In Defense of Nepotism
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Speaker 1: Hello and welcome to the In defense of Nepotism episode of Slate Money, your Guide to the Business and Finance News of the Week. I am Felix Salmon of Axios and I am on a call with my colleague Emily Peck, who is simultaneously rolling her eyes and shaking her head.
Speaker 2: It’s true. I am not defending Nepotism in this episode, just FYI. Dear listeners.
Speaker 1: Emily is not defending Nepotism Elizabeth Spiers. Are you going to defend Nepotism in this episode? No.
Speaker 3: We don’t vote you.
Speaker 2: Yeah.
Speaker 1: Well, I will step up to defend Nepotism. It’s a dirty job, but someone has to do it. We’re going to talk about Nepotism Napo babies, a term from Tik tok that seems to have consumed the media of late. We are going to talk about cocaine because it’s the party season and we are going to talk about retirement plans and how they are changing in 2023. We even have a Slate Plus segment where Emily, Elizabeth and I all come clean on the thing we were most wrong about in 2022. So there’s lots to look forward to. It’s all coming up on Slate. Money.
Speaker 1: So, Emily, we had this omnibus bill drop at the end of the year when everyone was running out buying Christmas presents or whatever one does at the end of the year. And it was roughly a million pages and no one read the whole thing. But inside it was this massive, great big holiday gift to anyone who is in a401k plan. And as far as I can make out. Am I right? Is this like the relatively fortunate Americans who are already in for a1k? Plans are going to be even more fortunate in 2023.
Speaker 2: Yeah. Yeah. I mean, you thought that you had a big Christmas bill at the end of the year. Well, Congress, this is $1.7 trillion and this was part of it. And I guess I guess it’s a win for people who have for one cares, but only the the highest earning people that have for a1k is I think. So if you want to back up this, the provisions that are tucked in this omnibus for four for one ks include like new 401k plans will require employers to auto enroll people into 4a1k is, which is pretty good. That’s like a good thing for especially for younger workers who might feel.
Speaker 1: Like this is an old fashioned Barack Obama style nudge. You know, it’s like we’re going to nudge people into saving for retirement. It’s certainly good for the 41k plans, right, because they.
Speaker 2: Get who want it. Yeah. These are the people who pushed really hard. And the other thing is more controversial, they increased. This is so nerdy. The required minimum distribution age will go up in ten years. It’ll be 75. That means you don’t have to start taking money out of your 4a1k until you are 75 years old. It is now 72 and that’s like a big win for wealthy people who don’t need the money in their 41k So they could keep that money which you know, you have to pay taxes on it when you take it out. So the longer it stays in there and you don’t have to pay taxes, that’s like that’s a win for rich people. Essentially. There’s a thing for people who are working and paying student loans. An employer can now match your student loan payment as a contribution to the 401. K, which I feel like is an. Is good, but is kind of like small ball, right? I mean, what do you think?
Speaker 1: I think this is just a litany of things for like basically for rich people is people who have just, you know, employers and jobs and student loans, like they might not be rich as in wealthy, but they’re probably relatively rich as in income. Yes. And they’re certainly rich enough that the idea is that they won’t opt out of a4a1k match because they won’t even notice it and they have enough money to live on anyway. And yeah, it’s a great way of increasing the amount of money floating around in semi perpetual four or one K retirement plans.
Speaker 1: Elizabeth, you’re the political animal here. Like I’m relatively cynical when it comes to these kind of bills, but is this just a case of. Rich people just always being the people that Congress cares about. Or is is this actually pretty good what they’ve done here?
Speaker 3: So politically, I think this is actually a good thing. I sort of agree with Felix that most of these provisions really benefit rich people, but the optics of them are a little bit different because the student loan provision in particular works well with Biden’s student loan forgiveness program. It signals that the administration cares about people who, for you know, for many people are the first people in their family to go to college and they graduate with student loans and not from elite universities. And these are the same people who may not know to enroll in their 41k. So the auto enrolment provision matters too. I’m not sure what the net effect of it is, but politically I think the optics are very good for the administration and I am curious about how common auto enrolment is. Were you to auto enrolled near for one go?
Speaker 1: I have never been auto enrolled. There’s a kind of anti paternalist bent in corporate America like, you know, back in the fifties, corporations were like, we’re going to look after you and do what’s best for you. And then sometime around the eighties, they were like, no, you know, we’re going to have like arm’s length contractual relationships with you and we’re not going to be family. You know, we’re going to be a team, but we’re not going be family. We’re not going to look after each other in the same way. And I think at about that point, this idea of like paternalistic auto enrolling people because we know what’s good for them, it was considered to be almost condescending in a way. I think it’s a good idea, but I do think it needs to be given a good shunt by the government, which does seem to be what’s happening. I think most corporations on their own don’t tend to do it.
Speaker 2: I mean, all of this stuff is just, I think, kind of small ball like Felix when we were talking about this topic a day ago or two days ago, you mentioned there’s this other bill that kind of went nowhere that would have really reformed how retirement savings and planning works for most Americans. Because the fact is these foreign cars are not enough for most people. Like about half of all private sector employees don’t have access to formal in case, you know, lower income workers don’t have a lot of money in their foreign case. It’s really like a retirement system that helps people who would have saved for retirement anyway. And on the margins, maybe it helps, you know, some younger workers. But those are probably the workers that ultimately would have made enough to start saving for retirement anyway. This is just giving tax breaks to people for doing a thing they would have done again anyway. You know what I mean?
Speaker 1: Absolutely. If you if you look at the people who max out there for one case and thereby get the maximum tax expenditure, you know, save to save the most taxes because it’s all pre-tax money that the rich people who we don’t really need to worry about their retirement security anyway. On the other hand, the gig workers and the hourly workers who we do need to worry about their retirement security have no access to any real retirement savings plans at all.
Speaker 1: And so Senator John Hickenlooper and the bunch of other people have introduced a plan which basically says if you are a gig worker or a low income worker, we are making less than the median wage, then we will basically enroll you in the same 4o1k plan that members of Congress are in. But like it’s really good is a very, very good for a1k plan. The members of Congress who have it really like it. It’s run very efficiently. It invests so sensibly. And the idea is that like you would basically just open up that scheme to everyone and really expand for a one. KS To everyone.
Speaker 1: And you know, on the one level it kind of that would ratify this problematic move that we’ve made. From turning retirement security into a from a collective problem to an individual problem. And there are lots of problems with that. And I would much rather we all went back to the old world of defined benefit pension plans and pension schemes rather than for one case for a whole bunch of reasons that we can go into or not.
Speaker 1: But on the other hand, since that seems to be a fait accompli at this point, and since we are now reliant on individual savings for retirement, we should definitely make individual savings for retirement something accessible to everyone and not just something accessible to people with employers who will offer for one K plans.
Speaker 2: Another thing we have in America is Social Security. And I don’t understand why we don’t just make some simple fixes to that system, which works really well at keeping people out of poverty when they’re old at least, Right? Why not raise the the minimum the income, Max, for paying Social Security taxes? Why not increase the amount of money people get in Social Security? Like why do these other 41k things?
Speaker 1: Right, exactly. Social Security is the ultimate defined benefit pension plan, right? It’s the ultimate pension scheme. It is something which everyone pays into and everyone is eligible for, you know, to a first approximation. And it works really well when you say and when people like, you know, bring up this idea of fixing Social Security. I don’t love that idea because it kind of implies that Social Security is broken and it kind of isn’t like it’s working pretty well. And people who get Social Security happy with it and they’re getting that checks every month. And, you know, those of us who are paying into it pay in every month and it seems to be relatively well set up.
Speaker 1: The only problem with Social Security is that for technical reasons, it’s based around this concept of a trust fund that quote unquote, owns a bunch of Treasury bonds. It’s basically the government lending money to itself. And you’re like, fine, okay, whatever. But there are. Legal reasons why it might be hard for. People to get their Social Security checks. If that trust fund goes to zero, which it like mathematically will at some point.
Speaker 1: And so there is a long term issue of, you know, are we going to allow Social Security or the government generally to continue paying out benefits even if there’s no money in the trust fund? And if so, how are we going to do that? And that is a really gnarly question which a whole bunch of people have different answers to. But. It’s not an immediately urgent question, Right. There are still trillions and trillions of dollars in the trust fund so that we have a little amount of time to wait that one out.
Speaker 3: Yeah, And people have people have a high level of trust in the Social Security program. And they don’t think of it as a regular entitlement program. They think of it as something completely discrete. And, you know, the political ramifications of that are, you know, pretty important. It’s why you don’t really see Republicans going after Social Security as the government safety net program that should be abolished. It’s very popular. People like it, especially if they, you know, are over the age of, say, 50. But I agree with Emily that, you know, there are ways to expand it and improve it. And I could say the same thing about Medicare and Medicaid.
Speaker 3: So, you know, the question is how much with expansion and improvement could a, you know, stronger or maybe that stronger but expanded version of Social Security replace things like for one case? Or how much would it cannibalize the way that people think about for one case as a significant piece of their retirement packages if they’re in a position to do that?
Speaker 1: Right. The first bank was never designed to be like the main way that Americans save for retirement. It was this tiny little you know, it was literally section four or one K of some obscure bill that some like random accountant in Illinois somewhere like discovered one day and said, oh, I can use this as a retirement scheme. It was barely even like, you know, it was it was almost a loophole, but it grew to become the thing. It was a loophole to, you know, and.
Speaker 1: There was definitely never a concerted push at the government level to move everyone out of collective pension schemes and into individual retirement plans, because individual retirement plans just intuitively don’t make sense, right? We don’t know how long we’re going to live for when we retire. We we want intuitively to be part of a scheme where, you know, the people who, through no fault of their own, drop dead two years after retiring and don’t need an income anymore, effectively cross-subsidise the people who live to 110 and need an income for a very long time. Right. We want to be able to collectivize this because otherwise everyone needs to save individually on the basis that they’re all going to live to 110. And that’s crazy. That’s like too much savings.
Speaker 1: So but yeah, we wound up in this individualised system and it would be great if the government, like having gone along with this individualisation of retirement security, started pushing us back in the opposite direction, perhaps by expanding Social Security a bit. Yeah, the problem with Social Security is that it’s only allowed to invest in Treasury bonds, right? So it’s never going to get a very high return on whatever is invested in it. And in so like fiscally speaking, I think it would be hard to turn Social Security into a mass savings vehicle for the, you know, upper middle classes.
Speaker 1: But, yeah, it’s. As I say, I don’t think it’s really broken right now. And to Elizabeth’s point, it’s very popular on both sides of the aisle. So when push comes to shove and the Social Security trust fund goes to zero, I’m quite sure that Congress is going to come up with some way of making sure that those retirees continue to get their Social Security checks, because those retirees we know one thing about them, and that is that they vote you know, they all vote.
Speaker 2: Yeah. And I think maybe another kind of problem would be like for all in case maybe we’re never meant to be the big thing that they are now. But now there’s, I think, trillions of dollars in these accounts and the corporate finance lobby, there’s a big lobby out there that wants to get more money into these accounts because it’s like hugely moneymaking business for a lot of companies who push for things like these new changes that I mean, we don’t really need and we’ll just put more money in for one case. That’s what they will do. There’s not the same kind of push for any kind of Social Security reform from any kind of industry lobby as far as, I mean, maybe AARP or something.
Speaker 1: You’re absolutely right. The private sector makes no money from Social Security, whereas it makes billions of dollars, so much.
Speaker 2: Money.
Speaker 1: For a1k plan.
Speaker 2: Like like they these are plans that are now you’re going to automatically have to give your money to the private sector.
Speaker 1: You’re going to automatically give your money. You’re not going to automatically have to give your money. You can always opt out.
Speaker 2: You’re automatically be enrolled, quote unquote, for your own good. And then the finance industry will take a percentage of that money that you’ve been kind of like pushed Obama style into taking out of your paycheck. It’s like a huge crazy giveaway and it’s meant to be a good thing. Right. It’s it’s it’s just wild.
Speaker 1: And what’s more, the you are you are at the mercy of your employer to choose the good for a1k provider. Yes. You know, you might be like totally on board with passive investment and index investing and low fees and all the rest of it. But then if your employer chooses some kind of high fee expensive for a1k plan that you just have to put up, put up with that you don’t have any choice. I mean, that’s not entirely true. You can actually roll roll money over from your existing 401k into an IRA that you set up, but like, no one does that. That’s just. Yeah, come on.
Speaker 2: And if you have a matching plan or something and not all employers do that, then you probably wouldn’t roll anything over because you want to get the dollars into that one account.
Speaker 3: Don’t you think part of the failure to collectivize this problem is a function of people changing the way they think about retirement planning, where it’s not a matter of safety and security anymore? It’s it’s a wealth building strategy.
Speaker 1: Yeah, no, it’s now called estate planning. You know, it’s like how how what’s the most tax effective way for me to leave my money to my children when I die? People don’t want to die with zero anymore. They want to die with lots of money that they can leave to their heirs. And this is all it’s Elizabeth is absolutely right, is tied up with that. And that’s one of the reasons why they don’t want that inherent cross-subsidy that you get in normal retirement plans and pension plans where, you know, if you die earlier, you wind up getting less money and if you die later, you end up getting more money because they’re like, No, if I die earlier, I want my. Children to get my money. And then that creates, you know, the idea that you actually want to own the money rather than just have rights to payouts from a fund.
Speaker 2: Wow. I mean, when I think about my retirement, I do not think like that at all. I’m just like, I just want enough money to live. Like, that’s all I am thinking about.
Speaker 3: You don’t have an estate planner. Is that what you’re telling us?
Speaker 1: You have. You haven’t created a revocable trust for your children. Really? Like, what do you.
Speaker 2: Even. What am I doing?
Speaker 1: What are you even doing? Am I speaking.
Speaker 2: Of passing things on to your children? Napa babies.
Speaker 1: Oh, than the Napa babies. Let’s talk about Napa babies. All right, so this is the part of the show where Felix and Emily get into a fight about Napo and nepotism and whether it’s a good thing or a bad thing. And Elizabeth, you’re going to have to adjudicate.
Speaker 3: I’m probably on Emily’s side. Please.
Speaker 2: I said I know it.
Speaker 1: Oh, no, no. I’m having to fight both of you. And you are both anti Nepotism.
Speaker 1: Okay, Elizabeth, what is wrong with Nepotism? And why are we even talking about Nepotism?
Speaker 3: So we’re talking about this because someone coined it on the Internet sometime last year and the New York Magazine just did a whole big package about what they called Napa babies in the entertainment industry. And Napa babies are people who benefit from nepotism and have had career successes and, you know, financial links up because of it. So why do I not like Nepotism? I feel like I’ve seen people get put in charge of important things solely because of nepotism, and it’s been disastrous for everybody. And my favorite example right now is that my former boss, Jared Kushner, was put in charge of the entire coronavirus response by his father in law, Donald Trump. And the only reason that happened was because he married Ivanka Trump. And I just think that sort of thing is bad for everyone.
Speaker 1: So if Elon Musk decides to appoint Jared Kushner, the CEO of Twitter, would that be nepotism, too, or is that point that point?
Speaker 3: I think that would be neither. I think if you on was, you know, Jared’s dad or something, I think there does have to be a family connection for it to be defined as nepotism. I do think putting Jared in charge of Twitter would be bad, but I don’t think that that’s a nepotistic hire. I think that’s a you know, we’re in this we’re in the same box at the World Cup and with all of our Saudi friends. And maybe this struck out as a good idea.
Speaker 1: I mean, Elon Elon does hang out with Napa babies. You know, his his cousin Kimbal is in charge of various bits of the of his empire. He’s put James Murdoch on the board of Tesla. And, you know, one has to ask Emily, like from your point of view. Why is Ellen doing this if nepotism is such an obviously bad thing where, like you wind up with unqualified people? What is it about these red blooded capitalists that makes them pick Napo babies to, you know, put into high powered positions?
Speaker 2: Okay. So the New York magazine article really focuses on Hollywood Napo babies. That’s when the the the sons and daughters of famous actors, actresses, producers, whatever get hired or cast in roles that maybe a similar person with the same experience wouldn’t get. But they get it because they kind of look like their parents are just.
Speaker 1: Well-connected or they’re just massively talented. And as I have mentioned on the slate, on the slate slack. But I will mention here, if you say anything weird about Liza minnelli or Angelica Houston, I will have exceptions.
Speaker 2: Right. I mean, some of them are talented. Fine. But and so and part of the reason yeah, part of the reason they get cast is like you don’t want to offend their famous and influential parents. So there’s probably a little of that going on, you know, in the business world also. I also think it’s a little bit of laziness on the part of executives and leaders who are like, Oh, so-and-so, So-and-so’s daughter’s like, seems smart enough. Like, let’s just hire her. And it’s like, Whatever, let’s just do it. It I think it is partly a little bit of laziness. It’s partly wanting to curry favor with influential people. That’s that’s a commonality between all.
Speaker 1: It’s also just pattern recognition. You know, people like they want to see someone who resembles the kind of person who’s been good at this in the past and know, you know, if you want to hire someone for your movie who resembles someone like really talented and gorgeous, like Lenny Kravitz or Lisa Bonny, you’re just going to hire Zoe Kravitz. And then she’s really beautiful and talented and gorgeous and gee, winds up being a movie star. And it just it just trickles down. Right. You don’t need to do a massive casting call of a million people because you know that she will be amazing and she will be amazing. So, you know, it’s yeah, it is a little bit it’s laziness and pattern recognition. I can totally see that.
Speaker 1: But I keep on thinking back to. The amazing episode of Slate Money that we had with Daniel Markowitz. Meritocracy. And he kept on making the really important point that a purely meritocratic system is also, in many ways a nepotistic system that we have created this economy where on a meritocratic basis, if you just look at sort of sheer talent and ability, the kind of advantages that are given to the children of the rich and the well-connected ensure that they are, you know, way ahead of everyone else when it comes to getting these jobs in the first place. Like, it’s not they’re not really at odds with each other, these two ideals, and they’re both terrible. I don’t believe in meritocracy and I don’t believe in nepotism. But like they are, they are much more closely they overlap much more than I think the anti-NATO people would like to admit.
Speaker 3: Well, I think that argument actually just points to the fact that, you know, there is no meritocracy, really. It’s it’s an illusion. But I also think of the the argument against nepotism is not just being about direct hires. So I think when we were discussing this earlier, I said I think of Sam Bankman-fried as a net baby because I feel like he was given extra benefit, that he knew what he was doing and was capable of behaving ethically because his parents are well-known ethics professors at Stanford.
Speaker 1: Well, they’re law professors. They’re not ethics professors.
Speaker 3: Well, they are, but they’re ethics experts.
Speaker 2: Yeah. I mean, I think that’s like what I mean, the line is a little blurry, but Felix and you are kind of saying the same thing. Like, some people have a lot of privilege. They have really fancy wealthy parents, and that allows them to do fancy wealthy things themselves. Right? I mean, if you look around like Elon Musk is, what the son of what is it, an emerald miner or something, and Mark Zuckerberg is the child of like, I don’t know, really rich upper middle class people in New Jersey. Like, there’s all that that stuff. But nepotism takes all of that privilege and sort of elevates it. I think the article in New York magazine said it was like the Cadillac of privilege or something. It’s like there’s privilege. And then there’s like this extra layer if your parents are famous that you get right?
Speaker 1: Yeah. I think in general, just like, you know, my parents are university professors and I became a crypto billionaire is not. Nepotism right. It’s it is like upper middle class privilege, but it’s not you know, it’s not like they they put him into that position.
Speaker 2: Which is, you know.
Speaker 3: That’s that’s my argument. My argument is that when he wanted to do that, people didn’t question his credentials as much and they absolutely didn’t question his ethics, because they assume that if you’re the kid of two Stanford law professors who are well-known experts on the topic, that you would have internalized all those things. And so I just don’t think that he was subjected to the same amount of scrutiny.
Speaker 2: Like there was all these reporting on Bankman-fried about having conversations about effective altruism at the dinner table growing up at the Bankman-fried house. And the parents did work, some kind of work on like corporate ethics and things like that. So in that in that frame, I feel like people are like he’s really well versed and really smart about this stuff. He grew up. It’s in his blood.
Speaker 1: One of the things that was this wonderful New York Times article that Emily sent around and we will put it in the show notes about the NAPCO babies, which which I liked because it wasn’t mostly pejorative, like the New York magazine. One is mostly like nepotism is bad. The New York Times one was like nepotism is like everyone wants to be in that po baby. Like this is the this is what everyone’s just covets this title because it’s such a cool and awesome thing to be. And I, you know, and I’m looking around like in sort of talking about how in our little corner of. Journalism night that there are obviously nappy babies in journalism like there are everywhere else. But you look at someone like Ronan Farrow, Anderson Cooper and the like. Yeah, that’s very sort of matter of fact about it, that don’t try and hide it. They don’t try and pretend they were they didn’t get advantage from it. But it’s not something to be ashamed of in any way.
Speaker 2: Yeah. And I think the New York magazine piece makes that point, too. It’s not like this is bad or good. It’s like I think it goes back to what Elizabeth said initially. Sometimes the Nepo issue leads inexperienced, incompetent people to be put in positions of great responsibility, like making peace in the Middle East or, for example.
Speaker 1: And sometimes it allows Ronan Farrow to, like, you know, bring down Harvey Weinstein.
Speaker 2: Yeah. Yeah. I think it’s it’s neither. It’s neither purely good or purely bad, but it points to some inherent unfairness.
Speaker 1: Yeah, I think that’s the that’s the the bit that kind of makes me feel weird, right? From your you you anti nepotistic right. Is that you seem to be comparing it to some sort of egalitarian ideal that exists nowhere on the planet and will never exist. Inequality is entrenched in every society in the world. And if you just going to say, well, nepotism is worse than pure egalitarianism, you’re like, Yeah, fine. But that be That’s not really the choice we’re facing. And I feel like given the choice we’re facing, there are many more harmful forces in this world. I’m not saying it’s fair, of course it’s not fair, but it’s unfair in a relatively transparent way.
Speaker 3: That’s not really an argument for not trying to mitigate it. I mean, you know, we all know because we’re adults that purer children ism doesn’t exist. But, you know, we have plenty of policy remedies that in theory work to reduce inequality and work to get us to somewhere that’s more egalitarian than what we have right now. So I don’t think it’s a matter of choosing between the status quo and some completely utopian existence that we all know is unrealistic.
Speaker 2: Yeah, I think about civil service workers. Like Once Upon a time, if you wanted to work for the government, you had to like, know someone, bribe someone. Blah, blah, blah. Then they created a whole framework where you had to take test and qualify for these jobs. And look, it’s harder to do the NAPO if you have a test that you have to take or some kind of other hoop to jump through, like it’s not so hard to fix these problems, you know what I mean? Like, we don’t have to just live with it, you know, and have only famous people.
Speaker 1: Yeah, I feel, I feel Emily. I feel like if if there were civil service jobs, the children of the rich and powerful really wanted, they would probably find some way of getting them. And in fact, there are civil service jobs that the children of the rich and powerful really want. And those jobs are called member of Congress or senator. And we do find that those jobs are overwhelmingly held by NAPPA babies.
Speaker 3: I mean, there’s a big structural reason for that. And it’s just the way we fund campaigns. You have to be able to afford to not work for the duration of the campaign. And that heavily influences who ends up in Congress.
Speaker 1: Right. I’m just saying that there are very few examples of desirable jobs that, you know, the children of the rich and famous really want that you don’t find nepotism. I it’s I think it is harder to fix these problems than Emily is suggesting, that you can definitely fix the problem at a level of like, you know, we’re hiring four people to work at the post office, but those aren’t the jobs that the rich and famous won. So, yeah, we’re not really getting very far there.
Speaker 1: And nepotism, you know, it’s been around for millennia. It’s it’s not it’s one of the oldest forms of of how to. Get a job. You know that. Always. Historically speaking, it was always like, what? Trade is your family. And, you know, if you were a son and your father did something, it was expected that you would follow in his footsteps. If your father was a carpenter, you would become a carpenter. And that’s a form of nepotism. And it’s just like how human society is lived for thousands of years.
Speaker 2: So, I mean, for thousands of years we didn’t have like, dishwashers. Are you anti dishwasher? Like, Come on, Felix, What are you talking about?
Speaker 1: The the much more interesting question that I have is the well, when I say much more interesting, I say mildly more interesting because I’m a finance nerd is the well documented tendency of big sell side investment banks and money management institutions to hire the children of their biggest and best clients.
Speaker 1: So, you know, if you go to and there have been settlements about this, like legal settlements where it’s been found to be completely illegal, where, you know, your Jp morgan or Goldman Sachs or Credit Suisse or someone like that and you have a. Big client who manages billions of dollars and has a bunch of very lucrative income streams associated with them. And you and you know, and they have some highly privileged and well-connected kid. And you give that kid a job at your institution and that makes the client feel better about you and send you more of their business.
Speaker 1: And on one level, some in some cases, this rises to the level of being clearly illegal and like violating the Foreign Corrupt Practices Act. And there have been settlements about it because it’s considered to be a bribe, a form of kickback to the client, but also on in many other cases, it’s actually a really smart hire because these kids have grown up in, you know, very important families. They know all the right people, they have all the right connections. And they’re actually very good at doing that kind of client facing financial services work. And they can be great hires in and of their own rights.
Speaker 1: And that tension of like on the one hand, we’re doing this kind of icky, just give this cushy job to a well-connected child of a client thing. Is tempered or mitigated by the fact this, you know, that child could actually be exactly the person you want.
Speaker 2: Yeah, And there’s some of this. They talked about a Vogue, which I guess used to have maybe still does have a tendency to hire the offspring of like really well connected people in New York City society and that serve them well when they need to do the journalism of Vogue, like, look, the right people go to the right events, all that kind of stuff, these. There was some line about they didn’t do any actual like writing or editing. It was more like making a phone call and making a connection. And that is valuable, I suppose, to these places.
Speaker 3: And I’m sort of on the fence about that sort of thing because then what you’re hiring them for is explicitly a network and there’s no kind of pretense that, you know, somebody is being hired because they’re just an amazing journalist. It’s, you know, I think everybody understands the value or lack of in certain areas.
Speaker 2: Yeah. And the piece did say like Anna Wintour, if you weren’t good at doing that, she would just get rid of you like she didn’t care. So I think that’s important. The ability to hire the NAPO babies, but the ability to fire them to.
Speaker 1: Exactly hiring them for babies is fine as long as you fire them as easily as you hire them. I think maybe maybe that’s where we can. That’s like alien synthesis from a from a disagreement here.
Speaker 1: But we should we should stick on the topic of privileged rich kids, because this is clearly the awesome Segway edition of Slate Money because we are going to talk about cocaine.
Speaker 2: Oh, take it away, Felix.
Speaker 1: Tell us. Okay, so it turns out that we are in a golden age of cocaine right now. There is more cocaine fluttering around the streets of every city in the world than in living memory. Their supply of cocaine has gone up many, many times since the sort of Pablo Escobar heyday, especially from Colombia. It seems that most of the cocaine in the world still does come from Colombia. Interestingly enough, it’s not like something where, you know, some Asian country has taken over, but Colombian production has become turbocharged for various reasons.
Speaker 1: And now cocaine is everywhere, and especially in Belgium, apparently, where they have seized so much cocaine in the in the ports of like Antwerp and places like that, that they have run out of incinerator capacity and they have these top secret cocaine warehouses where cocaine is piling up literally tons and tons of it. They they can seize four or five or six tons at a time of cocaine. And they just put it in this warehouse awaiting incinerator capacity because they don’t want to incinerate too much at the same time for various reasons. Yeah.
Speaker 2: And at a time when supply chains are under so much scrutiny and seem to be plagued with issues, the cocaine supply chain seems to have reached new levels of efficiency. So they they apparently they put the cocaine in shipping containers that mostly contain fruit and needs to move quickly through the supply chain so it’s less likely to get inspected or stopped. And that’s like the new strategy.
Speaker 1: Elizabeth, what is that? What is the big picture takeaway? Is the person among the three of us who’ve written the most about cocaine? You are that you are officially the thing.
Speaker 3: You know, the demand side of the US Is Coke popular? Again, I’m not cool enough or young enough to really know if this is the kind of thing where if you go to, you know, the coolest club in Berlin, everybody’s doing coconut. Where is the increased demand coming from or is this just like a supply glut?
Speaker 1: So there is actually a question and answer that question. And and it’s not it’s not the answer that you might think it is not the you know, suddenly the cool Williamsburg hipsters are all doing cocaine where they weren’t in the past. It’s much more that there is now so much cocaine to go around that it is it is landing in places like when the series or Santiago de Chile or Lagos, Nigeria, or Cape Town or, you know, it’s wound up becoming regularly consumed in parts of the world, like Warsaw.
Speaker 1: The like it just didn’t used to be regularly consumed to the same degree, you know, like it used to be that, yeah, you would find cocaine in New York City and Berlin and London and like financial centers and stuff. But where the fashion industry hangs out, you know, Milan. But now it does seem to be a more global product.
Speaker 3: Yeah, I think my, my cocaine expertise is definitely a I think, you know, I wrote something when I was 20, 22 or 23 about cocaine delivery services in New York. And I interviewed. A Wall Street person about her personal delivery service, and she had decided that the service had a lot of inefficiencies and just gave me an entire Harvard Business School case study on it. But I realized how much I actually don’t know about this topic because YouTube pointed me to this amazing correction on a 27 Slate story about how the DEA measures cocaine. And I just read I read it verbatim. It says, the original version said an eight ball is about ten lines of cocaine. While the size of a line depends on personal preference. Most users would divide an eight ball into more than 25 lines. So today I learned how many lines are supposed to be in the platonically ideal eight ball. I hope this is useful to someone.
Speaker 1: Yeah, 25. And that should last your whole weekend. Right. But in fact, yeah, I’m not going to. Yeah.
Speaker 2: I did read in the Wall Street Journal recently that drug use rose during the pandemic. More people who are working from home felt free to consume the cocaine, you know, because no one was around. As long as you keep the zoom camera off, you’re fine. But I guess sometimes these days the cocaine is cut with fentanyl in the United States and some people have died. So we should say it’s not all fun.
Speaker 1: Yet, especially if you’re in the United States. People get your fentanyl drug test kits out. We’re not going to be judgmental here and say never do cocaine. We are going to say, if you are going to do it, test it first, because you could die if you don’t.
Speaker 2: Yeah. So that seems bad. Also, the the story that inspired us to talk about this in Bloomberg, the reporter went to Colombia, where they’re harvesting the plants that are used to make cocaine. And as you would expect, the people who harvest the the coca plants, you know, make like, I don’t know, like $5 a day or something. And a lot of them wind up dead. And I mean, it’s just horrible. And also, I learned from this article that they, like, soak the coca leaves in like bleach and gasoline. I mean, it doesn’t seem healthy.
Speaker 1: Yeah. I’m going to I’m going to come out and agree with you on this one. After after a, you know, deep disagreement on the subject of nepotism, good or bad. Yeah, we can agree on the subject.
Speaker 3: For New Year’s resolution.
Speaker 2: Maybe no 100% agreement or less cocaine. Oh, no.
Speaker 1: It’s not good for you people. Let’s have a numbers round. Elizabeth, you have a number this week?
Speaker 3: Yeah. My number is 20 $800. And this is a personal number. That’s how much I paid for plane tickets from New York City to Montgomery, Alabama, for three people to be here for two weeks. And that’s about three times what I’ve paid historically.
Speaker 1: I’m getting I’m getting my calculator out here. So that’s $933.
Speaker 3: Not including baggage fees or anything else.
Speaker 2: Wow.
Speaker 3: But it’s depressing. It’s like, well, I guess I’m not going to see you guys again for three years.
Speaker 1: Well, unless and until the the price of plane tickets comes down, that there’s nothing more stochastic than plane tickets.
Speaker 2: Would it be cheaper to drive? Could you, like, get an RV and just drive?
Speaker 3: You probably could, but it would take you, like 20 hours or something. And I’m not a long haul driver.
Speaker 1: My number is 100,100, which is the number of New Zealand dollars that this chap called Julian Shorten bid in a New Zealand auction for a transcript of a parliamentary.
Speaker 1: Debate where the Prime Minister Jacinda Ardern was debating with one of the opposition leaders, this guy called David Seymour. And when and they had a back and forth and then when she sat back down at her seat, she turned to the person sitting next to her and didn’t realise that her microphone was still on and called him an arrogant prick. And apparently everything in New Zealand is so polite that this became a major New Zealand political scandal that she would say arrogant prick.
Speaker 1: And eventually they decided that she and he were both going to sign the transcript and auction off for some medical charity. And Julie and Shorten spent 100,000 and 100 NZD put in this bid in the full expectation that someone would outbid him at the last minute and then no one outbid him in at the last minute and he didn’t have that much money. So he’s now having to borrow the money to pay for the transcript. And this is exhibit A and like why you should never buy things at auction because you get caught up in the excitement of them and you do dumb things like spend more money than you actually have on a dumb signed, signed transcript. Don’t do that, people.
Speaker 2: Oh, that’s a nightmare. Don’t do that.
Speaker 1: Be careful out there in auctions.
Speaker 1: Emily, what’s your number?
Speaker 2: My number is 73. That is the number of senators on Thursday who voted for the Pregnant Workers Fairness Act, which is part of that giant bill we talked about earlier, the big spending bill. This is an act, a law. It will probably become a law very soon. I think it might have already, probably by the time you listen to this. It is a law which allows pregnant workers to keep their jobs if they need an accommodation, like more bathroom breaks or maybe like a like a stool to sit on if they’re working the cash register or something.
Speaker 2: Before this bill became law, employers could just put you on unpaid leave or fire you if you needed accommodations as a pregnant worker because you’re not considered disabled. There’s all kinds of ways to sort of get out of get out of it. So advocates have been saying, you know, women lose their jobs all the time because of dumb stuff like this. Let’s fix it. And it has been like a ten year fight. It’s kind of crazy. And it was a little bit surprising to me anyway as an observer that it finally got through.
Speaker 1: I guess you were saying that the Senate was the hard one, but then somehow 73 people decided they all wanted to support it anyway. So it turns out not to have been that hard after all.
Speaker 2: Well, okay, so last in 2021, it passed the House, no problem with bipartisan support, and it had bipartisan support this year all along. But for whatever reason, and I’m not a political reporter, but Senator Schumer, you’ve heard of him from New York, Chuck. He, for some reason wasn’t putting it to a floor vote. And the advocates there, I don’t understand why he’s not putting to floor vote. And like, again, I’m not a political reporter and I ask people and they’re like, we don’t understand either. No one understood. So finally it happened, but it did have bipartisan support all along. I mean, who’s going to vote against like letting pregnant people sit on a chair a little bit? You know what I mean?
Speaker 1: Anyway, thank you for listening. This has been fun. We are going to have a sleepless segment on the things that we were most wrong about this year. So you have that to look forward to if you are a member. Otherwise, thanks for listening. Thanks for sending us your emails on Slate Money at Slate.com. And we will be back next week with even more sleep money.
Speaker 1: Now that we’re in the safe zone of just elite plus members. Emily, what was the thing you were most wrong about? What did you get most wrong this year?
Speaker 2: I got two things wrong. I guess my first thing I got wrong was I really didn’t think Ellen would go through with it. I really, really didn’t think it would happen. Even towards the end, when it was becoming clear that the like he was going to be forced to. I really I really I didn’t foresee the chaos that has become Elon Musk’s reign of terror at Twitter. I thought it wouldn’t happen.
Speaker 1: I will. I will add a corollary to that, which was that when he just fired everyone and, you know, Twitter started running off backup servers and stuff, I was pretty convinced that, like the entire service would just go down within a couple of weeks, which it didn’t. It’s still ticking along. But I will say the thing I was most long about. In 2022 was. Inflation that I thought it would come down much more quickly than it did. I thought it was this weird supply chain spike and that they once that fed through it, would be over. But yeah, no. Then it became a much more entrenched like housing thing and it’s going to clearly take a lot longer to come down than I thought it would. Elizabeth.
Speaker 3: I will also admit that I was totally snowed by Sam Freed’s self made image. You know, I bought all of it, I think, and was genuinely surprised when FDX imploded. And the more that I read about it and understood about what had actually happened, the more I felt like a total sucker for thinking that there were competent people there.
Speaker 2: Wow. These are big stories that we got wrong. These aren’t the smallest business news stories of the year.
Speaker 1: Yeah, I. I mean, I think in in your defense, Elizabeth. It’s hard for me to think of anyone who specifically singled out Sam Bankman-fried as being. The big fraud, even fraudulent by crypto standards. There were definitely people who were like, All of crypto is a fraud. It’s all nothing. It’s all a Ponzi scheme. But I can’t think of anyone who said like, never mind. Crypto in general in particular is a Ponzi. I heard that about Binance. I heard that about Tether. I didn’t hear that about FDX. So anyone and you know anyone who did think that. I think even, you know, Michael Lewis, who’d been following San Joaquin Street around for months, didn’t think that he did a good job of knowing people.
Speaker 2: I think one thing from these three things to tie them together is the propensity towards like conservatism in looking at.
Speaker 1: Status quo bias.
Speaker 2: Status quo bias, Exactly. And looking at these stories, you’re like that. That’s crazy. That crazy thing will never happen. And then it’s like, wait, inflation is 9%. Wait, There’s a crazy person running Twitter. Now, wait. This guy was just stealing the money for himself. Wait, There’s a pandemic. Everything’s shutting down like crazy. Things happen all the time. I guess we should, first of all, not try and predict things. And second of all, know that the status quo is not a permanent state.
Speaker 1: I should write a book about how we’re in this new world called The New Not Normal.
Speaker 2: He’s plugging his book.
Speaker 1: We will talk much more about my book next year. But for the time being, thanks for hanging out. Lovely, sleepless people. We love you.
