S1: This ad free podcast is part of your slate plus membership.
S2: Hell, no. Welcome to this king of terrifying edition of Slate. Money Guide to the Business and Finance News of the Week. I’m Felix Salmon of axios and the SHYMANSKY is here from Breakingviews.
S3: Hello, Emily pacas here from HuffPo’s. Hello. We are going to talk about many terrifying things.
S4: There are terrified people who are terrified of fires, fires, disease, bad facial recognition they’ve really given. This is going to be a particularly dystopian edition. We’re going to talk about what CNBC is.
S3: Cool’s in its Kinahan the mystery virus, which as far as I can make out, has no mystery about the current environment or exactly what the virus is.
S2: We know where it is. We know how it spreads.
S3: But it’s scarier if you call that a mystery virus. Right. So you talk about the virus and how bad it is. We’re going to talk about the bushfires in Australia and why people are giving money to try and help out whether they’re doing any good. We’re going to talk about Clearview, which is a terrifying company, and much more. We’re going to talk about Smilde Direct Club in Slate, plus all that coming up on sleet money. So let’s start with coronavirus, because it’s the most newsy, according to him.
S5: I just got a news alert about it. Right. Just now. It’s literally actually literally in the news at this moment.
S3: So I feel like every so often there’s a sort of disease, trendy, highly infectious disease, which breaks across the cable news, breaks into the cable news consciousness.
S6: And then suddenly everyone is petrified about whatever it is that week, whether it’s, you know, anthrax or Ebola or sores or no, I guess it’s Corona virus. And there’s this weird sort of nationwide panic which may or may not be based in reality. And then a few weeks later, everyone’s kind of forgotten about it.
S1: So I kind of agree with you and kind of in that on the one hand, yes, I often think that these are just panics and especially the United States, I would say, right now. There is still just a lot of panic. However, like SRS took like a percentage of GDP of off of China’s GDP, like this was not a small thing, but like 800 people.
S6: Well, yeah, but a hundred people dying does not take a percent of China’s GDP. It’s panic. That takes a percent of China’s GDP. You know, eight hundred people die in China every day because it has a billion people. And that’s just what happens in China. It’s it’s the way that it affects transportation and commerce and all of that kind of thing. And some of those things are entirely rational. And they’ve quarantined Wunan because, you know, it’s smart to do that. And some of those things, especially in America, are not rational.
S5: Well, let’s just back up, OK, and talk about what’s going on. We’re talking about coronavirus, which originated in Wuhan in China. Probably one of these animal to human kind of viruses, you know, like Saras worth louvres, I think. Yeah. And there’s a pig flu.
S4: There’s a bird flu. Who knows what this is. Know that’s maybe a fad.
S7: And this was like ends in some kind of open market where the animal human interaction is. There’s a lot of it.
S5: And so I guess 12 cities have been kind of put on lockdown by China, which is scary, I think. Like, I think that’s part of what’s feeding the panic already. Million people. And you’re talking about. I mean, which is apparently the size of Canada’s population. Fun fact, anyway. So that’s what’s going on. There’s been two cases diagnosed in the U.S. so far, just two. And then to put this in context, in the U.S., in any given year, 200000 people are hospitalized for the flu and 35000 people die from the flu every year. But no one’s panicking about that. Just one thought for you and that people don’t even get their flu shots.
S3: Get your flu shots, people. If you haven’t got your flu shot this year yet, you’re not too late. You should have got it by now. But I’m not going to shame you.
S5: Just go out and get it. So I think you have a point. It’s it’s it’s not the actual pandemic or disease. It’s the it’s the chaos and the fear and the panic that causes the economic. So I think problems are their economic problems, we should say.
S3: So I think one of the unlucky things that is happening here is that at the height of the panic happens to have coincided with the lunar new year, which is literally today. Happy New Year, people. And that is the biggest holiday in China. Everyone travels back home to see their family. There’s a huge amount of gift giving. There’s a lot of commerce as a lot of traveling. And so the effects of coronavirus on that is number one. It’s going to reduce travel. Number two, it’s going to reduce commerce is going to reduce, you know, the economic activity.
S6: And all of that is going to magnify the effects of the virus compared to if it had happened. And the other week of the year.
S1: That’s true. I mean, I also would say that having something happen now as opposed to size in like 2003, you’re probably going to have a larger impact just because travel consumption services, that’s all a larger part of China’s economy now than it was in the past. So that means the impact can be magnified. And I think that ultimately you are correct that a lot of the negative economic impact is a result of the panic. However, humans panic. I just I don’t feel like we’re ever going to be able to undo that. Right. Primal. Yeah. I mean, it’s it’s like market cycles, like they happen in the central bank. Can’t make people stop panicking about a virus.
S7: Panic does fuel a lot of a lot of economic problems, doesn’t it?
S3: Really, if we could eliminate this this panic thing, if there was no panic, there would never be any bank runs and we wouldn’t need the FDIC.
S5: Yeah, it’s all fine. And then there were a couple of interesting pieces because everyone had tons of pieces about this because people get really, really interested. They put on their face mask. They start freaking out. But again, get your flu shot anyway. There is a good couple of good pieces in Bloomberg just about what the U.S. is doing around pandemics, which, you know, everyone kind of expects more of these. And you. People are more resistant to antibiotics now than they used to be. And apparently one issue for the U.S. and being prepared for these things is there’s not enough public funding for research. But also Big Pharma is not that interested in curing these things. So they don’t devote that much money relative to other problems like, say, like cancer to R&D on treating these kinds of pandemics. Yeah, I mean, it’s interesting.
S1: Yeah. And that that is often the case with a lot of these is that if something’s going to happen rarely, it’s not going to be the type of blockbuster drug they’re gonna be putting a lot of money behind. So that does obviously suggest that you need more funding from the public sector.
S3: It’s pharma in general just doesn’t love infectious diseases. You know, it’s just not what they like to fund, what they like to put money into. And so you wind up, you know, getting weird coalitions cobbled together by the W.H.O. and that kind of thing, saying like, you know, we have to work on these infectious diseases. But yeah, it’s true. It’s it definitely seems to be a weak spot of the pharmaceutical industry in general.
S1: It’ll be interesting, too, because in China, I mean, part of the reason you had this, at least a pathogen people think and Suhan was because you actually didn’t have almost any funding or not you had. So you get a lot less funding going into public health and actually a lot more money going into scientific research, which scientific research is good. But if you’re not funding basic public health and you have like a university area where you have a lot of people moving back and forth, you can have this type of thing happen. And that’s something in China in general that the hope is that this could actually spur more investment in actual public health.
S8: Yeah, one thing I was thinking was, I mean, the Chinese, they can they can like quarantine a city. It’s like no big, I guess.
S6: But in the U.S., I mean, when you’re a, you know, a communist dictatorship, you can do what you like.
S9: Right. But in the U.S., I mean, that’s not going to happen. Well, I will say was slightly and I don’t want I don’t want to say funny because people are dying. But I did read a report with like we are going to build another hospital in Trueheart in like six days. You know, it’s all I. It’s funny. It’s not funny. But you hear these things that I think sometimes it’s like plant economies, man. But then on the other.
S1: But then on the other hand, you know, part of the reason that these infectious diseases tend to can be made worse is because you have officials at the local level who don’t want to say when something bad is happening because of the way this plant economy works, because of the fact that you have one government state, I mean, that that happened in size and people think of that actually is why it took a little while for this to come out. Now, even though you had Chinese scientists saying there was a problem, but the local officials didn’t really want to get in trouble.
S7: So the numbers that we’re seeing reported might be on the low side, then I think it’s like 35 deaths or something like that could be much higher. We just don’t know.
S1: I think that’s the assumption because it was also like the number was very low and then it kind of spiked fairly quickly. And I think it’s not just cause a bunch of people on which died, it was that all of a sudden things were coming out again, like, you know, you’re comparing it to the number of flu deaths.
S3: I mean, it’s even lower than this time last year. A field was where we were at the height of the measles epidemic or pandemic, whether it got today in the end in the United States, which again killed more people and that one was coronavirus is just the same with all of these other things like Ebola is that it’s just eek. We don’t know how to cure it, although, you know, quietly without anyone really noticing, there was no cure for Ebola.
S1: I mean, and so I guess maybe that is the the somewhat of a hope that some of these panics bring, that they bring attention to things and then they can bring funding and then that can actually, in the long run, make people often who live outside of the United States actually live longer.
S5: I mean, and also every zombie movie starts off with like a shot of like the news, the TV news. And there’s like a map and there’s little red dots on the map about the virus that’s coming. And then all of a sudden someone in America coughs and then the zombies take over. And it does the way these things are covered. It does trigger in me at least a feeling of like this is it.
S4: This is this is the zombie zombie apocalypse. And and and yeah, I know it’s not, but it can be made.
S6: A colleague, Eileen Reilly, went to a simulation a couple weeks ago about like what happens if a virus spreads from China and a whole bunch of international agencies took part in this and tried to contain this hypothetical virus. And I think in the end, 93 million people had died or something.
S3: I mean, if you can get there quite easily, let us not forget the Black Death literally killed half of Europe. You know these things.
S10: I mean, you know, granted, things have improved. The medicine is a little bit better. 12TH century, you know, I mean, the the AIDS pandemic killed more people than.
S5: Am I right about this then worldwhere died in World War One to make America think.
S3: That’s right. And that you know, we know that not to mention like more than 90 percent of Native Americans got killed off by.
S5: Yeah. These are serious things and you can understand a lot why people panic.
S1: And also, I think, you know, when you have a period of time where you have more travel, when you have more people who are making more money, so they’re eating more protein, so then you just are going to have more animal human contact. You have climate change making higher temperatures. I just also just messing with things in general. It seems like these things are going to happen more frequently. And I wonder if you’re ever gonna get to a point where we will try to get out ahead of these. And I know in China, in theory, I have heard that they are they’re kind of like certain tech companies are saying they’re going to try to fund, you know, algorithms that are going to be able to determine where they could possibly go. I know. Exactly. And that’s kind of how I feel as well.
S3: But, you know, Google has had its flu index for a long time because, A, they measure how many searches they’re off. I’ve got a temperature or something and they can work out where the flu is.
S9: It’s a little terrifying and probably a good Segway. Speaking of terrifying.
S4: Speaking of terrifying, let’s talk about you, OK?
S5: Being tracked. Yeah. Yeah. Talk about it. Big story over the weekend in The New York Times, a little newspaper headquartered in midtown.
S3: It’s. Yeah. Cash Hill, who’s, you know, an awesome reporter used to work with back in the day. She finally cracked open the the clear view story, which.
S6: Is a very, very sketchy company run by a very, very sketchy found to CEO, who I can recommend you Googling. Go. Who used to write about him back in the day. But I think one of the reasons he got funding from Peter Teil was because they like bonded over like hating Gawker and being having had mean things written about them by Gawker.
S7: Did you say his name to complete your smear of this guy?
S3: No, I didn’t. If you want. Yeah. Let’s listen about this man.
S5: OK. I think it’s pronounced hoenn ton that you have that right? I think so. Yeah. So he is the sketchy is Felix’s word. Çello that’s founded Clear View, the sketchy company that has amassed a huge database of people’s faces and is peddling it to law enforcement agencies everywhere around the country.
S6: And BuzzFeed had another little baby investigation into him and his wife had ties to sort of the old. Right.
S1: And this also happened at the same time. Or you had Google come out and say that they want there to be a delay on investing more in facial recognition.
S6: So facial recognition is a thing that exists. Anyone who has I am actually sitting here in front of my new iPhone and my face unlocks my phone and I’ve had my face recognized. Last time I came into the country through global entry and they just say, oh, yeah, we know who you are just coming on. That’s kind of terrifying.
S9: But wait. That sounds awesome as well. This is the issue. And was it it was honest.
S3: It felt weird and it felt awesome. Although I did get through the, you know, customs and immigration incredibly quickly because they like, yeah, we’ve recognized someone through and it’s toothpaste that cannot be put back in the tube. Yeah. And there are literally billions of faces on the Internet that people have uploaded on Instagram, on Facebook. I mean it’s called Facebook and on a bunch of other places.
S6: And those billions of images have been scraped not only by keep clear of Yueya, but I’m sure by many, many other companies. And the technical challenge of. Being able to recognize who faces who’s is a solved problem like this is now mathematically not a difficult thing to do. And so probably on some level comes as no surprise that there is a company which is saying, hey, we can do this. We may have violated all every single terms of service of Facebook and Instagram and everyone else in order to be able to do it. But we have done it. And if you give us a face, we will tell you whose face it is and and then now what?
S8: And now one more thing. I think I read this just this morning that in London they just announced that they’re going to be using facial recognition, recognition technology in real time. So like when the London police are looking for some minor suspects, they can end. Someone’s walking down the street. They can apparently do it right away. Yeah. Lab you on the street. So it’s really everywhere.
S1: But as you say, like the cat is out of the bag, like we’re not we’re not going to go back here. So then I guess the idea is how do you regulate it and how do you regulate it? Also with the idea that other countries are going to regulate it differently because it does seem like you could very easily get a kind of facial recognition, you know, A.I. arms race where the U.S. government and, you know, national security is not going to want to fall behind. And this is not going to want regulations to get in the way of advancement.
S3: However, right out of the strip Strangelove. Yeah, we can have a mineshaft gap spare.
S7: I mean, I think you have to I think if to regulate it with civil rights in mines. Right. I mean, that’s the most important thing here. You don’t want law. Law enforcement agencies like running roughshod with this information, just using it willy nilly. Like there needs to be real laws and regulations around how this information can be used to take away people’s rights.
S3: And the kind of interesting, but probably with hindsight inevitable part of this. Is that clear? If you tried to use its technology in various ways, which never really got off the ground until they hit upon them, one which really worked, which was selling it to police departments and the police departments. This is awesome. I have like a CCTV, you know, still image of someone, you know, committing an assault. I think just plug that into this database and boom, I get a name. And then if I will investigate that person, if it looks like they’re in that place at that time and they had the motive and but about. But no, arrest him and case solved. You can see why this is incredibly attractive to police and the police on some level. The hardest part of civil society to constrain with laws. And it’s you know, you could try and pass a law saying no one use face recognition, but that’s not gonna stop the NSA from using face recognition. They’re just going to do whatever they can do anyway.
S7: Right. But I think you can set boundaries on. Like you can’t just use face recognition, too.
S9: I mean, there were some other evidence besides show show recognition piece.
S3: Sure. I mean, I don’t think I don’t think anyone I don’t think we’ve yet reached the point at which, you know, a match on clear view is going to be enough to get a guilty verdict in the court of law. Right. That’s a separate issue. But the question is, can the police use the database in the first place? And I’m kind of with Adam on this one. I think that it’s going to be incredibly hard now that you have multiple police departments already using it. It’s going to be very hard to get them to stop using.
S1: And you might not agree with me on this. But like, they’re also probably are some benefits. Yeah. For them using it. Right. You know, I mean, like that it isn’t all bad. And, you know, obviously we want to make sure that it’s accurate and we want to make sure it’s not being in cash.
S3: Media like the one thing which she was quite clear about, especially on Twitter, but also in an article, is like it’s accurate. It’s stunningly accurate. You put faces in and he can’t. He’ll tell you exactly who it is. And more to the point, she managed to get this database of like thousands of artificial faces from this court. This person does not exist. And she put all of those into the database. And every single time database said, no, this person, no match. And it’s amazing how how accurate it is now.
S7: So we talked about how law enforcement might use it, how might be in the criminal justice system. But what awful things will America’s biggest companies use this for? I mean, Apple’s using it for the goods. You can also look good things like, am I going to live in some like Tom Cruise movie where I walk into the mall and like all the screens start like giving messages to me through my air pods about what I should buy tailored to me. And like, are they gonna do like creepy stuff? Once they know my face, they’re not gonna let me, I don’t know, drive my car because they see my face and they know that I’m delinquent on my auto loan.
S3: Like what terrible things are in store for us because all of that and and in the end, the interesting question is. As you say, there’s been this announcement this week from Google saying we’re putting we’re not moratorium on face recognition in light weight. This is a deeply problematic technology. We want to make sure that anything we do is ethical. All of this kind of stuff, if. Yeah, and I can see why they said that. I in no way disapprove of them saying that, but it’s much easier on some level to talk to Google and try and stay on top of what they’re doing and how that stuff is being used. And if it winds up being like sketchy companies like Clearview. Yeah, yeah. That’s in some way even worse.
S7: Right. Although maybe some of of what we think we know about clear view is exaggerated. That story you sent around that said the company is claiming X number of law enforcement agencies use its technology.
S5: But really, it’s just sending tips to the police and oh, we caught your guy and then they count that. Maybe it might not be so.
S6: Yeah, there’s no there’s no real evidence that Clearview is itself like a massively successful or valuable company.
S1: But I think what you just said is really interesting in terms of thinking of the role of these larger tech companies moving forward, because it does seem like it would, in fact, be easier to regulate a small number of companies that have access to a lot of these most advanced technology. But then on the other hand, if we think that’s gonna give those companies a lot of power. So then, you know, if you break them up, then they will have less power. But then it may actually be harder to regulate.
S3: I mean, I do think on some level, like, you know, Cambridge Analytica famously did all of its evil things by using data that it had illegally scraped from Facebook.
S6: And eventually Facebook realized that and effectively shut them down and said, you know, you violated the terms of service. You need to destroy all of this data. And now Cambridge analysts agree it’s not really a thing anymore. You know, I feel it’s inevitable that Facebook is going to crack down on three of you and say, you know, you violated it cozily. And if our terms of service and you have to just stop operating. And I wouldn’t be at all surprised to see Kivu basically implode in the next few weeks just because they have no right to any of these images that they’ve managed to put into this database.
S3: So, you know, that particular company on some level I’m not worried about. And although it is almost certainly true that these images are now out there and Kivu is not the only company to have this database of three billion images. I do think that the idea of this making its way into the open world, every time you walk into a shopping mall, every time you walk into your car, that kind of thing, for that, you’re going to need, you know, the shopping mall companies and the auto companies to be dealing with legitimate legal vendors. And right now, there’s no legitimate legal vendor that has access to a database of three billion images because none of those databases are legitimate or legal.
S5: I’d like to walk into my car to get in my car, and it just starts because I face. So this stuff does sound really it really kind of does. I got no more passwords. Oh, that would be a miracle. I mean, heading that way, getting you will.
S3: You want to live in a world of no cookies?
S5: Oh, yeah. I mean, actually, having a karki has not proven to be an inconvenience for me in the least. It’s the passwords that I hate the most, all the many, many passwords to pull up cards like in car. Yeah. I want to just be free if I being shackled and having everyone in the world. No, it’s.
S4: And if all of that wasn’t scary enough, let’s talk about bushfires. Bushfires are destroying Australia. And someone sent me a tweet. Yes. And I’m going to call up the tweet.
S7: Felix sent the tweet around and said, let’s talk about this.
S3: It’s from Jason Morrison in Australia. And it says this. It says, Ninety five million dollars donated to Red Cross Bushfire Fund, but, quote, Some of the funds would be saved to spend towards disasters in the future, unquote. People didn’t donate so the Red Cross could bank. There are people living in tents who’ve lost homes and whole communities in distress. Spend the money.
S5: So, Felix. Yes. What is your take on this? Because a few weeks ago, I was just remembered this morning you wrote kind of about how donations to the bushfires, though well intentioned, perhaps aren’t necessary. So I’m very curious here. You think.
S3: So I said there are two different stories here, both of which on some level that, you know, squarely in the Felix philanthropy geek wheelhouse. One of them is what you just said, which is a huge proportion of the donations has gone to the volunteer firefighters in New South Wales who are effectively a government agency. And what you have is this very interesting phenomenon of people basically donating money to the Australian government, which, you know, is is not what you consider to be a cash constraint. You know, if they need more money, they can just raise taxes or they can just like take or borrow money on the international bond markets and give it to the fire department. You know, the government obviously has some kind of budget constraints and does or doesn’t fund the fire department. But there’s this fire department in particular has not actually complained about being underfunded. The there is just this very deep seated feeling of I want to do something. All I can really think of to do is give money. Who should I give money to? All the people who are putting themselves in harm’s way and fighting the fire. It is volunteer firefighters. They are literally unpaid. And so I’m going to help support them. And it’s it’s really quite effective in terms of making the giver feel better and feel that they have done something. And I just worry a little bit that may, you know, on some level, especially with the current Australian government, that this is going to mean that the government is going to turn around, go home. We don’t even need to fund this fire department anymore, because there’s so much money just coming in from, you know, American film stars who look like the Golden Globes.
S5: I mean, the Australian government recently agreed, I believe, to start paying some of the volunteer firefighters because their work is also much. Yes. But then is the Red Cross then it’s tangential to what you just said. And then the Red Cross is a separate issue. People love to hate the Red Cross. Am I right with that?
S3: So the red the American Red Cross is something we have talked about many times on state money and is I am just going to come out and say a bad charity and do not give money to the American Red Cross because they are bad. Although that said, they are getting better and they are doing less bad stuff and more good stuff. When I was down in Houston after Hurricane Harvey, they would actually pretty effective at just going out and giving $400 in cash to everyone who was affected, which is a pretty effective way of dealing with it rather than what they used to do, which is, you know, trying to get a bunch of ambulances and blankets. And remember after Sandy, how they served a whole bunch of like porked in this to the Jews. It was it was great. But, yeah. The Australian Red Cross, it’s not the American Red Cross. Do not tie the Australian Red Cross with the American Red Cross brush or most National Red Cross agencies are actually quite good. I have no reason to believe the Australian one isn’t. So that’s fine. Just like as an institution. The question then is should you be worried if you give money to the Australian Red Cross to help them respond to the wildfires that they might not spend all of that and they might keep some back for future disasters and. The answer is you should not be worried about that. You should hope and expect that they do that right. You should want them to do that. You know why, right? Why do we need to spell this one out?
S5: Because more disasters are coming and and. So there.
S3: So, yes, I mean, that’s so that’s about it. I mean, obviously we’re living in the age of global warming. These are not going to be the last wildfires in Australia. And the most important time to for an agency like the Red Cross to be able to respond to a disaster is immediately and not after the money comes in. So you want them to be to have the money they need to be able to respond immediately. And then you use some of the money from the last campaign to spend immediately with this one. And then the money will come in and you’re basically paying it forward.
S1: Right. And I think that you understand where the anger comes from. And I think just in the same way that people want to give money because they feel like they can’t do anything else. I think people want someone to blame for this. And it’s hard to blame nature. So they have now. OK. It’s the Australian Red Cross.
S3: But there’s but there’s something else going on. There’s a bigger reason here. And this actually goes back to one of the reasons why the American Red Cross is bad. It’s mostly its own fault. But there’s one reason which is not its own fault, which is that after 9/11, the American Red Cross got a huge number of donations and they were actually very few places where they could effectively spend that money. Right. Because virtually everyone who was injured in 9/11 died, you know, like the effect the eventual light lung disease and stuff happened years and years later. But there was a lot of people who died. And you can’t really help the people who’ve died. And the job of the Red Cross is not to sort of help the victims families, that kind of thing.
S5: I remember they had like the ten set up for survivors and there were just empty. Yeah. My my friend was working for a hospital at the time and she’s like, we just sit there and.
S3: And what you wound up with was the Red Cross saying, great, we have all of this money and we’re going to put its really good use, but we’re not going to put it to great use at Ground Zero, because that’s really not much we can do down there. And there was the mother of all out upwards and that we gave money to 911 and we want it spent on 9/11 and on anything else. And then that created this like earmarking crisis, basically where the Red Cross got shamed into feeling like it had to spend all money related to a certain disaster on that disaster and not on anything else. And that, in turn, created like an internal accounting chaos, which was incredibly unhelpful and created a lot of problems. And it’s, again, what we’re seeing in in in Australia and in just in general, if you give money to a charity, you have to believe in that charity. You have to trust that charity to spend that money. Well, if you don’t trust the charity to spend the money, well, do not give money to that charity. And if you do trust a charity to spend that money, well, don’t try and second guess where and how they’re spending it.
S1: Yeah. I mean I it kind of reminds me of even like when people are giving to universities and you get certain departments that are massively overfunded, whereas because people say, I am giving money to this one department. And so it’s always the business school. It’s always the business school. That’s very true. So this is one of these instances where this desire people have to have control over their giving actually makes the giving left less effective.
S7: I also want to point out a similarity between this story, people rushing to give money out of kind of a sense of panic and and powerlessness and just wanting to do something with a segment we did on the pandemic, which is a similar kind of emotion, and people reacting to things that are sort of just absolutely out of your control and you’re trying to put your arms around something or trying to control it. And so it’s like almost like the same motivation behind like giving during a crisis like this when it’s maybe not even useful and kind of like, you know, like wearing a mask in downtown New York City because you’re afraid of getting this respiratory illness from China, that only two people or for that matter, you know, the people who are convinced that if they spend a little bit more effort on recycling, that’s going to help save the planet.
S7: And I think this this also points out like if we’re gonna deal with climate change and global warming, like the answer isn’t give money to charities. The answer is, you know, pay taxes, pay more taxes, vote get the government involved, because that’s that’s who can really take collective action to you.
S3: I’m I’m going to write more about this next week in Mexico. Sedge bit Union Square Ventures, who’s just invested in a venture backed for profit carbon offset company. And, you know, like a great you know, like no good can come of this.
S11: Let’s have a numbers round. OK. What’s your number, Emily?
S4: I guess it’s one. Yes, his word. Yeah. I don’t know. You do other like. You know, worry about this number.
S7: It’s one. It’s Goldman Sachs. They said at Davos on Thursday that they won’t take your company public if you don’t have at least one on white on male person, on your board of directors. Could be. A woman could be.
S3: It was a little bit weird about whether she needs to be on the board of directors or just like on the list. Maybe becoming on the board or to Jason for the Jason.
S5: And so, I mean, people are very excited about this. They think it’s great. Well, the other one, the other underwriter banks follow is kind of interesting to me how quickly this board diversity push is kind of like taken off like.
S7: It does seem like there’s some kind of progress which kind of just then makes me skeptical about the whole thing as like anything more than just window dressing.
S3: Well, I mean, what David Solomon, the Goldman CEO, said is that they’re going to start with one and then in a couple of years they can move it to two, which is I think, too, when you get to two, it starts actually.
S5: Yes, it does. When it’s one, you’re the token, whatever. And I mean, Goldman is setting its rules. Could it be clear like they’ll take any token black person, they put sexual orientation as as a one, two. So. So whenever a white man. But if he is gay.
S3: So when Goldman Sachs went public, I went back to look, we said when Goldman Sachs went public, they had bought. They had seven board members. Four of them were named John.
S4: And none of them were a woman. It wasn’t that long ago and it wasn’t that long ago. But I think they would count because one of the johns was John Brown, who was gay. There you go. He wasn’t out there. He was gay then. Does that? Yeah. Is that how big? That’s the big question. Maybe he could have just been out to his lead underwriter and that that would be enough.
S10: But then they would get all the media cause of outrage and they would have their like you on background. They’d be like they’re like, we are going to test that. At least one of us is gay. We’re just gonna we’re gonna tell you which one.
S5: Yeah, I think that’s I think that would have worked.
S1: So they get by number is 130 million. There’s no kind of made me think of you. Oh, this is the value of the presidential plane in Mexico. So the Mexican president andwell, Manuel Lopez Obrador has decided he does not need this plane. They should not have this plane. He wants to sell this plane. So he tried to sell the plane. The problem is it couldn’t get any bid that actually matched the value of the plane. So then he came up with some other ideas. He was gonna have like maybe just give it to the U.S. and the U.S. would give Mexico a bunch of flight medical supplies or he was going to give you a bunch of different companies or then came to my personal favorite having a raffle he’s raffling off.
S9: He was going to raffle off the presidential plane. And it just keeps getting like this is so like Congress. Obviously, the presidential plane costs like a million and a half dollars here to surface. So he’s like, we’ll give you like one or two years of free service, like, that’s not enough. But then my absolute favorite part of the story is that it kind of blew up on like Mexican social media. And so this literary magazine started this contest. And the contest was the best short story that began with these lines. And when he woke up, he discovered he had won the presidential plane. Is it too late to submit it? I don’t actually think that doing the Ravell. It was just it was one of the things he said at it. It’s amazing. Like, so.
S3: Yeah. What do you mean? Yeah. What do you do with a second hand plane that nobody wants?
S9: It’s apparently a very nice play. Why there’s nobody wanted. Why someone? It’s just overpriced, right? That’s exactly right. Yeah. Yeah.
S3: My number is zero point one three percent, which is the acceptance rate for becoming a Chick-Fil-A franchisee. Apparently 60000 people a year applied to come Chick-Fil-A franchisees and they accept 80, one of them, which is way lower than it is. You know, this way harder to get that than it is to get a job at Google or get into Stanford or anything like that. And one of the reasons is all other franchises, you pay millions of dollars and you basically own the franchise and you get all the profits and you have to pay like 5 percent of revenues or something up to the parent company. Chick-Fil-A pays everything pretty much and they can pay up to like two million dollars. They pay the cost of opening up the store. They pay for the real estate, the equipment. But then they take 50 percent of the profit and 15 percent of sales. All you need is the franchisee Pasick Pendelton dollars as it is a completely separate model. So is it a good deal for the franchisee? There’s much less downside, but there’s also much less upside. So how much they make? And this is this is the. This is fascinating article. The majority of fast food franchise restaurant owners make less than $50000 a year per franchise. It’s like if you own a lot of them and they’re big in major cities, then you can get like a multi-million dollar revenue stream from them. But most of these are really small in terms of profits.
S1: So the margins are tiny. Yeah, but although I would imagine that this is going to it’s going to be higher barriers of entry, though, for there to be new Chick-Fil-A’s. So I would think that that would make it a slightly better deal for those who are able to jump through all the hoops to get to actually start a franchise.
S3: Yeah, I mean, it’s this like Chick-Fil-A has an average revenue per store, a 4.2 million dollars, which is way higher than any black people. KFC is 1.2. McDonald’s is 2.8. It’s like way, way higher. But precisely because of that, they like we want to keep that money. We don’t want to just let our franchisees keep it. So they have a very different system.
S7: That’s so interesting. And app. Have we ever talked about the law where it’s like companies like McDonald’s don’t want to be responsible for like labor violations?
S5: They’re franchise restaurants, franchises. Yeah. I wonder how it is for Chick-Fil-A. If they’re taking 50 percent like they have to be responsible for the behavior then for the labor violations and things from the stores. Right.
S4: You look to look into that. You don’t look like you’ve convinced even yourself. Look at this. I’m just interested. We will look into this.
S3: We might have had you Chick-Fil-A segment on some future episode of Slate Money, but for the time being, I think that’s it for us this week. We are going to have Slate Plus segment on Smilde wrecked. So that’s coming up. If you’re a slate plus listener.
S12: Otherwise, thank you for listening. Thank you for e-mailing us. Thank you. Just mean Molly producing. And we will come to you next week on.
S3: How’s your teeth, Emily Leo grinning and smiling.
S5: Look, in 2020, I come across a lot of people that have really nice teeth and it makes me feel bad about myself.
S3: My teeth are fine, but my teeth people would have there in English. And I you know, I’m definitely on the list for Smilde Direct Club. They’ll come to me and they’ll be like, Felix. You can smile without feeling self-conscious about your wonky teeth. They’ll be like you and then I’ll pay them thousands of dollars. And then I guess I’d know I’ll have jaw problems and ask for a refund. And now they’ll be like, OK, maybe I’ll give you a refund. But first you have to sign an NDA on the phone and then the A Luby a whole thing. Right.
S5: Yeah. According to The New York Times, according to The New York Times exposé on small direct club, it’s not so direct. They are smile’s might be a little crooked.
S3: They are a public company. Their IPO and the stock is going down to the right, but not a lot. It’s just like kind of slowly meandering down. Its not plunging.
S5: So how it works, which I didn’t know, even though I’ve seen a million ads for this company, is that they send you a mold for your teeth. You do it. You put your teeth in the mold. You send it back and then they send you liner’s and designers that are supposed to like straighten out your problems or whatever. And it’s way cheaper than going to the orthodontist. But apparently, the problem is you still might need an orthodontist.
S1: See, though, this is where I have mixed feelings about this, because small, direct seems like kind of sketchy in certain west. So I’m not saying that there aren’t a lot of problems specifically with small direct. But I think that, you know, we want there to be better access to different medical treatments and we want to make medical costs cheaper. And to me, a lot of that is by trying to get some of the very, very overpriced doctors out of the way. If they don’t need to be there. And I I was not necessarily convinced even by this article that there was massive harm being done to people. I mean, I think that there is a company to be run, but this is a multi-billion dollar company.
S3: You’re always going to be able to find people who, you know, if you had an orthodontist with that many customers, you could find that many people who are unhappy with the orthodontist.
S8: But I think the issue was there, if you were asked to sign NDA is which is very extreme and not common.
S1: Well, and I and I also think that in kind of I can’t talk about the problem. No. And that I agree with, especially because, you know, these are industries where it’s kind of part of this like rating society, where people you find out how good this system is from how it is rated. And if that’s being skewed because people aren’t allowed to talk about, that’s a big problem.
S3: And actually, as part of the settlement, you not only sign an NDA, you also have to go back and delete any rude things you said about smell directly in social media, including any negative reviews that you might have left on Yelp or anywhere else.
S5: I think that’s a really bad sign because if you want to be a good company, you want the feedback and you want to be held accountable. And you. That’s how you get better.
S1: I mean, I do think that I’m not saying that I think this is correct. But I do think part of Smile Durex issue was that they feel like there is this concerted effort of like the dental cartel to come after them and that there are like fake negative things being put out there by the dental cartel. I am not saying that that is actually happening, but I think that is part of what is driving this kind of paranoia.
S5: I mean, author, done, tre, orthodontia, big orthodontists, orthodontics.
S7: It’s pretty expensive, I guess. I just also want to say, apropos of nothing, that there is an example in the story of someone who use small direct and it didn’t work.
S5: And then she went on to become a dentist, which I just was like a suspicious man, the fake character that is pretty wild, like I’ve never interacted with like a bad tech product and then be like, I’m going to go to school and learn how to make semiconductors or something.
S9: It was just wonderful. She is, in fact, being funded by big dentist. I mean, maybe she is big then God.