0:00:03 Support for Prop 3 comes from Viori.
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0:00:40 Exclusions apply, visit the website for full terms and conditions.
0:00:49 Support for the show comes from ServiceNow, the AI platform for business transformation.
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0:02:05 Welcome to The Proficent Pod’s Office Hours.
0:02:07 This is the part of the show where we answer questions
0:02:10 about business, big tech, entrepreneurship and whatever else is on your mind.
0:02:12 If you’d like to submit a question,
0:02:15 please email a voice recording to officehours@proficentmedia.com.
0:02:18 Again, that’s officehours@proficentmedia.com.
0:02:20 So, with that, first question.
0:02:24 Hey, Prof. G, this is Daniel from Chicago.
0:02:29 And I have a question for you about Apple and tech regulation
0:02:31 in the new Trump era.
0:02:34 So, the price of Apple products,
0:02:38 if these Trump tariffs he talks about go into effect
0:02:40 with the products coming out of China.
0:02:44 Now, could Apple decide to self-regulate
0:02:46 and start to impose age-gating
0:02:48 as kind of a way to counter these things?
0:02:50 I also think this might be an opportunity
0:02:53 for them to kind of stick it to meta in another way.
0:02:57 So, your thoughts on Apple and self-regulation?
0:03:01 Self-regulation is nothing but an attempt to create a prophylactic
0:03:05 in the 11th hour hoping that if you make a peace offering,
0:03:05 it won’t be as bad.
0:03:09 There is zero self-regulation as far as I can tell.
0:03:13 I’ve always been a fan of Apple, but let’s be honest.
0:03:19 Tim Cook and Senator Pichai are really likeable,
0:03:21 but they’re really likeable crack dealers
0:03:22 outside of junior high school.
0:03:26 Oxford just came out with a study showing a linear correlation
0:03:29 between social media use and depression,
0:03:32 anxiety, and eating disorders and self-harm among teenagers.
0:03:33 Let me repeat that.
0:03:37 Social media use is directly correlated
0:03:40 to self-harm, anxiety, depression, and self-harm.
0:03:42 So, is it Mark Zuckerberg’s fault?
0:03:46 Yeah, but also the person delivering and selling
0:03:50 this crack cocaine or these opiates or this meth
0:03:53 is in fact Google and Apple.
0:03:56 They’re the ones that could probably more easily
0:03:57 agegate their products.
0:04:00 There’s no reason any 14-year-old should have a smartphone.
0:04:02 There’s no reason anyone under the age of 16
0:04:03 should be on social media.
0:04:07 We’re starting to see real pushback from the private sector.
0:04:09 I would say the public private sector,
0:04:11 specifically schools that are starting to ban phones,
0:04:14 mostly because my colleagues break through seminal
0:04:17 landmark work, the anxious generation.
0:04:18 You’re seeing entire countries.
0:04:20 I think New Zealand has banned phones in schools.
0:04:23 It’s just a talk everywhere, banning phones in schools.
0:04:25 And as someone who’s a father of two sons,
0:04:28 spare me your bullshit that it’s about parenting, it’s not.
0:04:30 If you have kids, they’re going to be on social media
0:04:32 because when they’re not on social media,
0:04:33 they actually end up more depressed.
0:04:35 And the depressed kids on social media
0:04:38 because they’re ostracized and they feel alone.
0:04:41 I don’t think there’s going to be any self-regulation here.
0:04:42 I think that you’re going to see.
0:04:44 I mean, they might do it to try and stave off
0:04:47 more punitive regulation, but be clear,
0:04:49 if we’re waiting for the better angels to show up,
0:04:50 you’re going to, I don’t know,
0:04:53 you might as well wait for autonomous Tesla.
0:04:57 Anyways, in terms of tariffs, Tim Cook has been very savvy.
0:05:02 Trump seems to have a soft spot for Cook.
0:05:06 He was able to avoid the majority of tariffs
0:05:08 on most of its products during the first Trump presidency.
0:05:10 How, back during Trump’s first term,
0:05:12 Apple CEO Tim Cook convinced the White House
0:05:13 to keep most of Apple’s products,
0:05:16 including iPhones, off the tariff list.
0:05:17 That makes sense, no.
0:05:19 Even though most are made in China,
0:05:22 he argued that tariffs would end up raising prices on products,
0:05:24 including smartphones, tablets, and computers,
0:05:26 which would hurt Apple and some of its tech peers.
0:05:27 The White House seemed to agree.
0:05:31 And he’s right, but why do you have tariffs on fucking anything?
0:05:33 The argument that Tim Cook made could be made
0:05:35 for any toy, any piece of clothing, anything.
0:05:37 This is nothing but a tax on consumers,
0:05:39 except Tim and Apple are cool.
0:05:43 And I think Trump liked hanging out with Tim Cook
0:05:45 and thought, “No, Apple’s kind of apply,
0:05:46 and I want to be with the cool kids.”
0:05:47 Makes no sense.
0:05:51 Now things could possibly change with Trump’s second term.
0:05:51 I doubt it.
0:05:54 Trump has talked about putting a 10 to 20% tariff on imported goods
0:05:58 with a 60% higher tariff on imports from China.
0:06:00 Good fucking luck is all I have to say with that.
0:06:03 First off, the reason why I don’t think
0:06:04 tariffs are going to come through
0:06:07 or be levied to nearly the extent
0:06:09 that Trump has been blustering about.
0:06:12 First off, for Apple, economists estimate
0:06:14 that if Trump implemented new tariffs on goods made in China,
0:06:18 the price of your next $1,000 iPhone would cost an extra $300.
0:06:19 If you want to see people get really angry
0:06:23 before they start self-cutting or throwing up their lunch,
0:06:25 raise their iPhone price $300.
0:06:27 But some experts think it’s possible
0:06:29 that the next White House will skip tariffs
0:06:31 on smartphones, computers, and tablets again.
0:06:33 Also, many companies have successfully shifted
0:06:35 some of their marketing to other countries
0:06:36 to steer clear of the higher tariffs
0:06:37 on products made in China.
0:06:39 In fact, Apple is one of them.
0:06:42 Apple, you got to think, in every goddamn meeting,
0:06:44 he’s like diversify away from China.
0:06:46 Oh, factoring India?
0:06:47 Yeah, sure, we’ll do that.
0:06:48 Factoring Mexico?
0:06:50 Hundred percent.
0:06:52 Also, one of the reasons I don’t think these tariffs
0:06:53 are going to have nearly the traction,
0:06:55 he’s hoping, is a couple things.
0:06:57 One, Republicans do get the economy.
0:07:00 Oftentimes, they get it more than Democrats.
0:07:02 And you’re going to see a lot of Republicans
0:07:03 grow up backbone and say,
0:07:05 if you put these kind of tariffs on this,
0:07:07 you’re going to raise 88% of toys
0:07:09 under the Christmas tree come from China.
0:07:10 What happens when everyone’s Christmas
0:07:13 gets 20% more expensive for people with kids?
0:07:16 You’re going to see a number of Republicans
0:07:17 break from the administration.
0:07:21 Because one, they understand economics.
0:07:22 They like populist arguments.
0:07:24 And also, also what people aren’t talking about.
0:07:28 In a couple weeks, President Trump is a lame duck.
0:07:29 He can’t run again.
0:07:31 He can’t boot people out of office.
0:07:33 He can probably boot them out of office
0:07:37 if they’re up for reelection in the House in 2026.
0:07:39 But other than that, he’s not going to carry
0:07:41 the kind of valarium steel he’s had all along.
0:07:44 He’s been able to make or break careers pretty soon.
0:07:47 He’s going to be kind of Joe Biden on his way out
0:07:50 and not be able to intimidate nearly as many Republicans.
0:07:51 Sinning them for tariff?
0:07:52 Let me think.
0:07:53 Tax.
0:07:54 Thanks for the question.
0:07:56 Question number two.
0:08:00 Hey, Prof. G, John coming to you from Austin, Texas.
0:08:03 In the autopsy of the presidential election,
0:08:04 I have not heard much mentioned
0:08:08 about the sheer number of votes cast in 2024 compared to 2020.
0:08:13 Voter turnout percentage hasn’t been calculated yet for 2024,
0:08:14 but you can only assume it was much lower
0:08:17 than the 66.6% from 2020.
0:08:20 My question is what happened in 2024
0:08:23 with such low voter turnout compared to 2020?
0:08:26 Is the answer that the mass voting public
0:08:27 was just too lazy to get out of the House
0:08:30 and cast a vote in person in 2024?
0:08:32 I would love to hear your thoughts on this.
0:08:34 Thanks.
0:08:35 Thanks for the question, John.
0:08:38 About two-thirds or 66% of eligible voters
0:08:40 participated in the 2020 election.
0:08:44 That was the highest turnout for a national election since 1900.
0:08:44 Wow.
0:08:46 As we’re recording this,
0:08:48 ballots are still being counted for this year’s election,
0:08:50 but according to estimates from the Associated Press
0:08:52 and the University of Florida election lab,
0:08:55 64.5% of eligible voters participated.
0:08:59 So I think that’s actually a pretty decent turnout.
0:09:02 So I think this was a very emotional election,
0:09:05 and I think that this shows that this turnout was actually
0:09:09 as high or higher than most elections.
0:09:12 And typically, oftentimes people don’t vote
0:09:14 because they get discouraged or they’re confused
0:09:16 or they don’t know who to vote for.
0:09:17 But in this instance,
0:09:19 I think a lot of people were very motivated,
0:09:21 very polarized, very emotional, a lot of rage.
0:09:25 So actually, I think voter turnout was pretty strong here,
0:09:27 not as strong as two-thirds.
0:09:31 I think some of that was, there was a bit of a gag reflex
0:09:34 around Trump, very emotional time around COVID.
0:09:36 And I think there were a lot of people
0:09:39 who were just less comfortable with Trump.
0:09:44 Now, having said that, why didn’t you have greater numbers in 2024?
0:09:46 The honest answer is I don’t know,
0:09:47 but historically speaking,
0:09:49 we had pretty strong voter turnout here.
0:09:51 We have one quick break before our final question.
0:09:52 Stay with us.
0:09:59 Support for the show comes from Anthropik.
0:10:01 Meet Claude, the AI assistant from Anthropik
0:10:03 that can transform how your organization works.
0:10:06 Imagine if every person on your team had an expert collaborator
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0:11:00 Just FYI, and they didn’t ask me to say this.
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0:11:02 I think it’s a great partner.
0:11:09 Support for PropG comes from Vanta.
0:11:11 Whether you’re starting or scaling
0:11:12 your company’s security program,
0:11:15 demonstrating top-notch security practices
0:11:17 and establishing trust is more important than ever.
0:11:22 Vanta automates compliance for SOC2, ISO 27001,
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0:11:26 while helping you build customer trust.
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0:11:59 Support for the show comes from Alex Partners.
0:12:02 In business, disruption brings not only challenges,
0:12:03 but opportunities.
0:12:06 As artificial intelligence powers pivotal moments of change,
0:12:08 Alex Partners is the consulting firm
0:12:10 chief executives can rely on.
0:12:13 Alex Partners is dedicated to making sure
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0:12:18 As part of their 2024 tech sector report,
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0:12:30 And in their 2024 digital disruption report,
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0:13:00 In the face of disruption,
0:13:02 businesses trust Alex Partners
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0:13:11 Welcome back, question number three.
0:13:13 Hey PropG, this is Will in Philadelphia.
0:13:15 I just got out of the Navy
0:13:17 and now I’m using that sweet, sweet GI Bill
0:13:18 to go to grad school.
0:13:21 Finding an internship has been an interesting process.
0:13:23 I’m 31 and this is the first time in my life
0:13:25 a job interview didn’t involve running in push-ups.
0:13:28 I find myself spending a lot of time writing.
0:13:30 For schoolwork, networking emails,
0:13:33 cover letters, and questions for podcasts.
0:13:35 Spending this much time writing is new for me.
0:13:37 I find the process to be much more enjoyable than imagined,
0:13:40 but I’m admittedly not a good writer.
0:13:42 I’m trying to increase my skills and storytelling ability
0:13:45 because, A, I want to be good at the things I enjoy.
0:13:48 And, B, I consider it an asymmetric advantage
0:13:49 in my professional and personal future.
0:13:53 My question is, how did you develop your writing skills?
0:13:55 What aspects of writing and storytelling
0:13:57 did you want to develop specifically?
0:13:59 Thanks again.
0:14:01 Thanks for the question, Will.
0:14:02 And thanks for your service.
0:14:04 And I mean that sincerely.
0:14:07 One of the things I regret is never having served.
0:14:11 I think the great storytelling is the lost art
0:14:13 or the key competence.
0:14:14 If I could give my kids anything,
0:14:16 and I say this a lot, but it bears repeating,
0:14:19 it wouldn’t be Mandarin or computer science,
0:14:22 or programming, or negotiation skills,
0:14:23 it would be storytelling.
0:14:27 Your ability to get capital,
0:14:29 your ability to convince people to join you,
0:14:31 your ability to sell clients,
0:14:32 your ability to manage people,
0:14:35 your ability to find a mate, friends,
0:14:35 whatever it might be,
0:14:37 get elected to the House of Representatives
0:14:40 is based on your ability to be a great storyteller.
0:14:42 And that’s not just standing in front of a bunch of people.
0:14:46 It’s, are you a great storyteller over text?
0:14:47 Good twist of phrase.
0:14:49 Are you good on threads?
0:14:53 And I find that the hardest skill is writing.
0:14:54 It’s the hardest thing I do.
0:14:56 I’ve committed to writing a book every 18 months
0:14:57 until I kind of dropped dead,
0:14:59 and I’ve done that for the last seven years.
0:15:01 And every time I do it,
0:15:03 I think, why the fuck did I agree to do this again?
0:15:04 It is really difficult.
0:15:06 And I find I try and work out.
0:15:08 I try and damage my muscles,
0:15:11 and it’s such that they’ll grow back stronger and faster,
0:15:12 although that’s kind of going away.
0:15:15 But I also try and damage the muscle in between my ears,
0:15:18 and I find the best way to do that is to try and write.
0:15:20 There’s a few things you can do to write well.
0:15:23 One is academic, get struck in white, elements of style,
0:15:26 and just make sure that you understand basics of grammar.
0:15:27 I read that book six or seven times,
0:15:29 and I still struggle with grammar.
0:15:31 By the way, I was a shitty writer up until,
0:15:32 I don’t know, 25 or 30.
0:15:35 The second thing is, it sounds, Pat,
0:15:37 you just got to write all the fucking time.
0:15:38 The most important thing,
0:15:40 and this is true of most things, is starting.
0:15:41 You want to write something?
0:15:44 The key, flip open your laptop and start writing.
0:15:47 Because the real magic, there’s two pieces of magic.
0:15:49 Starting, and then going back in the edit.
0:15:52 So you just got to open, get some thoughts.
0:15:54 As soon as you get a thought, start writing.
0:15:56 It doesn’t mean that you don’t have to start.
0:15:58 It can be a paragraph that’s going to be in the body.
0:15:59 It can be the conclusion.
0:16:01 But the moment you have something, some form,
0:16:05 some coagulation of thoughts, some gestation of a concept,
0:16:07 some narrative arc, whatever, you write an outline,
0:16:09 whatever it is you think you have some insight
0:16:12 into what you, or some idea what you want to do, start writing.
0:16:15 The next thing is, if you want to be a great writer,
0:16:17 is you need to read a lot.
0:16:19 Because you’ll start picking up on things.
0:16:23 You’ll start getting great writers.
0:16:25 We’ll give you a sense for pace and cadence
0:16:26 and the architecture sentences.
0:16:28 A book that really helped me was,
0:16:31 I think it was called On Writing by Stephen King.
0:16:33 If you just type in Stephen King’s book on writing,
0:16:35 I thought it was fantastic.
0:16:38 And he uses these examples where he cites a passage
0:16:42 from one of his book where he’s describing this metal chest
0:16:43 that things are stored in.
0:16:47 Or he describes how he used to go to the doctor
0:16:49 and have his eardrums pierced to release the fluid.
0:16:51 And he describes it in such horrific detail
0:16:53 that you’re literally just on the edge of your seat.
0:16:57 And you realize this guy has such, such a gift.
0:16:59 I think he’s arguably my favorite writer.
0:17:00 Is that true?
0:17:00 Maybe John Irving?
0:17:01 I don’t know.
0:17:05 Anyways, in some basic academics, elements of style,
0:17:09 chest start, practice, read, wonderful writers.
0:17:10 But again, it’s like anything in life.
0:17:11 What is the key?
0:17:12 What is the key?
0:17:14 Now, start.
0:17:17 That’s all for this episode.
0:17:18 If you’d like to submit a question,
0:17:21 please email a voice recording to Office Hours of Prop 2 Media.
0:17:23 Again, that’s officehoursofprop2media.com.
0:17:35 This episode was produced by Jennifer Sanchez
0:17:36 and Caroline Shagren.
0:17:37 Drew Burroughs is our technical director.
0:17:39 Thank you for listening to the Prop 2 Pod
0:17:40 from the Vox Media Podcast Network.
0:17:43 We will catch you on Saturday for No Mercy, No Malice,
0:17:45 as read by George Hawn.
0:17:47 And please follow our Prop 2 Markets Pod
0:17:48 wherever you get your pods for new episodes
0:17:50 every Monday and Thursday.
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0:01:18 Thumbtack presents the ins and outs of caring for your home.
0:01:23 Out, indecision, overthinking, second-guessing every choice
0:01:28 you make, in, plans and guides that make it easy to get home
0:01:30 projects done.
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0:01:40 In, knowing what to do, when to do it, and who to hire.
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0:01:44 Download Thumbtack today.
0:01:50 Welcome to Raging Moderates.
0:01:51 I’m Scott Galloway.
0:01:53 And I’m Jessica Charlotte.
0:01:54 Where are you, Jess?
0:01:56 I’m in New York.
0:01:59 I’m home, tending to my children.
0:02:03 Well, not right the second, but I don’t live as free as you.
0:02:05 You’re south of the border.
0:02:06 Don’t stand too close to my flame.
0:02:07 You might get burned.
0:02:10 I’m a rolling stone, Jess.
0:02:14 This is the midlife crisis that will go on several decades.
0:02:16 Is everyone in your family OK with that?
0:02:19 Or are they happy to see you go in the, like,
0:02:22 we’ll miss you for real way, but, like, you should go?
0:02:23 Oh, that’s interesting.
0:02:25 That perfectly described.
0:02:27 It’s like, so when are you leaving again?
0:02:28 I mean, we’ll miss you.
0:02:30 But when are you leaving?
0:02:31 We can’t live without you, though.
0:02:33 We live so well without you.
0:02:35 Without you, yeah.
0:02:39 I often joke about my partners constantly talking
0:02:40 about when I’m gone.
0:02:43 We call it loss, life after Scott.
0:02:48 And the money and who they’re going to have relationships
0:02:49 with and what they’re going to do.
0:02:51 I mean, and, unfortunately, he speaks about it
0:02:53 with a little too much optimism.
0:02:54 But anyways, back to me.
0:02:57 I met this thing called Baja Summit.
0:02:59 Have you heard of this sign?
0:03:02 No, but it sounds like something I’d like to be invited to.
0:03:03 Maybe next year, if you’re interested.
0:03:06 I was going to bring all of the teams.
0:03:08 So this is, let’s back up.
0:03:12 So Summit is a group of guys who created this community.
0:03:15 Initially, they bought some land on a mountain somewhere.
0:03:17 I don’t know, they must be rich kids, anyways.
0:03:20 And then they call it learning man.
0:03:21 During the day, it’s TED Talks.
0:03:23 And at night, everyone does drugs
0:03:26 and listens to world-class DJs.
0:03:30 And it’s got kind of a very hip granola, but successful.
0:03:33 A lot of people starting vertical farming startups
0:03:37 are really focused on their sleep or, you know,
0:03:39 talking about why it’s important to be poly
0:03:43 as they explore THC-infused muffins.
0:03:46 It’s very kind of, I don’t know how to describe it,
0:03:48 but I spoke at it two years ago.
0:03:49 They did Summit at THC,
0:03:52 which is they take over this Virgin cruise ship.
0:03:54 And the thing I first noticed is that no one’s drinking.
0:03:56 Everyone’s doing psilocybin or MDMA.
0:03:58 No one’s actually drinking.
0:03:59 So not really my people.
0:04:03 But it’s in really interesting concept.
0:04:05 They do a really nice job and I really had a good time.
0:04:06 So they said, “We want you to come back.”
0:04:08 And I said, “Well, I don’t know if you’ve heard them.”
0:04:09 Kind of a big deal.
0:04:11 I charged a lot of money and they said,
0:04:13 “Well, we’ll let you bring some people with you.”
0:04:14 So I was going to bring the team,
0:04:15 but then I’m like,
0:04:17 “The team doesn’t need to see me get this fucked up.”
0:04:22 So I brought a bunch of my college buddies from Los Angeles.
0:04:23 All right, Jess, enough of that.
0:04:26 Today, we’re talking about Trump’s controversial cabinet picks,
0:04:28 Republicans gain control of the house
0:04:31 and our predictions for the week.
0:04:32 But before we get to that,
0:04:36 we want to remind you to follow our show Raging Moderates
0:04:38 on its own podcast feed.
0:04:40 The Raging Moderates feed is where you get
0:04:43 to take advantage of our exclusive coverage and interviews,
0:04:45 including the one this week with John Fevro
0:04:47 from Pod Save America, love John.
0:04:49 So right now, please search Raging Moderates
0:04:51 wherever you listen to your podcast
0:04:53 and hit that follow or subscribe button.
0:04:55 So you never miss an episode.
0:04:56 We’re getting huge listenership,
0:04:57 but quite frankly,
0:04:59 we don’t have a lot of subscribers on our feed yet.
0:05:02 And without that, quite frankly, we can’t make money
0:05:04 and Jess has two new kids
0:05:07 and I’m in the midst of a raging mid-life crisis
0:05:09 and they both take cabbage.
0:05:11 So please do us a favor right now,
0:05:15 right now and go to the Raging Moderates feed and subscribe.
0:05:17 We will be eternally grateful.
0:05:20 And if I meet you, you can come up to me and as a reward,
0:05:22 I will provide you with five seconds
0:05:24 of uninterrupted eye contact.
0:05:25 Again- – Can I selfie?
0:05:26 – There you go.
0:05:28 Why not?
0:05:29 Okay, moving on.
0:05:31 Let’s go to Trump’s cabinet picks.
0:05:32 For a minute, it seemed like we’d see
0:05:34 kind of the usual suspects,
0:05:38 people including Senator Marco Rubio and Elise Defano,
0:05:42 but then came kind of the free gift
0:05:44 or the free toaster as a parting gift
0:05:47 if the toaster was fucking crazy and unqualified.
0:05:50 Fox News host, Pete Hegseth,
0:05:51 does no business make secretary of defense.
0:05:53 Okay, let’s move on Tulsi Gabbard
0:05:56 as director of national defense.
0:05:57 Well, she did serve.
0:06:00 Matt Gaetz, returning general, that’s my favorite.
0:06:01 That’s my favorite.
0:06:04 If you’re really gonna go dancing with the stars,
0:06:05 batshit crazy, go all in.
0:06:08 And then RVK Jr. at leading health and human services,
0:06:12 which I find, I actually find out strangely enough,
0:06:14 the one that’s most disturbing.
0:06:15 So to the extent you can,
0:06:18 talk about either Pete or Tulsi
0:06:20 for defense and national intelligence.
0:06:24 – Yeah, so I wanna be clear that just because
0:06:27 I get along with Pete and he’s always been lovely to me,
0:06:29 it doesn’t necessarily mean that I think
0:06:31 he should be head of the Department of Defense,
0:06:33 which oversees three million people
0:06:35 and having, managing a unit.
0:06:39 And I’ve been bothered by how people have been talking
0:06:42 about him and not even discussing his service,
0:06:44 which was outstanding.
0:06:47 So two decades as an infantry officer
0:06:50 in the Army National Guard, he has two bronze stars.
0:06:53 He did three tours, one in Guantanamo Bay,
0:06:55 one in Iraq, one in Afghanistan.
0:06:58 He also has the national defense service medal
0:07:02 and the expert infantrymen and combat infantrymen badges.
0:07:04 So like, he’s a real dude.
0:07:07 And I’ve seen a lot of feedback from people
0:07:10 who have served not like four star generals,
0:07:13 but like actual boots on the ground people
0:07:15 who are really excited at the prospect
0:07:20 of having someone with that kind of perspective do this job.
0:07:23 And that’s where I think the most interesting argument
0:07:27 for Pete comes in, that like he could be supported
0:07:31 by people who have the Lloyd Austin experience, let’s say.
0:07:35 But bring more of that on the ground perspective.
0:07:39 Now, it’s a little bit more complicated than that.
0:07:43 So over the years, and he’s had a good relationship
0:07:45 with President Trump who considered him for something
0:07:47 in 2016, and I honestly thought
0:07:50 that he was gonna get veterans affairs this time around.
0:07:51 And that made a lot of sense to me.
0:07:55 He’s led two veterans advocacy organizations in the past.
0:07:57 He cares deeply about veterans.
0:07:59 And so that’s where I thought he was gonna land.
0:08:02 And then coming out at defense was kind of crazy.
0:08:05 But there are these things that stick out
0:08:09 like he lobbied Trump to pardon several service members
0:08:10 accused of war crimes.
0:08:14 And I think two of them were pardoned
0:08:16 and they did bad things, it looks like.
0:08:20 There is a sexual assault issue that’s going to come out
0:08:22 and the Democrats are considering
0:08:24 whether they wanna try to make this part
0:08:26 of the confirmation process.
0:08:28 I imagine that they will.
0:08:30 And I don’t know, it’s a weird thing
0:08:32 ’cause we all sign morality clauses, right?
0:08:34 When we go and work somewhere.
0:08:37 And that seems like something that would be a violation
0:08:40 of it, especially when you’re talking about leading
0:08:44 three million people and being in charge of the Pentagon.
0:08:46 So I am conflicted because I think
0:08:49 that there’s interesting perspective.
0:08:50 I’m not sure if he’s right
0:08:52 that women shouldn’t serve in combat roles.
0:08:54 That’s like one of the main things that he argues
0:08:59 and that the wokification of the army is making us flat-footed.
0:09:01 But I do think having a different kind of experience
0:09:05 is an interesting facet of the nomination.
0:09:06 What do you think?
0:09:08 – I agree with you.
0:09:11 You know, he’s got outstanding chops
0:09:15 in terms of his commitment to the country and his service.
0:09:19 The question is, does he have kind of the gravitas
0:09:23 or experience outside to management?
0:09:24 I don’t know.
0:09:27 There’s kind of more executive experience, I would say,
0:09:31 in terms of managing, again, what is three million people?
0:09:36 The people who don’t like him are really flying that flag.
0:09:40 It was an allegation, he was never charged.
0:09:43 And he did pay somebody to sign a confidentiality.
0:09:45 I gotta think that these payoffs are gonna go away
0:09:47 ’cause they’re never confidential.
0:09:49 They always end up coming out.
0:09:51 And there’s just an, correctly or incorrectly,
0:09:54 there’s just a stain or an air of guilt, right?
0:09:56 When you paid someone off.
0:09:58 And you can also imagine a scenario
0:10:02 where someone makes an allegation and you decide,
0:10:04 you know, this would be easier for my career
0:10:06 and your lawyer advises you to pay it.
0:10:08 This is a touchy one.
0:10:10 At least you could make the argument
0:10:12 that they’re trying to bring in youth.
0:10:14 This person served.
0:10:17 This one seems actually kind of less batched crazy.
0:10:19 I think the thing that has the left all up in arms
0:10:21 is quite frankly that he worked at Fox.
0:10:23 – Well, that’s what they’re leading with.
0:10:26 And I think it reflects so poorly on them to say,
0:10:28 well, this guy’s a morning host.
0:10:31 It’s like, A, don’t be shitty about morning hosts.
0:10:35 But B, look at his bio before you do that.
0:10:37 And if you dig in, there is plenty for you
0:10:38 to be critical of.
0:10:41 I should also mention that he was taken off duty
0:10:44 for Biden’s inauguration because he was deemed
0:10:46 a quote unquote possible insider threat
0:10:49 because of a tattoo that he has on his bicep
0:10:51 that’s associated with white supremacist groups.
0:10:55 Now, he maintains obviously that that is not
0:10:57 why he has that tattoo, but it is something
0:10:58 that was taken seriously enough
0:11:01 that he was pulled off of protective detail.
0:11:03 – That’s just fucking strange.
0:11:06 He has a tattoo that is a, see, I didn’t,
0:11:08 I didn’t know that’s a new wrinkle on the peat ball.
0:11:10 – I think there are two tattoos
0:11:11 that people are focused on.
0:11:13 Pete has a lot of tattoos.
0:11:14 I don’t know this one.
0:11:15 This one’s really tough.
0:11:20 I just don’t know me that my tramp stamp
0:11:23 is going to keep me from being secretary of the interior.
0:11:26 Okay, let’s move on from this one.
0:11:28 This is a tough one or a worse one.
0:11:30 – Well, also, can we just say though
0:11:33 that in light of what we are about to discuss,
0:11:35 odds are that Pete is going to get confirmed
0:11:39 because they can only torpedo so many nominations.
0:11:42 And I think that Matt Gaetz is the top priority
0:11:44 in terms of not going through.
0:11:46 – Well, let’s talk about that.
0:11:49 Is this a strategy to do a blood offering?
0:11:52 Let Matt give Matt an opportunity to step down
0:11:53 before the ethics investigation comes out,
0:11:55 put forward this bad shit crazy guy,
0:11:57 so everybody else seems less crazy.
0:11:58 Is this a strategy where you think
0:12:01 the Trump administration knew that Gaetz
0:12:02 probably wasn’t going to get through,
0:12:04 but would be a great weapon of mass distraction
0:12:07 from how qualified or unqualified the other ones are,
0:12:10 but they aren’t someone who is,
0:12:13 as I would argue, more credible claims
0:12:14 is under current investigation.
0:12:16 Is that fair current investigation,
0:12:19 the House ethics report that they wrote about it?
0:12:23 This one feels, it would think that if there’s one position
0:12:26 where you have to be pretty squeaky clean,
0:12:27 it would be this one.
0:12:30 What are your thoughts on former representative Gaetz?
0:12:31 He stepped down, right?
0:12:35 – Yeah, so Johnson’s majority dwindles by the day.
0:12:40 So I would say yes, that I thought that it was 5D chess
0:12:43 or whatever yours, but whatever the best chess is.
0:12:44 The most thoughtful chess, except that–
0:12:47 – Called checkers, that’s the best chess.
0:12:48 Anyways.
0:12:53 – Except that it was reported that Trump made this decision
0:12:55 and didn’t consult Susie Wiles,
0:12:56 and basically it was talking to Gaetz
0:12:58 in like one part of the airplane,
0:13:00 and Susie Wiles was in the other part,
0:13:04 like playing dominoes with her grandkids
0:13:09 or something like that, and was like WTF, I’m sorry, what?
0:13:11 Matt Gaetz for attorney general.
0:13:16 So obviously Gaetz made this pitch in an urgent way
0:13:21 and auditioning it as like I can help you the most
0:13:22 of anyone, right?
0:13:24 Like I am unencumbered,
0:13:27 whereas other people might have some sort of moral compass,
0:13:29 but like I got nothing here, right?
0:13:31 And you know what I’m gonna do to boot?
0:13:33 I’m gonna resign right away.
0:13:35 I’m gonna scuttle this ethics investigation,
0:13:38 which I think probably to some degree appeals to Trump,
0:13:40 this idea of being falsely accused of things,
0:13:42 whether, I mean, it doesn’t really seem like
0:13:45 Gaetz was falsely accused ’cause there are people,
0:13:48 I guess that they’re plotting to get on the record
0:13:50 who were at these sex parties with him.
0:13:54 And the big problem is around this 17 year old
0:13:57 that he had sex with in front of a bunch of people
0:13:59 against a pool table at a party.
0:14:02 And I passed no judgment except the minor part of it.
0:14:03 – That’s a low recreational device,
0:14:05 people have sex against.
0:14:07 – No, I mean, the minor thing is not good.
0:14:10 And then there were all those exchanges
0:14:12 like that they were Venmo-ing him and his,
0:14:15 I don’t wanna say colleague, that’s like too nice of it,
0:14:19 his, what do you call people who go around
0:14:20 doing that together?
0:14:25 His pal who was like, his wingman, Venmo-ing people.
0:14:28 So I feel like Gaetz is the ultimate wrecking ball
0:14:32 that Trump wants and the one who will identify
0:14:35 deep staters like right away to him.
0:14:38 And I think that’s really what Trump is paranoid about.
0:14:41 So I think he does want Matt Gaetz.
0:14:42 I think he probably accepts
0:14:44 that he’s not going to get Matt Gaetz.
0:14:46 I mean, it’s rumored that up to 30 Republicans
0:14:47 would vote against him.
0:14:49 Now that’s what happens every time they say like,
0:14:51 oh, this is definitely not gonna happen.
0:14:53 And like, maybe it’s just Susan Collins
0:14:55 and Lisa Murkowski and a couple of others.
0:14:58 But like, there are enough people in the Republican caucus
0:15:01 who are on record saying, I really hate this guy.
0:15:02 He’s complete scum.
0:15:05 So I think that Gaetz is like number one,
0:15:08 not getting through, but not because he was intended
0:15:12 that way, just because he shouldn’t get through.
0:15:14 – And what do you think of Tulsi Gabbard
0:15:17 for director of national intelligence?
0:15:19 – I know likey at all.
0:15:21 No, I think it’s really bad.
0:15:24 She’s part of this cohort of like former Democrats
0:15:26 that Republicans always throw in our faces.
0:15:27 Like my colleagues will be like, well,
0:15:29 we have RFK Junior and we have Tulsi Gabbard.
0:15:31 And I’m like, guys, this isn’t the own
0:15:32 that you think that it is, right?
0:15:36 Like people who can be persuaded over with the promise of,
0:15:38 and these are big jobs, right?
0:15:39 That are coming their way.
0:15:42 But the kinds of arguments that they’ve been making
0:15:45 against Democrats don’t really feel like they were
0:15:48 that solid, at least for the last few years.
0:15:51 But Tulsi Gabbard, you know, she was a Bernie Sanders
0:15:53 acolyte, she ran in 2020.
0:15:55 She had some very embarrassing moments during the debate,
0:15:56 especially with Pete Buttigieg,
0:15:58 who absolutely decimated her.
0:16:02 And I’m not one to lightly call someone a Russian asset,
0:16:06 but she is very partial for arguments that the Kremlin makes
0:16:08 and has been doing that since the beginning
0:16:09 of the invasion of Ukraine,
0:16:13 basically saying that Ukraine wasn’t respectful of them,
0:16:16 that they were running bio labs, American backed bio labs.
0:16:19 And that was the argument that Putin was using,
0:16:22 that they had to go in because they were gonna attack them
0:16:23 with what they were making in these labs.
0:16:26 And the truth is, it’s just public information
0:16:27 that these labs exist.
0:16:29 And it happens all over the world.
0:16:31 And we work together to make sure
0:16:33 that people can be protected.
0:16:36 And if there is something like a COVID that shows up,
0:16:39 she also went to visit Assad in Syria
0:16:41 and didn’t tell the US government and came back
0:16:44 and said like that the people there really like him,
0:16:46 which is obviously parroting talking points
0:16:50 that are completely unacceptable.
0:16:53 And Russian state TV, and they are very savvy over there.
0:16:55 They love her.
0:16:58 They call her their girlfriend.
0:16:59 What do you think about her?
0:17:02 – Well, I don’t think it’s fair to call her a Russian asset.
0:17:03 And I don’t think it does us any good.
0:17:05 Representative Wasserman Schultz
0:17:07 said she’s essentially a Russian asset.
0:17:10 And there’s no evidence as far as I can tell
0:17:11 that they actually control her.
0:17:15 Having said that, I think the more legitimate argument
0:17:17 is that she shows, you know,
0:17:19 she provides comfort to the enemy.
0:17:21 Russia is our enemy.
0:17:23 I would describe China as our adversary, our competitor,
0:17:25 but I wouldn’t qualify them as our enemy.
0:17:27 We have mutual assured destruction
0:17:30 because we’re essentially both capitalist nations
0:17:31 and they produce the shit we buy.
0:17:33 We need each other.
0:17:34 Russia is our enemy.
0:17:36 They are spending a lot of time and energy
0:17:38 trying to destabilize our society.
0:17:41 And somebody who finds empathy for Assad,
0:17:44 who’s one of the most murderous leaders in the world,
0:17:48 and for Putin, in my opinion, just doesn’t share our values.
0:17:50 I’m not accusing her of being a spy or an asset.
0:17:53 I don’t see any evidence of that,
0:17:56 but this is not somebody to have someone come in
0:17:59 that I think would be just such a puncturing blow
0:18:02 to the culture and the morale there.
0:18:04 Quite frankly, it just seems to be really bad management
0:18:07 on the part of the Trump administration.
0:18:08 – I think that that’s right.
0:18:10 And this isn’t just about the DNI pick,
0:18:13 but in general, to the culture point,
0:18:15 I think the argument that they’re trying to make is
0:18:20 that the culture at a lot of these places is not good,
0:18:22 right, that there are people within them
0:18:26 that are not being fair and just
0:18:28 in the way that they do their jobs,
0:18:32 that there are practices that are being put into place,
0:18:35 or rules that are coming to fruition,
0:18:39 that don’t make us safer, don’t make us more agile,
0:18:42 don’t make us the fighting force of the 21st century
0:18:43 that we need to be.
0:18:46 And I think that airing those grievances
0:18:48 and having those conversations is something
0:18:51 that Democrats have probably been too resistant to doing,
0:18:54 and it has forced the pendulum to swing
0:18:56 in the absolute opposite direction
0:18:59 where people just say, “Burn it all down.”
0:19:02 And that’s a terrible place to be,
0:19:04 ’cause there are millions of civil servants
0:19:07 that are doing a really fucking good job, right,
0:19:10 at what they do, and they are subject matter experts,
0:19:12 and they understand a hell of a lot more than people
0:19:17 who have, like Tulsi, no experience in intelligence.
0:19:22 And to add to that, our allies are not going
0:19:24 to share information with us.
0:19:28 And that’s the cornerstone of being able to be efficient
0:19:32 and to be able to do anything good in the world.
0:19:33 We have to be able to work with those
0:19:35 who we are on the same side as.
0:19:37 I don’t know what the future of NATO looks
0:19:41 under an administration with these people filled out there.
0:19:45 It will be tenuous in a best case scenario.
0:19:47 And this isn’t just like when Trump came in the first time
0:19:49 and said, like, everyone should pay their fair share.
0:19:51 You should pay like 1% more or whatever it was.
0:19:54 I mean, this is something much more substantial
0:19:58 and frightening, and it scares me to think about
0:20:00 and America isolated.
0:20:01 I mean, when they say America first,
0:20:05 I hear America isolated, and there’s a hell of a lot
0:20:07 that’s going to be going on behind our backs.
0:20:11 If you have people like Tulsi Gabbard in the DNI position
0:20:12 where you’ll say, “Well, we can’t go to her
0:20:15 and talk about this,” and that’s when bad actors
0:20:18 fill a power vacuum, and for non-bad actors,
0:20:20 for the people that we just typically work with,
0:20:22 they’re just going to go about their business
0:20:24 and not count on us in the same way.
0:20:27 And that’s extremely damaging as well.
0:20:31 – Okay, let’s take a quick break.
0:20:32 Stay with us.
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0:23:54 – Let’s talk a little bit about
0:23:58 the Department of Government Efficiency, or DOH.
0:24:00 Jelon Musk and Vivek Ramaswamy were appointed
0:24:03 to the newly created Department of Government Efficiency,
0:24:05 which they’re calling DOHs, of course.
0:24:08 What is your, what are your initial thoughts on this?
0:24:12 – I feel like this is the toy you give to people or kids,
0:24:14 kind of like kids, I don’t know,
0:24:17 but like he needed to give them something.
0:24:20 Elon Musk is principally responsible
0:24:21 for him winning the selection.
0:24:23 Like besides Trump, I’d say the number two
0:24:25 in that effort is Elon Musk.
0:24:28 And Vivek was, I think the first one who dropped out
0:24:30 to really endorse him and has been, you know,
0:24:31 totally Trump-y.
0:24:34 I don’t really know what this is going to be.
0:24:37 I mean, Elon Musk has like 50 different things
0:24:40 that he’s doing, and he’s launching more rockets this week.
0:24:42 So he seems to be obsessed with being part
0:24:44 of the Trump orbit, or these articles
0:24:46 about how annoyed Trump is at him,
0:24:48 that he just like won’t go away.
0:24:50 And he’s at Mar-a-Lago all the time.
0:24:52 But what I’m concerned about,
0:24:57 if they actually do get some degree of power,
0:25:01 is that they’re going to go around getting rid of things
0:25:02 that, A, you shouldn’t be getting rid of,
0:25:06 but also just like firing tens of thousands of people.
0:25:08 You’re going to have a spike in the unemployment rate.
0:25:10 I don’t know what happens to like Maryland
0:25:11 and Virginia and DC, right?
0:25:14 If you get rid of such a huge swath
0:25:16 of quote, unquote, bureaucracy,
0:25:18 but that they aren’t actually thinking
0:25:20 these things through.
0:25:22 They’re just, I mean, Vivek was giving an interview
0:25:24 where he said something like, you know what we’re going to do?
0:25:26 We’re going to take social security numbers.
0:25:29 And like, if it starts with this digit, this happens to you.
0:25:31 And if it ends with this kind of digit, that happens to you.
0:25:33 And like, there is an actual reason
0:25:35 why our social security numbers are the way they are,
0:25:38 like based on where we were born.
0:25:40 But when you hear someone talk like that,
0:25:44 it’s very hard to take it seriously.
0:25:47 And I am concerned about these mass reductions.
0:25:50 And Vivek was on with Maria Bartiromo over the weekend.
0:25:53 And she was even, I mean, she’s very partial
0:25:57 to Donald Trump and this idea of creating more efficiency.
0:25:59 And she was given him the eyebrow raise.
0:26:03 She was like, dude, what are you talking about?
0:26:07 – So first off, it sounds sort of like an oxymoron
0:26:09 to have a new department.
0:26:11 If it was a task force, first off,
0:26:14 this thing has no power, is my understanding,
0:26:16 that these, any sort of spending cuts
0:26:18 or reductions in labor force in the government
0:26:19 would have to be approved by Congress
0:26:21 or specific departments.
0:26:23 – This thing effectively has no teeth.
0:26:24 It can make recommendations.
0:26:27 – Well, that’s part of the like giving, yeah,
0:26:28 your kids like a toy.
0:26:30 – Yeah, like, it’s like almost like an ambassador
0:26:32 shipped to the Bahamas or something.
0:26:35 So, and it just strikes me as you’re starting off
0:26:36 in the wrong foot when you have a department
0:26:40 of government efficiency that has two co-heads.
0:26:42 Anyways, and if you look at where the spending is,
0:26:46 their ability to actually like where they would make cuts,
0:26:48 it gets pretty narrow pretty fast
0:26:51 in terms of what they could actually look at for cuts.
0:26:54 One thing I really do like about this though, is they are,
0:26:56 they’ve kind of put out a call to say,
0:26:58 we’re looking for hardworking people.
0:27:00 I actually think the benefit here won’t be cutting,
0:27:02 it’ll be adding employees or a certain type of employee.
0:27:04 And that is they have put out sort of this call that says,
0:27:06 if you’re interested in working for the government
0:27:08 and you want to work really hard
0:27:12 and bring new ideas and innovation, please send us your CV.
0:27:16 And I actually met a guy here who sold his company,
0:27:20 is wealthy now and is trying to figure out his new thing
0:27:22 and his purpose other than improving his sleep
0:27:24 and wearing an aura ring all the time.
0:27:30 And he’s sent a resume into a friend of mine knows Elon.
0:27:33 And of course, I like to call him First Lady Elania.
0:27:35 He knows him and he asked if you could get my resume
0:27:37 in front of him ’cause I’m really interested in this,
0:27:39 a dogerole or whatever it is.
0:27:43 And I really do like the idea and think if this group
0:27:45 accomplishes the following, it’ll be worthwhile.
0:27:49 And that is if it brings some aspirational kind of innovation,
0:27:51 coolness back to what are largely seen
0:27:56 as unfairly kind of stale lame jobs.
0:27:57 In other words, government,
0:28:00 other than going to wearing a uniform for the military,
0:28:02 I would argue that going to work for the government
0:28:06 outside of our security apparatus or a defense apparatus
0:28:08 does not have a lot of aspirational value.
0:28:10 And if they can restore some of that,
0:28:12 I think that would be a really good thing.
0:28:13 Your thoughts?
0:28:14 – Yeah.
0:28:19 Listen, I think that the best inventions
0:28:21 or the most progress that we make
0:28:24 is when the public and the private sector get together
0:28:27 and they bring the best ideas from both of those backgrounds.
0:28:29 So there is potential for that.
0:28:33 And I don’t wanna underestimate Elon Musk ever.
0:28:35 I think Vivek is a smart guy.
0:28:38 I don’t think he’s an Elon Musk level thinker.
0:28:41 I think very few people in the history of the world have been.
0:28:44 So I think that there is potential in that way,
0:28:47 but at least from early quotes about it
0:28:49 or the way that it has been discussed,
0:28:54 it feels much more just like taking a hammer to everything.
0:28:55 And I think that when you do that,
0:28:58 and in a lot of ways that’s what Trump is, right?
0:29:01 He’s just, he’s a disruptor, he’s gonna blow it all up.
0:29:05 And I hope that they will be more thoughtful about it
0:29:10 and also consider that there are millions of people
0:29:12 who have given their lives.
0:29:15 And that is why they serve, right?
0:29:18 I mean, people in mid-level bureaucratic jobs,
0:29:20 I understand it’s not sexy, right?
0:29:23 It’s not the thing that gets your name and lights in any way,
0:29:26 but they do feel a duty to serve.
0:29:28 And I know that you obviously think
0:29:29 that that’s something really important.
0:29:31 We’ve been talking about national service
0:29:32 and things like that.
0:29:36 And I hope that this doesn’t end up in discouraging people
0:29:40 from wanting to serve in whatever capacity they can,
0:29:42 or in a whole bunch of people losing their jobs.
0:29:45 Like we have a very good unemployment rate.
0:29:50 If they decimate these departments, you will see a spike
0:29:53 in that and these are good paying jobs as well.
0:29:55 – There is something to be said about the notion
0:30:00 of bringing more competitive, I don’t know, merit-based
0:30:05 as opposed to tenure-based culture to government work.
0:30:07 What’s interesting is I believe stake in local employment
0:30:09 is either flattered down.
0:30:11 The federal, the kind of the administrative state does
0:30:13 has gotten bigger, both under Republican
0:30:16 and Democratic administrations,
0:30:19 but a certain level of, I don’t know, full body contact,
0:30:24 capitalism, the majority or 90% or 80% of the workforce
0:30:26 has to face every day.
0:30:28 I think a little of that in the public sector
0:30:30 would probably be a good thing.
0:30:33 The first piece of data, I think though,
0:30:35 that is gonna really check back
0:30:38 the Trump administration’s current policies
0:30:39 is if one, there’s all of a sudden
0:30:43 a pretty significant uptick in unemployment,
0:30:44 although I don’t think they’ll be able to affect this.
0:30:46 What they might be able to do though
0:30:48 is substantially spike inflation
0:30:51 if any of this shit around tariffs
0:30:52 or these immigration policies.
0:30:56 And the moment that inflation starts to spike again back
0:30:58 from, I mean, it was a real yeoman’s work
0:31:00 on behalf of Chairman Powell to get inflation
0:31:04 from whatever it was, 5, 6, 7% down to 2.2 again,
0:31:06 which is where economists say is sort of the sweet spot.
0:31:09 If in one quarter or one month, it’s in announces,
0:31:12 or they announced that the CPI has spiked
0:31:14 50, 100, 150 basis points,
0:31:17 you’re gonna see a serious rethink
0:31:18 of some of these policies.
0:31:19 And I think that’s coming down the pike
0:31:23 if he just gets a fraction of what he’s asking for
0:31:24 in terms of tariffs.
0:31:26 But actually, I’m less triggered by this,
0:31:28 this Department of Government Efficiency,
0:31:30 ’cause I think it’s gonna be hilarious
0:31:32 when these two think they can run up against Congress
0:31:34 and tell them to start cutting jobs in certain areas.
0:31:36 I think it’s gonna be really funny
0:31:40 to see what actually happens or doesn’t.
0:31:44 And finally, let’s save the best or the worst for last.
0:31:47 RFK Jr., question mark, your turn, Jess.
0:31:51 – Hi, everyone who’s listening,
0:31:54 I’m sure has heard before that, you know,
0:31:57 about RFK Jr. and his vaccine skepticism,
0:32:01 but you know, there are 83 dead kids in Samoa
0:32:04 and they blame RFK Jr. who showed up four months
0:32:06 before a huge measles outbreak
0:32:09 and talked about how dangerous those kinds of vaccines are.
0:32:11 He’s now trying to sugarcoat everything
0:32:14 and make it like, you know,
0:32:17 it’s just about you doing what you want,
0:32:19 but not giving any of the information
0:32:24 about how unbelievably good and effective vaccines are.
0:32:25 Like this isn’t about,
0:32:27 do I want the COVID booster or not, right?
0:32:30 These are kids that are not getting measles vaccines.
0:32:32 There’s a very funny meme with Marco Rubio
0:32:35 and it says Marco and then RFK Jr. and it says Polio.
0:32:38 Yeah, so I did enjoy that.
0:32:40 Ultra processed foods are bad.
0:32:43 Pesticides in our food supply are bad.
0:32:47 All of that can be true without having to get RFK Jr.
0:32:51 And I don’t know, I mean, you’ve been on Silo Sibbins
0:32:53 in Mexico, so perhaps you didn’t see Marr
0:32:55 from the weekend or from Friday, I should say,
0:32:59 but he had on Dr. Casey Neans, do you know her?
0:33:00 I don’t.
0:33:03 So she’s a Stanford educated doctor.
0:33:06 She wrote a book, “The Secuge Head, Good Energy,
0:33:08 The Surprising Connection Between Metabolism
0:33:09 and Limitless Health.”
0:33:12 And she was talking just about
0:33:15 how we have no prevention system for chronic disease
0:33:18 and that she wasn’t taught anything in medical school
0:33:21 that actually helped her treat human beings
0:33:24 and what a racket it is and how we can do so much better.
0:33:26 And she was giving crazy stats,
0:33:28 like our life expectancy for American men
0:33:32 is 73 in Japan, it’s 83 same in Switzerland.
0:33:34 We’re the sickest of the top 11 high income countries
0:33:35 in the world.
0:33:39 And she said in the interview, you know, I’m not a Trumper,
0:33:41 but it excites me that RFK Jr.
0:33:42 is talking about some of these issues.
0:33:46 And so I say, can we have Dr. Casey Neans
0:33:50 as our HHS secretary because she doesn’t have a brain worm.
0:33:55 She didn’t take a dead bear cub and put it in Central Park.
0:33:58 And going back to the morality clause,
0:34:00 RFK Jr. is a prolific philanderer.
0:34:02 I think it’s the most generous way to describe this.
0:34:04 And his wife ended up killing herself over this.
0:34:06 He was detailing all of his affairs
0:34:09 and a diary in lurid detail.
0:34:13 Like, why do we need morally bankrupt people
0:34:15 in these huge positions of power?
0:34:19 – Well, it’d be worse if this happened for the presidency.
0:34:24 Anyways, I mean, we’re not, we should even go there
0:34:25 because I don’t know if it–
0:34:27 – I know, it just upsets me.
0:34:29 Like– – I get it, I get it.
0:34:31 The thing about RFK Jr.
0:34:33 There are some aspects of what he says
0:34:36 that I think are so powerful.
0:34:39 And this notion that there’s this, and I believe this,
0:34:42 there’s this unholy alliance between
0:34:45 the industrial food complex that wants to get you addicted
0:34:47 to sugary, shitty food and then hand you over
0:34:49 to the diabetes industrial complex
0:34:51 and then tell people who are obese
0:34:54 that you’re finding your truth, not a ventilator.
0:34:57 And this is the epidemic that kills more people
0:34:59 than COVID every year.
0:35:02 And Americans share one thing, and that is,
0:35:04 not more than 50% of Americans are anything
0:35:06 except maybe on Netflix and Amazon Prime,
0:35:09 but the one thing we do share is that 70% of Americans
0:35:11 are obese or overweight.
0:35:14 And he has gone right after the food industrial complex
0:35:15 and said that we have all the wrong incentives.
0:35:18 Kids should be able to have a healthy lunch.
0:35:20 He’s really good on this stuff.
0:35:23 And then, but the problem is when a guy named Kennedy
0:35:25 who’s handsome and gets an official title,
0:35:29 and I don’t care, he’s trying to basically whitewash
0:35:33 all of the incredibly insane things he said about vaccines,
0:35:37 you’re going to have, you know, when kids get rubella
0:35:40 and measles, you know, they end up losing limbs
0:35:42 and they end up dying.
0:35:43 I don’t care if it’s the semiconductor,
0:35:46 the printing press, the iPhone,
0:35:48 whatever you think is the premier innovation
0:35:51 of the last 100 or 200 years,
0:35:52 I guess the printing press was more than that,
0:35:55 but I would argue that the premier innovation,
0:35:58 the premier technology, the most impressive thing
0:36:00 that shows how when we come together,
0:36:03 we can do just tons of good for the species is vaccines.
0:36:07 Vaccines have saved tens of millions of lives.
0:36:09 And for this guy to be coming up,
0:36:11 and this is a true story, you know,
0:36:13 or telling people the best thing you can do
0:36:14 when you see a new mother and her baby
0:36:17 is to come up and whisper, don’t get her vaccinated.
0:36:20 – Yeah, wasn’t you doing that like on a hiking trail
0:36:21 around LA?
0:36:23 I mean, this shit is just,
0:36:26 it’s just unacceptable to fly in the face of science
0:36:30 like that and spread this kind of misinformation
0:36:33 that at the end of the day results
0:36:35 in a level of death, disease and disability
0:36:37 that is just unneeded.
0:36:39 It’s just such a shame ’cause on so many things,
0:36:42 I think he could really be a change agent,
0:36:45 but the notion that we’re gonna have an anti-vax person
0:36:47 in this role is just fucking insane.
0:36:50 And then, so just as Trump took stocks up
0:36:52 because the general assumption is he would cut
0:36:54 corporate taxes, which would increase earnings
0:36:57 and thereby increase the value of the shares,
0:36:59 we have seen a similar meltdown
0:37:00 across the pharmaceutical sector,
0:37:04 specifically those who get a lot of money from vaccines
0:37:07 on word that Kennedy was gonna get HHS.
0:37:11 And check out this, Eli Lilly down 13 and a half percent,
0:37:13 Nova Nordisk off six and a half percent,
0:37:18 Pfizer 4.6 percent and Moderna down 9.3 percent.
0:37:21 I mean, this is literally hundreds of billions
0:37:24 in market cap drawdown because of an individual
0:37:25 who is seen as anti-vax.
0:37:27 So the market, so far the market
0:37:30 has been remarkably prescient.
0:37:31 And if the market is correct here,
0:37:36 what they’re saying is this guy will decrease substantially
0:37:39 the adoption and usage of vaccines,
0:37:42 which is, in my view, just again,
0:37:44 see above death, disease and disability.
0:37:47 – It begs the question and I wanted to note as well
0:37:49 that the World Health Organization has reported
0:37:53 that global cases have surged more than 20 percent
0:37:57 and over a hundred thousand kids have died now.
0:37:59 And it’s in the last year, I think,
0:38:01 over not getting their measles vaccine.
0:38:03 So that’s obviously a huge problem,
0:38:06 but this is where the like, we don’t need experts
0:38:09 for anything like the Joe Rogan philosophy
0:38:11 of like, “I’ll just look it up myself.”
0:38:12 – Dr. Google.
0:38:15 – Yeah, and you can get a lot out of that,
0:38:18 but I don’t know, I still want my doctor
0:38:21 to tell me what she recommends
0:38:24 and certainly what she recommends for my children.
0:38:25 What happened during COVID
0:38:28 has just monumentally fucked up society
0:38:32 and just opened the door to all sorts of lunacy.
0:38:34 And there were people who were saying vaccines
0:38:36 cause autism before all of this,
0:38:38 RFK Junior being one of them,
0:38:42 but now that, I don’t want to say it’s mainstreamed,
0:38:44 but that certainly people aren’t getting,
0:38:46 you know, the raised eyebrow like they used to
0:38:49 when they say things like that is deeply concerning.
0:38:52 – Yeah, it’s anything,
0:38:53 this falls under the rubric of anything
0:38:56 that the far left and the far right agree on
0:38:58 is just a really bad fucking idea.
0:39:00 Actually, the anti-vax movement started on the far left,
0:39:01 you know, sort of this granola,
0:39:05 don’t put big corporations in your body.
0:39:07 But I find that the far left and the far right
0:39:09 come together to agree on things like reckless spending,
0:39:11 anti-Semitism and anti-vax.
0:39:15 So be very careful when you hear AOC
0:39:19 or I don’t know, Ted Cruz on agree on something.
0:39:21 All right, Jess, let’s take a quick break.
0:39:22 Stay with us.
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0:41:16 Republicans have officially clinched the house,
0:41:18 re-electing Mike Johnson as speaker
0:41:20 and Democrats are hoping to shrink the majority
0:41:22 to one or two seats.
0:41:23 But things start to get tricky
0:41:24 because three new Trump appointees
0:41:26 are currently serving in Congress.
0:41:28 A governor to Santus has started
0:41:29 scheduling special elections,
0:41:30 but that could take a while.
0:41:32 Jess, how might these open seats impact
0:41:36 the house’s ability to get things done initially?
0:41:37 – Cool, hugely.
0:41:40 I mean, Mike Johnson has made jokes about it.
0:41:43 And there are some who are thinking
0:41:46 that Trump is playing checkers in this.
0:41:49 But again, I’m low to give him that kind of credit,
0:41:51 but that basically he just wants everything
0:41:52 to be about him.
0:41:55 And he doesn’t want to give anyone the capacity
0:42:00 to be powerful except for him as the tip of the spear.
0:42:03 Not the spear, which is a cool place to go to a concert.
0:42:05 So having a slim majority like this
0:42:06 is a big problem for Johnson.
0:42:09 And he has a bold agenda.
0:42:10 I mean, he’s been talking about it for months,
0:42:11 things that he wants to get done,
0:42:14 obviously extending the Trump tax cuts.
0:42:16 He wants to do stuff on China.
0:42:17 He wants to address the border,
0:42:18 boosting oil and gas production,
0:42:23 though we’re producing more oil than we ever have in life.
0:42:27 Expanding school choice and going after
0:42:28 size and scope of the federal government,
0:42:31 which I guess Doge is going to be eating into.
0:42:34 But Johnson will really have his hands tied on all of this.
0:42:36 And I think they’re gonna do another continuing resolution
0:42:38 in March to keep the government open.
0:42:42 But I don’t know how fast these appointments
0:42:44 are going to be to fill these open seats.
0:42:46 Ron DeSantis has a lot ’cause he’s Marco Rubio.
0:42:48 He has Gates, he has Mike Walts,
0:42:51 who’s going to be national security advisor.
0:42:53 And who knows?
0:42:57 I mean, Trump isn’t done necessarily in what he’s doing.
0:42:58 So it’s gonna be slim.
0:43:02 And in the Senate, at least as far as these confirmations,
0:43:04 go John Thune, who’s the Senate majority leader,
0:43:07 now has said he’s open to recess appointments.
0:43:09 Apparently Mitch McConnell has said he isn’t
0:43:10 and he’s the one who is in charge
0:43:12 at this particular moment.
0:43:16 But when you have a bunch of lunatic appointments
0:43:17 or potential appointments
0:43:20 and you’re going to lose Susan Collins
0:43:23 and Lisa Murkowski probably on every single one of them,
0:43:26 you have a very, very slim majority to be playing with.
0:43:28 Even with JD Vance as the tying vote.
0:43:32 So it feels kind of lame-ducky
0:43:37 even for the trifecta that they were able to pull off.
0:43:38 What do you think about him?
0:43:39 – I just want to come out.
0:43:42 I actually like Mike Johnson.
0:43:43 There’s something about him.
0:43:45 Speaker of the House is supposed to be administrative role
0:43:48 and I don’t like his politics.
0:43:51 But I think he’s done actually a pretty good job
0:43:53 keeping all the fucking crazies in line
0:43:55 so we can do basics like have funding for the government
0:43:57 and pass a budget.
0:43:59 I think he’s, I actually think he’s done his job.
0:44:01 And I like John Thune
0:44:02 because I just think he’s very handsome.
0:44:04 I think it’s important to have him.
0:44:04 – Oh, I was going to say that,
0:44:09 but I didn’t know if I was supposed to objectify people.
0:44:11 But yeah, John Thune, like if your husband looks like that
0:44:14 at 63, you’re like, I nailed this.
0:44:17 – Yeah, no, that’s winning.
0:44:20 One more big story, Pennsylvania Senator Bob Casey’s race
0:44:22 is heading to a recount.
0:44:24 How’s that race looking, Josh?
0:44:25 – Well, bad.
0:44:31 So I understand why Bob Casey wants,
0:44:35 I mean, the issue is with ballots that weren’t dated properly
0:44:38 and there’s been court battles back and forth on this
0:44:41 and the right is trying to spin this as election denialism,
0:44:43 which it absolutely isn’t.
0:44:45 And this has been done in the past,
0:44:48 but basically everyone accepts that Dave McCormick
0:44:50 has won that seat.
0:44:53 And, you know, we defended really well.
0:44:55 Democrats did on a comparative basis.
0:44:57 I mean, we held four of five,
0:45:00 Sherrod Brown potentially I guess could have held on,
0:45:02 but looking at the trends that was unlikely
0:45:04 and we knew that we were going to lose John Tester.
0:45:07 So it’s turning into more of a swirl, I think,
0:45:10 than we could actually win this seat,
0:45:13 but he wants every ballot to be counted.
0:45:16 And I think that is how democracy works and all this,
0:45:17 but Dave McCormick has gone to DC.
0:45:19 He has an office with his name on it.
0:45:22 We no longer have Bob Casey seat.
0:45:24 – Hmm, there you go.
0:45:27 So, Josh, any, before we wrap here,
0:45:29 any predictions for the weekend?
0:45:31 – It’ll be interesting to see if there’s progress
0:45:35 on the treasury pick, which I wanted to talk to you about.
0:45:37 Like it was supposed to be down to just two,
0:45:39 Howard Lutnick and Scott Besant.
0:45:42 And now apparently there are a couple others
0:45:45 that are in the mix, Rowan who started,
0:45:49 Mark Rowan, Apollo and Kevin Warsh,
0:45:52 who was in contention in 2017 as well.
0:45:54 And of course everyone’s battling over like
0:45:57 whether tariffs are a good thing or a bad thing.
0:46:00 But I think that that will matter a ton in all of this.
0:46:03 And one thing that Trump has been able to do,
0:46:05 like he did with Mnuchin is kind of
0:46:07 attract some normal people, right?
0:46:10 To come that want to do monetary policy.
0:46:13 So I’m curious if you think like,
0:46:16 if he cares the most about how the economy is, right?
0:46:18 Cause that’s how people will remember him.
0:46:22 And the stock market is already down to pre-election levels.
0:46:26 We should note, do you think,
0:46:27 well, A, do you have any insight
0:46:30 on who he is going to pick for this job?
0:46:32 And they’re doing like a survivor type thing
0:46:34 where they’re all going down to Mar-a-Lago.
0:46:37 And where do you think he’s actually gonna net out
0:46:39 on the tariff idea?
0:46:43 – So I can, I mean, as is the narcissist,
0:46:44 kiss my ring, bend the knee thing.
0:46:49 I can’t stand these public blowjobs of come down
0:46:53 and Mitt Romney and after,
0:46:56 after shitposting me, you know, beg for forgiveness.
0:46:59 And then I’m gonna publicly release these photos.
0:47:02 I don’t like these public tryouts, as you called it.
0:47:06 I don’t know, the voice or America’s Got Talent
0:47:08 or whatever it is, I find it,
0:47:09 I just don’t think you should treat people
0:47:11 this way of the stature.
0:47:13 I don’t know, John Paulson.
0:47:15 John Paulson is famous for one enormous trade
0:47:18 and that is the sub subprime credit trade
0:47:21 where he went short a bunch of subprime bonds
0:47:24 and made like 50 X his investors money.
0:47:26 Other than that, Paulson, the fund itself,
0:47:28 not that that indicates whether you’re qualified
0:47:31 for the position has not performed that well.
0:47:36 The guy I find incredibly impressive is Mark Rowan.
0:47:38 I’ve been at Apollo conferences
0:47:40 where he’ll give an overview of the economy
0:47:44 in this guy just as like get some serious fucking brain power.
0:47:48 I also like the way he handled the controversy around Penn
0:47:51 in contrast with Bill Ackman.
0:47:52 He was very upset.
0:47:54 Mark Rowan, who’s I guess very involved with Penn
0:47:56 was very upset about the comments
0:47:58 or the lack thereof of the president
0:48:01 basically got her fired,
0:48:04 but then didn’t get drunk on power
0:48:06 and start deciding like who should be fired where
0:48:09 and how we should redo the educational institution.
0:48:12 I actually think he handled that very well.
0:48:14 He was forceful yet dignified
0:48:18 and I know personally, having seen him in action,
0:48:20 when it comes to the economy,
0:48:21 you don’t want to bring in a candidate.
0:48:24 I mean, you just, you don’t want to bring in someone charismatic
0:48:29 but stupid or whose views are outside of the mainstream,
0:48:31 but the adults in the room have to be the people
0:48:33 to get the jobs around the economy.
0:48:37 Now, not having said that HHS is arguably even more importantly
0:48:40 and more important, but America,
0:48:41 I see America as a platform for two things,
0:48:44 the defense of our shores and our citizens
0:48:47 and to create atmospherics for prosperity such that
0:48:49 people can develop economic security
0:48:50 for them and their families.
0:48:52 And if you’re worried about rights, it’s pretty easy,
0:48:53 shove more money into a community
0:48:55 and they’re going to get more rights.
0:48:58 So I hope that it’s Rowan, but I don’t,
0:48:59 and that’s not even to say,
0:49:01 I think the other ones wouldn’t be good picks,
0:49:05 but I know firsthand this guy is very impressive.
0:49:06 I mean, I don’t, the other stuff
0:49:08 has more checks and balances on it.
0:49:10 These guys in my opinion
0:49:14 have the most consequential impact on America.
0:49:18 I mean, if you, Taylor Swift was person of the year,
0:49:20 she shouldn’t have been, it should have been,
0:49:21 it should have been Chairman Powell.
0:49:25 He has a lot more impact on everyday lives
0:49:27 than almost anyone in the administration.
0:49:29 So anyways, I hope it’s Mark Rowan,
0:49:32 but I have no insight into who it might be.
0:49:35 – Well, I’m glad we listened to you then.
0:49:37 – No, that was insight actually having heard him
0:49:39 and I had forgotten about his role
0:49:44 in the anti-Semitism on campuses issue.
0:49:47 I think the only one in that group of four
0:49:50 who’s a little nutty is Lutnick.
0:49:53 The rest of them are pretty normie picks.
0:49:55 So we’ll see where Trump wants to go with that.
0:49:57 And this is like a place where I feel like Suzy Wiles,
0:50:00 we may see the impact of her.
0:50:06 But I’m excited for somebody to bring a bit of a balanced
0:50:07 or more nuanced perspective,
0:50:11 at least on the tariff’s pitch in all of this.
0:50:14 And maybe he’s just using it as a negotiating tool,
0:50:16 I don’t know, or maybe he’s going to destroy the economy.
0:50:18 So that’s, I guess what I’m watching for this week
0:50:21 and I’m interested in, and we’re gonna talk about this
0:50:24 with John Favreau from Pod Save America
0:50:26 on the raging moderates feed,
0:50:28 which you have to go to and subscribe.
0:50:33 But this autopsy, which continues to go on now
0:50:37 a couple of weeks in that Democrats are performing
0:50:39 on ourselves has been enveloping me.
0:50:42 I’m reading more content listening to more podcasts
0:50:46 about what went wrong and where we go from here.
0:50:49 And I continue to be hugely conflicted.
0:50:51 And I know that you’re just in the like,
0:50:54 we got our asses kicked camp,
0:50:57 but now that the popular vote is below 50%.
0:51:01 And it’s the third smallest win since 1888.
0:51:06 I’m feeling less self-flagellatory, is that a word?
0:51:11 And just thinking like, let’s pick ourselves up
0:51:13 and let’s dust ourselves off,
0:51:17 let’s figure out how to expand the base again, right?
0:51:20 Bigger tent, but that we don’t need to sit around
0:51:24 and embarrass ourselves constantly about what happened.
0:51:26 So I don’t know if you’ve changed your view on this,
0:51:27 but that’s where I am. – I have been.
0:51:29 I think that where it mattered,
0:51:32 he got enough votes to go seven for seven
0:51:33 in the swing states.
0:51:35 And I worry that Democrats are gonna find
0:51:40 some sort of cold comfort or keep making hollow excuses.
0:51:43 You know, we only lost by more people unsubscribed
0:51:45 to the Washington Post and he won Wisconsin by,
0:51:46 I keep hearing all this stuff that,
0:51:49 oh, actually it was closer than we think
0:51:50 and we shouldn’t change a thing.
0:51:53 I worry that the Democrats won’t take this.
0:51:55 You know, crisis is a terrible thing to waste.
0:51:57 And I think this is an opportunity for Democrats
0:51:59 similar to after the ’80s go.
0:52:02 We have to stop institutions,
0:52:07 whether it’s the ARP or unions, dictate our policy
0:52:10 and start thinking about what actual people need from us.
0:52:13 And instead of deciding that we’re sort of some,
0:52:17 you know, self-appointed cops for social justice
0:52:19 or some sort of political orthodoxy,
0:52:22 let’s get back to the Clinton years
0:52:23 where we’re gonna have budget surpluses.
0:52:26 Let’s be the adults in the room around the economy
0:52:28 and start talking about the deficit.
0:52:30 And instead of playing identity politics
0:52:32 and being more obsessed with race
0:52:34 and quite frankly, Republicans and seeing everything
0:52:37 through the lens of your identity
0:52:40 starts seeing stuff through the lens of do you have money?
0:52:42 Let’s double down on the middle class.
0:52:44 Let’s double down on youth.
0:52:47 And for God’s sakes, let’s fucking figure out a way
0:52:51 to have less insane people representing our party.
0:52:52 Let’s pivot towards the middle.
0:52:53 And the thing that really scares me
0:52:55 is this whole narrative of well,
0:52:58 we weren’t bad shit crazy enough on the left
0:53:00 that we should have doubled down on these values.
0:53:02 I think that would be a disaster.
0:53:05 So I’m hoping that similar to what happened
0:53:07 after Reagan, Democrats rethink things
0:53:10 and form a coalition in the middle
0:53:13 because that’s where the majority of Americans are.
0:53:14 And that’s the opportunity.
0:53:17 It’s pivoting towards the center and being more focused
0:53:20 on what actually impacts people’s lives
0:53:22 as this constant virtue signaling,
0:53:25 this constant inability to have a sense of humor,
0:53:30 this massively over reactive viewpoint
0:53:31 where we’re offended at everything,
0:53:33 representing every special interest group
0:53:35 to the extent that all we’re doing
0:53:39 is not representing the 24% of people specifically.
0:53:42 And I know everything is a nail and I’m a hammer,
0:53:44 but I generally believe this was the election
0:53:47 of young people failing and their parents.
0:53:49 And if your kid isn’t doing well,
0:53:50 and I’ve said this before,
0:53:51 you don’t give a flying fuck
0:53:54 about territorial sovereignty in Ukraine or trans rights.
0:53:56 That’s just a luxury you don’t have
0:53:58 when your kids aren’t doing as well as you.
0:54:00 That brings shame and rage throughout the household.
0:54:02 And I think Democrats would be smart
0:54:04 just to get back to the basics.
0:54:08 And as James Carville said, it’s the economy, stupid.
0:54:10 And I worry that they’re gonna make a bunch of excuses
0:54:13 for why, no, we should have doubled down
0:54:17 on our current virtue signaling meets identity politics.
0:54:19 – Thank you for my TED Talk.
0:54:22 Thank you for my TED Talk.
0:54:25 – So without disagreeing with you, ’cause I don’t,
0:54:29 I just want to note that Kamala Harris did not talk
0:54:31 about identity politics issues.
0:54:33 And the problem with that was,
0:54:35 is that it let Trump define her
0:54:39 and our refusal to push back on certain things,
0:54:41 like the trans, anti-trans, you know,
0:54:44 she’s for them, I’m for you, cost us.
0:54:47 Their blueprint did polling on where the late breakers
0:54:51 would turn them, and bigger than inflation was social issues.
0:54:55 And so it’s always a delicate dance.
0:54:58 It is the economy, stupid.
0:55:02 It’s not as simple as like, she did try to pivot
0:55:04 to the middle, but she wouldn’t say the shit I said
0:55:06 in 2019 is crazy, right?
0:55:08 And I should have never said that.
0:55:11 And there’s a great piece in the New York Times
0:55:14 about Democrats kind of pushing back
0:55:15 against special interest groups.
0:55:18 It’s called like, when will Democrats just say no?
0:55:20 And it’s by this guy, Adam Jettelson,
0:55:21 I think it’s how you pronounce it,
0:55:23 who worked for Harry Reid,
0:55:26 and then for one of our faves, John Federman.
0:55:28 So that, I found that really interesting.
0:55:29 But that’s it.
0:55:32 – Good stuff. Anything fun personally?
0:55:34 Jess, doing anything interesting, anything good?
0:55:35 – No, I was in LA last week though.
0:55:38 I had a, I had lunch at the Beverly Hills Hotel.
0:55:39 I thought of you.
0:55:41 – What’d you get?
0:55:43 Did you get the $54 Cobb Salad?
0:55:44 – It’s crazy.
0:55:45 I mean, I wasn’t paying.
0:55:46 So I felt better.
0:55:48 But I, my favorite thing to do there though,
0:55:52 is to try to figure out who everyone else is.
0:55:55 Like, who, there was a kid, I swear to God,
0:55:57 I thought he was 15, 14, 15, right?
0:55:59 And he was waiting for his room, right?
0:56:01 I figured his parents are like somewhere else
0:56:03 or he dropped him off early, whatever.
0:56:05 And then it turns out that the room is for him.
0:56:07 – It’s Justin Bieber.
0:56:11 – No, well, maybe he looked like a tech Justin Bieber.
0:56:13 Then there were a lot of women with babies.
0:56:15 So my ovaries swelled.
0:56:19 But yeah, the people watching at that place is incredible.
0:56:22 But yes, the Cobb Salad, amazing.
0:56:24 – I’ll be there Wednesday and Thursday night.
0:56:25 Yeah, I love it there.
0:56:27 My second home, that’s great.
0:56:28 – Second second home.
0:56:29 – Yeah.
0:56:29 – Especially when you live in London.
0:56:30 – There you go.
0:56:31 – Oh, London has so many great hotels
0:56:33 for you to become like a hangar there.
0:56:36 – Yeah, it’s, that’s wonderful.
0:56:38 So back to me.
0:56:43 So I go from Los Cabos tomorrow to Vegas
0:56:44 for a speaking gig.
0:56:46 Then I go to LA for a couple of days.
0:56:49 Then I’m back to Vegas for F1.
0:56:50 And then I’m going to Brazil next week.
0:56:53 I’m going to Sao Paulo for a speaking gig.
0:56:54 Yeah.
0:56:55 Have you been to Brazil?
0:56:56 – I have not.
0:56:57 – It’s lovely.
0:57:02 It’s, I think it’s, first off, the beef is outstanding.
0:57:03 And the people are really hot.
0:57:07 So, you know, peanut butter and chocolate, beef and hot people.
0:57:08 How can you go wrong?
0:57:10 How can you go wrong, Jess?
0:57:10 – I don’t know.
0:57:13 – And one day maybe you’ll see your family again.
0:57:14 – Oh, them.
0:57:15 Them.
0:57:16 Yeah.
0:57:17 I don’t know.
0:57:18 I think, I think they’re doing just fine.
0:57:18 All right.
0:57:20 That’s all for this episode.
0:57:21 Thank you for listening to Raging Moderates.
0:57:24 Our producers are Caroline Shagrin and David Toledo.
0:57:27 Our technical director is Drew Burroughs.
0:57:29 You can find Raging Moderates on its own feed every Tuesday.
0:57:31 I think we’ve made that abundantly clear.
0:57:32 That’s right.
0:57:35 Raging Moderates on its own feed.
0:57:38 Please follow us wherever you get your podcasts.
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0:01:57 Today’s number, 80,000.
0:01:58 That’s how many pounds of butterkoska
0:02:02 were called last month after forgetting to add milk
0:02:04 to the ingreeding list.
0:02:05 Fuck.
0:02:07 So what happens if you drink all this tequila?
0:02:08 Seriously.
0:02:10 Today’s number, 80,000.
0:02:12 That’s how many pounds of butterkoska were called last month
0:02:16 after forgetting to add milk to the ingreeding list.
0:02:18 Today’s number, 80,000.
0:02:21 That’s how many pounds of butterkoska were called last month
0:02:24 after forgetting to add milk to the ingreeding list.
0:02:25 True story, Ed.
0:02:29 One day, my mom caught me masturbating in the bathtub.
0:02:31 And I thought she’d be mad, Ed, but instead,
0:02:33 she’d just stopped buying margarine.
0:02:47 I’m not even sure what that means.
0:02:48 How are you, Ed?
0:02:49 How are you?
0:02:51 I’m very well.
0:02:52 We finally got there.
0:02:53 Took a while.
0:02:55 Seems like you had a pretty big night last night, no?
0:02:57 Oh my God, should I do some name dropping?
0:03:00 So do you have a posse of friends
0:03:02 that you can just call, text at any moment?
0:03:03 Like, what are you doing?
0:03:04 Let’s grab a drink?
0:03:05 I’d like to think so, yeah.
0:03:06 Yeah, so I’d like to think so.
0:03:07 Fuck you, man.
0:03:09 Just take my advice.
0:03:12 So my friend Scott Sabal used to be that guy
0:03:12 for me in New York.
0:03:15 Anyways, died of a rare form of leukemia,
0:03:16 but we’re not going to talk about this.
0:03:17 This is a happy story.
0:03:20 So now I don’t have a posse of like textable drinking buddies.
0:03:23 And I liked to both text and drink.
0:03:27 And so last night, hanging out, I got nothing to do, Ed.
0:03:31 I’m in New York, I’m a sea-less celebrity,
0:03:32 and I got nothing to do.
0:03:34 And I know there’s something great going on,
0:03:36 and I also know that I’m just not a part of it.
0:03:39 And so I text my new friend, Justin Thoreau,
0:03:41 of Beetlejuice fame.
0:03:43 And I’m like, dude, what are you doing?
0:03:44 You want to grab a drink?
0:03:45 And he’s like, I’m headed to this
0:03:47 Hyundai Genesis reveal event.
0:03:48 And he’s like, I know, I know.
0:03:49 Weakest Flex in the world.
0:03:50 And he’s like, come.
0:03:52 So I’m like, I’m on my way.
0:03:54 So I went and saw the new Hyundai Genesis,
0:03:57 which is lovely, which is lovely.
0:03:58 And then we’re like, okay,
0:04:00 am I gonna get a free Genesis here?
0:04:01 Why are we here?
0:04:03 So we’re like, oh, like let’s go to zero bond.
0:04:06 And then we text our buddy, George Han.
0:04:09 I’m like, come out and not drink with us.
0:04:11 I’m trying to be better about inviting people out
0:04:13 to drink with me, even if they’re in recoveries,
0:04:14 to think that’s it.
0:04:16 They can know I can no longer be friends with these people,
0:04:19 but I’m not gonna be that way and George is always fun.
0:04:21 George always acts a little fucked up,
0:04:22 even when he’s not.
0:04:25 So he rolls in and then,
0:04:27 and this is totally name dropping, but I don’t care.
0:04:31 At nine o’clock, I know AC 360 in.
0:04:34 So like at nine 10, I text Anderson Cooper.
0:04:37 I’m like, Brohemian Rhapsody playing now at zero bond.
0:04:38 Come join us.
0:04:39 And he’s in the car.
0:04:40 He’s like, I’m in the car, I’m on my way.
0:04:45 The four of us sat at zero bond and drank tequila sodas,
0:04:47 except for George Han.
0:04:49 And we had the best time.
0:04:50 – That’s amazing.
0:04:51 – Oh, it’s awesome.
0:04:55 And the lesson I’m trying to take away from it is,
0:04:57 it’s easy to think other people are super busy
0:04:59 and they are, but you never know.
0:05:01 If you’re not busy, just like start texting people.
0:05:02 What are you doing?
0:05:04 And it was great to hang out with them,
0:05:06 but what I loved about it was we’re both like,
0:05:09 we’re all guys that’s trying to find friends.
0:05:13 And daddy went deep in the paint last night.
0:05:15 I’m switching to tequila according to Justin.
0:05:18 It’s a cleaner burn and I was about to hangover.
0:05:21 So I still feel a little bit slow today.
0:05:23 So you’re going to have to do what I do
0:05:25 on basically every podcast ad.
0:05:27 You’re going to have to carry the show.
0:05:30 You’re going to have to carry the show.
0:05:31 – All right, let’s start with our weekly review
0:05:32 of market vitals.
0:05:35 (upbeat music)
0:05:42 The S&P 500 came down from its post-election high.
0:05:44 The dollar continued to climb.
0:05:47 Bitcoin surpassed $90,000 for the first time.
0:05:49 – Fucking A, Ed.
0:05:50 (laughing)
0:05:52 – And the yield on tenure treasury’s increased.
0:05:53 – Who doesn’t own a coin?
0:05:54 Raise their hand.
0:05:55 Who doesn’t own a coin?
0:05:56 Raise your hand.
0:05:58 – Shifting to the headlines.
0:06:02 Spotify’s monthly active users grew 11% to 640 million
0:06:03 in the third quarter.
0:06:06 The company is on track for its first year of profitability
0:06:09 with a better than expected forecast for the fourth quarter
0:06:11 and shares rose 8%.
0:06:14 Gambling company Flutter reported third quarter earnings
0:06:18 that beat analyst expectations with revenue up 27%
0:06:19 from a year earlier.
0:06:21 The company also raised its full year guidance
0:06:23 due to strong results outside of the US
0:06:27 and shares climbed almost 7% following that earnings report.
0:06:30 Disney’s stock rose 9% after its streaming unit
0:06:32 and studio business reported strong growth.
0:06:35 Disney Plus marked its second consecutive quarterly profit
0:06:38 gaining 4.4 million core subscribers.
0:06:39 And the company also issued guidance
0:06:42 that projects a jump in profits over the next three years.
0:06:45 And finally, activist investor Elliot Management
0:06:48 has built a $5 billion stake
0:06:50 in industrial conglomerate Honeywell.
0:06:53 That’s Elliot’s largest investment in a single stock.
0:06:55 They want Honeywell to break up its aerospace
0:06:59 and automation businesses into two separate companies.
0:07:02 Scott, let’s start with Spotify’s
0:07:04 very strong earnings, your reactions.
0:07:07 – So its stock is 150% a year to date
0:07:11 and they’ve raised a ton of money massively spent
0:07:15 to essentially consolidate the streaming music market.
0:07:16 And I would argue people say,
0:07:16 what about Apple?
0:07:17 What about Amazon?
0:07:19 I think if you’re into music,
0:07:22 I just think you have to have a Spotify subscription.
0:07:24 And occasionally people try to act alternatively.
0:07:25 Like, well, I like Apple.
0:07:26 – That’s me.
0:07:27 – You don’t listen to Spotify?
0:07:30 – I know, for me, it’s just a switching over issue.
0:07:31 I know it’s a better platform,
0:07:33 but it’s just a pain to switch over.
0:07:34 – Oh, I think they do such a good job,
0:07:38 but they’re taking a page out of the Netflix book
0:07:39 and they’ve overspent.
0:07:42 But for the first time, it appears to be working
0:07:43 and they appear to be kind of hitting
0:07:45 the same sort of escape velocity
0:07:47 that Netflix hit about, I don’t know,
0:07:50 seven, eight years ago or five or years ago,
0:07:51 where they really are the default player
0:07:54 in subscription music.
0:07:58 And paid subscribers jumped 12% to 250 million.
0:08:00 The profit margin reached 31%.
0:08:01 That’s up 26%.
0:08:05 That knocked on Spotify with it was basically a music co-op
0:08:07 passing through all the revenues of the artists.
0:08:09 And now it appears they have so much power
0:08:10 that they’re probably cutting better deals
0:08:13 in terms of revenue share or lack thereof.
0:08:15 And Spotify, I get this, since 2015, last nine years,
0:08:18 has seen its revenue grow eight-fold.
0:08:20 And it struggled to achieve full-year profitability
0:08:23 ’cause it kept reinvesting, but that has changed this year.
0:08:26 It’s gone into profitability, which is like putting
0:08:28 an investor’s lips around a crack pipe.
0:08:30 It means you can’t take it away.
0:08:33 And to get there, again, I think the CEO took a page
0:08:36 from Netflix’s playbook emphasizing tighter cost discipline.
0:08:38 The company has also cracked down on password sharing
0:08:40 and raise prices twice in the past year.
0:08:42 I think basically they are on fire.
0:08:45 If this is like Netflix, it still could triple
0:08:47 or quintuple from here if they have
0:08:49 the kind of market power I think they have.
0:08:51 ‘Cause Netflix supposedly had other competitors,
0:08:53 but did they really, did they really add?
0:08:55 So I’ve always loved Spotify.
0:08:59 It was my stock pick of like 2021 or something.
0:09:01 And it went nowhere for three years.
0:09:03 It was flat for the longest time.
0:09:04 – You were just so early.
0:09:05 – That’s it.
0:09:06 I was early, Ed.
0:09:07 I wasn’t wrong.
0:09:08 I was early.
0:09:11 Yeah, that’s what my ex-wife used to say.
0:09:12 And it’s not bad.
0:09:14 You’re just early all the time.
0:09:15 Blimey, I’ll be here all week.
0:09:16 Try the deal.
0:09:21 Okay, so get on Spotify and use their AIDJ.
0:09:23 It is fucking amazing.
0:09:24 It is so good.
0:09:26 It has figured out that every song for me
0:09:31 should either be Tom Petty or Tom Petty or Yellow
0:09:33 or occasionally Calvin Harris to make me feel
0:09:36 like I’m not 100 years old and it just works.
0:09:39 My whole thing, Ed, is choice is a bad thing.
0:09:43 I only want things where there is no choice.
0:09:46 And I love Spotify AI because a lot of times
0:09:49 when I’m home and I’m on prescription grade pharmaceuticals
0:09:50 and I want to dance,
0:09:53 I don’t know the perfect dance music.
0:09:55 And Spotify figures out, you know,
0:09:59 I think at what time what my mood is, it’s really powerful.
0:10:00 – I’m glad you mentioned the AIDJ
0:10:02 because I think the thing that I’ve been thinking about
0:10:05 with Spotify right now and what they’re really good at
0:10:08 is unlike a lot of other tech companies
0:10:11 that just come out with these kind of meaningless product
0:10:14 updates that no one really cares about.
0:10:18 I feel like every product update from Spotify,
0:10:19 the users just love.
0:10:22 So they have video podcasts now,
0:10:24 which they’ve sort of doubled down on recently
0:10:25 to compete with YouTube.
0:10:29 And there are now more than 300,000 video podcasts
0:10:30 across Spotify.
0:10:32 That’s another great product update.
0:10:34 They have podcast comments now,
0:10:37 basically opening up a comment section.
0:10:39 And then I think the best thing that they did
0:10:42 from a product perspective was Spotify Wrapped,
0:10:44 which was sort of the year-end review
0:10:47 of all the stuff you’ve been listening to.
0:10:50 And, you know, when they did that, it exploded,
0:10:53 it went viral, Apple Music ended up having to copy them
0:10:56 and they have just a worse version of it.
0:10:59 Clearly the engineers there, the product managers,
0:11:00 they’re very scrappy.
0:11:03 They’re constantly figuring out new ways to package
0:11:06 and deliver this content.
0:11:08 And I think, you know, the market’s now recognizing this.
0:11:13 As you said, it’s talks up nearly 150% in the past year.
0:11:15 It’s starting to look perhaps a little expensive,
0:11:17 but in this case, I think it’s warranted.
0:11:19 This is just a great quarter.
0:11:20 And I agree with you.
0:11:22 I think this is a great company
0:11:23 and clearly they’re doing something right
0:11:25 from a management perspective.
0:11:27 And let’s move on to Flutter now.
0:11:29 So this is a gambling company.
0:11:33 They own brands like Betfair and Sky Betting
0:11:34 and Paddy Power.
0:11:37 If you’re from the UK, you’ll recognize those names.
0:11:40 But in the US, they also own Fanduil.
0:11:42 And the story of this earnings report
0:11:44 is all about America.
0:11:50 So US revenue jumped 51% to $1.3 billion.
0:11:53 A big source of revenue was the NFL.
0:11:55 The CEO said that betting activity,
0:11:57 I found this quite staggering,
0:11:59 betting activity on some of the NFL games
0:12:02 that are happening right now is actually higher
0:12:06 than betting activity on last year’s Super Bowl.
0:12:09 So sports gambling is absolutely soaring.
0:12:11 And if you want to ride that wave,
0:12:13 this is the stock, Flutter Entertainment.
0:12:15 I’m uncomfortable with all of this,
0:12:18 but the reality is the fastest way to scale your company
0:12:21 with high margin revenue is to have some sort of tap
0:12:24 into some sort of addictive weakness of the species.
0:12:25 And this is doing that.
0:12:27 Having gambling on your phone
0:12:30 and having it be so frictionless is really,
0:12:34 I think really troubling, but at the same time,
0:12:37 it’s a great, it’s just not getting around it.
0:12:38 It’s a great business.
0:12:41 Fanduil has almost, they control almost half the market.
0:12:44 They have 46% market share.
0:12:46 Americans spent a record 120 billion
0:12:47 on sports waders in 2023.
0:12:50 That’s up 28% from 2022.
0:12:51 This year, sports betting is expected
0:12:53 to surpass 150 billion.
0:12:56 – 150, I just want to like emphasize that,
0:13:01 $150 billion in sports bets, that’s a crazy number, no?
0:13:03 – Yeah, it’s huge.
0:13:05 People, you know, it’s fun.
0:13:08 And I mean, it really is passing out crack.
0:13:11 $50 free for your first bet, right?
0:13:12 Free money for your first bet.
0:13:13 – It’s also just such a shame
0:13:17 that like the most ascendant companies
0:13:21 and assets right now are just totally unproductive
0:13:23 in terms of the actual real economy.
0:13:26 Like I wish that the best performing assets
0:13:27 were actually productive.
0:13:30 This is not societally productive.
0:13:31 – Well, the only thing I’ll wrap up with
0:13:33 is people will say, well, Scott,
0:13:34 investing in the stock market is gambling.
0:13:35 This is no different.
0:13:36 No, it is different.
0:13:40 If you invest in the stock market and you don’t trade
0:13:41 over time, you’re gonna make money.
0:13:44 When you gamble, if you enjoy it, fine,
0:13:45 just like the way you enjoy drinking alcohol
0:13:48 or buying tennis shoes, it’s consumption.
0:13:49 This is consumption.
0:13:51 It’s not investing and be clear.
0:13:54 Keep track of how much psychic enjoyment you’re getting
0:13:56 because in terms of money, you’re gonna walk away
0:13:58 from the table eventually over time with less money.
0:14:00 – Let’s move on to Disney earnings.
0:14:01 Very solid quarter.
0:14:04 Not much really jumped out to me apart from the fact
0:14:06 that this is the second quarter in a row
0:14:09 where the streaming business has been profitable.
0:14:11 So last quarter was the first time
0:14:12 that streaming was profitable.
0:14:15 And we said, well, maybe they’ve got this whole
0:14:16 streaming thing figured out.
0:14:18 I think this earnings report confirms it.
0:14:22 They have finally figured out streaming,
0:14:24 which is essential for Disney
0:14:27 because the traditional TV business is essentially
0:14:28 in free fall.
0:14:31 Just this number here from the earnings report,
0:14:34 operating profit on that traditional TV business
0:14:37 was down 38% this quarter.
0:14:39 And that’s despite all of the election spending
0:14:41 and that’s despite owning ABC.
0:14:43 So they need streaming to work out
0:14:45 and it looks like that’s what’s happening.
0:14:46 – It’s doing really well.
0:14:49 I think the movies are, the movies are meaningful,
0:14:51 the revenue from the parks meaningful,
0:14:52 but from the market perspective,
0:14:54 the results of the streaming division are profound.
0:14:57 And the streaming division had a great, great quarter.
0:14:59 I like it because I like Bob Iger
0:15:00 and this is gonna give him a chance.
0:15:03 Like he was stupid enough to go back to Afghanistan
0:15:04 but on a second tour,
0:15:07 he’s gonna get another medal pinned on his uniform.
0:15:09 He’s gonna get to leave this combat zone
0:15:12 called traditional media, a hero again.
0:15:16 – I thought you’d analogize Disney with Afghanistan.
0:15:18 – Well, ad supported media right now.
0:15:19 – Point taken, yeah.
0:15:21 I mean, it is hand to hand combat.
0:15:23 And the thing about Disney,
0:15:24 they’re one of the survivors
0:15:26 ’cause they have this singular positioning around family
0:15:29 and unbelievably deep IP and it’s starting to pay off.
0:15:31 And also it’s paying off for them
0:15:33 ’cause they stood the test of time
0:15:37 through what is this walking through the desert,
0:15:39 if you will, of consolidation.
0:15:41 And for the first time in two years,
0:15:43 Netflix is no longer increasing their spend.
0:15:46 So every other company doesn’t have to follow them down
0:15:48 this rabbit hole of unsustainable spend.
0:15:49 And there’s also pricing power.
0:15:51 Netflix is kind of creating
0:15:54 and elevating the ceiling around pricing
0:15:55 and they’re raising their prices,
0:15:58 which gives everyone cloud cover to raise their prices.
0:15:59 I think it’s good for Disney,
0:16:01 good for Bob Iger, good for the planet.
0:16:02 I think it’s a great company.
0:16:03 I hope it stays independent.
0:16:05 And it was one of my stock picks last year,
0:16:08 Disney and Warner Brothers, so we’ll see.
0:16:10 But yeah, I think, good for them.
0:16:11 Congratulations, great quarter.
0:16:13 – We’ll move on to Elliot’s investment,
0:16:15 activist investment in Honeywell,
0:16:17 which is this industrial conglomerate.
0:16:19 I think this is interesting for two reasons.
0:16:23 One, it’s Elliot’s biggest single company investment
0:16:24 ever, $5 billion.
0:16:27 So this is a very high conviction bet.
0:16:29 And two, what they are suggesting
0:16:31 from an activist perspective
0:16:34 is right out of the prog markets playbook.
0:16:37 Specifically, this is all about the conglomerate tax,
0:16:39 which you’ve talked about a lot on this podcast,
0:16:40 which is that conglomerates
0:16:44 tend to get these slightly depressed valuations
0:16:47 because investors don’t really reward diversification,
0:16:49 what they really care about is focus and growth.
0:16:50 And that’s a lot harder to do
0:16:53 when you’re operating multiple businesses.
0:16:55 Honeywell is a great example of that
0:16:56 because their aerospace business
0:16:59 and their automation business,
0:17:00 they’re two very different things.
0:17:03 And oftentimes when one has performed,
0:17:05 the other has lagged and vice versa.
0:17:07 So I think this is a great idea from Elliot,
0:17:10 split them up, have an aerospace company
0:17:12 and an automation company.
0:17:14 The only question I would have
0:17:16 is are the partners at Elliot management
0:17:17 listening to this podcast?
0:17:19 Because if they are,
0:17:21 we deserve some credit and we deserve a cut.
0:17:22 – Oh, 100%.
0:17:25 Yeah, there’s no doubt a check coming our way.
0:17:26 Yeah, I like this stuff.
0:17:29 Like sometimes when a stock gets below a certain amount,
0:17:32 the hole is less than the sum of its parts.
0:17:35 And that’s the strategy here.
0:17:37 So the stock’s up 12% year-to-date,
0:17:38 but the industrial sector,
0:17:42 ETF is up 25%, so it’s underperformed the market.
0:17:43 And then it’s kind of,
0:17:45 one of these themes among all the economy companies
0:17:47 is growing by shrinking.
0:17:48 And that is, we’ve talked about this,
0:17:51 the market rewards deconglomerization.
0:17:52 Gs break up in April,
0:17:54 G-aero space stock had risen more than 25%.
0:17:57 And G-vernova shares have risen more than 20%.
0:17:59 Honeywell trades at 27 times earnings,
0:18:02 while G-aero space trades at 32 times earnings.
0:18:04 So I wouldn’t be surprised if they
0:18:06 decide to do this themselves
0:18:08 or come up with some sort of extra dividend.
0:18:10 They give Elliot their pound of flesh.
0:18:12 The guy who handled Elliot better
0:18:13 than anyone was Mark Benioff.
0:18:14 And they showed up and said,
0:18:15 “You’re spending too much money.”
0:18:17 And rather than the traditional,
0:18:21 you have insulted me, good sirs,
0:18:23 and circle the wagons and hire lawyers
0:18:25 and proxy solicitors and comms people
0:18:26 to shitpost the activists.
0:18:28 They say, “Okay, we can learn from you.”
0:18:32 Mark Benioff uses his cloud cover to cut costs.
0:18:36 AI came in and Salesforce stock is now at an all-time high.
0:18:37 And essentially what you do as an activist investors,
0:18:40 you just show up with a big stake and say, “We’re here.”
0:18:42 And if the stock goes up on its own,
0:18:43 if we’re wrong and the stock goes up on its own,
0:18:45 fine, we’ll sell and congratulations, you win.
0:18:47 If it doesn’t, then you need to do what we say
0:18:49 or we’re gonna start nominating directors.
0:18:52 So you get a little bit of a free call option
0:18:54 if the stock is cheap enough.
0:18:55 So I like these things.
0:18:57 I think, you know, they go through a cycle
0:19:00 where they conglomerize and they deconglomerize.
0:19:03 Anyways, the aerospace and automation,
0:19:05 do they need to be in the same umbrella?
0:19:06 And it’s the basic notion of CEO.
0:19:10 So love to diversify by having bigger company
0:19:12 and diversify or smooth out their earnings.
0:19:15 When again, investors don’t need CEOs to do that for them.
0:19:16 They can diversify on their own.
0:19:17 So I like this.
0:19:20 We’ll be right back after the break
0:19:23 with a look at one of ChatGPT’s first victims.
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0:22:55 More than a year ago, ChatGPT took a bite
0:22:57 out of a leader in the ed tech space.
0:23:00 Chegg, a textbook and homework help provider,
0:23:03 was a big winner during COVID as learning moved online.
0:23:05 And then the AI hype cycle began.
0:23:06 And Chegg was one of the first companies to say
0:23:09 that ChatGPT was stifling its growth.
0:23:13 18 months later, the company is telling the same story.
0:23:15 Chegg’s earnings last week showed revenue, subscribers
0:23:18 and web traffic all fell by double digits
0:23:19 in the latest quarter.
0:23:22 The company is also laying off 21% of its workforce,
0:23:26 its second round of big job cuts this year.
0:23:28 Scott, Chegg was still blaming ChatGPT
0:23:31 for his problems on its latest earnings call.
0:23:33 It has lost half a million paid subscribers
0:23:34 since the launch of that product.
0:23:38 Shares are down around 99% from 2021,
0:23:41 erasing $14.5 billion in value.
0:23:43 And according to the Wall Street Journal,
0:23:46 bond traders doubt this company will be able
0:23:48 to pay its debts.
0:23:52 Is it safe to say that ChatGPT has claimed its first victim?
0:23:53 – It’s really interesting.
0:23:55 So if you look at the industry,
0:23:59 as they were supposed to be disrupted by AI,
0:24:01 I’ve been predicting to be healthcare.
0:24:03 It was supposed to be education.
0:24:05 It hasn’t happened in education.
0:24:06 Actually, the top 100 universities
0:24:08 are a stronger, stronger than they’ve ever been.
0:24:10 And I’m so confident about disruption.
0:24:11 I started an ed tech company
0:24:14 and quite frankly, it just hasn’t panned out.
0:24:16 Chegg came in, people, it was a COVID darling.
0:24:20 A lot of people trapped indoors, taking courses,
0:24:21 but it’s off 99%.
0:24:24 And some of this is not their fault
0:24:27 or the market dynamics
0:24:29 well as Trump individual performance.
0:24:31 But this company was gonna get cut in half.
0:24:34 Now, why is it been cut by 99%?
0:24:37 I just think the comms here is terrible.
0:24:41 I think to blame ChatGPT is to say ChatGPT is our enemy.
0:24:42 Okay, you’re fighting an enemy.
0:24:46 This is the Albanian army taking on the third Reich right now.
0:24:49 So if you identify that ChatGPT is coming for us
0:24:52 and they’re our enemy, it’s like, okay, that’s too bad.
0:24:54 And we understand and you’re right, it’s their fault.
0:24:56 But you’re fucked.
0:24:59 Because if in fact you’re right and they’re your enemy
0:25:01 and they’ve identified this as a space they wanna go after
0:25:05 or that consumers are using agents to help them
0:25:09 with their studies or essentially find the same utility
0:25:11 they were finding for you at a higher price,
0:25:14 we see no reason why that problem won’t get just worse.
0:25:16 The interesting thing here is what you said about the debt.
0:25:18 I’d love to know what the debt is trading at
0:25:21 because I believe someone is gonna make real money here.
0:25:22 And who is that?
0:25:23 I think a distressed credit investor
0:25:25 is gonna come in and buy the bonds.
0:25:28 And if they do in fact blow their covenants
0:25:29 and the thing goes into bankruptcy,
0:25:31 I think whoever owns the bonds will come in,
0:25:32 cut a lot of costs,
0:25:35 say this is no longer a growth company,
0:25:37 this is a distressed asset,
0:25:40 but they do have revenues have fallen 18%,
0:25:43 subscribers have fallen 20%,
0:25:45 which means they still have 80% of their subscribers.
0:25:50 So this is probably still a pretty decent company.
0:25:52 It’s just that somebody’s gonna have to come in here
0:25:55 and massively cut costs and recognize
0:25:57 we’re no longer a growth company,
0:25:59 we’re a company in decline.
0:26:02 But if we can cut costs faster than the decline,
0:26:03 we’re still gonna have something here.
0:26:07 And they probably have invested a massive amount of money.
0:26:08 I don’t know what the market cap is,
0:26:11 but if it’s off 99%, that means it’s like a hundred.
0:26:12 – It’s 170 million.
0:26:15 – Okay, I’d be curious how much debt they have,
0:26:18 but I would think distressed credit investors
0:26:19 are looking at those bonds and saying,
0:26:24 okay, can I own this company for tens or hundreds
0:26:26 of millions of dollars and say it’s probably worth
0:26:28 a couple of billion dollars to someone else.
0:26:31 They have a subscriber base who are still paying,
0:26:34 companies not going to zero.
0:26:37 The best investments I have ever made
0:26:40 have been pulling bankrupt companies out of bankruptcy
0:26:43 at a very low price in things like consumer products
0:26:46 or the yellow pages and then consolidating
0:26:48 or seeing if there’s other acquisitions
0:26:49 of other distressed companies in the space
0:26:52 cutting costs faster than the revenue declines.
0:26:54 And you can usually pick them up really cheaply
0:26:57 and then you can make a lot of money.
0:27:00 And the analogy I was using is that in 1999,
0:27:02 people knew Blockbuster was going away.
0:27:04 So you could buy a Blockbuster franchise
0:27:06 for two and a half times, it’s cashflow.
0:27:09 They did go away, but it took another 12 years.
0:27:11 So if you bought companies at two and a half times cashflow
0:27:15 and they went another 12 years, you made a lot of money.
0:27:16 And I think that’s the case here.
0:27:18 So I look at this and I think, okay, that’s interesting.
0:27:21 First kind of public chat GPT victim,
0:27:23 although there’s probably others not as obvious,
0:27:25 but I actually think a distressed credit investor
0:27:28 is probably looking at the bonds right now.
0:27:30 – Yeah, you mentioned, there are probably others.
0:27:35 I mean, I looked into this, I really couldn’t find many.
0:27:38 And I’d be interested to know maybe our listeners
0:27:39 can identify some companies
0:27:42 that have really gotten crushed by AI.
0:27:45 But I do find it interesting because, you know,
0:27:48 there was all of this catastrophizing and speculation
0:27:50 around how AI was gonna put all of these companies
0:27:53 out of business, it was gonna take all these jobs.
0:27:55 And here we are two years into this revolution
0:27:59 and the big victim of AI is Chegg,
0:28:03 which is just like a kind of irrelevant company,
0:28:04 barely any employees at all.
0:28:06 I mean, they cut 20% of the workforce,
0:28:09 but that’s only around 300 employees
0:28:12 who are losing their jobs to AI, I guess.
0:28:16 And so it’s interesting to me and I’m a little surprised
0:28:21 at how undestructive AI has proven to be.
0:28:25 So I guess the question that I would pose to you,
0:28:27 which companies or which sectors do you think
0:28:32 are going to get hit by AI as hard as Chegg just has,
0:28:37 or is the AI catastrophizing just too overblown?
0:28:38 – Well, first off,
0:28:40 anyone in customer service, right, gets hit pretty hard.
0:28:43 But if I were to look at large sectors of companies,
0:28:45 there’s software as a service
0:28:47 and we decided that as a palindrome,
0:28:49 it’ll be services of software.
0:28:52 So travel agencies, publicly traded travel agencies.
0:28:56 I wonder how real estate agencies are gonna fare
0:28:57 in a world of AI.
0:29:02 I don’t know, that’s a super interesting question
0:29:07 around who are chat GPTs next victims.
0:29:09 – Yeah, I mean, it feels like the entire economy
0:29:12 has figured out a way to get AI on their side.
0:29:12 – I like that.
0:29:13 – Or at least, at the very least,
0:29:15 they’ve made it seem that way.
0:29:17 And I guess the big mistake by Chegg
0:29:20 was saying where AI is not on our side.
0:29:23 As you said, AI is our enemy.
0:29:25 But I mean, I look at the rest of these companies
0:29:29 and no one’s been taken to the woodshed by AI
0:29:30 the way we thought,
0:29:33 unless I’m just missing something massive here.
0:29:36 – What I find is, if you’re really worried about something,
0:29:39 it usually doesn’t happen because you prepare for it.
0:29:41 It’s when you don’t see the comet coming.
0:29:42 You know, no dinosaur thought,
0:29:46 I’m really freaked out about a meteor hitting Earth.
0:29:48 That wasn’t their biggest worry.
0:29:49 I don’t know, I don’t know how anxious
0:29:51 dinosaurs would begin with.
0:29:52 – They’re struggling with mental health, yeah.
0:29:54 – Yeah, who knows, right?
0:29:58 I don’t know, being the prospect of being eaten
0:30:00 while you’re sleeping or while you’re drinking
0:30:01 from a while is pretty like,
0:30:04 that is still my favorite TikTok
0:30:06 ’cause the little cheetah comes up
0:30:09 to the watering hole for a little refreshment.
0:30:11 And it’s such a peaceful little waterhole
0:30:15 until an 18 foot croc takes that bitch into the water.
0:30:18 And I mean, I just never get sick of that.
0:30:19 And whenever I see an animal drinking at a waterhole,
0:30:21 I’m like, okay, here we go.
0:30:25 Anyways, I don’t know how I was going with that,
0:30:27 crocodiles, it’s the stuff you don’t see coming.
0:30:29 What do you think, what do you think,
0:30:32 what sectors do you think are gonna be most disrupted by AI?
0:30:33 – This is my point.
0:30:35 I don’t think anyone’s gonna be,
0:30:37 I don’t think anyone’s gonna be hurt
0:30:39 in the same way that Chegg did, is my view.
0:30:42 I just, I think what’s gonna happen is gonna be slow
0:30:44 and we’re gonna figure out a way
0:30:46 to make AI work for us.
0:30:51 So I mean, to me it’s telling the fact that we’re here
0:30:55 and the big loser is this tiny company
0:30:57 that no one cared about anyway.
0:31:01 But maybe I’ll eat my words, we’ll see.
0:31:03 One detail I did find interesting though
0:31:04 that I wanna bring up.
0:31:08 So apparently the employees of Chegg a couple of years ago
0:31:10 actually asked for an AI budget
0:31:14 ’cause they felt that AI would be helpful to the business,
0:31:15 would help with automating their answers.
0:31:20 And supposedly the leadership denied that request.
0:31:23 And so I feel like there are some big questions here
0:31:28 for leaders and for managers of companies
0:31:29 around how to innovate.
0:31:31 Because in this case, the leadership said,
0:31:32 “No, we don’t need to do that.”
0:31:35 And they look stupid now, obviously.
0:31:38 But I’m sure there are many other situations
0:31:40 where an employee has come to leadership and said,
0:31:43 “Hey, there’s this new technology, we have to do it.”
0:31:47 And the manager has said, “Thanks, but no thanks.
0:31:49 “We’re gonna focus on this other stuff.”
0:31:50 And it probably ended up being the right decision.
0:31:52 And the example that comes to mind for me
0:31:53 is like the metaverse.
0:31:56 I mean, how many employees three years ago
0:31:58 were going up to their managers and saying,
0:32:00 “You don’t understand, metaverse is the next big thing.
0:32:01 “We gotta do it.”
0:32:05 And the guys who said, “No, are the ones who look smart now.”
0:32:08 But in this case, if you’re at Chegg,
0:32:11 you really screwed over the entire company
0:32:12 by not embracing AI.
0:32:14 So I guess my question to you would be,
0:32:17 what are some of the learnings here for leaders?
0:32:19 It’s essentially an innovators dilemma question.
0:32:23 How do you correctly allocate your resources
0:32:27 while not risking falling way behind as Chegg has done?
0:32:30 – Well, I mean, just hearing you talk,
0:32:34 what I think is it’s not sectors that’ll be the losers.
0:32:36 It’ll be the companies in every sector
0:32:39 that don’t incorporate AI into their business operations.
0:32:42 It’d be like saying, we knew that the windtail revolution
0:32:43 was gonna have a huge impact on the economy,
0:32:46 but it wasn’t like PCs took out the auto industry
0:32:48 or took out the restaurant business.
0:32:51 It was the companies that didn’t adapt
0:32:52 in a corporate technology into their everyday business
0:32:55 operations were beaten by the companies
0:32:56 in their sector that did.
0:32:58 I think the same is probably true here.
0:33:01 I don’t think, again, I think there’ll be winners
0:33:04 and losers in every category,
0:33:07 but will there be like five or six industries
0:33:08 that just go away?
0:33:10 I don’t know, I don’t know, we’ll see.
0:33:13 – We’ll be right back after the break
0:33:15 with a look at the new Department of Government Efficiency.
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0:35:25 – We’re back with Broff G Markets.
0:35:28 Donald Trump has named Elon Musk and Vivek Ramaswamy
0:35:30 as the heads of a new entity
0:35:33 called the Department of Government Efficiency.
0:35:35 In a statement, Trump said the department
0:35:39 will dismantle bureaucracy/regulations and expenses
0:35:41 and restructure federal agencies.
0:35:42 He also called it, quote,
0:35:45 “The Manhattan Project of Our Time.”
0:35:47 Scott, your initial reactions
0:35:49 to the Department of Government Efficiency,
0:35:53 also known as DOGE aka Doge.
0:35:56 – Well, I think the fact that they have two heads
0:35:59 of a department on efficiency kind of says it all,
0:36:02 and that is this makes no fucking sense.
0:36:05 So first off, budget cuts aren’t
0:36:07 within a president’s constitutional power.
0:36:09 Only Congress controls federal spending
0:36:13 and may or may not act on outside advice.
0:36:16 And all of these Congress people have districts
0:36:18 that are all making money from federal contracts
0:36:21 and have a lot of employees that work for the government.
0:36:23 So, you know, you may wanna slow your roll here.
0:36:27 The, an official government agency cannot be created
0:36:28 without an act of Congress.
0:36:32 So it’s unclear if DOJA would exist within the government
0:36:33 or outside of it.
0:36:36 And effectively this efficiency group,
0:36:39 air quotes, is more bureaucracy, not less.
0:36:43 And look, every single administration
0:36:46 has had something similar talking about
0:36:48 how to eliminate bureaucracy
0:36:50 and inefficiency in government.
0:36:52 But let’s, let’s just be real.
0:36:53 Mandatory spending, including social security,
0:36:55 Medicare and federal debt interest
0:36:57 consumes two thirds of the budget.
0:36:59 So they’re gonna try and make, find, you know,
0:37:04 squeeze blood from a turnip that is one third of the budget.
0:37:06 Elon Musk claimed at a Trump rally in October
0:37:07 that the federal budget could be cut
0:37:09 by at least $2 trillion.
0:37:11 That’s just not true.
0:37:14 To cut $2 trillion, Musk would have to eliminate
0:37:17 both social security and national defense spending.
0:37:19 And also, if you did that kind of cut,
0:37:23 you would send the economy into immediate recession
0:37:26 because, you know, we have, what is it about a third
0:37:31 of our GDP center, actually 38% is total government spending.
0:37:34 That’s actually less than Japan, which spends 42%.
0:37:36 UK at 43 and Germany at 48.
0:37:39 So we’re spending less on government than other places.
0:37:42 Now granted, they would argue they get more services
0:37:43 for their employees.
0:37:45 We may be in fact, more inefficient.
0:37:48 The US public sector employs one in seven workers,
0:37:49 so 14% of workers.
0:37:52 And that’s more than Germany’s 13% of Mexico’s 12%,
0:37:54 but less than France’s 21%.
0:37:57 So I don’t, I find this kind of a lot of jazz hands.
0:38:00 And just to be clear,
0:38:03 when we’re talking about the person running
0:38:06 the quote unquote efficiency department,
0:38:08 let’s look at his track record, all right?
0:38:12 So if you look at the auto industry,
0:38:17 you have BMW at about $1.1 million per employee, right?
0:38:23 You have Ford at $980,000 per employee,
0:38:26 General Motors 1.02 million per employee,
0:38:28 Mercedes 950,000 per employee,
0:38:32 and who brings up the rear at $740,000 per employee,
0:38:36 the least efficient automobile company, Tesla.
0:38:41 So granted, he was able to maintain a minimum viable product
0:38:44 with Twitter by laying off 80% of the employees,
0:38:48 but he also registered an 80 plus percent decline in revenue.
0:38:51 So anything resembling a reasonable conversation
0:38:53 would go like this.
0:38:56 We have to put a cap or start reducing
0:38:58 or means testing entitlements.
0:39:01 Not everyone should be entitled to entitlements.
0:39:03 I should not get Social Security.
0:39:05 I’m not sure I should be eligible for Medicare
0:39:07 ’cause I have the money.
0:39:09 We are going to have to raise revenues,
0:39:11 which is Latin for taxes.
0:39:13 Corporate taxes are at their lowest rate since 1938.
0:39:15 The 25 wealthiest Americans are paying somewhere
0:39:18 between an effective tax rate,
0:39:20 depending on who you talk to, between seven and 16%,
0:39:24 but they’re paying less than most middle-income workers.
0:39:27 But the notion that Musk and Vivek Ramaswani
0:39:30 are gonna come in and find $2 trillion in savings,
0:39:32 good luck with that.
0:39:34 And I just also like to, I mean, I don’t know if you saw,
0:39:39 but the new secretary of the interior is David Hasselhoff
0:39:42 and Jane Lynch’s character from Glee
0:39:45 is the new secretary for health and human services.
0:39:47 I mean, this isn’t even a cabinet.
0:39:50 It’s fucking dancing with the stars.
0:39:53 My complaint with this is I can’t tell
0:39:56 how serious it is about the problem.
0:40:01 And the feeling that I get is that this is mostly just
0:40:07 a way to kind of put up a finger at the establishment
0:40:09 and that by putting Elon in charge
0:40:11 and putting Vivek in charge,
0:40:14 this is less about addressing the deficit
0:40:17 and more about like owning the libs.
0:40:20 And that to me is a shame
0:40:22 because this is a massive, massive problem
0:40:24 and everyone agrees it.
0:40:28 Like everyone agrees that the deficit needs to be solved
0:40:31 and everyone agrees that it would be great
0:40:32 to have a more efficient government.
0:40:36 But to your point, this has been tried
0:40:37 several times in the past.
0:40:39 Clinton tried to do it, Reagan tried to do it,
0:40:41 Bush tried to do it, Obama tried to do it.
0:40:44 And the other side to it, which you also brought up,
0:40:48 is that we need to raise tax revenue.
0:40:52 Like if you want to get back in the green as a government,
0:40:56 then we need to figure out a way to raise more taxes
0:40:57 as a percentage of our GDP.
0:41:00 And the reality is that our nation
0:41:04 has one of the lowest tax revenues as a percentage of GDP
0:41:07 among all developed nations.
0:41:11 In addition, like Vivek, Vivek has talked about
0:41:13 getting rid of all of these government agencies.
0:41:16 Like he wants to get rid of the DOE and the DOJ.
0:41:20 And I just, I wish he would have a sober conversation
0:41:22 about the numbers here.
0:41:25 If you were to get rid of every government agency
0:41:29 apart from the Department of Defense, which is huge,
0:41:30 if you were to get rid of all of them,
0:41:35 you would only reduce our spending by at less than a 10th.
0:41:37 Like these numbers are tiny,
0:41:39 that what we spend all of our money on
0:41:44 is as you said defense and social security and healthcare.
0:41:47 It adds up to 75% of our entire budget.
0:41:49 – So let’s talk about the Department of Education.
0:41:52 It has about a $220 billion budget.
0:41:54 Some of the things they do with that money,
0:41:56 they fund Title I of the Elementary
0:41:58 and Secondary Education Act,
0:41:59 which provides supplemental funding
0:42:02 to high poverty K through 12 school districts.
0:42:05 They have the head, they fund the Head Start Program,
0:42:07 which provides vital childcare services
0:42:09 for many low income and rural communities
0:42:10 across the country.
0:42:13 The department also administers Pell Grants.
0:42:15 Who is here speaking to you right now?
0:42:19 Because of Pell Grants, yours truly.
0:42:22 These are investments in lower income households
0:42:23 that couldn’t go to college,
0:42:25 which I could not have done without Pell Grants.
0:42:28 And by the way, those are investments.
0:42:31 They’re not entitlements, they’re investments.
0:42:34 A lot of the money that goes to seniors is welfare.
0:42:36 A lot of things like Pell Grants
0:42:37 and the Department of Education are investments
0:42:39 because you start making these investments
0:42:41 as a very credible argument
0:42:43 that I end up continuing to live with my mom
0:42:46 instead of paying a shit ton of taxes, which I do.
0:42:47 These are four leaning investments
0:42:51 or you increase government spending on police fire,
0:42:56 rehabilitation, mental illness, diabetes,
0:42:58 incarceration.
0:43:01 I would argue the problem is we can’t connect it
0:43:03 as quickly as they’d like.
0:43:04 I would argue the Department of Education
0:43:06 is probably one of those departments
0:43:08 where over the medium and long term,
0:43:12 we see a really strong return on investment.
0:43:16 You know, Project 2025 is talking about eliminating
0:43:18 the Department of Education,
0:43:19 which they describe as a one-stop shop
0:43:21 for the woke education cartel.
0:43:24 – Yeah, it’s just like, that’s just an unserious proposal.
0:43:25 – Yeah, so.
0:43:27 – It’s just not even about politics.
0:43:30 It’s like, can we actually have like a legitimate conversation
0:43:30 about the problem?
0:43:31 – I don’t know.
0:43:32 Where I see with all of this,
0:43:35 whether it’s Roe v. Wade being overturned
0:43:38 or this ridiculous notion about efficiency,
0:43:41 here’s who’s gonna get hurt.
0:43:44 It kind of preys on the most vulnerable, right?
0:43:46 My kids don’t need the Department of Education
0:43:48 either will yours.
0:43:53 But a middle-class family, a family in rural America,
0:43:54 kids who couldn’t afford to go to college
0:43:57 or junior college or need student loans,
0:44:00 are in poor school districts that don’t get the funding
0:44:02 they need ’cause they don’t have rich parents
0:44:06 showing up and bidding $5,000 for lunch with Ed Elson
0:44:08 or whatever these stupid charity auctions.
0:44:11 You know, this is, again, if you reverse engineer
0:44:14 to who really gets hurt with these policies,
0:44:15 it’s the most vulnerable.
0:44:18 And do we need a more efficient government?
0:44:19 Are there places to cut spending?
0:44:20 100%.
0:44:24 But what I would do if I were a Democrat is,
0:44:28 and I am a Democrat, is like, look, we’ll go one for one.
0:44:31 You or one for two.
0:44:34 For every dollar you increase or we find in cuts,
0:44:37 you’re gonna raise $2 in taxes.
0:44:40 There’s been an explosion in wealth and prosperity.
0:44:43 We keep coming up with reasons to save businesses
0:44:46 and stimulus and PPP.
0:44:49 Oh my God, what if Delta actually goes out of business?
0:44:51 But then when they’re printing money,
0:44:52 you wanna lower taxes on them?
0:44:55 So look, we need government.
0:44:57 I do believe government is too big.
0:45:00 When it gets to this point or even bigger than this point,
0:45:01 it starts to crowd out.
0:45:03 Private investment, I do think there’s something
0:45:05 to the notion that we shouldn’t be,
0:45:08 whatever it is, 38% of GDP, we should be under 30%.
0:45:09 I get it.
0:45:11 But the only way realistically,
0:45:12 we’re gonna have a serious conversation
0:45:15 is to cap increases in spending,
0:45:17 cut in areas where we can,
0:45:20 but also you gotta talk about the revenue side.
0:45:21 I mean, what’s next?
0:45:24 They’re gonna nominate Matt Gaetz to be Attorney General.
0:45:26 Oh wait, oh wait.
0:45:28 Anyways, I’m all riled up, Ed.
0:45:31 I’m gonna just take the other side of this now, though.
0:45:34 There is a positive to this,
0:45:36 that Elon and Vivek heading up this new department.
0:45:40 And to me, it’s exemplified by a tweet
0:45:43 that was put out by the new official account
0:45:45 for the Department of Government Efficiency
0:45:46 that was posted on X.
0:45:48 And I really like this.
0:45:50 They said, quote,
0:45:52 “We are very grateful to the thousands of Americans
0:45:54 “who have expressed interest in helping us.
0:45:57 “We don’t need more part-time idea generators.
0:46:01 “We need super high IQ, small government revolutionaries
0:46:04 “willing to work 80 plus hours per week
0:46:06 “on unglamorous cost-cutting.
0:46:10 “If that’s you, DM this account with your CV.
0:46:14 “Elon and Vivek will review the top 1% of applicants.”
0:46:16 I love this.
0:46:18 And I love the language they’re using here.
0:46:21 And it was an incredibly popular post.
0:46:22 I mean, people were liking it.
0:46:24 They were commenting on it.
0:46:26 They were saying, let’s fucking go.
0:46:30 And it’s a very bro-y comment section.
0:46:33 But what it has done clearly
0:46:36 by putting Elon and Vivek in charge
0:46:40 is that these great marketing tools for attracting talent.
0:46:42 Because I think previously,
0:46:43 one of our biggest issues in America
0:46:46 has been that it’s not cool to work for the government.
0:46:49 But clearly what’s happening here is,
0:46:51 whether you like Elon and Vivek or not,
0:46:53 they’re clearly making it sexier
0:46:55 to work for the government.
0:46:59 On that tweet, the way that they’re sort of making it exciting
0:47:03 that we’re gonna be cutting costs in an unglamorous way.
0:47:06 But we need the smartest people in America to help us do it.
0:47:09 That, to me, is the right direction.
0:47:13 And if using Elon and Vivek are the ways to do it,
0:47:14 I’m actually all for it.
0:47:15 – I like that.
0:47:17 I think that’s really insightful.
0:47:19 And you’re absolutely right.
0:47:21 We need to make government jobs aspirational.
0:47:26 And if we can use two aspirational, very successful men
0:47:28 to create that aspiration around government work,
0:47:31 I love how you’re calling balls and strikes.
0:47:32 And I think that’s true.
0:47:33 I think that is a positive.
0:47:36 And anything that attracts brighter human capital
0:47:39 into government service, that is the silver lining here.
0:47:41 – Yeah, they just need to be honest
0:47:44 about what this is all for.
0:47:47 And if this just becomes a giant talking point
0:47:50 to own the libs, this is not productive.
0:47:51 – And no one owns me.
0:47:52 I’m my own woman.
0:47:54 I’m fucking Mary Tyler Moore in Minneapolis
0:47:56 throwing my hat into the air.
0:48:00 You’re gonna make it after all.
0:48:02 – Ask your parents, Ed.
0:48:03 Ask your parents.
0:48:04 – I’ll do that.
0:48:07 ♪ Love is all I’m gonna need to waste it ♪
0:48:12 ♪ You can never tell me why don’t you take it ♪
0:48:16 ♪ You’re gonna make it after all ♪
0:48:18 – Let’s take a look at the week ahead.
0:48:21 We’ll see earnings from Nvidia, Target, Walmart, and Lowe’s.
0:48:24 And we’ll also see consumer sentiment data for November.
0:48:26 Do you have any predictions for us, Scott?
0:48:28 – Mine is kind of weird.
0:48:31 So a bunch of companies, smart companies bought up these
0:48:34 cheap and supposedly dying local news stations.
0:48:36 And do you ever watch local news?
0:48:37 – Never.
0:48:38 – It’s hilarious.
0:48:39 It’s literally hilarious.
0:48:42 It’s some guy, the weatherman is like constantly predicting,
0:48:44 “Hey, I love the size of golf balls.”
0:48:47 And it’s usually some older guy with good hair
0:48:49 who makes you feel comfortable.
0:48:51 And some hot young woman who’s hoping, you know,
0:48:53 she’s gonna get Katie Couric’s job
0:48:57 or I don’t know, Savannah Guthrie’s job someday.
0:48:59 And the two of them have a nice pleasant banter.
0:49:02 And basically they do the weather, they do local sports.
0:49:03 And in between them, they have a bunch of segments called,
0:49:06 “This is what stupid people did in our neighborhood today.”
0:49:08 But these companies hemorrhage money
0:49:10 for 20 months every two years.
0:49:14 And then for four months, they have a tsunami of money
0:49:16 that washes over them in the form of political advertising.
0:49:18 ‘Cause the general consensus to date
0:49:20 has been that old people vote
0:49:22 and old people watch local news.
0:49:24 And so they quintuple their ad rates
0:49:26 and they just rake in money
0:49:28 for the four months leading up to the election.
0:49:32 I think those local TV stations and their owners
0:49:34 are about to get disrupted.
0:49:36 As I think one of the externalities
0:49:39 or realizations of this election
0:49:42 is that TV generally does not work.
0:49:44 If you wanna influence seven-year-old white women,
0:49:46 which is the viewer of MSNBC,
0:49:49 go on and you’ll reach a million people.
0:49:54 But if you wanna reach 55 million 34-year-old males,
0:49:55 go on Rogan.
0:49:58 I think you’re gonna see a tsunami of capital,
0:50:00 election spending capital,
0:50:03 transition out of local broadcast news stations
0:50:06 or local broadcast stations into podcasts.
0:50:09 And I think we’re about to see this cute little anomaly
0:50:12 in the markets be dislocated or slash disrupted.
0:50:14 I think local TV stations
0:50:16 are about to get the shit kicked out of them
0:50:18 and that capital election spending,
0:50:20 which is only getting bigger and bigger,
0:50:22 is about to flow.
0:50:23 I already see this happening.
0:50:26 All these people are clearly planning to run for president,
0:50:29 are calling me and seem to be very interested in me right now
0:50:30 and expressing their viewpoint
0:50:33 and telling me how much they love our work on young men,
0:50:34 which they do, these are good people,
0:50:38 but they’re also interested in starting to come on our podcast
0:50:40 ’cause everyone has noticed
0:50:44 that the technology that doesn’t work is knocking on doors
0:50:46 and that the person with the most money
0:50:48 is not unlike in the past necessarily the winner here.
0:50:50 Kamala raised more money.
0:50:52 It’s the person that’s smartest about media
0:50:55 and going after media that attracts old people
0:50:56 who’ve already made up their mind doesn’t work,
0:51:00 but young men who are more persuadable.
0:51:03 People go to cable TV, people go to local news
0:51:07 or go to cable news to sanctify their religion
0:51:09 or their positions and their religion
0:51:10 is their political views.
0:51:13 People, young men go to podcasts to actually learn.
0:51:14 There are more open there.
0:51:15 And then if you look at the numbers,
0:51:18 anyways, my prediction is the following,
0:51:21 local news stations loss is gonna be podcast gains
0:51:24 and we’re gonna about to see these kind of tired,
0:51:27 non-innovative companies that have had this sugar high
0:51:29 from political spending.
0:51:32 I think that’s about to come to a fairly abrupt end.
0:51:34 – Yeah, and I would also just add,
0:51:37 I think you gotta throw social media into the mix too
0:51:40 because what you just described about local news channels,
0:51:42 like here’s a compilation of stupid things people did
0:51:44 in the neighborhood this week.
0:51:47 That’s TikTok except with presenters.
0:51:49 So you can get the same product on TikTok.
0:51:51 That’s what TikTok is for.
0:51:52 That’s where all the young people are.
0:51:55 And it’s pretty staggering how much more money
0:52:00 these campaigns spent on TV ads versus social media ads.
0:52:01 They should be on TikTok
0:52:03 and they should be on Instagram Reels,
0:52:07 which to me is gonna translate to even greater profits
0:52:09 for bite dance and meta.
0:52:12 (upbeat music)
0:52:14 – This episode was produced by Claire Miller
0:52:16 and engineered by Benjamin Spencer.
0:52:18 Our associate producer is Allison Weiss.
0:52:19 Mia Silverio is our research lead.
0:52:21 Jessica Lange is our research associate.
0:52:23 Drew Burris is our technical director
0:52:25 and Catherine Dillon is our executive producer.
0:52:27 Thank you for listening to “Profogy Markets”
0:52:29 from the Vox Media Podcast Network.
0:52:31 Join us on Thursday for a conversation
0:52:35 with Jigga Shah, only on “Profogy Markets”.
0:52:40 ♪ The lifetimes ♪
0:52:48 ♪ You held me ♪
0:52:53 ♪ In kind reunion ♪
0:53:00 ♪ As the world turns ♪
0:53:04 ♪ And the dark lights ♪
0:53:07 ♪ La la la la la ♪
0:53:15 (upbeat music)
0:53:20 – I am so bullish on podcasting last night.
0:53:22 I think next year you could make, I don’t know,
0:53:24 15 and 18 bucks an hour if you keep this up.
0:53:26 This could get, yeah.
0:53:29 If you keep, add just a little motivation,
0:53:30 a little motivation.
0:53:34 If you keep working this hard and my predictions come true,
0:53:36 I’m gonna get to buy two Ferraris.
0:53:37 – I can’t wait.
0:53:38 I cannot wait.
0:53:41 – All right.
0:53:47 – Secretary of Transportation, Joe Exotic.
0:53:49 – Support for the show comes from Alex Partners.
0:53:52 Did you know that almost 90% of executives
0:53:55 see potential for growth from digital disruption?
0:53:58 With 37% seeing significant or extremely high
0:54:01 positive impact on revenue growth.
0:54:04 In Alex Partners’ 2024 Digital Disruption Report,
0:54:06 you can learn the best path to turning that disruption
0:54:08 into growth for your business.
0:54:10 With a focus on clarity, direction,
0:54:12 and effective implementation,
0:54:14 Alex Partners provides essential support
0:54:16 when decisive leadership is crucial.
0:54:18 You can discover insights like these
0:54:22 by reading Alex Partners’ latest technology industry insights
0:54:27 available at www.alexpartners.com/box.
0:54:32 That’s www.alixpartners.com/vox.
0:54:37 In the face of disruption, businesses trust Alex Partners
0:54:39 to get straight to the point and deliver results
0:54:41 when it really matters.
0:54:46 – Many songs are written to make us dance,
0:54:48 others to deal with heartbreak.
0:54:51 But it’s the rarest song that makes us feel freaky.
0:54:53 I’m musicologist Nate Sloan,
0:54:54 and I’m songwriter Charlie Harding.
0:54:56 And on this week’s episode of Switched On Pop,
0:54:59 we delve into a trilogy of new releases
0:55:00 from well-established freaks.
0:55:03 Lady Gaga, Tyler the Creator,
0:55:05 and along the way to return the cure.
0:55:08 – Listen to the musicology of freaky songs
0:55:11 on Switched On Pop presented by Nissan.
0:55:13 (upbeat music)

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0:00:30 (upbeat music)
0:00:33 Support for this podcast comes from Anthropic.
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0:01:59 I’m Scott Galloway, and this is No Mercy, No Malice.
0:02:01 Young people were the epicenter
0:02:03 of the political earthquake last week.
0:02:07 The fall line, masculinity.
0:02:11 The testosterone election, as read by George Hahn.
0:02:20 I believe the more interesting conversation
0:02:23 than why she lost is how he won.
0:02:26 We on the left tried to comfort each other
0:02:29 with the cold, i.e. freezing comfort of,
0:02:32 he barely won the popular vote,
0:02:36 or Wisconsin was decided by just 30,000 people.
0:02:42 But the reality is Donald Trump destroyed Kamala Harris.
0:02:46 Trump, for the first time, won the popular vote
0:02:48 and took all seven swing states.
0:02:50 It was a political earthquake
0:02:53 that rendered legacy media and knocking on doors
0:02:56 as 20th century relics.
0:02:59 The aftershocks will be felt for the next four years
0:03:04 and beyond, but we know where the epicenter was.
0:03:08 Despite a 51-48 split in the popular vote,
0:03:12 three-quarters of Americans agree on one thing.
0:03:15 We are on the wrong track.
0:03:16 That’s been the political reality
0:03:19 for most of this century.
0:03:21 High levels of dissatisfaction
0:03:25 resulting in a series of change elections.
0:03:27 The reason?
0:03:29 Voters recognize that millennials and Zoomers
0:03:33 aren’t as prosperous as their boomer and Gen X parents.
0:03:34 One example?
0:03:39 In 1981, the median age of a homebuyer was 38.
0:03:42 Today, it’s 54.
0:03:45 The epicenter of the 2024 political election
0:03:47 and the 2024 political earthquake
0:03:52 wasn’t immigration, bodily autonomy, or democracy.
0:03:57 It was the social contract between America and its citizens.
0:03:59 The contract is straightforward.
0:04:01 Work hard and play by the rules,
0:04:04 and your children will have a better life than you did.
0:04:07 For the first time in 250 years,
0:04:10 that contract has not held.
0:04:16 In an earthquake, solid ground is an illusion.
0:04:18 I learned this in 1971
0:04:21 when the Silmar Quake devastated Los Angeles.
0:04:23 The movement of tectonic plates,
0:04:26 usually just a few centimeters per year,
0:04:29 goes unnoticed until they slip,
0:04:33 releasing enough energy to rip apart the ground beneath your feet.
0:04:36 Tectonic plates meet, pressure builds,
0:04:40 and ultimately breaks apart at the fault line.
0:04:41 If the epicenter of this election
0:04:44 was America’s social contract,
0:04:48 the fault line was masculinity.
0:04:52 Before the election, I predicted the outcome would be decided
0:04:57 by whoever presented a more aspirational vision of masculinity.
0:04:59 The reasoning was correct.
0:05:02 The call was wrong.
0:05:05 Instead of seeing men as providers and protectors,
0:05:10 voters embraced crypto, the UFC, and Hulk Hogan.
0:05:14 Tesla, Bitcoin, Ethereum, and Dogecoin
0:05:23 are up 29%, 25%, 24%, and 106%, respectively.
0:05:28 Note the S&P is up nearly 4% over the same period.
0:05:31 And we Democrats were stood up,
0:05:34 left bereft by voters motivated by bodily autonomy,
0:05:38 who didn’t show up.
0:05:40 Trump was able to distance himself
0:05:42 from the bodily autonomy issue.
0:05:46 Five of the seven states that voted for pro-choice amendments
0:05:49 split the ticket on the issue,
0:05:52 polling the lever for the former president.
0:05:54 America elected President T.
0:06:01 Only the T doesn’t stand for Trump, but testosterone.
0:06:03 How Americans vote should be taken seriously
0:06:05 regarding the direction of the country,
0:06:07 but much of the rhetoric has been ugly
0:06:11 and should not be normalized.
0:06:14 I receive a lot of emails from worried parents,
0:06:16 particularly mothers, along these lines,
0:06:19 quote, “I have a daughter who lives in Chicago
0:06:23 and works in PR and another daughter who’s at Penn.
0:06:27 My son lives in our basement, vapes, and plays video games,”
0:06:29 unquote.
0:06:31 Young American men are in a crisis
0:06:35 of under-employment and under-socialization.
0:06:38 Soaring college costs affect people regardless of gender,
0:06:41 but since 2011, the percentage of young men enrolled
0:06:47 in college has dropped from 47% to 42%.
0:06:50 Manufacturing jobs, once a ticket to the middle class
0:06:54 for men without college degrees, have been off-shored.
0:06:56 Housing is increasingly unaffordable.
0:07:01 Nearly 60% of men aged 18 to 24 live with their parents,
0:07:06 and one in five still live with their parents at 30.
0:07:09 Many men are stuck, isolated, despairing,
0:07:12 and unproductive, prone to obesity, drug addiction,
0:07:15 and suicide, susceptible to misogyny, conspiracy theories,
0:07:18 and radicalization.
0:07:24 They make inadequate mates, employees, and citizens.
0:07:28 An African proverb states, quote, “The child
0:07:30 who is not embraced by the village
0:07:35 will burn it down to feel its warmth,” unquote.
0:07:39 When young men are struggling, they and their parents
0:07:43 vote based on an attribute versus an issue.
0:07:47 That attribute, this cycle, was disruption.
0:07:49 These voters didn’t vote for the party that
0:07:51 believes the solution for young men
0:07:55 is to act more like women or even traditional Republicans.
0:07:57 They opted for whoever would disrupt
0:08:01 an America that’s broken its most basic contract.
0:08:06 As Cersei Lannister said, “I choose violence.”
0:08:10 The electorate chose chaos.
0:08:12 When parents see their kids hurting,
0:08:14 they become single-issue voters.
0:08:19 From 2020 to 2024, Trump gained 15 points
0:08:22 among 18 to 29-year-old men.
0:08:26 The mothers of young voters, women ages 45 to 64,
0:08:30 voted for Trump more than any other age group of women,
0:08:33 including women over 65.
0:08:37 Their fathers, men ages 45 to 64,
0:08:40 voted for Trump at a higher rate than any other male age
0:08:44 group, except for men over 65, who supported him
0:08:46 by one percentage point more.
0:08:50 The boys burned down the village to feel its warmth,
0:08:55 and their parents gave them the matches.
0:08:59 In April, I gave a TED Talk about America’s war on the young.
0:09:02 The war is being waged on nearly every front,
0:09:05 but one especially revealing battleground
0:09:08 is our social safety net.
0:09:10 If it seems like we care more about senior citizens
0:09:14 than our children, trust your instincts.
0:09:18 Recall that we let the child tax credit expansion expire
0:09:20 post-pandemic.
0:09:22 Meanwhile, Social Security remains
0:09:25 the third rail of American politics,
0:09:27 with old people electing older people who
0:09:29 vote themselves more money.
0:09:31 To paraphrase Warren Buffett, there
0:09:36 is a generational war in America, and my generation is winning.
0:09:42 After a campaign where most of the oxygen was consumed
0:09:45 by performative pandering over culture war issues,
0:09:52 voters reminded us that their number one issue is the economy.
0:09:55 America is a platform that provides two things–
0:09:58 the defense of our shores and citizens,
0:10:01 and economic opportunity.
0:10:04 Everything else comes in a distant third.
0:10:08 In a capitalist society, the fastest path
0:10:12 to expanding and protecting rights is simple–
0:10:15 give people more money.
0:10:18 When you put expanding rights ahead of increasing
0:10:22 economic opportunity, you’re treating the symptom,
0:10:25 not the disease.
0:10:28 In America, and this has not always been the case
0:10:31 and should be celebrated, your opportunities
0:10:33 are more a function of your economic weight
0:10:36 class than your identity.
0:10:38 Demographics are no longer destiny.
0:10:41 Today in America, you’d rather be born non-white or gay
0:10:43 than poor.
0:10:48 Our spending priorities, like entitlements, tax policies,
0:10:52 like capital gains and mortgage interest deductions,
0:10:56 and fiscal policies, like bailouts of incumbents,
0:11:01 are nothing but a transfer of wealth from young to old.
0:11:04 Compared to 40 years ago, the average 70-plus year old
0:11:09 is 72% wealthier, and the average person under 40
0:11:13 is 24% less wealthy.
0:11:15 In addition, social media notifications
0:11:21 remind them 210 times a day that everyone else is killing it.
0:11:24 The most noxious emission in America
0:11:27 is not carbon, but shame.
0:11:30 The disease is simple to diagnose.
0:11:33 Young people don’t have enough money.
0:11:37 We should treat the disease, not with leeches like tariffs
0:11:40 and cocaine like tax cuts for the wealthy,
0:11:44 but treatments that are proven to work.
0:11:47 A few suggestions.
0:11:49 Do the minimum.
0:11:54 70% of minimum wage workers are between 16 and 34.
0:11:57 The fastest way to put more money in their hands
0:11:59 is to give them a raise.
0:12:01 I believe the federal minimum wage
0:12:05 should be $25 per hour.
0:12:09 Ask what you can do for your country.
0:12:13 Only 18% of 18 to 34-year-olds say
0:12:16 they’re proud to be an American.
0:12:20 We should require or encourage one or two years of paid service
0:12:22 for young people.
0:12:25 Service builds grit, camaraderie, connections,
0:12:27 and social conscience.
0:12:31 It heals political divisions and restores faith in the country.
0:12:35 The left will cry fascism, the right communism.
0:12:39 Angering both extremes is a tell for good policy,
0:12:43 which generally appeals to the center rather than the fringes.
0:12:46 Note, when the extremes agree,
0:12:50 it’s usually centered on reckless spending or antisemitism.
0:12:53 Get fit.
0:12:57 JFK challenged Americans to improve their physical fitness.
0:13:01 The president’s physical fitness test emphasized performance,
0:13:04 but it was replaced by the presidential youth fitness
0:13:07 program, which emphasized health.
0:13:10 We should do both, as some studies
0:13:15 have shown that physical strength and exercise are 1.5 times
0:13:21 as effective as antidepressants at battling depression.
0:13:24 Build, baby, build.
0:13:26 We have a shortage of affordable housing.
0:13:28 One conservative estimate suggests
0:13:32 we need to build 3 million housing units.
0:13:34 This isn’t rocket science.
0:13:37 Building housing at that scale would create more than a million
0:13:41 jobs and generate billions in tax revenue.
0:13:44 The private sector responds to incentives.
0:13:50 This should likely be done via a tax credit versus regulation.
0:13:52 Nuclear option.
0:13:55 FDR’s New Deal put millions to work,
0:13:58 building the Hoover Dam and LaGuardia Airport
0:14:01 and bringing electricity to the south.
0:14:03 Eisenhower’s Interstate Highway System,
0:14:07 a project of immeasurable benefit for jobs and commerce,
0:14:11 continues to pay dividends 70 years later.
0:14:15 Today, we need carbon-free energy to combat climate change
0:14:18 and fuel the AI revolution.
0:14:22 Nuclear accounts for 20% of our total power output
0:14:25 and half our clean energy.
0:14:30 Increasing our nuclear output 3x would likely
0:14:33 create 1.5 million jobs.
0:14:37 Nuclear energy feels more masculine than wind and solar.
0:14:40 I’m hopeful Trump will embrace it.
0:14:42 IRS Yovam.
0:14:45 We should take a page from Portugal
0:14:49 and grant a tax holiday for 18 to 35-year-olds
0:14:53 as a means of staunching generational wealth transfer.
0:14:55 The Portuguese government recognized
0:14:59 the most talented young Portuguese had one thing in common.
0:15:02 They’d left the country.
0:15:05 The new tax benefits extend over 10 years,
0:15:08 including no taxation for the first year.
0:15:10 The program is meant to help retain
0:15:13 and attract young professionals.
0:15:15 In the US, we have the most anxious
0:15:18 and depressed younger generation in history.
0:15:21 The incumbents will plead complexity
0:15:23 as a misdirect from a simple solution,
0:15:26 more prosperity, i.e. money.
0:15:29 The program would not be that expensive
0:15:32 as it requires no increase in the administrative state
0:15:34 and young people don’t generate much tax revenue
0:15:36 to begin with.
0:15:40 Make education affordable again.
0:15:45 Nothing says we believe in you like education.
0:15:47 Some public universities offer free admission
0:15:51 to students who meet minimum academic requirements.
0:15:54 This should be the rule, not the exception.
0:15:59 Any university that has an endowment over a billion
0:16:01 that’s not expanding its freshman class faster
0:16:06 than population growth should lose its tax-free status.
0:16:08 It’s no longer a public servant,
0:16:10 but a hedge fund offering classes.
0:16:14 Also, we should bulk up on vocational training
0:16:18 and paid apprenticeships as many people, especially men,
0:16:21 thrive in careers that require strength,
0:16:23 sweat, and technical skill.
0:16:27 These are good-paying jobs shamed by the zeitgeist
0:16:30 in our society, which says if you’re one of the two-thirds
0:16:33 of families whose kid doesn’t graduate from college,
0:16:36 you and your kid have fucked up.
0:16:39 See above, shame.
0:16:44 Make dating great again.
0:16:46 Young people are having less sex.
0:16:50 This contributes to a delay in unlocking adult milestones,
0:16:54 marriage, kids, and sets up a demographic time bomb.
0:16:57 Without the prospect of a romantic relationship,
0:17:01 women pour energy into other relationships and work.
0:17:05 Men into addiction and resentment.
0:17:08 Remote work is a disaster for young people.
0:17:11 A quarter of all couples meet at work.
0:17:14 We need to get more young people into an office,
0:17:16 classroom, or some other environment
0:17:18 where they’re serving in the agency
0:17:19 of something bigger than themselves.
0:17:22 See above, national service.
0:17:25 Today’s venue for connection, or lack thereof,
0:17:27 is online dating.
0:17:30 But like every other sector that’s being digitized,
0:17:33 it’s become a winner-take-most arena.
0:17:36 A small number of men garner all the attention,
0:17:38 leaving a man of average attractiveness
0:17:39 totally shut out of the market,
0:17:43 which validates his sense of worthlessness.
0:17:45 And the top decile of men are given license
0:17:48 to engage in Porsche polygamy,
0:17:49 which doesn’t encourage the formation
0:17:52 of long-term relationships and issues a hall pass
0:17:54 for bad behavior.
0:17:58 Who wants more economically and emotionally viable men?
0:18:00 A, women.
0:18:03 How do we get young people pairing?
0:18:06 A, make more men more attractive
0:18:09 by leveling up young people economically.
0:18:17 AI, GDP, S&P, innovation, shareholder growth,
0:18:20 these things are all means.
0:18:23 The ends are deep and meaningful relationships.
0:18:26 They are everything.
0:18:28 And the center of literally everything
0:18:31 is the well-being of your kids.
0:18:32 When they’re not doing well,
0:18:35 they and their mothers become the mother
0:18:37 of single-issue voters.
0:18:40 Change, disruption.
0:18:44 So, how did Trump win?
0:18:48 A, his campaign determined the best way to win over young men
0:18:53 and their parents was to act like a young bro himself.
0:18:54 Think about it.
0:18:58 Rockets, crypto, Rogan, course language, offensive jokes.
0:19:01 This election was supposed to be a referendum
0:19:03 on women’s rights.
0:19:05 It wasn’t.
0:19:09 It was a cold plunge into testosterone.
0:19:15 Life is so rich.
0:19:18 How do you feel about your campaign?
0:19:21 Do you feel like your leads never lead anywhere?
0:19:23 And you’re making content that no one sees,
0:19:26 and it takes forever to build a campaign?
0:19:29 Well, that’s why we built HubSpot.
0:19:31 It’s an AI-powered customer platform
0:19:33 that builds campaigns for you,
0:19:35 tells you which leads are worth knowing,
0:19:37 and makes writing blogs, creating videos,
0:19:39 and so on.
0:19:41 So, how do you feel about your campaign?
0:19:44 Do you feel like your leads never lead anywhere?
0:19:47 Do you feel like your leads never lead anywhere?
0:19:49 Do you feel like your leads never lead anywhere?
0:19:52 Do you feel like your leads never lead anywhere?
0:19:54 Do you feel like your leads never lead anywhere?
0:19:57 Do you feel like your leads never lead anywhere?
0:19:59 Do you feel like your leads never lead anywhere?
0:20:01 Do you feel like your leads never lead anywhere?
0:20:03 Do you feel like your leads never lead anywhere?
0:20:05 Do you feel like your leads never lead anywhere?
0:20:08 Do you feel like your leads never lead anywhere?
0:20:10 Do you feel like your leads never lead anywhere?
0:20:13 Do you feel like your leads never lead anywhere?
0:20:15 Ladies Gaga, Tyler the Creator,
0:20:17 and along the way to return, the cure.
0:20:21 Listen to the musicology of freaky songs
0:20:23 on Switched On Pop, presented by Nissan.
0:20:26 (upbeat music)

0:00:05 Support for this episode comes from The Current. The Current podcast is back with an exciting
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0:00:33 a major CPG brand like Hershey can learn from each other. Listen in and subscribe to The
0:00:40 Current at TheCurrent.com or wherever you get your podcasts.
0:00:45 Support for this podcast comes from Anthropik. It’s not always easy to harness the power
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0:01:46 videos, and posting on social abrees. So now, it’s easier than ever to be a marketer. Get
0:01:50 started at HubSpot.com/Marketers.
0:01:57 Episode 325. 325 is the area covering parts of West Central Texas in 1925. The world’s
0:02:02 first motel opened. True story, last week I checked into a Western hotel and I asked
0:02:21 if the porn be disabled. Guy looked at me and said, “It’s just regular porn, you sick fuck.”
0:02:25 Welcome to the 325th episode of The Prop G Pod. In today’s episode, we speak with Dr.
0:02:30 Jenny Shutz, a nationally renowned economist, author, and policy expert on housing and land
0:02:36 use. We discussed with Jenny Trent’s instructional shifts occurring in the housing market, America’s
0:02:41 broken housing system, along with policy solutions. Okay, what’s happening? Federal Trade Commission
0:02:46 Chair Lena Kahn’s future might be determined by Trump’s biggest cheerleader, Elon Musk,
0:02:51 or as I like to call him, the first lady, Elania. In the days leading up to the election,
0:02:57 Elon Musk wrote on X that she will be fired soon. Oh, great. We have a guy who is addicted
0:03:03 to a non-associative drug determining antitrust and FTC regulation. That makes sense. That
0:03:08 totally makes sense. Both Republicans and some high-profile Democrats, including Reid
0:03:13 Hoffman and Mark Cuban, have openly criticized Lena Kahn, accusing her of pushing a far left
0:03:18 gender and using the FTC power to aggressively at the same time. She has a lot of, I think
0:03:23 they’re called cons, a rubber cons. She’s like Matt Gaetz, some unlikely fans on the
0:03:29 right, and she’s, everyone’s mad at big tech right now. There are a few bipartisan issues.
0:03:32 One of them is wanting to break up or punish big tech, although not even get their shit
0:03:35 together to actually do that. It feels as if the only things that the far left and the
0:03:41 far right can agree on and get the five or six centrist people to come along with them
0:03:45 on is one, anti-Semitism, the far left and the far right are both anti-Semitic, and two,
0:03:52 reckless spending, $7 trillion in expenditures on $5 trillion in revenues. Imagine the U.S.
0:03:58 as a household making $50,000 a year spending $70,000, and our debt is $320,000, but don’t
0:04:03 worry. We get to keep racking up debt because they keep sending us more and more credit
0:04:08 cards, at least China does, or overseas investors, and guess what? When we die, we’re going to
0:04:11 have all the champagne and cocaine, and we’re going to live large, but our kids get to inherit
0:04:14 the household debt. Well, that is what we are talking about now.
0:04:19 Anyways, a little off-script. Meanwhile, Trump’s transition team has tapped the anti-trustler
0:04:24 Gale Slater to help determine cons potential successor. I thought Lena was going to survive
0:04:29 this. I thought it would soften his image. She’s done a lot of work. I don’t think he’s
0:04:34 going to have the patience or understand things like numbers and concepts and legal jargon.
0:04:38 No joke in the first administration, when people were coached on how to present to them, they
0:04:42 would say fewer words, more pictures. I just don’t think he’s going to have the staying
0:04:46 power here. Maybe he’ll hand it over to JD Vance. JD Vance could probably do something
0:04:51 different, but what is it they want from her? I don’t get it. Oh, they want a kleptocrat.
0:04:56 They want her to back the fuck off if you made a campaign contribution. If you said
0:05:01 nice things about him, and you said money in, fine, you can do whatever you want, including
0:05:04 consolidate the industry and drive up prices, which will be inflationary, folks. By the
0:05:08 way, the most deflationary thing we could do right now would be, one, to kiss and make
0:05:14 up with China, and two, to break up big chicken, big pharma, big ag, big tech. It’s pretty
0:05:19 simple when there’s two or three players, they figure out a way to charge higher rents
0:05:24 on consumers. Notice how airline tickets have skyrocketed in the last few years. Why? Because
0:05:29 there’s basically two or three big airlines now, and they kind of wink at each other and
0:05:33 coordinate, such that they can jack up prices. If you notice that every flight has been full
0:05:37 for about the last five years, they keep taking out supply, and then they wink at each other,
0:05:42 and they don’t create more supply. Why? That would create pricing pressure, and the CEOs
0:05:46 of these companies who took about $100 or $150 million in compensation, pre-pandemic,
0:05:50 and then cried, cried poor when the pandemic came along and said that we’re all in this
0:05:56 together until the market is booming again, and then it’s free market capitalism, and
0:06:00 I should make $150 million when I’m paying my flight attendant $78,000 a year. Anyway,
0:06:05 another talk show. Who’s on the list of candidates? It’s Slater’s Assembling. Reportedly, the
0:06:09 list includes former Justice Department attorney Mark Meador. Meador, it’s not Mark Meador.
0:06:13 I know that. It’s Mark Meador with an R, probably an entirely different person with
0:06:18 a different complexion and personality. George Mason University law professor Todd Zawicki.
0:06:23 Don’t know Todd. Don’t know Professor Zawicki. That’s a pretty awesome name, though. Alex
0:06:27 Oculiar, a partner of Morrison Forrester, or as I like to call it, MoFo, and the FTC’s
0:06:33 two Republican commissioners, Melissa Holyoke, and Andrew Ferguson. Jesus Christ, I’m bored.
0:06:38 I’m bored listening to this shit. Are we going to have to cover the fucking Trump cabinet
0:06:42 for the next two or three weeks? Can you just start imposing tariffs? By the way, what
0:06:47 a shocker. He wants to raise tariffs on Mexico, who, by the way, has become a lot more important
0:06:52 to us. I think has become our biggest trading partner, our biggest import, or the country
0:06:55 we now import the most from. What’s really interesting about trade, or I find it really
0:06:59 interesting, and this was blew me away when my colleagues, Pankaj Gemawad, did the study
0:07:03 on trade and he found that trade is a function of proximity. Generally speaking, almost every
0:07:06 nation in the world, their biggest trading partner is one they share a border with.
0:07:13 I guess transportation kind of gets in the way, or people intermarry and have no people
0:07:18 over there and they develop business relationships, or just struck me that in a digital age, proximity
0:07:27 is still the primary driver of trade. Anyways, we are about to enter into a trade war. He’s
0:07:31 talking about a massive deportation force. Jesus, have you seen these people that are
0:07:35 lining up for the deportation force? It’s literally like, okay, what happens when you’re
0:07:39 bullied in high school and you finally get your revenge on people? These people just
0:07:45 seem so fucking angry. This is really nuts, but let’s take inflation and how do we reverse
0:07:50 engineer inflation? I know. Let’s reduce competition. Okay, we’re doing that. We’re going to get
0:07:58 rid of Lena Kahn. Let’s make our imports more expensive. Okay, we’re doing that. And let’s
0:08:04 find our most flexible agile workforce and terrorize them and make it such that immigrants
0:08:08 don’t want to come in. And here’s the dirty secret. The migrant problem is out of fucking
0:08:14 control and the asylum system that was set up or exploited under the Biden administration
0:08:19 was unforgivable and was probably a reason that, I don’t know, she lost one brick in
0:08:23 the blue wall. This was handled incredibly poorly for the last 30 years and especially
0:08:28 poorly the last four years. However, however, when no one wants to say out loud, is that
0:08:32 immigration while being the secret sauce of America, the most profitable part of immigration
0:08:37 is illegal immigration. They commit crimes at a low rate and they’re so worried about
0:08:40 getting caught. They don’t call the fire or police department. They don’t use our services.
0:08:43 They don’t go to the hospital. And what do they do? But they also get to pay taxes. They
0:08:48 pay their taxes. And then when the work or the crops, when the work dries up, you know,
0:08:55 grandma dies or restaurants go into recession or the crops are picked, this flexible workforce
0:09:00 heads back to their country of origin. This is literally the thing that has kept on giving
0:09:03 or the gift that has kept on giving for the last 20 or 30 years. And that is the reason,
0:09:08 actually the last 40 years, why no one ever gets that serious about immigration reform
0:09:12 and how it comes. So let’s politicize and it never gets reformed. It’s really interesting
0:09:15 if that bipartisan immigration reform bill actually goes through. It probably will now.
0:09:21 So Trump can take credit for it. The big picture, with Trump’s return to office sectors constrained
0:09:25 by strict antitrust oversight, including tech and healthcare, could see a new wave of merger
0:09:29 and acquisition activity. I would imagine Goldman Sachs and Morgan Stanley Stocker
0:09:35 thinking that M&A is going to have its sort of M&A Palooza in 2025. The markets have already
0:09:40 gone crazy since the election. This week alone, mega cap tech companies added $773 million,
0:09:43 that’s right, three quarters of a trillion dollars to the collective market cap, as dealmakers hope
0:09:48 Trump’s FTC will be more open to M&A than Biden. So according to data from DealLogic,
0:09:53 last year hit a low for M&A deals targeting U.S. companies, a low since 2015. And this year’s pay
0:09:59 suggests even fewer deals might be going through. All right, what’s going on here? Why is the market
0:10:03 screaming up? Is it because they think there’s going to be some sort of sustainable or fundamental
0:10:06 growth in companies? Have we made massive investments in R&D? Are our products more
0:10:11 attractive to overseas? Have we figured out more free trade that’ll increase the purchase of our
0:10:18 products? No. This is nothing but the following. Trump is a vessel for the transfer of wealth
0:10:25 from young people to old people. The credit markets know it. The tenure spiked about the moment
0:10:29 he was going to get elected. The moment I knew he was elected, a friend of mine who runs,
0:10:34 he was the chief investment officer from the M&A, $75 billion hedge fund called me and said,
0:10:36 he’s won. And I said, how do you know this? I don’t see this. They said the credit markets
0:10:41 are spiking, which means they know that he’s won because his policies will be more inflationary.
0:10:46 Trump is nothing but a vessel. Actually, there’s a bunch of things, including he is a vessel for
0:10:51 the transfer of wealth from young people to people like me. By the way, I have made a
0:10:56 shit ton of money in the last four or five days. And I love it. It’s great. I’m happy for it. But
0:11:03 guess what? My kids, my kids, well, that’s another story. We have to stop this war on the young.
0:11:07 Old people keep voting themselves. More money. And young people and middle-class people are
0:11:12 only the impression that, hey, the deficit never matters. And if a guy’s angry and if a guy’s
0:11:17 really offensive, he must be a leader. Let’s get a strong man. And on the fucking far left,
0:11:23 we have decided we’re self-appointed social justice cops. No, no one asked us to do that.
0:11:31 What is America? America is a platform. It’s a platform for two things. One, protect our borders,
0:11:36 Army, Navy, Air Force, Marines. Make sure that we are, that Americans are incredibly safe and that
0:11:41 we continue to spend more on our military than the next 10 biggest military spenders combined. Why?
0:11:46 Because despite what Coca-Cola or Ben and Jerry’s would like you to believe, or people on the far
0:11:50 left, the moment a group of people can come for us and kill us and take our Netflix and
0:11:58 Espresso away, be clear, they will. Job number one of this platform, defend our shores. Job
0:12:03 number two, to create atmospherics and an environment that provides prosperity, opportunity,
0:12:09 growth, innovation, capitalism, boom, profits, such that we can tax them at a fair rate,
0:12:13 at a lower rate, hopefully over time, a lower rate such that we can fund the government with
0:12:19 an even lower tax rate because of the growth, such that, such that young people can have some fucking
0:12:26 hope of buying a home, forming a family, having sex, having kids, and getting to the whole shooting
0:12:30 match. What is the whole shooting match? It’s not AI. It’s not innovation. It’s not tax rates.
0:12:36 It’s not GDP. It’s deep and meaningful relationships. And this guy is going to decrease, continue to
0:12:42 decrease the number of households that are formed. We’re going to continue to see a continued decline
0:12:46 in birth rates. Why? Because all of this economic sugar high, guess where it’s going? It’s going to
0:12:53 the top 1%. Oh my God, the market’s touching new highs. Guess what? Who owns 90% of the market?
0:12:59 The top 1%. So yeah, it’s great for me. It’s great for your boss. You know who it sucks for?
0:13:07 Everyone else, a vessel for the transfer of wealth from young to old, President Trump.
0:13:13 We’ll be right back for our conversation with Dr. Jenny Schoetz.
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0:16:45 Welcome back. Here’s our conversation with Dr. Jenny Shutz, a nationally renowned economist,
0:16:51 author, and policy expert on housing and land use. Jenny, where does this podcast find you?
0:16:56 I’m in my office in Arnold Ventures. We’re close to downtown DC.
0:17:01 All right. So, you recently joined Arnold Ventures where you’re addressing the nation’s
0:17:05 challenge of housing supply shortages and rapidly increasing rents and home prices.
0:17:11 Let’s talk about this head on. How can we repair America’s broken housing systems?
0:17:16 Well, the policy side is actually not that complicated. We need to make it easier to build
0:17:22 housing and build more types of housing, especially in high demand locations. It turns out that the
0:17:27 tricky part of this is the politics. We’ve essentially delegated a lot of control over housing
0:17:32 production to local governments and to neighborhoods. And people who live in a neighborhood often
0:17:38 don’t want to have more housing built. So, my sense is, and you tell me if this is correct,
0:17:43 the incumbents, the people who already own homes, have a vested interest in not having more supply,
0:17:47 so they get involved in local review boards and basically make it near impossible for new housing
0:17:53 permits. Is that a safe thesis? It’s true that there are at least some number of incumbent residents
0:17:58 who don’t want more housing and don’t want their neighborhoods to change. One of the questions
0:18:03 we’re sort of grappling with is how widespread is this resistance to new housing? We’re sort of
0:18:09 ingrained to believe that NIMBYism is widespread. Basically, everybody who already owns a home
0:18:14 doesn’t want more housing. But what we’re starting to learn as we do more polling and surveys is
0:18:20 that NIMBYism may not be as widespread as people thought before. The NIMBYs are loud and they’re
0:18:25 often very politically well connected. But there are often a lot of people, including longtime
0:18:29 homeowners, who understand that their communities need to grow, need to change. And so part of the
0:18:36 challenge is figuring out how to tell politicians that this median voter may actually be comfortable
0:18:41 with more growth than they assumed. Yeah, I think what’s happening, I think a lot of people have
0:18:46 children who are either renting or looking for a home and they just realize how bad it’s become.
0:18:52 What are some ideas or innovative policy solutions or economic solutions for—my understanding is
0:18:57 it’s—a lot of it’s a supply problem. We just aren’t building as many homes as we need to. What
0:19:01 are some policy ideas that you’ve seen that you think might address the issue?
0:19:06 There’s sort of three buckets of policy changes that we know are likely to be effective.
0:19:13 One is just to make it possible to build a more diverse set of housing types. So roughly three
0:19:18 quarters of the land, even in major urban areas, is set aside exclusively for single family detached
0:19:24 homes. Those take up a lot of land. They’re the most expensive type to buy or to rent. And they
0:19:28 also just occupy a lot of space. And so we have neighborhoods that are built out as single family
0:19:34 homes and you can’t add any more until you change the zoning. So legalizing everything from townhouses,
0:19:39 accessory dwelling units, all the way up to apartment buildings adds more capacity and more
0:19:43 diversity to the housing stock. We also have to look at sort of things like the dimensional
0:19:49 requirements. So legalizing an apartment building but capping it at two stories doesn’t actually
0:19:54 make it feasible. So making it possible to build taller buildings, smaller setbacks,
0:19:59 getting rid of off-strait parking requirements, all of those sort of details can matter.
0:20:03 And then probably the most important thing is actually the process. We have gone to a system
0:20:10 where there’s a lot of complex discretionary approvals. Neighborhood by neighborhood gets to
0:20:15 weigh in on what gets built to provide feedback on everything from the landscaping and the design,
0:20:20 the size of the project. Writing down a set of rules that are consistent and objective and
0:20:25 letting developers build according to the rules without having this community engagement process
0:20:30 that drags on forever would shorten the process and would allow more housing to get built more
0:20:34 quickly, which means that those units can then be sold or rented at lower prices.
0:20:40 Yeah, I have some experience with this firsthand. I bought a piece of land down here in Delray,
0:20:45 Florida, and we were planning to develop on it. And you have to go to the local review board
0:20:51 and a woman showed up and said, “I don’t know if I want that land developed. I walked my dog over
0:20:56 there.” And I’m like, “Okay, that’s called trespassing.” But they delayed the decision for
0:21:02 a month or three months. These things don’t meet that often to do some sort of review or study
0:21:08 based on the fact this woman was walking her dog over there. And it just felt like anyone who shows
0:21:14 up can not necessarily kill it, but delay it forever. So my question is, I mean, on a very
0:21:18 reductive level, my sense is permits have been taken out of the hands of officials who think big
0:21:24 picture and put into the hands or at least of homeowners who can have a lot of influence and
0:21:28 just delay this shit. And everything I’ve done around this stuff or everything I’ve seen,
0:21:35 they basically just delay, delay, delay. And any objection results in the delay of them finally
0:21:41 issuing the permits, what can be done? Because my sense is it’s very state by state or even
0:21:46 community by community. How do you address this? Is there some sort of federal law or state law
0:21:52 that expedites, if you will, is a laxative to the constipation here of housing permits?
0:21:58 Yeah, there’s very little the federal government can do. The Constitution doesn’t give the federal
0:22:05 government control over land use or development or zoning. So that’s a power that’s held by
0:22:11 the states. And sort of what we’ve seen is this delegation downwards states delegated land use
0:22:16 authority to local governments, local governments have in turn kind of outsourced this to individual
0:22:22 neighborhoods, either formally or informally. And so we’ve pushed the approval process or at
0:22:28 least the veto power down to the lowest level of geography and the people who are most impacted by
0:22:34 it. So one thing that local governments can do is just move the timing of when you get community
0:22:39 engagement instead of doing this for every single permit, every single parcel that gets changed,
0:22:44 move it upstream to something like the comprehensive planning process. So like every 10 years,
0:22:48 the city comes together and says, where do we want to grow? What do we want to add? And once
0:22:51 that’s written down in the plan, then you don’t get to protest every single development in every
0:22:57 project. That would make things a little easier. One trend we’ve seen in the last five or six years
0:23:01 is that state governments are starting to reclaim some of the power they delegated to localities
0:23:07 because states are recognizing the real economic harms of not building enough housing.
0:23:11 If you look at places like California and Massachusetts and New York, the state level
0:23:17 economy can’t grow. They can’t attract and retain enough workers because there isn’t housing
0:23:21 that’s affordable at different kinds of income levels. And so state governments are starting
0:23:26 to put guardrails around what localities can do, setting quantitative targets for how many homes
0:23:31 they have to allow, or telling them you’re not allowed to ban, for instance, apartment buildings
0:23:36 near transit stations. So I think this is a really promising trend because state governments do have
0:23:42 this bigger picture economic impact. And they have the power if they want to use it to push back
0:23:47 against all of the local NIMBYs. I think I’ve heard people reference the mayors in Austin and
0:23:54 Minneapolis are trying to be innovative around expanding the housing stock, the stock of housing.
0:23:58 A, do you know anything specifically about those, or can you point to other examples of
0:24:01 where local officials have shown leadership around this issue?
0:24:07 Yeah, those are both good examples. Minneapolis was the first city to legalize duplexes and
0:24:12 triplexes in all of its residential neighborhoods, which is kind of a modest step. It’s a little
0:24:18 bit more symbolic. But they also did a lot of upzoning around their new light rail system.
0:24:23 So it’s very easy and straightforward to build apartments near the transit stations in Minneapolis.
0:24:27 And they’ve in fact built a lot of apartments nearby. And that’s been very helpful to providing
0:24:33 more supply. Austin is just a growth friendly city. I was there in February of this year,
0:24:38 and there are cranes everywhere. They are building, building, building. Austin has really embraced the
0:24:44 sort of change from being kind of a smallish city, college town, to being a big city in its own right.
0:24:49 And a lot of what this is telling us is if elected officials want more housing to get built,
0:24:53 they’ll figure out ways to make it happen. If elected officials don’t want to build housing,
0:24:57 they’ll figure out ways to stop it. I noticed the same thing when I was in Austin,
0:25:03 that they have this sort of growth mindset. What about the idea? Could the CHIPS Act be a role
0:25:07 or be a model? And that, as they just said, we’re going to provide subsidies to inspire
0:25:13 more domestic manufacturing of key semiconductor technology. What about just straight subsidies
0:25:19 that say to a developer, if you figure out a way to navigate these local zoning laws and build more
0:25:26 than 8, 10, 12 units, we’ll give you 3, 5, 10% tax credit? I mean, the problem isn’t that developers
0:25:31 don’t want to build. It’s that they can’t, and that developers don’t control the development
0:25:38 process. So, you know, there’s always a worry about subsidizing either demand or giving subsidy to
0:25:45 providers to developers without relaxing the rules may just wind up driving up prices even more.
0:25:51 Let’s zoom out. Give us your impression as some of the housing trends by market, because people
0:25:58 will say, you know, it’s difficult to, I think, make statements about housing across the U.S.
0:26:01 because housing in St. Louis, I would imagine, is an entirely different situation than it is in
0:26:08 Phoenix or San Francisco. If you were as a housing analyst, what markets do you think reflect the
0:26:13 most strengths right now, the most weakness, what types of real estate or asset classes are you
0:26:18 keeping your eye on? Give us sort of breakdown, if you will. Give us a lay of the land, but be
0:26:25 more segmented by region and property type. So, in the last five years or so, really since the
0:26:31 start of the pandemic, we’ve seen affordability go from being mostly a regional problem in the
0:26:36 high-cost coastal markets to being almost a national problem. And it’s not as acute everywhere,
0:26:42 but, you know, California, Seattle, Boston, New York for something like 40 years have been
0:26:46 underbuilding and have been very expensive, and that’s just sort of baked into expectations.
0:26:53 Places like Austin, Denver, Nashville, a lot of the Sunbelt metros have historically been really
0:26:57 affordable. They build a lot of housing when there is more demand and prices haven’t gone up.
0:27:03 That sort of broke in the pandemic, and it’s unclear whether that’s a short-term problem.
0:27:08 Lots of people moving away from California to places like Phoenix because they could buy
0:27:13 cheaper homes. Maybe this is going to correct itself. The worry is that some of those places
0:27:17 are going to become more like California. You know, if Austin and Phoenix start making it
0:27:21 harder to build, and in the long run they stay expensive, that’s going to be a real problem
0:27:26 for a lot of people. It is certainly still true that a lot of the traditional sort of rust belt
0:27:32 metros, St. Louis, Cleveland, Pittsburgh, I mean, housing is still objectively a lot cheaper there
0:27:38 than it is in most of the country, but those places are also seeing tightening. So we’re seeing,
0:27:43 you know, Pittsburgh is redoing their comprehensive plan now. They’ve seen vacancy rates drop in a
0:27:47 way that they’re not used to seeing and are trying to figure out how do we get out in front of this.
0:27:53 So we’ve seen this sort of geographic convergence, in a sense, on spillover, looking at sort of
0:28:00 different kinds of home types. The single-family home building completely collapsed in the Great
0:28:04 Recession. People couldn’t get qualified for mortgages, developers couldn’t get money to build,
0:28:10 and so if you map single-family permits and multi-family permits, they both dropped off a cliff
0:28:15 in the Great Recession. Multi-family has picked up a lot, and single-family has just not gotten back
0:28:20 to the levels that it was. Some of this is that, you know, you need more land to build single-family.
0:28:25 There’s a lot of demand for living in the urban core where there are amenities, and there you’re
0:28:30 going to be building more multi-family, but some of it also seems to be that it’s just harder for
0:28:35 people to qualify for mortgages than it used to be, and so there’s less building of single-family
0:28:37 that’s designed for especially entry-level home ownership.
0:28:43 Do you think that young people not being able to pursue “the American Dream”
0:28:50 is leading to our polarization and dissatisfaction with life in America?
0:28:56 It definitely doesn’t help. When I talk to people under the age of 40, they are really
0:29:01 pessimistic about their ability to buy a house in a neighborhood that’s close to jobs and amenities,
0:29:06 and people are just sort of resigned. I’m going to be a renter forever,
0:29:10 which isn’t necessarily terrible, right? If there’s good quality rental housing in neighborhoods
0:29:16 that you like, being a renter allows you to be more flexible, to move someplace for another job,
0:29:21 but we’re so conditioned to believe that sort of part of becoming an adult is buying a house and
0:29:25 having part of the American Dream and building wealth, and so people who feel like that’s not
0:29:29 going to be a possibility are really embittered and not feeling like the system is working for them.
0:29:36 Do you think we need to break out of this kind of zeitgeist that you’ve failed as an adult or
0:29:42 you’re not that successful unless you own? My podcast co-host on my other pod, Raging Moderates,
0:29:46 is successful. She and her husband make really good money. They live in New York,
0:29:50 and they’ve made the conscious decision to leave their money in the market as opposed to put it
0:29:55 buying a very expensive place in Tribeca or wherever, because they’ve said the yield,
0:30:00 it’s just not economic. It’s a better deal to rent than to buy. Do you think we just need
0:30:08 a change in mentality or mindset? I think we should be a lot more honest about the financial
0:30:14 risks and downsides of owning. There’s a long tradition among our elected officials from both
0:30:19 parties of pushing this idea that home ownership is the American Dream, and we should get people
0:30:25 into home ownership as quickly as possible and renting a second-class status. I will say that
0:30:31 for a lot of people, the biggest benefit of home ownership is not that you’re going to build a ton
0:30:35 of wealth through the equity, but that you have stability and predictability of your housing
0:30:40 payments for a fairly long period of time. If you rent every year when your lease rolls over,
0:30:46 the landlord can raise the rent. If you own, the principal and interest on the mortgage are fixed
0:30:52 over generally 30 years. One of the things that’s coming up though with climate change is that
0:30:58 property insurance and property taxes are going up faster because local governments have to pay
0:31:02 for a lot of these repairs, and insurance companies are raising rates pretty quickly.
0:31:07 That makes home ownership a little bit less attractive as just a stability of your housing
0:31:13 payment system. It’s really important that before people buy a home that they look at where else
0:31:17 they could be investing their money, in a lot of markets, particularly these sort of Midwestern
0:31:22 cities, the stock market would have performed better than putting your money in real estate and
0:31:28 having it all in a down payment. It’s inherently risky to invest all of your savings in one piece
0:31:34 of property in one location in the same regional job market where you work. There’s a lot of risk
0:31:39 involved, and we haven’t really been that upfront with people about it. Generally speaking, looking
0:31:46 at the yields or the ratio of rent to ownership, is it generally speaking better to rent now
0:31:50 across the nation or have rents kept pace with the same escalation at home prices?
0:31:57 That really varies across markets. Places like Austin that have built a ton of housing,
0:32:01 rent inflation topped out during the pandemic and has slowed, and some of them are actually
0:32:06 seeing softening of rents. You might be able to get, say, one or two months free rent when you
0:32:11 sign a new lease, but in places like California and New York that have not built enough housing,
0:32:15 rents continue to go up much faster than income. It’s still the case that
0:32:19 home ownership is a better deal financially in some markets than others.
0:32:25 What about in these climate affected areas where people can’t get insurance? How is that
0:32:32 impacting the housing market? We’re just starting to see that now. Florida is certainly ground zero
0:32:39 for this. Insurance premiums are going up on owner-occupied properties and going up on rental
0:32:43 properties. Landlords are having to pay higher rates as well. In some places, people are going
0:32:47 to have a hard time getting insurance at all, or the insurance is not going to cover the full
0:32:53 replacement cost if there’s damage. We are seeing some people who just choose not to have
0:32:57 insurance. If you don’t have a mortgage, nobody forces you to buy property insurance and you may
0:33:03 just go without. We see, unfortunately, a lot of that among some of the older mobile home parks
0:33:08 because people don’t have a mortgage, they don’t have to have insurance, but then they have nothing
0:33:14 when a disaster strikes. We may also see some wealthy people who just choose to fully self-ensure.
0:33:19 If you have a lot of money saved up and you really want to live close to the ocean, you might be
0:33:22 willing to live there and just accept that you’re going to have to rebuild your house from time to
0:33:32 time and pay for it out of pocket. We’ll be right back. Support for Prop G comes from Quince.
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0:36:53 holiday shop ever, also available at skims.com. So back in 2022, you spoke with Ezra Klein about
0:36:58 how progressive states struggle more with homelessness. Why do you think that is? And why
0:37:04 haven’t things changed? I mean, you just hear so much about the home. I see it when I’m in Seattle,
0:37:11 when I’m on these west coasts, “progressive cities,” you just see such an extraordinary
0:37:17 homeless problem. Why is that? Many of the progressive cities and states are the ones that
0:37:22 have made it the most difficult to build housing. Fundamentally, the number of homeless people is
0:37:27 a function of the number of people who can’t afford the rent or the mortgage. So expensive places have
0:37:33 higher rates of homelessness. People are falling into homelessness much faster because they’re
0:37:38 housing unstable and they’re spending a lot of money on income. There’s this weird relationship
0:37:44 with why progressive places have made it the hardest to build. Some of this goes back to
0:37:50 some of the big social trends in the 1960s and ’70s. Giving communities a voice in what gets
0:37:56 built and in what gets torn down very much comes out of a reaction to urban renewal. The federal
0:38:01 government tore down a bunch of black and brown neighborhoods and cities to run highways into
0:38:05 the downtown areas and they didn’t talk to the communities that were displaced. The federal
0:38:10 government just came in and took your house and tore it down and ran in a highway. So the sort of
0:38:15 community empowerment comes out of a reaction to that. In California, California was the first
0:38:23 state to pass a statewide environmental protection law, CEQA, which initially was supposed to protect
0:38:29 environmentally vulnerable places, but now has really become weaponized so that people can sue
0:38:34 to stop a bike lane or infill development or affordable housing on the grounds that it’s
0:38:39 going to create more traffic or that it’s going to disturb their view. So a lot of the sort of
0:38:44 good impulses in the progressive movement have now been weaponized by some of the most affluent
0:38:49 and well-organized communities to stop poor people and to block projects often that have big
0:38:55 environmental benefits. There’s been a lot of controversy about institutional buyers coming
0:39:01 in buying up apartments or housing. And one, do you see it as a bad thing or is it just additional
0:39:08 source of capital that should inspire more supply? So I don’t think we should worry about the sort of
0:39:13 legal entities that are buying housing as much as we worry about the ways that housing is being
0:39:19 provided. There are sort of a couple of reasonable pushbacks against private equity in particular
0:39:23 buying up homes. One is that in some cases they’ve not been great landlords. They provide
0:39:27 poor quality housing. They don’t fix maintenance issues. They’re not responsive to their tenants.
0:39:33 And tenants have a right to good quality housing and good treatment. But that’s true whether your
0:39:38 landlord is a private equity firm or a mom and pops landlord or for that matter a public housing
0:39:42 agency or a nonprofit. And we should enforce these rules across all kinds of landlords.
0:39:47 There’s also been concern that private equity has a lot of cash. And when they go in and they’re
0:39:53 buying up properties for cash, they can outcompete first-time home buyers who need to get a mortgage.
0:39:57 Again, understand that that’s definitely a pain point. But then we should also worry about things
0:40:03 like boomers who are retiring and selling their primary home and using cash to buy a second home.
0:40:07 If it’s cash buyers, then again, this applies across all different kinds of entities.
0:40:12 So my sense is we’re scapegoating private equity because it’s a convenient villain.
0:40:17 But even if you banned all of private equity from buying up housing, that wouldn’t alleviate the
0:40:23 housing shortage and that wouldn’t reduce rents and prices by very much. And I think people forget,
0:40:28 didn’t a lot of the institutional buyers get basically their face ripped off and had to sell
0:40:33 these things at a loss creating more cheap supply? Doesn’t it swing both ways when you have institutional
0:40:38 buyers? It does. Some of them are good at buying at the bottom and selling at the top and others
0:40:43 mistime the market just like any other investor. In the wake of the Great Recession, there were a
0:40:48 number of markets that had really high vacancies and a lot of foreclosures. And remember that nobody
0:40:52 could get a mortgage. And so you had to have cash to be able to buy. A bunch of the big institutional
0:40:57 investors went into neighborhoods that had foreclosed and boarded up homes, bought them,
0:41:02 and at least rehabbed them enough to be habitable, got renters in. So they stabilized some of the
0:41:08 neighborhoods that were hardest hit. You may argue, we’d like them to sell to homeowners once the
0:41:12 mortgage market’s loosened up, but they did perform a really important service because they
0:41:16 have access to capital when other people don’t. What do you think of these sort of cities and
0:41:21 startups? And my understanding is there’s certain big swaths of land in California and other states
0:41:26 that have been incorporated by investors. And my understanding is one of the motivations or the
0:41:31 opportunities they see is a lack of zoning and the ability to just kind of build, baby, build.
0:41:37 What do you think of these sort of startup cities? So there’s a big one outside of the Bay Area that’s
0:41:44 gotten a lot of political pushback. My sense as part of the problem there is that there was
0:41:50 intentional secrecy on the front end. So they were buying up a lot of land and trying to
0:41:56 develop plans for this without revealing who was behind it. And that comes across as
0:42:02 secretive and undemocratic. And so people are kind of nervous about this. We do have older
0:42:08 examples of planned cities, so Celebration in Florida, Columbia, Maryland, Reston, Town Center
0:42:14 in Virginia, where there was a big master plan city. Many of those are lovely places to build,
0:42:20 and people want to be in a place that has housing and restaurants and public space and parks.
0:42:26 And there’s some efficiencies to doing these in kind of large scale. We see that also within
0:42:30 neighborhoods within cities. In Washington, D.C., where I live, a number of the big new
0:42:35 neighborhoods around Union Market and the Navy Yards Ballpark, those were done as big master
0:42:40 plan communities. So those can be really nice places, and you have some economies of scale in
0:42:46 the infrastructure provided. I think the sort of concern of our private companies doing this going
0:42:52 to be accountable to voters is worth a conversation. I’m also a little skeptical that you can build
0:42:57 a city and fill it with tenants who won’t at some point then want to take control over the
0:43:03 democratic process. So maybe you build Forever, California, 10 years down the line, the people
0:43:06 who’ve moved in there decide they actually don’t want to continue building housing and they turn
0:43:10 into nimbies. That strikes me as a very plausible outcome down the line.
0:43:16 When I look at the impacts in the economy coming out of COVID, it feels like the real
0:43:22 structural enduring change is remote work, more so in the U.S. than in Europe and other parts of
0:43:26 the world where you see vacancy rates are back to kind of the normal levels in commercial real
0:43:31 estate. But in the U.S., it seems that a lot of people have gotten very used to remote work.
0:43:38 Is there perhaps just an entire structural shift that will step change up the value of
0:43:42 housing because people are just spending a lot more of their waking hours in their home?
0:43:49 Yes, and we have probably seen some of that already. So there’s some good research that shows
0:43:57 that about 20% of the increase in prices nationally is due to remote work by high-income
0:44:01 workers. So it’s not just that people are working from home, but it’s the most affluent workers
0:44:06 who want more space to have a home office or just more space to spread out, and they’re really
0:44:13 driving that. So in metro areas with higher rates of work from home, we see bigger spikes in housing
0:44:19 prices. I will say that they’re sort of a flip side, which is the opportunity from reimagining a
0:44:25 lot of the office-heavy downtowns. It’s not quick and easy to convert an office building
0:44:29 into residential, but this does open up more buildings. And in some of the city centers that
0:44:34 have a lot of amenities, it’s probably going to take five to 10 years before we see substantial
0:44:38 numbers of homes, and they’re not going to be cheap. But that does mean that we’ve got some
0:44:45 places we can reimagine. And I realize this isn’t your domain, but I can’t resist asking
0:44:52 any thoughts. About a year ago, there was all of this speculation that some of the second tier
0:44:55 regional banks were going to go out of business because they had all this commercial real estate
0:44:59 on their balance sheet. And it doesn’t feel as if we’ve seen them melt down. We’ve seen
0:45:05 vacancy rates be stubbornly high in commercial real estate, but we haven’t seen this sort of meltdown
0:45:09 similar to the subprime crisis in 2008 that was being predicted in the commercial real estate
0:45:13 market. Any thoughts on the state of commercial real estate right now?
0:45:19 That’s going to look different across markets too. Even for things like office vacancy and retail
0:45:25 vacancy, some cities have held up better than others. So places like San Francisco and New York
0:45:30 still have some of the highest office vacancy rates, but that’s fundamentally very expensive land,
0:45:34 and somebody is going to figure out something to do with that land and those buildings to make
0:45:42 money off of it. Many of the smaller markets, the Sun Belt never had as much work from home,
0:45:49 and those office markets have held up much better. Regional banks tend to loan both for acquisition
0:45:56 and for development and the loans on commercial properties in their home region. So maybe the
0:46:00 regional banks that are lending on San Francisco real estate are going to take more of a hit,
0:46:07 but again, those are pretty diversified in big economies. And so without speculating too much,
0:46:11 it’s not clear that we’re going to see a giant wave of bank failures primarily because of
0:46:17 commercial real estate. So just a couple of theses, and I want you to respond to them. One,
0:46:24 it feels as if, so life happens, death, disease, divorce, that all of these homes are these kind
0:46:29 of unexploded devices called a mortgage at 2.5% where they can’t leave. At some point,
0:46:35 as those mortgages start to come due or they need to turn them or refinance them, at some point,
0:46:39 when you just got to move back to be closer to your aging parents or you need a bigger house,
0:46:46 there’s my understanding is the housing, we’ve never seen where kind of a historic trough in
0:46:52 terms of housing sales right now. Do you see pent up demand and what might be like a kind of a
0:46:57 housing liquidity or sales boom in the next one to three years? It just feels at some point,
0:47:02 the dam has to break or is this just a structural shift where people are going to stay in their
0:47:09 homes for much longer? People will move eventually. People do decide they’re just going to take the
0:47:13 hit and they will move to something that’s going to have a higher interest rate if they really
0:47:17 need to. I think that’s right. When people have life circumstances, they will change.
0:47:23 Interest rates will come down in the next couple of years. We don’t know how quickly and how far,
0:47:27 but that loosening up is probably going to open the spicket a little bit and people will get more
0:47:33 flexible. The other option is that people do what they did in the greater session. You have to move
0:47:38 for a job related change or a family change, but rather than sell your old house, you rent it out,
0:47:44 so part of the uptick in single family rentals is actually just normal people who are renting
0:47:49 out their other home that they used to live in. I’m curious to get your take on a specific type
0:47:55 of property. My thesis is that the fastest growing demographic isn’t seniors or Latinos,
0:48:00 it’s billionaires or very, very rich people. I think income inequality is only going to get worse
0:48:06 and you’re going to continue to see the quote unquote really aspirational high end places,
0:48:13 whether it’s certain parts of LA, certain parts of New York, although as someone who’s owned in
0:48:18 New York, the middle-state market has been kind of flat for the last decade, but the 1% communities
0:48:22 are going to outpace everywhere else just because of income inequality. Your thoughts?
0:48:29 We’re seeing that in markets that really cater to high-end homes. One of the other trends that
0:48:34 came out of the pandemic was a real spike in demand for housing in places like Aspen,
0:48:39 in upstate New York, in a lot of the rural resort communities. Those are some of the hardest places
0:48:44 to grapple with this because you have very wealthy people buying vacation homes and second homes with
0:48:50 essentially no price cap. You also need to have a bunch of not very well-paid workers who serve in
0:48:55 hospitality and retail and food service who can’t live anywhere close to there. I think those are
0:49:01 sort of one of the early examples that we’re going to see this inequality. You may get to some
0:49:08 broader realization that we have to have workforce housing for regional economies to work,
0:49:13 including in some of these resort areas and in major cities. The regional economy just doesn’t
0:49:19 function well. If you don’t have enough housing, middle income, and for lower-wage workers,
0:49:23 we may get to a breaking point in sort of political realization, but I don’t think we’re quite there yet.
0:49:28 Dr. Jenny Schütz is a nationally renowned economist, author, and policy expert on housing
0:49:33 in Lanias. She recently joined Arnold Ventures as vice president of infrastructure for housing.
0:49:38 She joins us from her office in Washington, D.C. I love how just sort of sober you are about this.
0:49:43 Really enjoyed the conversation. It’s such an important topic and we need more thoughtful
0:49:54 voices weighing in. Appreciate your time. Thank you.
0:50:01 I was a bit of happiness. This has been a rough week for me. I didn’t realize how much the election
0:50:07 was going to fuck with me. I was very invested. Was I invested in Vice President Harris? Not really,
0:50:13 but I have never supported a candidate initially that ended up getting the nomination. I supported
0:50:20 Michael Dukakis in 1992. Ask your parents. Most recently, in the 2020 election or 2020,
0:50:26 I supported Michael Bennett. So I don’t have a great track record of picking candidates and Vice
0:50:31 President Harris wouldn’t have been my pick. I’m not here to talk about why she lost or how he won.
0:50:36 I’m here to talk about what I do and I feel myself going into a bit of a tailspin. I’ve
0:50:42 talked about this before. My acronym is SCAFA. Now, how do I identify? I start getting quiet.
0:50:48 I start getting angry. I start being curt. I start getting very upset at myself and I feel
0:50:57 I recognize, okay, I’m going into a tailspin. I implement this acronym called SCAFA to try
0:51:03 and snap out of it. SCAFA. S for sweat. I find working out and sweating kind of resets your
0:51:09 system, if you will. C for clean. I try to eat at home. When you eat out, it’s buttery. It’s salty.
0:51:13 It’s sugary. It’s just not good for you. A, abstinence. Not the abstinence. Most people think
0:51:18 but abstinence from alcohol and THC. I like alcohol. I like THC. I’m good at both of those things.
0:51:23 They’ve enhanced my life, but when I’m not doing well, I try to just give my sensors a bit of a
0:51:30 break. F is for family. I try and be around my family, specifically my boys. Not because they’re
0:51:35 so wonderful, but mostly because they’re oftentimes very awful and being around my kids forces me to
0:51:41 be out of my head thinking about how bad I feel because they command or demand, I should say,
0:51:45 my total attention. And also on occasion, they are pretty wonderful. And then A is for affection.
0:51:49 I get a lot of affection. It sounds weird for my dogs. My dogs are always up for
0:51:55 laying on me and playing with me and letting me pet them. And I think my kids sense when I’m not
0:51:59 feeling well. And I’ll say, I’m not doing great. Can we watch TV or something? And they’ll sit out
0:52:05 and just sort of instinctively flop their legs over mine. And it just feels very nice. And most
0:52:11 recently, this time, something that gave me real moments of peace, real moments of peace, was music.
0:52:16 And I’m going to play some of that music now. We had these two, I found, I stumbled upon these two
0:52:24 wonderful songs. The first is the cover or a cover for the English Beat Save It For Later from their
0:52:29 Special Beat Service album. Was it called Special Beat Service? Anyways, great album. Reminds me
0:52:34 of my friend Lee. We used to go to Vegas and his red jet. I get $40 of the ATM and head to Vegas.
0:52:39 And we’d listen to that album the whole way out. And Eddie Vedder at Pearl Jam does a wonderful
0:53:02 job covering it. And then this other one I found on threads, and we’ll play it for a few seconds
0:53:09 as well, is a cover of America’s Ventura Highway by this band called Penelope Road.
0:53:12 And they look like three high school boys. And it’s just so lovely.
0:53:41 Anyway, so I hope that you are doing well this week. I am doing better. I’m getting out of the
0:53:46 house. I’m getting more sunshine. I’m socializing, which helps. And I can feel myself back on an
0:53:53 upward spiral. But if you are struggling with this or anything else, find a recognize it,
0:53:59 admit it, and find your own acronym and spin your way out. But in the meantime, enjoy these two
0:54:05 wonderful covers. This episode was produced by Jennifer Sanchez and Caroline Shagrin.
0:54:08 Drew Burroughs is our technical director. Thank you for listening to the Prop G Pod from the Vox
0:54:13 Media Podcast Network. We will catch you on Saturday for Nomersino-Mellis, as read by George
0:54:18 Hahn. And please follow our Prop G Markets pod wherever you get your pods for new episodes every
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