

Listen to this episode

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

S2: Welcome to the good news is good news. Edition of Slate Money Guide to the Business and Finance.

S3: News of the Week. I’m Felix Salmon of Axios. I’m joined by Anna SHYMANSKY of Breakingviews. Hello. Emily Peck of Huff Post is also here. Hello. And we are going to talk about Facebook, which seems to have lost, at least for this month of July, 400 plus major brand advertisers. What does that mean for media and for Facebook? We are going to talk about environmental, social and governance, investing, ESG investing, and why the Trump administration doesn’t seem to like it very much. We are also going to talk about that jobs report this week, which I’m sure you saw what it means for the future trajectory of the U.S. economy. We are also, if you’re a slate plus member, go and talk about Netflix and how they’re trying to place some of their cash into institutions which will funnel it towards black communities. It’s a fun episode, so stay tuned. All of that is coming up on Slate Money. So this is kind of unprecedented and amazing is that, as we all know, there are only two advertising platforms in the world anymore. They’re called Facebook and Google. And one of them, Facebook, is now facing the biggest boycott that it has ever seen. It has over 400 big corporate brand advertisers who got together after being pressured into doing so by various advocacy organizations and said we are just not going to advertise at all on Facebook for the month of July. And this seems like a pretty big deal on a bunch of levels, a pretty big deal just on corporations making a stand, not just in a vague way about saying we think Black Lives Matter or something like that, but saying you Facebook, you are doing something wrong and we are going to try and punish you for it. And it also just it’s an incredible collective action thing that has come together in a very short amount of time. And it says a lot about whether Facebook even is a good place to granddad. I think there’s so much to unpack here. I am very glad that Emily, you are here to help unpack it. What’s your big takeaway from this?

S4: My big takeaway, I think, is probably that in the long term, this is not going to really impact Facebook all that much. I think that at least since 2016, the company has been on this sort of roller coaster where everyone complains about Facebook. You know, you cause Trump to win the election. And Facebook said, no, we did. And then Facebook said maybe we did. Then they made some changes and then everyone kind of let them off the hook. And I, I kind of feel like while this is big, that 400 advertisers are pausing or stopping putting their ads on Facebook. And some of them are also pausing, asked social media like Unilever is doing that. First of all, they’re not a big according to Facebook, they’re not a big percentage of advertisers on Facebook. These are big companies. But Facebook is saying that most of their advertising comes from smaller businesses, which is sort of interesting and much more.

S3: I mean, that’s that’s true. I I’m pretty sure that’s true. There’s I have a little spreadsheet which got leaked to Axios, which is kind of awesome, where it lists like one hundred advertisers on Facebook. And I’ll I’ll come to who the top two are in the moment. They are not part of the boycott, interestingly. But yeah, the fact is that the top 100 between them only account for about six percent of the advertising on Facebook. This is not one of those short head things. It’s actually been very difficult from from inception. Facebook has found it really hard to attract those big national brand advertisers, which is one of the reasons why it bought Instagram, because Instagram is much more friendly to brand advertising. And what’s fascinating about this boycott is that it’s not just Facebook, it’s also Instagram.

S1: I think that might speak to why a number of these companies are doing that. Facebook represents a small percentage of their ad spend, and they probably wanted to cut back on advertising spending anyway because of the pandemic and the economic downturn. And then now this enables them to do that while also getting a PR win.

S4: And I mean, Facebook has done some stuff in the past week like it, I guess. A band, a bunch of. And I don’t know if I’m pronouncing this right, boogaloo boogaloo groups, these white supremacist groups that had, you know, private groups on Facebook where they met up and in at least two cases planned violence, and that resulted in at least three deaths. So Facebook finally decided, oh, maybe we shouldn’t let these guys just lay down with each other on our social network. You know, maybe that’s not good. Free speech. So they did do that little thing. But I mean, think of. How small that gesture is compared to all the pressure on them? Just again, indicates to me that, like, this is a lot of PR and a lot of handwaving. And at the end of the day, the company is just nothing major is going to change from this. I’m sorry. We need regulation.

S3: You’re actually right. Emily, the boogaloo thing is not why anyone is boycotting Facebook. The reason why people are boycotting Facebook is because Facebook has said very explicitly that it is going to allow politicians to lie in their ads. And it’s not going to fact check those lies. And especially Donald Trump is allowed to say basically anything he wants in his ads, whether that’s true or not. And they are going to let him do that. And he is allowed to say very sort of hateful things and incite violence. And they are going to let him do that as well. And so that said, the initial impetus for the boycott came from organizations like Color of Change and the Anti Defamation League and Sleeping Giants who are very much concentrating on the Donald Trump side of things and saying this is not a great way of helping civil society, which is your stated raison d’être. You’ve got to stop this. And what’s fascinating is that Facebook first impetus here, it’s was to reach out to the brands and to the agencies and say way. Hang on a sec. Can we talk to you? What if we shut down the private boogaloo group or whatever? And you say that’s marginal, especially given that Facebook owns WhatsApp, where more of these groups tend to live, the private groups. But the. More salient point here is that. The agency is in the brands just immediately turned around, said, don’t talk to us, you shouldn’t be talking to us, you should be talking to be ended defamation league and to cultural change and to sleeping giants, because that’s who we’re listening to. And if you can persuade them that you’ve done something effective and if they tell us, OK, you’ve made your point, now you can go back to advertising, then we’ll do that. But don’t try and persuade us directly like we’re part of a group here. And the people organizing this group are not the advertisers and the agencies. It’s the these other nonprofit organizations. And I think that their ability to answer in that way and say, like, listen, don’t talk to us is incredibly powerful. And I agree with you that this is not going to hurt Facebook economically or is a cultural force. But I do think that it’s a super interesting development in the world of media and advertising. And I think it could presage a significant decline in. Companies using social media as part of their brand advertising, because I think they have basically they kind of have wanted to get rid of it all for a couple of years now. And it’s been very hard for them to do it because it’s such an enormous part of their audience. And they’re now saying, well, let’s do it for a month and see how it goes. And if we don’t see too much decline in, you know, our metrics, maybe we can keep on doing this. We can save money in perpetuity.

S1: You’re still going to have, though, all the small businesses which don’t have the reach of those large corporations and do still need to rely more on advertising through social media.

S3: Absolutely. The small businesses is the heart of Facebook and it’s the heart of Instagram. And it’s where Facebook remakes all of its money as the self serve advertisers who can’t afford TV ads, who can’t advertise in local newspapers because local newspapers don’t exist anymore. It’s all of those kind of people. And this doesn’t affect so economically, it doesn’t affect Facebook at all. I don’t think this is a big story in terms of the economics of Facebook, but I do think this is a big story in terms of it could mark an inflection point in terms of how brand advertisers advertise. They moved away from print en masse. They moved towards places like Instagram en masse. And now they might be thinking to themselves, well, is this actually working for us? And if it turns out that these social networks aren’t that important to them, don’t help them that much. They might just never come back. And as I is, you’re actually right. That wouldn’t be a big effect on Facebook, but it would be a big effect on all of the other places that carry brand advertising, including, you know, print media.

S4: That’s my question. I mean, my selfish question. There’s two things I feel like I want to discuss. First is the selfish one, which is like, OK, if advertisers abandon Facebook and other social networks, will they please come back to content? Exactly. Companies online and not Sobeys, Facebook and Google, basically the media industry. So maybe now we can be regurgitated. I don’t know where that metaphor is going, but that’s sort of like a hope. But I feel like that’s not what’s going to happen. I mean, Felix, do you have any thoughts on that? Like, if they’re leaving Facebook and they’re leaving Google, where are they going to put their ads? Have post.com or what?

S3: Well, they’re not leaving Google and they’re not leaving YouTube. YouTube does not count as a social network for the purposes of Unilever or anyone else. So even the people who are back, who is putting a stop to all of their social media advertising, that means Facebook, Instagram, Snapchat, Twitter. Tick tock. It does not mean YouTube does not mean Google. So Google is the obvious first winner here because Google and Facebook are the big duopoly. But yes, at the margin, I think that outdoor content, print, radio, podcasts, you know, all of the other places where places advertise could see either an uptick in revenues or at least could see that the decline in revenues stop and they could finally reach that floor that they’ve been wondering where that floor is for a while as this sort of big move away from them. And towards that, you all believe maybe comes to an end that I’m with you. I think I’m relatively hopeful on that front because I think it does have to come to an end at some point. And I think that. Facebook in particular, is a very bad place for brand advertising, it just doesn’t it doesn’t provide the kind of context that the big brands want. And I have to mention, because I said a word, the two top advertisers on Facebook. I have you want to take a guess who who they might be? Either one of them. Pangea’s the top one. Right. It’s not even close to Peng.

S4: Is it like a like a yoga pants brand or something?

S1: It’s certainly about my fear.

S3: On it’s Home Depot and Wal-Mart. And the reason why Home Depot and Wal-Mart are the two biggest advertisers on Facebook is because Facebook is very, very good at telling them, look, we showed this person an ad for your company, for your store on their phone. And then that phone walks into this Home Depot or walked into that Wal-Mart. They track you geographically and they can show you with incredible accuracy just how effective their ads are at driving you physically into the stores. And so all of the other big advertisers like Microsoft and The New York Times and PMG and Unilever and Horizon and you name it, they don’t have those kind of physical stores where Facebook can say, look, we have driven people into your physical store. And so it’s much harder for them to see the effect of the advertising that.

S4: The one other thing I’ve been thinking about a lot is that Kevin Roose, the New York Times reporter, he’s been tweeting every now and then or every day on Maturer Hoover, that the top articles on Facebook, who they’re posted by. And I mean, it’s just that the top 10 is just a list of like the most right wing conservative crap out there. And I sort of wonder, like, if these, like, big brands live the platform and progressive groups like Color of Change are out there, kind of like flagging how bad things are on the platform that Facebook in the US becomes more of, like a like a cesspool of like misinformation. There is another story about how all these groups popped up like a. locked down kind of groups, anti mass groups that were like, give us our freedom from Corona virus. Now, once that kind of fell out of fashion, all those groups kind of like Mass, changed their vibe to like anti Voxer kind of misinformation kind of stuff.

S3: Facebook is an incredible vector for for that kind of extremism, as is YouTube. We should never forget that because YouTube and Facebook both optimized for engagement. It turns out that the extremes of like political discourse and tiebacks, discourse, anti mosque discourse, whatever you want, are exactly the kind of conversations that elicit the most engagement, both on both from the people in those camps and the people who love nothing more than to get onto Facebook and fight with people who are in those camps. And so they really wind up surfacing in the feeds and in the top stories. The Kevin tweets out, and this is a deep structural issue with the Facebook algorithm that basically no one in senior management at Facebook seems to have any desire to change.

S4: And I just feel like it’s going to get worse and worse. And and they haven’t even scratched the surface. YouTube this week announced that they were banning David Duke’s channel from YouTube. And it’s like, wait, it’s 20/20. And David, do the Nazia has a channel on YouTube Blache. These companies are just so far behind what needs to be done. And I feel like it’s just getting worse.

S1: And I know the one thing that I do think is kind of interesting about all this is that, you know. What you’re seeing in terms of the. The way to this boycott was able to be formed, you know, a number of political movements we’ve seen have existed and been able to gain the traction they have because of social media. They wouldn’t have been able to gain the power they have without it. And I do think that that’s an interesting part of all of this, is that I’m not in any way trying to say we don’t have tremendous number of problems of social media and. They have. I’m not saying that. But, you know, it’s just interesting to me that there are positive sides of it, too, like there are and there isn’t.

S3: I disagree. And I think I think that if you look at the way that brands signed on to this boycott, it wasn’t because there was a massive social media campaign, if you know, Sharmin, toilet paper consumers saying these Shaam employees boycott Facebook. It was a very behind the scenes. The thing that sleeping giants and color of change were actually incredibly good at was just going behind the scenes to a handful of big media buying agencies and saying, I’m putting out their case privately, not in public, not on social media and persuading them privately. I honestly don’t think this boycott was driven by social at all.

S4: You can’t discount the role social media plays in progressive social movements more broadly, like we can argue about the particulars of this boycott, whether or not these companies did it because of social media pressure vs. color of change behind the scenes pressure. But you can’t discount the power of social media like over the past I mean, decade, five years, whatever you want in pushing actual progressive causes, like look at like ME2, for example, or even the George Floyd protests or like any kind of movement over the past few years without social media has made those movements more powerful. Even at the same time, it’s become especially Facebook, kind of like a like a cesspool for trolls. It’s really it’s a really interesting paradox to grapple with, I think.

S3: So let’s move on to one thing. That one hundred percent was not driven by any kind of pressure from social media. And that is the Department of Labor. Coming out what we can huff. Two weeks ago and saying, hey, we have this bright idea. There’s hundreds of millions of Americans who are invested in pension funds, whether their defined benefit or defined contribution. It doesn’t matter. There are all these pension fund trustees who are in charge of investing those Americans money. And we have seen this thing where the trustees are increasingly investing in ESG, which sencer environmental, social and governance. And we don’t like it. And when I say we, I mean Eugene Scalia, who’s the department, his labor secretary, I don’t like it. And I’m going to put a stop to this. And so he promulgated this rule. He’s put it up for public comment. It isn’t in effect yet, but something similar to it is likely to go into effect. And the rule basically says. You are not allowed to put anything ESG as the default option in any of these funds. And insofar as you offer ESG in any of your funds, whether it’s default or not, you really need to dot a lot of I’s and cross a lot of T’s to make it absolutely clear that the only reason you’re doing that is because you think it will. You know, it’s a pecuniary reason that you think that this is a good investment and it’s a better investment than any of the other alternatives. You need to show what alternatives you’re comparing it to. And and there’s a whole bunch of paperwork involved. And if you can’t do that, basically don’t invest in ESG. It’s this it’s an astonishing thing to come out from the United States government, especially given that the European Union a couple of years ago actually did the exact opposite. And they forced all investors to make ESG part of their investing process.

S4: Yeah. And Felix in his newsletter said the move was lame duck hippie punching from a beleaguered administration looking to throw a bone to climate change deniers, which I thought was nicely put.

S1: Thank you for quoting me.

S4: But it does seem like this very petty kind of gross thing that the Labor Department did just to. Yeah, to heavy punch, like, whoa, what is the reason for that? Shouldn’t they be like dealing with, you know, record unemployment numbers or something or OSHA violations any like why are they bothering with this? I don’t really understand.

S1: No, I agree. I mean, I think it’s a dumb kind of own the Libs thing. You know, I, I don’t agree with that at all. I also think that the party that’s all supposed to be about choice, the idea, they’re like, no, you can’t do this, though. Kind of disagree with that. I mean, I personally do have some issues with ESG funds in terms of the fact that there’s like zero like rules in terms of classification. They’re all over the place. The dispersion is all over the place in terms of like what is in one fund versus another fund. It’s just it’s still nascent in a lot of ways. And I do think that this is a separate issue. But I do think there needs to be better standards and terminology and metrics and all that. But that doesn’t mean that you shouldn’t have a pension fund, shouldn’t have the option of choosing ESG fund.

S3: Right. And these pension fund administrators, you know, it’s their job to look through the rival metrics and say this is the one that we think is best and we should go with this one rather than that one in that way, you’ll see, right? Yes. He is not well-defined in any way. And there are no consistent standards. But that just means, hey, we have a free market here in in the way that people can invest. And the thing that really stood out to me from this. Rule was that they were like there are lots of like generally accepted investment principles, which we considered to be absolutely fine if you want. If you think to yourself, I want to invest in small cap growth stocks, I want to Inmet vest in a momentum strategy or I want to invest in merger arbitrage or I want to invest in Timberland or whatever Lee asset class you care to mention, they’re like, yeah, that’s perfectly fine. We understand that. That’s something that investors do. But the minute you say I want to invest in ESG, which is kind of the most obvious investment thesis of all, which is basically just I am very, very long term investor with a time horizon of, you know, 75 years or 100 years or whatever. And I want to make sure that my investments are going to be able to last that long. And so I need to invest in companies with good governance and that will help the planet stop imploding from climate change. And all of that kind of thing is such an obvious long term investment thesis. And yet that is the One Long-Term investment thesis that the Department of Labor is specifically picking out and saying that looks that looks like it’s non pecuniary to me. And and you get these pressure groups, you know, saying that it’s it’s political or even Scalia saying that he’s like ESG isn’t actually an investment thesis. It’s it’s a political stance and. Pension fund managers shouldn’t be political.

S4: I feel like right at this moment where, you know, we’re seeing this like massive inequality and like coronavirus who get sick and who dies. And, you know, where we’re seeing all this unemployment. But then you look the stock market, everything’s fine. And then if you feel bad about all this stuff, you still have to put your retirement money in the stock market, which is fine. It is kind of political no matter what, because there is this weird dichotomy in the U.S. where you can be really upset and liberal and progressive. But then at the end of the day, you’ve got to put your money in the stock market, which is exacerbating inequality.

S3: Yes, I agree. The default, that’s. Yes, we have the right investing in stocks is, by its nature, sort of putting your hands on the scale of the haves against the have nots. And we’ve seen that so much in the past quarter. Right. We just had the best quarter for stocks in living memory, which basically means the biggest companies in the world did great while 40 percent of small businesses went out of business, you know. And so if you’re invested in the stock market, that means you’re invested in big business rather than small business. And that investment in favor of the rich and against the struggling poor is just as political, if not more political, than saying I don’t want to make money from fossil fuel companies that are destroying the planet.

S4: Yeah, I’m more like we’re forced to put our money in that in that basically, like, what am I supposed to do about my retirement if I don’t put my money in the Yankee stock market?

S3: Just that’s just waiting for the planet to burn up into a hell fire on your sixty fifth birthday and then you don’t need to worry about retirement.

S4: That’s a good point. But maybe I want to be a little more cautious about that. Maybe it’s not going to blow up till I’m 75 and then I need that 10 years, yada, yada, yada. And also is that even our ESD, even that that good, though, like. Not like. Are they OK?

S3: Most of them are not. And we can have a we can have a whole conversation about that on some other episode. It’s it’s. Very, very marginal, what kind of effect they have. But just on an ideological level, I guess, and this is maybe the one thing that I’ll. Kind of agree with Scalia on like one of the things they do is they just say that if you don’t want to personally profit from the actions of evil companies, then we will help you not personally profit from the actions of evil companies. And there’s a lot of people who feel that way. And there’s demand for that in the market. And it’s kind of crazy that the Department of Labor is making it as hard as they possibly can for people to express that desire in their retirement funds. That’s really crazy. But let’s talk a bit about what’s actually going on with the economy, because we just got the June jobs numbers, four and a half million people got jobs in June, which is great, but it wasn’t really in June. It was looking at one week in the middle of June, which happened to be the absolute low point of the coronavirus curve. And since then, as we all know, the coronavirus curve has spiked up. So we don’t know if that is going to turn out to be like this weird false hope that rapidly dissipates as the number of deaths in America starts to spike again. What did you make of the jobs report?

S1: I mean, I think despite all of the uncertainty, I mean, I think this was probably unsurprising in the sense that you expected it to be a pretty good number. It was I mean, it was almost five million jobs. And I, I. I don’t think we should discount the fact that we have had a lot of people who’ve come back into the workforce over the past few months. And that’s good. And that’s makes a big difference in those people’s lives. However, as you said. The most important data points, we can probably look at it now and honestly, probably for next year are going to be cases of viruses, deaths, hospitalizations. I mean, honestly, I think those are probably gonna drive what happens on the ground a lot more than one month or a few weeks of noisy data.

S3: And one of the things we saw this week as well was the release of Fed minutes where the Federal Reserve Open Market Committee was meeting and saying, how’s the economy doing? And the TLT are on. That is really badly. They’re basically saying, what can we do to push the economy to grow faster and create more jobs? Because one of the things we did find in the jobs report this week was that the number of permanently unemployed people is going up even as the number of temporarily unemployed people is going down because they’re going back to work. It’s lockdown’s and we are seeing an unprecedented rise. It was over 600000 people who’ve just like not current job at all and have no job to go back to.

S1: Yeah, and that’s not really surprising. You know, based on the number of different factors. And I think that we’re not really going to know the kind of depth of the economic damage until the economy has been completely reopened. And that might not happen for another year. You know, who knows? But I think you’re right that the Fed was and I think very purposefully very negative. I think they will continue to be honest, regardless of what happens, because they want to send a message to the federal government. They want to make it clear that more stimulus is required, continual stimulus is required. You can’t say, OK, we’ve had two months of decent job numbers. Hey, unemployment’s still over 10 percent. And the Fed is simply not well suited at this stage, especially with how like low rates are. The Fed can do essentially nothing in order to really help. At this stage, it has to come from Treasury. And if they’re and if the federal effort is going to do it, then again, everything the Fed does is essentially gonna be meaningless.

S3: So we are in good news is good news territory right now. When the jobs report came out and it showed lots of jobs being created. And Donald Trump came out and started tweeting about how wonderful the jobs report was. The stock market went up. And that was interesting to me because on some level, I think it’s pretty clear that. Congress and specifically the Republicans in Congress, the bet, are in this mindset of the better the economy looks, the less stimulus we need to do. And isn’t that the case? One would think that the big unknown as far as the markets are concerned, is how much stimulus there is going to be coming from the federal government that we know as much as we know about the future trajectory of corona virus, like nothing that we see in the jobs report is going to change that. What we don’t know is what the government is going to do. And it looks to me like every good jobs report makes it less likely we’re going to have sufficiently large fourth round of stimulus. And that should be bad news for stocks.

S4: It’s very confusing. Maybe they don’t understand the stock market piece of it. I know that Congress right now is there is discussion about another round of stimulus. It’s not going to be as much as as last time. Trump has said he wants to do checks again, which is good. And Democrats are obviously onboard for the checks. And then the really the open question mark is, is if Republicans will be onboard for any kind of new stimulus. One thing that I think seems a little more clear now is that they’re going to have to do something for schools. Right. I mean, that’s the big question, I think, for the economy in the next couple of overlayed colleges and universities know for like K through 12. I think state and local governments are struggling. Right. And but we need to reopen schools and schools need help in figuring out, like, how to function right now. And if they can’t figure it out, then parents can’t go back.

S3: I think that’s right. I have to say, I’m skeptical that, like the Department of Education or whoever in Washington, D.C., is going to be particularly effective at being able to help them. This is one of those areas where a bunch of federal cash has limited utility. I wrote a bunch this week about like how there’s lots of cash. An absence of cash is not the problem. The one place where absence of cash is a problem is in state and local governments. And so if you do put five hundred billion dollars or so toward state and local government, that would help them at the margin. Right. You know, help help, like, provide the kind of marginal extra funding necessary to try to help the schools do what they need to do. But I do think that. Just sheer architecture, like physical school architecture, is the real constraint here. And you can’t change that with a stimulus bill.

S1: I agree with you. I mean, I think that it’s not just a matter of money. Money won’t fix this entirely. However, you know, state and localities do need a know, significant amount of money or they’re going to have to cut funding to education. And that’s always going to be one of the first things you’re going to cut in this situation. So I do think that that’s a really, really important part of, you know, any kind of future stimulus. The one thing I would say is that I think regardless of what we see in jobs numbers, I think we will continue to see some type of stimulus probably for the next year or so. It just may take different forms. And I agree with you that I think right now, until we are open, we still need a significant amount of just simply sending people checks, because you have, you know, large parts of the country, people simply cannot work. So the idea of doing payroll cuts is nonsense. You know, however, once you do get to a point where more people can go back to work, that I don’t think it’s unreasonable at that point to start thinking about modifying it, whether it’s it is, you know, infrastructure spending and try and kind of hiring in that way or whether it is kind of payroll cuts and these other types of things or things to get businesses to invest, that that’s going to be a massive issue. So even if the current form of stimulus, you know, doesn’t continue for the next year, I do think stimulus itself will be one thing that I think is important to note on.

S4: The unemployment rate went down for every group in the U.S. except for black men. Unemployment for black men actually went up, which is awful. And one thing that I’m thinking about or worried about is, you know, there’s a lot of talk from Congress about letting the enhanced unemployment benefits that they passed, you know, expire or doing like less. You know, there’s this extra six hundred dollars now. So if Congress does do something like that, let it expire or there’s something someone proposed, like tying those extra benefits to the unemployment rate. So as it goes down, the benefits go down. That’s really sort of like you’re seeing like institutional or structural racism, kind of like in play playing out in policy, like in real time, basically, because you’re seeing black people’s unemployment rates stay higher than than white people’s. And then you’re seeing the federal government like pull the rug out from unemployment benefits at the same time. And you can really see in real time how structural racism kind of reinforces itself in so-called like race neutral policies like this is happening right in front of us. Right. As lawmakers and everyone in the country is saying, like are saying black lives matter, we need to do something. It’s like you can actually do something. You can just, like, keep these unemployment benefits going.

S3: Like, do it that way. It’s pretty it’s pretty uncommon still to find Republicans saying that black lives matter because neither the president nor the vice president is ever willing to actually say that in as many words. One of the one of the proposals I’ve seen, which I think makes a lot of sense, is to specifically tie fiscal policy. And exactly what you’re talking about, unemployment benefits and that kind of thing to. Test of what’s best for black women. And if you look at if you do that in terms of what’s best for black women, then it helps everyone like something that’s good for black women, that’s going to be good for virtually everyone else in the economy. But it does make sure that they don’t get left behind in this kind of way. If a bunch of white people have got their jobs back and a bunch of black folks have not, you just keep on stimulating until the black folks get their jobs back. And that’s a good thing for everyone.

S4: That sounds great.

S3: Let’s have another numbers round. I’ll start this week. Why not? My number is one point six percent. This is a fund management number. And it comes from the latest S&P report card on fund managers. And I’m looking at smallcap managers in particular. And so let’s take two successive three year periods. You take the three day period from 2014 to 2016, you look. Who are the best SmallCap managers? Who. Who are the ones who finish in the top quartile in terms of performance? The top 25 percent. And then you look at how many of those people finish in the top quartile in the following three years from 2017 to 2019. And the answer is one point six percent. There is absolutely no persistence in our performance whatsoever. Meanwhile, more than 25 percent of those top quartile fund managers in the first three years ended up in the bottom quartile in the second three years. So anything you just want to like, if you want someone who’s going to outperform you, just, I don’t know. Pick someone in the bottom. It’s just it’s likely that outperformance if you pick someone in the top. There’s this is an argument against active fund managing. But, Adam, what’s your number?

S1: My number is seven hundred million. That is the bail out for this trucking company. Why are Sea World Wide, which. Yeah, it’s interesting because like of all the industries there, like companies that are getting bailed out, there’s like the spread of trucking company, which is basically trucking for the Department of Defense, right? Exactly. Exactly. And that and that is obviously why, you know, that they are getting bailed out. But it’s just like this company, man. I mean. Well, I think they’re already getting sued for overcharging the government. If you look at, like the the interest rate they’re having to pay on this loan versus what it would take them to, like, get financing in the market, like the U.S. government kind of gets screwed in this particular loan. And then on top of that, if you just do some, like, basic math in terms of where this company is valued, the equity is worthless. Like why why are we giving a loan to this company?

S3: It just I don’t know, like I mean, does that mean that the U.S. government becomes like the fulcrum security when they go into bankruptcy? And then and then the U.S. government winds up owning YRC and then YRC becomes part of the Defense Department.

S1: The Treasury said that it’s going to be giving this loan to YRC in exchange for about a 30 percent equity stake.

S3: It’s a very odd bailout. But the reason why it’s not bailout is because none of the obvious companies who everyone thought would want a bailout actually wanted one or asked for one. Even Boeing said, yeah, we don’t want a bailout. So it’s kind of weird. Like there’s this five hundred billion dollar fund of bailout cash, which everyone’s like, yeah, no, we don’t want it. And so the only people who want it winds up being very odd. Companies like YRC, possibly the whole thing seems very sketchy to me. Emily, what’s your number?

S4: My number is three point eight percent. That is the percentage of Facebook employees who are black. And I got the number from an EOC complaint filed this week by one man who works at Facebook named Oscar, the NRC and is complaining, basically alleges that Facebook is a bad place to work for black people. And it’s a really interesting complaint, I think, because I don’t think Facebook is that different from many other Fortune 100 companies and the way black employees say they’re treated. He outlines and focuses on the hiring process and to the people who’ve joined the complaint, are people who’ve applied to work at Facebook and say they didn’t get the job because they weren’t qualified. Which I feel like is going to be a pretty hard complaint to make it through to a courtroom. But anyway, in there he described specifically like words like culture fit that that are used in hiring and that, you know, typically mean that like we have a white culture and you have to fit and then gives like a lot of examples about how that kind of plays out and reviews and the way he’s treated like there’s some example in the suit where he was in a meeting about recruiting and he, like at the recruiter, named a bunch of schools. They’re going to look for candidates and there is only one historically black university on the list. So this guy is like, why is there only one HB C on the list? And was told, like, why are you attacking the white H.R. lady? Like you’re being so hostile towards her just for asking the question. And I think that’s sort of like an indication of what’s really going on inside these companies that are talking about diversity and how they’re really there’s a big disconnect by, you know, the things they’re saying outwardly and how things are functioning inwardly and the lasting. Because I know I’m babbling and you guys look so bored. Is that so this is an EOC complaint. But the likelihood of it making it into a courtroom is going to be pretty small because Facebook still has employees who binds employees to arbitration in litigation, though, like last year, they said they wouldn’t do it anymore for sex discrimination cases. They still do it for race discrimination cases, which I mean, is insane to me. I mean, race discrimination. These goes to people’s human and civil rights. And companies can still, you know, shut shut up employees and send them to secret arbitration for race discrimination. Just something that I think is going to come up more in the coming year, probably cause I’ll write about it, but also because I think a lot more people start talking about it because it’s messed up.

S3: On which note? I think that’s it. Firstly, money this week. Thank you so much for listening. Thank you so much for all of your e-mails.

S2: E-mail address, as ever, is sleep money at sleep dot com. Thank you to just me and Molly for turning our rambling conversation into something. And Coach Aaron. And we will talk to you next week on sleep. Money.

S3: Let’s have a quick slate plus about Netflix, which made a very interesting announcement that they were going to take two percent of their cash, which works out to about one hundred million dollars, and invest it not in black owned banks specifically, but broadly in ways that will somehow wind up trickling down somehow to black communities. In principle, I like this idea. Cash is you can hold cash at any bank you like. And if the bank you hold it at is a black owned bank, then that means that bank has more funds available to be able to lend into the local African-American community. But it turns out it’s much harder than that because, you know, we’re talking about hundreds of millions of dollars here. And if you put money on deposit at a black owned bank, only two hundred and fifty thousand dollars of it insured. And obviously, these corporate treasurers want their money to be super safe because that’s what that’s the whole point of having cash in the first place. It needs to be liquid and safe. So, Anna, how can they do this or is it basically impossible?

S1: I mean, you could put two under 50000 dollars. I mean, like you could you’re not going to put all of your. I mean, but often cash on casual bank, but you could potentially I mean, spread it around in a bunch of different banks. So then you are still, you know, relatively safe at the same time that you can create a kind of better deposit base, which is an issue that you have at a lot of kind of community minority community banks, is that you don’t have the same type of sticky deposits you have at other banks. And thus, you know, it’s more expensive funding. It’s harder for them to make loans. It makes it kind of a harder, harder enterprise. So, I mean, I agree with you that it’s not there. You know, it’s not an easy theory, like, okay, all this money goes to one place. But I think you can make a difference by spreading it around a little bit. And honestly, I think that that’s probably a better way to do it than a lot of the other things you’re seeing out of other companies in terms of they’re just making statements or, you know, giving money to charity is great. But if you can kind of actually try to get more capital into certain communities, I think that that might be better.

S3: The interesting thing is that that’s not what Netflix is doing so far. They’ve made two investments towards the 100 million dollar target. One of them is a 25 million dollar investment in a fund. The other one was a very odd certificate of deposit, which I can’t really get details about in black on credit union, which is 10 million dollars. Both of them, obviously well over 250 thousand dollar insurance limit. And at least one of them basically stops being cash at all. The Netflix quite explicitly says that it’s the day that they wanted to be a relatively long term investment and they can’t just liquidate that and pull it out on a moment’s notice, which is the point of being cash. And I think what we’re seeing here on some level is companies just saying, yeah, we have so much cash, we don’t even know what to do with it all. And we can just sort of declassify some of it and put it into some fund at a black owned credit union or similar, because there’s really no chance we’re going to need that cash anytime soon.

S1: With Netflix, Netflix, I mean, it seems that that they have five or negative.

S3: They have five billion dollars of cash. And, you know, they they don’t see that cash balance going down that much. They reckon they can do this with two percent cash if they need that last two percent of their cash. They are in real trouble.

S1: Yeah, I just say that, like I mean, in particular Netflix example, like this is the company that exists because they in theory have a strong high equity price and that equity cushion enables bond holders to keep giving them money. But like, it’s not a company that generates cash.

S4: It’s like black owned banks. I mean, that’s a very small, small, fractional percentage of banking in the U.S. or globally. Is there something that big companies like Netflix could do with the big banks where they could say to them, like, I’m not going to let you hold my money anymore unless you have X number of black people in senior level positions or you invest more in these communities or, you know what I mean? Like, is there more to be done in that direction?

S3: That’s a really good question. I would love to see people like tugging on that string a bit.

S1: I agree with you because I know that and more so when she was on here with her book, you know, that was one thing she somewhat noted, not me. She’s obviously said that, you know, minority banks are important. But she said kind of the larger issue is that, you know, that the way the banking system works, the United States is not this like Jeffersonian tiny bank model. It’s this Hamiltonian large banking model. And when you tend to keep minorities out of that, then, you know, people are never going to be able to build up well, they’re never going to be able to have the same access to capital and frankly, the same access to capitalism that the rest of the country does. So I do think part of this is also, frankly, just changing some of the behaviors of the larger banking system.

S4: And they have some bad behaviors. I mean, I wrote about that lawsuit, the former diversity chief at Morgan. Stanley just fouled, and there is another guy who has been talking to me from JP Morgan and Chase who, you know, was pushed out of that firm and some terrible things happened. There were they weren’t even taking on black people as as clients for private wealth management. The Times is reported on that a lot.

S3: Yeah. I mean, meanwhile, you go down with, like actor the Ford Foundation doing it’s like social bonds so they can invest more in black communities. And who are the lead managers of that social bond? But Morgan Stanley and Wells Fargo.

S4: Oh, my God. Yeah. Yeah. I mean, good for Netflix. But there’s more that they could do. I think that could affect maybe real change.

S1: Yeah, maybe too. Like. So this is what people are this, Nancy. Plus that just won’t be like all negativity. I thought I do think the fact that we are seeing something like this that is a very real action as opposed to what we tend to see is is good. It’s significant. I do think, like, it’s not it’s not gonna fix it, but it’s a good it’s a step in the right direction. Yes.