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0:02:06 Welcome to Raging Moderates.
0:02:07 I’m Scott Galloway.
0:02:08 And I’m Jess Katarlov.
0:02:08 Jess.
0:02:10 So this is going to be like every other show.
0:02:11 You’re going to have to carry it.
0:02:14 I got home at about 2 a.m. last night from Mexico.
0:02:15 Very jet lagged.
0:02:16 Was up till 4.
0:02:17 Took his annex.
0:02:19 And I woke up about 10 minutes ago.
0:02:19 Cool.
0:02:25 And I’m feeling a little, I don’t know, I feel like a Democratic member of the Senate.
0:02:26 I don’t know where I am.
0:02:27 I just want soup.
0:02:30 And I’m looking for people to do my work for me.
0:02:35 And I have just absolutely no understanding of my surroundings or the current situation.
0:02:37 So back to you, Jess.
0:02:37 What’s going on?
0:02:38 Okay.
0:02:42 Well, do you want to do a whole show about what it was like with little kids this weekend?
0:02:46 Since you don’t have the strength to fight me on this.
0:02:55 And I can tell you about having my first fight with my husband about parenting in front of other couples with kids the same age.
0:02:56 Which, did you guys ever do this?
0:02:57 It’s very uncomfortable.
0:02:59 And they probably think we’re getting divorced.
0:03:02 So uncomfortable fights are just part of it.
0:03:02 Yeah.
0:03:03 Just lean in.
0:03:03 Yeah.
0:03:05 Just lean in.
0:03:07 And what was the, let me help.
0:03:10 So I, I’m very good at running other people’s lives.
0:03:11 Give me the situation.
0:03:13 I’ll tell you who is right, who is wrong, and what you need to do.
0:03:13 Okay.
0:03:15 We’re in a public place.
0:03:17 It is quiet.
0:03:19 But people are eating.
0:03:28 So we’re in, like, the cafeteria part of a Whole Foods, having lunch with three three-year-olds and the respective parents.
0:03:30 The kids start being really loud.
0:03:33 Disrupting other people, for sure.
0:03:36 There are other kids there, but they’re not making noise.
0:03:37 They’re younger than ours are.
0:03:39 So they’re, like, in strollers, just kind of chilling.
0:03:40 But people are working.
0:03:43 People are having low conversations.
0:03:46 Anyway, they start doing Ring Around the Rosie real loud.
0:03:48 My husband has a very low threshold for this.
0:03:53 He also reflexively hands over his phone for screen time.
0:03:56 I feel like he pushes screen time on my child.
0:04:01 But we’re also with two other families that don’t do screen time at all.
0:04:06 So he starts offering up his phone to my daughter.
0:04:13 I’m pushing back saying, you can’t do that because these other kids, you can’t even give one kid a snack that the other kids can’t have.
0:04:17 Anyway, it got bad, you know.
0:04:20 And the dads were intervening, saying, you know, you can’t do this.
0:04:23 We distracted them with food a little bit.
0:04:25 But there was big back and forth.
0:04:28 And he said, this is the hill that I am willing to die on.
0:04:33 You can’t disrupt other people’s lives because of your children.
0:04:36 So who’s right, who’s wrong, who’s moving out, who gets to keep the house?
0:04:37 Sure.
0:04:37 No, I understand.
0:04:38 I understand.
0:04:46 No, the real fissure here is between you and horrible couples who are those couples who decide they’re not giving their kids screen time.
0:04:47 Those are awful people.
0:04:48 No, they’re not.
0:04:49 Those are.
0:04:50 They’re lovely.
0:04:52 And their kids aren’t addicted to screens.
0:04:55 They don’t, you know, yell out for Moana in their sleep.
0:05:00 Yeah, those are, you know, those are the people that, oh, it’s parenting and they shouldn’t have screen time.
0:05:01 Those are awful people.
0:05:02 You need better friends, too.
0:05:06 The real key here is you need to start hitting your children.
0:05:15 That immediately resets the operating system and brings a moment of shock, but a moment of peace to everything.
0:05:20 And I’m in favor of giving them screen time.
0:05:22 So first off, I totally empathize.
0:05:31 I go absolutely crazy when our kids, when our kids, my kids or other kids are loud and distracting.
0:05:35 If they’re really loud and distracting, I think you take them outside and separate them from the rest of the crew.
0:05:37 I have no patience for that.
0:05:42 Also, it’s a very difficult situation.
0:05:49 I’m actually, I’m now being serious because the reality is I get accused of this a lot.
0:05:55 And that is I decide I understand parenting when it’s bothering me, but I’m not interested in participating in parenting when everything’s fine.
0:05:59 And so it’s a little bit like selective parenting.
0:06:08 But I think it’s, I think you’re going to, the good news is this is only going to happen to you about every two weeks for the rest of your marriage until the kids are out of the house.
0:06:15 So I think, and also I think your husband needs to realize as it relates to parenting, he’s an influencer, not a decision maker.
0:06:25 I have generally found, which is a bit of an abdication and I want to acknowledge that, but I’ve generally found that mom has just much better instincts around how to handle this stuff than dad.
0:06:26 I’m a sexist that way.
0:06:34 I’ll provide input around parenting decisions and then mom gets to make the decision because I find she’s just more, much more in tune with the kids.
0:06:46 But yeah, the, the way the kids behave in public is absolutely a point of tension for me because I think what he’s doing is just, I think he’s reflecting on his own shortcomings as a parent.
0:06:47 Thank you.
0:06:52 He feels as a man, he’s a disciplinarian and when the kids are out of control, it’s a poor reflection on him.
0:06:54 He also grew up hypersensitive to this apparently.
0:06:56 So I, and I get it.
0:07:03 My dad used to just pick us up and take us out of restaurants and say like, Judy, my mom, you know, get the check.
0:07:04 We’ll be outside.
0:07:05 And that’s the end of it.
0:07:07 Which I would have understand.
0:07:09 I mean, this wasn’t, you know, like a high-end restaurant.
0:07:14 We were in the public space at Whole Foods, but I take the point.
0:07:23 Anyway, we ended up in a good place and I appreciate your sexism when it’s going in a feminist direction that you should try to always hang in that direction.
0:07:25 But anyway, that was basically my weekend.
0:07:29 So just recognize that kids ruin everything.
0:07:32 Kids are the best thing that could happen to you that will ruin your life.
0:07:35 And it does put a huge strain, I have found.
0:07:43 There’s actually, just to be serious for a moment, all the studies on happiness show that your least happy years are the years you’re in.
0:07:45 25 to 45 specifically around child-earing.
0:07:51 You’ll look back on the period where you have young children at home and reflect on that as the happiest time of your life.
0:07:58 But what’s interesting is in the moment, people without children are actually happier on average than people with children because of instances like this.
0:08:03 But as they get older, it gets, I do find it gets easier and easier.
0:08:06 Yours are 11 and 9.
0:08:07 Three and not even one.
0:08:08 Have we met?
0:08:09 I knew that.
0:08:09 Oh, you did?
0:08:13 Okay, that’s a Mexico hangover joke.
0:08:13 Okay.
0:08:13 Yeah.
0:08:17 No, it gets, it gets, it gets, it gets much better.
0:08:18 I know.
0:08:21 There’s a very, I don’t know if it counts as a meme.
0:08:23 I don’t know what the definition of a meme is.
0:08:30 But anyway, something that was passed around on social media about how parents spend their days just praying for the kids to go to sleep.
0:08:35 And then we just lay in bed looking at cute pictures of them all night until we fall asleep.
0:08:36 That’s really nice.
0:08:37 Yeah.
0:08:39 It’s very sweet and very accurate.
0:08:40 All right.
0:08:46 Before we dive in, in a quick announcement, Jess and I are taking the show live.
0:08:50 We are literally, we are literally woke royalty right now.
0:08:56 We are the grand, we are literally the, the Duchess of Wokistan now.
0:09:04 We’re partnering with, get this, the 92nd Street Y in New York for a special event on Thursday, April 17th.
0:09:04 That’s right.
0:09:06 Thursday, April 17th.
0:09:08 And you can grab your tickets right now.
0:09:10 The link is in the show notes.
0:09:10 Trust us.
0:09:12 You don’t want to miss this one.
0:09:19 Literally, I’ve been working my ass off for 30 years and I’m an overnight woke success because of you, Jess.
0:09:27 This is literally, like, I feel like Patrick Moynihan is, it could emerge from his crypt.
0:09:29 And who’s the wokest person ever?
0:09:33 Literally, we are, we are woke royalty now.
0:09:35 We’re speaking at the 92nd Y.
0:09:35 Your thoughts?
0:09:38 I would love it if Daniel Patrick Moynihan could come and chill with us.
0:09:39 I heard he’s not doing that well.
0:09:40 Rough patch.
0:09:41 Yeah.
0:09:41 Whatever.
0:09:42 Go ahead.
0:09:42 I’m so excited.
0:10:00 I grew up in the city here and the 92nd Street Y has always held, you know, some of the most interesting and exciting programming and where everyone wants to go to be able, if they have a book coming out or for serious conversations on what’s going on, future of the country.
0:10:04 And was totally floored when they sent the email.
0:10:05 That was true, actually.
0:10:05 I didn’t know.
0:10:12 It was like when a boy that you like texts you and you think, like, how long should I wait to reply?
0:10:15 When we got that email, I was like, is four seconds too long to wait?
0:10:20 With the unequivocal, yes, I will do anything to do this.
0:10:25 It’s a little daunting for me because we did a live show right after we launched with, like, 100 people.
0:10:29 This is many more people than that, but you say it’s going to be fine.
0:10:34 So I’m just leaning in to your experience, but it feels very special and exciting.
0:10:42 And I hope if whoever’s listening, if you guys are in the New York area, that you’ll get tickets and come see us live at the 92nd Street Y.
0:10:44 Yeah, just as a moment of excitement.
0:10:49 Let me just relate that or make it relatable to the 98% of us that weren’t really attractive in high school.
0:10:54 It’s like when you found out you got on the 80th percentile in the SAT and you said, oh, I might get into UC Irvine.
0:10:57 Anyways, but we feel you.
0:11:00 But this is so exciting.
0:11:03 I’m waiting for the fallout of my other co-host, Kara Swisher.
0:11:05 She and I have not been invited to the 92nd Street Y.
0:11:07 But anyways, come see both.
0:11:10 Come see both at the 92nd Street Y.
0:11:13 This is very exciting on April 17th.
0:11:19 Today, in today’s episode of Raging Moderates, we’re discussing the Democrats’ fury over Schumer’s vote.
0:11:20 on the spending bill.
0:11:26 Trump challenging the courts on deportations and the latest on Ukraine-Russia ceasefire talks.
0:11:27 All right, let’s jump into it.
0:11:36 Last week, as the clock ran down to a potential government shutdown, Senate Minority Leader Chuck Schumer found himself in a tough spot trying to balance a divided Democratic Party.
0:11:47 His unexpected decision to support the GOP’s stopgap funding bill sparked major backlash from House Democrats and members of his own caucus who wanted a stronger stand against Trump’s agenda.
0:11:57 The bill itself slashes about $7 billion in overall spending from fiscal 2024 levels, cutting $13 billion from non-defense discretionary programs while boosting defense spending by $6 billion.
0:12:05 With no easy path forward, Schumer’s choice has left Democrats questioning their strategy for the battles ahead in this volatile political climate.
0:12:10 Jess, what led to Schumer’s decision to back the GOP funding bill?
0:12:12 And do you think him folding was a mystery?
0:12:13 What do you think?
0:12:16 I’m very upset, like most Democrats are.
0:12:24 And that’s not because I don’t think that we ended up in the correct place, because the calculation was, what’s scarier?
0:12:38 The government being open and them operating the way that we know, which is very bad, but we have an insight into it, versus the government is shut down, and then they get to make the decisions on absolutely everything.
0:12:40 And it doesn’t become Donald Trump’s government.
0:12:43 It doesn’t become Elon Musk’s government.
0:12:45 It becomes Russ Vogt’s government.
0:12:57 The guy who’s running OMB, the guy, the Project 2025 guy, the guy who is the most dedicated to destroying the federal government, I think, of anyone in this administration.
0:13:00 And he would decide who’s essential and who’s not.
0:13:07 He could close entire bureaucracies, and Democrats were worried about, well, how are we even going to get these open again?
0:13:08 What is the path forward?
0:13:14 So I understand the conundrum, and I think ultimately probably Schumer was right,
0:13:17 right, that the devil you know is better.
0:13:22 But the way he went about this was totally feckless, totally spineless.
0:13:24 He screwed over his caucus.
0:13:32 I mean, just 24 hours before he said that he was voting for the continuing resolution, he said they don’t have the votes.
0:13:47 And then all of these moderates, all of these Democrats that are in swing districts up for reelection, like John Ossoff in Georgia, for instance, came out against the continuing resolution, thinking that this was a unified front like it was in the House.
0:13:53 There was only one Democrat in the House, Jared Golden from Maine, who voted for it.
0:13:56 Hakeem Jeffries had the caucus absolutely in line in this.
0:14:07 And I think it’s ultimately, and we’re almost broken records about this, there’s such a tremendous messaging problem about this continuing resolution.
0:14:15 If you went out and asked people on the street what the continuing resolution is, obviously most people would say, I don’t even know what you’re talking about.
0:14:24 But the people who did know would likely tell you that this was a clean continuing resolution and that it was just an extension of the Biden-Harris spending plan.
0:14:27 That is absolutely not true.
0:14:34 It’s chock full of cuts that we don’t want, things, you know, to veterans, Social Security benefits.
0:14:36 It’s giving them more and more authority.
0:14:40 You know, we know that the executive is after having full control of everything.
0:14:42 They don’t care about oversight.
0:14:45 They don’t care about congressionally appropriated money.
0:14:48 But that’s the going narrative on this.
0:14:52 I’m seeing it on social media from smart people, actually, who usually are paying attention.
0:15:03 They’re like, well, this is a clean CR and we’ll deal with it in September when it’s up, when they’re going to try to jam through their trillions of dollars in tax cuts and take away, you know, nearly $900 billion in Medicaid funding.
0:15:10 But the way that the Democrats played this or Schumer played this, it was like it was a surprise to them.
0:15:17 We have known for months that March 14th was the drop-dead date on this, that that’s when this vote was going to happen.
0:15:22 And it’s like they woke up four days before and were like, oh, holy shit, something’s happening.
0:15:23 The House is on fire.
0:15:32 How did you not spend months recasting the continuing resolution as, you know, something like the DOGE Act, right?
0:15:34 Or, I don’t know, give it some fancy name.
0:15:35 You’re the branding guy.
0:15:37 Maybe you can come up with something better.
0:15:40 But how did you waste that opportunity?
0:15:48 And then how did you not also have your own continuing resolution to put forward to say, okay, let’s work together on this.
0:15:55 Spending the government should be bipartisan, which is one of the lines from one of Schumer’s speeches, maybe when he was wearing the really bad suit.
0:16:11 And you say, all right, if you guys are going to maintain this as a clean CR, let’s show you what an actual clean CR is and force them, force them to accept some amendments that keep the government, you know, reflective of at least how it has been, even though that’s not ideal.
0:16:14 And so we missed on absolutely every opportunity.
0:16:18 The voters are incensed to a crazy level.
0:16:24 The Democratic approval is the lowest it’s been in 30 years of polling, 29 percent or something.
0:16:34 And 65 percent of self-identified Democrats now want our elected officials to stick to their positions, even if this means not getting things done in Washington.
0:16:42 That’s a complete reversal of what we saw coming into this, where people were saying, you know, pick and choose your spots, work with them where it makes sense.
0:16:45 Now they’re saying this is war.
0:16:45 I thought that was great.
0:16:58 So, yeah, the graph that sort of indicates this is the very beginning of the last Trump administration in 17, 74 percent of Democrats wanted Democrats to work with Republicans and get things done.
0:17:00 That number is now 42 percent.
0:17:06 And there’s a difference between being effective and being right.
0:17:08 And right now we look neither.
0:17:21 It just it looks as if we are the gang that can’t shoot straight between these ridiculous, feckless attempts to be angry at the joint address or march down to federal buildings and wave arcane.
0:17:27 It’s clear the the leadership is divided and has no control over the caucus.
0:17:29 They’re responding late.
0:17:44 One of the strategies that the GRU sort of invented and that Trump has adopted is flooding the zone every day through so much shit out that they react to and chase that we can slip through almost everything because they’re not unified.
0:17:48 They don’t know where they don’t know which which arrow to put their wood behind.
0:17:51 And so let’s announce we’re letting the Tate brothers back into Florida.
0:17:53 Everyone goes apeshit.
0:17:56 Let’s blame a helicopter crash on DEI.
0:17:57 Everyone goes apeshit.
0:18:06 And they’re not looking at kind of the bigger issues that America cares about or they could actually have some reasonable, reasonable chance of putting pushing back on.
0:18:10 America, quite frankly, over the last couple of weeks has been the nation of surrender.
0:18:15 Trump surrendering to Putin and the Democrats surrendering to Republicans.
0:18:26 And his argument was that, look, Schumer’s argument was that all we were going to do here was play into Trump and Musk’s hands by closing the government, shutting it down.
0:18:37 Everyone in the government or nearly everyone in the government would be furloughed except where he could invoke some sort of emergency powers to keep air traffic controllers and effectively never end the furlough and essentially shut down the government.
0:18:39 And they didn’t want to let him do that.
0:18:42 We’re at that point where we need to take that risk.
0:18:45 And that is the government is no longer a government of the people.
0:19:01 When you are sending plants, when you are denying court orders, when you have the richest man in the world who has no congressional oversight or approval going upstream of those programs and cutting out funding to things like USAID, which by latest estimates is going to cost three million lives this year.
0:19:04 Then, OK, it’s no longer a government of the people.
0:19:08 You have usurped government and we’re going to we’re not down with that.
0:19:08 We are fine.
0:19:09 Let’s shut down government.
0:19:11 And they also miscalculated.
0:19:16 I listened to Senator Schumer on his follow up on The Daily.
0:19:23 And he said that effectively he thought, OK, this is without it.
0:19:26 The entire government would be shut down and we would be blamed.
0:19:26 No, we wouldn’t.
0:19:35 If if within whatever it is, 45 days of inauguration or what is it, 60 days now, the government is shut down.
0:19:39 People would feel this and I believe they would hold Trump responsible.
0:19:51 OK, he’s inaugurated and the government gets shut down and it’s not reopening and people aren’t getting their diabetes medication and we’re having trouble with with flights and we’re getting people aren’t getting their Social Security payments.
0:19:56 This was essentially the Democrats saying we are so fucking disorganized.
0:19:58 We have such an inability to punch back.
0:20:03 I mean, for God’s sakes, the first thing they should do.
0:20:04 It’s like when I was in Sunday school.
0:20:07 They used to say, what would Jesus do?
0:20:09 That was meant to be a framework for decisions.
0:20:10 What would Jesus do?
0:20:13 And now my attitude is for the Democrats.
0:20:19 I am so fed up with their feckless, stupid rationalization of doing the weakest thing possible.
0:20:21 What would Mitch McConnell do?
0:20:26 And what Mitch McConnell would have done here was said, this is an unacceptable policy.
0:20:29 Unfortunately, Americans and he could show data don’t agree with what’s going on in the government.
0:20:36 We’d like to work with the president, but the Republican Party is so off the rails in terms of of of American priorities.
0:20:41 We refuse to sign this bill and force them to negotiating table.
0:20:43 And also there was there was an in between.
0:20:46 There were several steps along the way, including a filibuster.
0:20:47 We’re probably going to got some.
0:21:00 I mean, this this literally is like our biggest fears about how just incredibly weak and our inability to punch back because we have really weak, unstrategic leaders with absolutely no command.
0:21:07 Of their constituents that all bubbled up and said, yeah, your worst fears are being realized here, that there is no adult supervision.
0:21:11 The kids are running wild at the Whole Foods and there’s nothing we can do.
0:21:17 There’s no there’s absolutely, absolutely no parenting here.
0:21:24 And the outcome here is I’m now convinced that the new junior senator from New York is going to be AOC in 2028.
0:21:26 I think Schumer’s out.
0:21:29 I think he looks so incredibly weak.
0:21:35 I’m just sick of being bested by people who have control of their of their caucus thoughts.
0:21:44 So, yeah, it doesn’t seem like Schumer being minority or let alone a majority leader again is an idea that’s long for this world.
0:21:48 You know, Hakeem Jeffries basically dodged a question about it.
0:21:58 I think Senator Warnock, also from Georgia, made a comment, which was basically like, I’m not backing this guy, especially after he hung all of us out to dry.
0:22:05 There is precedent and you say, what would Mitch McConnell do in this in 2021 under similar circumstances?
0:22:11 Senate Republicans successfully filibustered on a continuing resolution and they got some of what they wanted.
0:22:14 People just want to see the fight, right?
0:22:24 They just want to see that there is a pulse and that that pulse understands the existential threat to the constitutional republic that we are witnessing.
0:22:29 And I hate to be that girl that’s screaming constitutional crisis.
0:22:32 But all of the evidence is just sitting out there in front of us.
0:22:35 And Bill Maher used to always say, it’s a slow moving coup.
0:22:36 It’s a slow moving coup.
0:22:39 This coup is so fast.
0:22:43 Usain Bolt wouldn’t be able to catch it at this point.
0:22:48 Like, when you look at the continuing resolution and it’s a six months, right?
0:22:50 That’s a quote unquote short term funding bill.
0:22:53 Think about what’s happened in just two months.
0:23:00 So then you give them another six months of runway with furloughed employees and bureaus being closed.
0:23:04 And you have to go to the absolute worst possible conclusion.
0:23:09 And it’s not as if the American public isn’t noticing that things are going badly.
0:23:17 So according to the new NBC poll, the only area that Trump is above water on is his handling of immigration.
0:23:19 And we’re going to talk about that in the next block.
0:23:25 But people disapprove of how he’s doing the job generally, the economy, how he’s handling tariffs.
0:23:27 You see people like Scott Bessent.
0:23:29 He’s on with Kristen Welker over the weekend.
0:23:33 She’s asking him about, you know, the market plunging, trade wars.
0:23:35 And he says a correction is healthy.
0:23:39 Well, this is so easy for people who have over half a billion dollars to say.
0:23:45 It made me think back to, do you remember Wilbur Ross, who was the Commerce Secretary in Trump 1.0?
0:23:48 And he, I think his net worth is about $700 million.
0:23:51 And he’s talking about tariffs again.
0:23:53 I guess it’s a theme that tariffs are not good for people.
0:23:56 And he holds up a Campbell’s soup can, right?
0:24:00 And he says, well, people can have soup for a little bit.
0:24:02 And it was, of course, wildly out of touch.
0:24:04 It was Marie Antoinette moment.
0:24:06 And we went about our business and we elected somebody else.
0:24:13 But now it’s like, when you have 13 billionaires in your cabinet, it’s just everywhere.
0:24:18 There is nowhere to look for a person with any semblance of a normal perspective on what’s going on.
0:24:20 And the American public get it.
0:24:29 Like, there was this new stat that it’s the highest level of people who think that business conditions will be worse in a year since 1980.
0:24:33 So they are smashing records on consumer sentiment going down.
0:24:36 This, how will things be for me in the next year?
0:24:40 And it’s kind of astounding that it happened this quickly, right?
0:24:45 There was a lot of economic promise coming into this, or at least the average voter felt that way.
0:24:46 And it’s been a complete reversal.
0:24:54 And Democrats are just sitting there thinking, like, if I post a video from my car and shout out Mark Warner,
0:25:04 I was glad that he started engaging with social media in the 21st century in a way that, you know, people can access it and maybe feel like you’re even slightly relatable.
0:25:08 But, like, car videos aren’t going to save us at this point.
0:25:10 Floor votes are.
0:25:11 Yeah, I agree with all that.
0:25:20 My only thing is the social media being kind of put out there as we’re fighting back feels like they hired someone’s niece to do their social media.
0:25:23 They just look so unnatural and so uncomfortable doing it.
0:25:28 But this was an opportunity for the Democrats to at least fight back.
0:25:32 And Americans will take bad policy over weakness.
0:25:38 I think that one of Biden’s losses was when you talk to him about, when you talk to voters about policies,
0:25:44 people vastly favored Biden’s policies over the stated policies or non-policies of Trump.
0:25:52 But they just, they’ll, they just, weakness and a lack of resolve are just death nails in politics.
0:26:00 And right now, the Democrats look fragmented, weak, and just like we’re clutching our pearls all the time and complaining,
0:26:03 and yet have an inability to even punch back.
0:26:10 And this, we just look weak, we look defeated, and we look like, I don’t know, agents of surrender.
0:26:10 All right.
0:26:13 Jess, we’re going to take a quick break.
0:26:14 Stay with us.
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0:29:35 Welcome back.
0:29:38 The Trump administration is facing sharp criticism
0:29:41 after ignoring a federal judge’s order to halt the deportation
0:29:42 of alleged Venezuelan gang members.
0:29:46 The White House argues the order came too late
0:29:48 as the planes were already over international waters.
0:29:49 It’s weird.
0:29:50 I heard planes can actually turn around.
0:29:54 But legal experts warn this move could mark the start
0:29:56 of a serious constitutional showdown.
0:29:58 Meanwhile, concerns over immigration enforcement
0:30:00 are also growing on college campuses
0:30:03 where a Palestinian activist and Columbia University student leader,
0:30:06 Mahmoud Khalil, now faces deportation.
0:30:10 His arrest has sparked fears the administration is targeting political dissent
0:30:12 under the guise of national security.
0:30:16 Jess, the administration claims it wasn’t actively defying a court order
0:30:19 rather than operating within the legal gray areas.
0:30:22 What are the legal consequences of this move?
0:30:22 I don’t know.
0:30:23 We’re going to find out.
0:30:27 I feel like I have a little bit of interview egg on my face
0:30:29 because I talked to Mark Elias last week.
0:30:33 The interview went up on Friday and it was all about how the courts
0:30:37 are the only viable backstop for what’s going on.
0:30:41 And then you wake up and you’re like, okay, well, that’s gone.
0:30:43 So what do we have?
0:30:46 It feels like we got nothing on this.
0:30:48 And I’m watching Tom Holman.
0:30:49 The borders are.
0:30:51 He’s on Fox and Friends this morning.
0:30:52 We’re recording this Monday morning.
0:30:58 And he’s asked by Lawrence Jones, the host, well, what’s next?
0:31:00 And he says, another flight, another flight every day.
0:31:01 We are not stopping.
0:31:03 I don’t care what the judges think.
0:31:05 I don’t care what the left thinks.
0:31:05 We’re coming.
0:31:09 So they’re laying it all out on the field, right?
0:31:16 Going back to a six-month spending bill, that’s tons of time in Trump years
0:31:19 for them to accomplish whatever it is that they are going after.
0:31:25 And, you know, it’s a difficult place to be in because, like,
0:31:27 I tweeted something about this yesterday.
0:31:30 And I said, well, I guess the courts aren’t stopping him.
0:31:34 And Tommy Lahren, who is, you know, a MAGA firebrand,
0:31:36 and one of my colleagues, we actually get along really well.
0:31:38 She responded and said, you know,
0:31:41 Jess, I love you, girl, but, like, why are you defending these people?
0:31:47 And I’m not defending Trender-Owagwa gang members.
0:31:51 I’m defending the rule of law and the fact that,
0:31:53 according to immigration attorneys,
0:31:57 there are people on those flights who had legitimate asylum claims
0:31:58 and are not in a gang.
0:32:05 Like, they’ve been using tattoos as evidence of someone being part of this gang,
0:32:07 which is a murderous gang.
0:32:10 And I want every single one of those people out of this country.
0:32:13 But they’re saying, like, about this one person’s client,
0:32:15 that they had the gang tattoos.
0:32:19 And she posted on social media that that is not the case,
0:32:21 that this person has decorative tattoos,
0:32:23 part of the LGBTQ plus community,
0:32:25 here with a legitimate asylum claim.
0:32:28 And their hearing was supposed to have started last week,
0:32:30 but this person was disappeared.
0:32:34 And there’s another person whose hearing was supposed to be today, on Monday.
0:32:37 But they ended up on one of these flights heading to El Salvador,
0:32:42 to one of the scariest prisons that apparently exists on the face of the planet.
0:32:52 And I feel so despondent about what to do and worried that we used all of our alarm bells
0:32:56 and all of our words about the constitutional crisis
0:33:01 and the end of the republic too early, right?
0:33:04 That we were—this was 2016, 2017, and it went through 2020.
0:33:10 And then he did actually try to stay past his sell-by date, right?
0:33:12 The voters decided they wanted Joe Biden.
0:33:15 He stages an insurrection, gets away with it.
0:33:18 Now, every prosecutor that worked on that is gone.
0:33:21 He’s going after the lawyers that worked on those cases, etc.
0:33:26 But I don’t know if we should have just been quiet the entire time.
0:33:28 And certainly there were some big swings and misses, right?
0:33:30 We should not have done Russia, Russia, Russia,
0:33:36 even though the Mueller report obviously did show that the Russians were working to get Trump elected.
0:33:38 I am not trying to minimize any of that.
0:33:45 But it feels like people completely tuned out the argument that he is a threat to democracy.
0:33:50 They don’t want to hear about January 6th again, which seems like a clear precursor to what we’re seeing now.
0:33:56 And that we’re like the girl who cried insurrection, and now we have nothing.
0:34:03 Yeah, this is really—if you think about—I mean, it’s sort of deciding, all right, we don’t have a country.
0:34:10 If we’re not going to have laws, an easy way to reduce a lot of crime would be to do away with search and seizure laws.
0:34:17 And that is, if for whatever reason, your local law enforcement or federal law enforcement can just come raid your house,
0:34:22 raid you, incarcerate you, hold you for as long as they want until they’re satisfied,
0:34:27 they’re either right or wrong, you would see a drop in crime.
0:34:31 But we’ve decided that it might be you with that knock at the door,
0:34:35 and that we’re going to pay for a certain level of insecurity around, you know,
0:34:42 overtime crime and those rights, and that rule of law and that democracy attracts so many talented people
0:34:47 and makes people feel so good about America that ultimately resolves in a greater quality of life,
0:34:49 greater prosperity, greater economic growth.
0:34:53 This is essentially saying, okay, we’re now in an autocracy,
0:34:59 and the people in power get to kind of make the laws and basically not listen to the government.
0:35:01 So there are literally no checks and balances.
0:35:05 The Republican Party, who is in control, has said,
0:35:12 I’m willing for an unelected official who was not born here to essentially usurp my power as an elected representative, right?
0:35:14 So that branch of the government is gone.
0:35:21 Then sort of the last man standing or the last defense between us and total autocracy was supposed to be the courts.
0:35:25 And they have said, we don’t give a shit what the courts say.
0:35:25 Yeah.
0:35:29 I mean, when I saw it, the courts have ordered these flights to stop.
0:35:32 Then that means the flights can’t go or can’t turn around.
0:35:36 Well, they said they basically stuck up the middle finger and said, stop us.
0:35:42 So this feels like when you challenge the court, if nothing happens here,
0:35:46 they will have the incentives and the signal that they are now the law,
0:35:50 that the White House, the Trump administration, and the supporters are now the law.
0:35:56 The judges are now similar to Republican representatives who are so scared of being primaried
0:36:00 or a weak and feckless Democratic Party that there’s effectively,
0:36:03 we’ve gone from checks and balances to absolutely none of them.
0:36:06 They’ve all been sort of shut down.
0:36:10 And the one that kind of tested my resolve around this,
0:36:14 or I had some immoral dilemma, if you will, is Mahmoud Khalil’s arrest.
0:36:17 And it did tickle my progressive censors.
0:36:23 I think an individual here on a green card who is inciting violence, in my view,
0:36:26 and shitposting America and making a campus environment less productive,
0:36:31 and kids can’t go to class, and basically tearing at the fabric of America.
0:36:37 And also the legal argument for deporting him is that when you’re here on a green card,
0:36:40 you are not supposed to promote or endorse terrorist activities.
0:36:43 That is a legal argument for deporting him.
0:36:46 And I can see making that legal argument.
0:36:48 The problem is the way they went about it.
0:36:50 And that is he was effectively disappeared.
0:36:56 And that is he was arrested and detained, and his family and his lawyer couldn’t even find out where he was.
0:37:00 And then he had been transferred to a facility, I believe, in Louisiana.
0:37:04 And that’s the thing that’s really upsetting and bothersome.
0:37:09 And as much as I would like to see this individual having had been expelled and maybe losing his,
0:37:12 I imagine he’s, I don’t know if he’s here on a student visa or a green card.
0:37:13 Just green card.
0:37:14 Just green card.
0:37:16 I can see…
0:37:16 Not just green card.
0:37:17 It’s the best.
0:37:18 I shouldn’t say that.
0:37:20 Student visa would be worse.
0:37:22 He has the best you can have.
0:37:23 He has the best you can have.
0:37:24 He has a green card.
0:37:33 The bottom line is this, is that regardless of how shitty the speech may be, if you start rounding up people and deporting them for political speech,
0:37:36 be careful for when that knock comes on the door.
0:37:47 Because eventually it means that if you have political speech that is counter or detrimental or disparaging of an administration that now appears to be ignoring court orders
0:37:57 and is suing and intimidating and saying publicly now that people at CNN and MSNBC should be prosecuted,
0:38:06 I mean, we are, you know, we’re effectively in a full, I don’t know what you want to call it, dictatorship where speech is now chilled.
0:38:17 So as much as I would like to see bad things happen to this individual, because I think he’s created incredible, incredible dissent and that he’s wrong and that he’s inciting violence.
0:38:27 If he hasn’t really broken any laws and this is just political speech and he’s getting disappeared and deported, you know, who’s next?
0:38:32 And what qualifies as political speech that is worthy of deportation?
0:38:34 So there’s a lot here.
0:38:44 It feels as if because we show absolutely no resistance, no coordination, no backbone, and quite frankly, it doesn’t feel,
0:38:50 it feels as if the flooding the zone has the public looking in so many different directions over if and what to respond to,
0:38:58 that this is now, I used to think that the focus should be on Ukraine, our surrender to Russia over Ukraine, the deficits,
0:39:04 but this feels like it really is something that Democrats should be focusing on and messaging.
0:39:11 And that is, have we broken down all of our constitutional checks and balances that, in fact, make us a democracy and a country?
0:39:18 And the last week, I would think the last week, and I’m trying to think if I’m being somewhat, if I’m catastrophizing,
0:39:29 it feels like the actions of the last week, if they go unchecked and the Democrats and the public don’t coordinate, mature, gestate a really thoughtful, strong response to this,
0:39:38 that we have pretty much taken a pretty, pretty strong step away from a democracy to an autocracy.
0:39:41 What are your thoughts about Mahmoud Khalil’s arrest?
0:39:44 I share a lot of your same sentiments.
0:39:50 And, you know, this is someone who is completely abhorrent to me.
0:39:57 And I see this also as a major failing of Columbia University that could have nipped this in the bud last year.
0:40:07 You know, and it is part of the Trump administration’s plan to gut higher education in this country.
0:40:10 So they took $400 million away from Columbia.
0:40:12 They’re doing the same at Harvard.
0:40:23 I saw that they’re taking $800 million in USAID grants from Johns Hopkins, which is the biggest employer for Baltimore writ large.
0:40:28 And there’s no accusation of an anti-Semitism problem at Johns Hopkins.
0:40:33 You know, they just don’t want people to be able to continue with their research grants.
0:40:39 And, you know, they say, oh, we have to maintain that we’re going to be competitive with China and the rest of the world.
0:40:45 Well, why don’t you just take away our innovation, which is happening in all of these labs that have NIH funding.
0:41:01 And it’s as someone who believes in higher education, was part of a quote unquote elite institution for my Ph.D. work, taught there, loves the ivory tower, even though I accept that there are problems with it.
0:41:03 This is gut wrenching.
0:41:14 And I worry about the fact that the people that we’re seen going to the mats for are folks like Mahmoud Khalil.
0:41:18 And I know that the point of the First Amendment is that it’s not about the speech that you like.
0:41:21 It’s about the speech that makes your blood boil.
0:41:24 And that is exactly the kind of speech that this man engaged in.
0:41:39 But I really wish that the administration would go out there and find the law that he violated, the law that’s on the books for that, or even the Columbia University laws that he definitely violated.
0:41:50 Because what went on last year at Hamilton Hall and that Jews were prevented from going to the library, to their classes, to their Chabads, that seems like grounds for him to have been kicked out of school.
0:41:53 So we have to retrace our steps.
0:42:02 And all of this is making Marco Rubio, who gave a pretty impassioned defense of what the administration was doing, seem pretty sane.
0:42:12 Like, this is the hill that you want to die on for this guy who sympathizes with a terrorist organization that is at this moment holding Americans hostage.
0:42:17 This isn’t some group that has no relevance to our lives right now.
0:42:21 There are Americans sitting in tunnels in Gaza.
0:42:27 God knows what has happened to them over the last, what is it, 450 days now at this point.
0:42:30 And we have to be on the side of this guy.
0:42:32 Now, we have, I guess, good company.
0:42:35 Ann Coulter is with us now.
0:42:41 Eli Lake, someone who really hates Mahmoud Khalil, came out and said as well,
0:42:49 like, you need some law that the guy broke in order to take away a green card, which is basically sacrosanct.
0:42:57 On top of the fact that he’s married to an American who’s eight months pregnant, which creates, you know, a lot of sympathy for the situation.
0:43:02 But I was taken, there was, it was just a White House official.
0:43:03 There was no name attached to it.
0:43:11 But there was reporting in the Free Press last week where this official told the Free Press reporter, essentially,
0:43:14 we don’t need to say that any law was broken.
0:43:18 We’re just going for aiding and abetting a terrorist organization.
0:43:20 And the American public gets that.
0:43:28 And I think when push comes to shove and when you look at those immigration numbers, that that’s the only area in which Trump is above water.
0:43:31 I think it’s a 55 percent approval in the new NBC poll.
0:43:33 That I think that they’re going to win this one.
0:43:50 And he is not going to be a sympathetic figure for many people kind of in the moderate middle of this, who are looking for examples of people who they don’t think hold beliefs that run counter to the American project,
0:44:01 who are not siding with violent terrorists that are holding us captive at this particular moment and think that October 7th was a day of love, right, and that there was nothing wrong with this.
0:44:11 And, you know, their anti-Zionism certainly steps over the line into anti-Semitism, which is what was going on in these campuses and continues to go on on a number of them.
0:44:28 With these spineless leaderships who sat in front of Congress and basically said, we’re not going to do anything when we know if this hadn’t been about Jews and it had been about black kids, trans kids, gay kids, they would have been shut down in minutes.
0:44:31 There is no chance that they would have been able to go forward.
0:44:37 And so it’s complicated, of course, and I’m torn about it.
0:44:40 But I’m looking at this as the precursor for what they’re going to continue to do.
0:44:45 You know, they reportedly held a green card holder at Logan Airport.
0:44:46 Did you see this story?
0:44:51 A German who’s been here on a green card since 07, 08, married to an American.
0:44:52 He’s an engineer.
0:44:57 According to his mother, they detained him, put him in an ice-cold shower.
0:45:05 There’s no evidence that this guy is sympathetic to anything that runs counter to the United States.
0:45:07 And no one is safe.
0:45:14 They should really just change this to, we only want natural-born citizens plus Elon Musk.
0:45:19 And if you have a green card, that doesn’t mean anything to us.
0:45:24 And we’re going to completely rewrite the way we do immigration law in this country.
0:45:24 Asylum?
0:45:25 Get over it.
0:45:26 It’s done.
0:45:27 It means nothing.
0:45:29 There are no legitimate asylum claims.
0:45:31 And Tom Homan is the king.
0:45:38 Yeah, I do think that Democrats have a habit of sticking out our chin and having this fist
0:45:40 of autocracy stone come for it.
0:45:48 And to your point, if I had gone down as a faculty member of NYU with a big sign saying,
0:45:53 burn the gays or lynch the blacks, they would have had no need for context.
0:45:56 I would have been, my ID would have been turned off.
0:46:00 I would have been shut out of academia, fired, never allowed back on the campus,
0:46:03 never been able to work in academia again.
0:46:08 But when, you know, free speech has never been freer when it’s hate speech against Jews.
0:46:14 And the Republican administration has now found an opportunity to tap into that rage and that
0:46:19 wrong and go way too far and deny the rights of everyday Americans.
0:46:26 And this is just a huge failing, in my opinion, and has created an opening the size of the Grand
0:46:30 Canyon for the Republicans to come in or for the Trump administration to come in and start
0:46:32 violating everybody’s rights.
0:46:38 And I actually did advise or have been advising the Regents of the University of California
0:46:38 on this issue.
0:46:43 And their general viewpoint is, my advice was, this is super easy.
0:46:44 They were really worried about fall.
0:46:47 What happens when the students return last fall?
0:46:52 And because UCLA, I think probably, I think the most shameful moment I’ve ever felt, and there
0:46:59 hasn’t been a lot of them, for my alma mater, UCLA, was when kids were passing out bans to
0:46:59 non-Jews.
0:47:02 And if you didn’t have a band, you couldn’t access certain parts of the campus.
0:47:08 So they basically decided to prohibit Jews from certain, you know, from campus activities.
0:47:10 And I thought, okay, what’s going to happen here?
0:47:13 And I don’t know what happened, which probably means nothing.
0:47:17 And they said, well, what would you do?
0:47:18 And I said, it’s very easy.
0:47:24 The first protest, first sign of any protest around where there’s hate speech, or there
0:47:28 are people trespassing who aren’t students, or the students are doing anything resembling
0:47:32 what would qualify as hate speech, of which there’s a lot.
0:47:34 If it’s a peaceful protest, of course you do nothing.
0:47:40 But if it’s not, and it turns ugly, or they’re occupying facilities, like what recently happened
0:47:46 to Columbia, you give them 15 minutes to vacate, and then you start expelling students and let
0:47:51 them call their parents and say, oh, that $72,000 tuition, I’m coming home.
0:47:56 And you do that right away, and word gets out really fast.
0:48:00 And there was this bullshit argument that, Scott, these are young people.
0:48:04 We can’t just start expelling them in a wanton kind of reckless fashion.
0:48:11 And my response is the following, at Columbia, they expel 91% of freshmen every year.
0:48:13 It’s called the admissions process.
0:48:19 And the notion that somehow you have a birthright to attend a private university, and that you’re
0:48:24 protected by these, first, you have, you’re at a private organization.
0:48:28 It’s like, no shoes, no shirt, no service.
0:48:33 They have the right to kind of determine the laws, as long as they’re not breaking the law.
0:48:40 And the fact that they have come across as so incredibly anti-Semitic, they have stuck their
0:48:45 chin out, and the result is an overreaction, and the Trump administration taking advantage
0:48:52 of this weak, bigoted thinking to go the other way and have an overreaction.
0:48:59 I do think, to your point, this is a response to an incredible lack of leadership and insanity
0:49:01 on university campuses.
0:49:04 I’m about to do a college tour with my son.
0:49:10 And I’m fascinated by colleges and admission standards and data and enrollment trends.
0:49:17 And it’s interesting, the schools that are booming in terms of applications are these southern
0:49:23 schools that are seen as apolitical or even a little less, or even a little conservative.
0:49:28 Parents are sending their kids, they want their kids to go to college.
0:49:30 They don’t want a political orthodoxy.
0:49:36 They don’t want a school and administration that sees themselves as engineers of social engineers.
0:49:38 It’s really interesting.
0:49:44 Southern schools, or schools that are distinctly seen as somewhat center-left, are booming in terms
0:49:45 of applications.
0:49:51 But Columbia University leadership goes down as such incredibly misguided, weak leadership
0:49:55 that has set up an overreaction that has been justified.
0:50:02 And the cloud cover for the justification of an overreaction has been what have been an incredible
0:50:05 lack of leadership and blatant anti-Semitism.
0:50:10 So this is, you know, this is like a lot of democratic policies.
0:50:17 We start on the right foot, we take it too far, and we set up an overreaction because people are just
0:50:23 rolling their eyes and thinking, okay, making an argument for a six-foot-four swimmer to show up to a
0:50:27 swimmate, to a swimmate who presents as female, and then blow away everything.
0:50:31 Didn’t win a single race as a male swimmer, but is absolutely winning everything.
0:50:36 And then having everyone on the left applaud and say, isn’t that inspiring, you set up an
0:50:40 overreaction where we begin demonizing a special interest group for no real reason.
0:50:42 And the same has happened here.
0:50:47 We take things too far, we stick our chin out, and we set ourselves up for an overreaction
0:50:52 that makes things much worse than if we’d had a less insane, thoughtful reaction.
0:50:53 I’m totally with you.
0:50:59 I’m noticing the higher education trend myself, that parents are saying, oh, we’re going to
0:51:03 look at University of South Carolina, we’re going to look at Clemson.
0:51:05 Or Wake Forest, or SMU.
0:51:05 Wake Forest, yeah.
0:51:09 People love Vanderbilt, UNC Chapel Hill.
0:51:13 Vanderbilt is now as difficult to get into as many Ivy Leagues.
0:51:14 There’s so many applications.
0:51:16 That feels right to me.
0:51:22 Not just on this point, but the way that academia and higher education
0:51:26 has been going, it’s exclusionary.
0:51:30 It’s not providing what it purports to, right?
0:51:32 You know, people think it’s the golden ticket, right?
0:51:36 That you got to the Wonka factory and your life is going to be set.
0:51:37 But guess what?
0:51:43 The only thing that makes your life set is hustle and reading and preparing.
0:51:49 And you’re seeing that more and more in these high positions, everywhere from investment
0:51:55 banks, law firms, down to, of course, like the tech and the startup world, where it’s just
0:51:56 how hard you’re going to work.
0:51:59 How good are your ideas and how intense is your grind?
0:52:05 And by the time my kids are going to college, you know, I went to private school here in New
0:52:10 York City, I went and talked to, who’s now the head of the school, prestigious, progressive
0:52:10 institution.
0:52:16 He was like, it’s not even necessarily going to be a requirement by the time your kids are
0:52:18 going to college that you have to be thinking about this.
0:52:20 Because I said, I have two little Jewish babies.
0:52:22 What am I going to do, right?
0:52:27 I’m not going to send them off to Harvard or Columbia under these conditions.
0:52:32 Even if there aren’t protests in the streets, the academics have shown themselves to not be
0:52:36 interested in treating Jews equally to the other kids that are there.
0:52:38 And he said, Jess, don’t worry.
0:52:43 It’s going to be a completely different game by the time your kids are going.
0:52:47 And you’re going to see it, even on the tour that you’re organizing for your son, schools
0:52:51 that you wouldn’t have even thought of that you were going to go and consider, he’s going
0:52:52 to be dying to get into.
0:52:56 Say like, this is the right place for me, both academically and socially.
0:53:00 So maybe that will be a silver lining in all of this.
0:53:05 But these huge endowments, Harvard with what is it, $50 billion they’re sitting on, they
0:53:08 should start paying for all these kids to come for free.
0:53:09 Now is the time.
0:53:12 If the government’s going to take away your funding, you say, you know what, we’re going
0:53:12 to go it alone.
0:53:15 Get rid of all the anti-Semitic professors.
0:53:21 Get rid of the kids that are ruining the quality of life for other students, clearly violating
0:53:26 your policies and put that money back into the system so that the smart kids that are going
0:53:29 to be the leaders of tomorrow can come there without landing themselves in hundreds of
0:53:34 thousands of dollars of debt for the rest of their lives and make this a bit more of an
0:53:34 equal playing field.
0:53:34 Yeah.
0:53:36 Well, as you can imagine, I think a lot about this.
0:53:41 And I do think, unfortunately, I do think it’s tempting to think that because there’s so much
0:53:46 manufactured artificial stress as someone is going through it right now from universities
0:53:50 who have adopted a rejectionist exclusionary strategy, and despite sitting on an endowment
0:53:56 the size of the GDP of a Latin American nation, only let in 500 students.
0:54:00 Dartmouth sits on an endowment of $8 billion and lets in 500 freshmen.
0:54:05 Harvard sits on an endowment of $52 billion and decides to only let in 1,500.
0:54:06 That is morally corrupt.
0:54:11 If you had a drug that made people less likely to kill themselves, more likely to get married,
0:54:15 more likely to pay a lot of taxes, less likely to be obese, less likely to be obese,
0:54:18 less likely to be depressed, would you hoard that drug?
0:54:21 We in higher education hoard that drug.
0:54:22 We have the resources.
0:54:23 We have the capability.
0:54:28 There would be absolutely no sacrifice in the quality of the students.
0:54:30 People say, oh, but the brand would go down.
0:54:33 When I applied to UCLA, the acceptance rate was 76%.
0:54:35 It’s now 9%.
0:54:38 And it wasn’t exactly a Joey Bag of Donuts brand back then.
0:54:40 We have become the enforcers of the caste system.
0:54:45 And as much as we like to believe that, oh, don’t worry, college won’t matter, it does.
0:54:47 Because America is turning into a caste system.
0:54:52 And the easiest way for corporations to evaluate human capital is based on the school they went to.
0:55:04 So the notion that it, quote, unquote, doesn’t matter anymore is a lie we tell ourselves such that we feel better about the massive amount of stress and the inequity and our disappointment in higher ed.
0:55:14 And what has slowly happened in higher education is me and my faculty sometimes who are 15 administrators to everyone who actually teaches have decided that we would rather not have accountability.
0:55:24 So we teach bullshit, ridiculous courses that have no measurable outcomes, leadership, sustainability, DEI, ethics.
0:55:26 Show me someone teaching ethics.
0:55:40 I’m going to show you a FIPP, a formerly important person who hangs out at a university, makes $200,000 to $400,000 a year for trying to teach a 27-year-old in business school how to be more ethical, which is such the height of arrogance.
0:55:55 Instead of being centers of excellence, we’ve turned it into a political orthodoxy machine with a vast majority of the faculty, our very left, not reflecting any diverse thought, and where you can get in trouble for certain words.
0:55:57 We have totally lost the script.
0:56:04 Our job is to give you the skills to go out and create economic security for you and your family and do great work, empower the economy.
0:56:16 And the fact that we have become this exclusionary and this arrogant in teaching all of these bullshit courses with no measurable outcome, the result is we constrain supply.
0:56:17 And it’s not about who gets in.
0:56:18 It should be about how many.
0:56:30 If a school doesn’t increase its freshman seats faster than population growth, it should lose its tax-free status as it’s no longer a public servant, but it’s a hedge fund with classes.
0:56:33 Higher education absolutely needs to be reformed.
0:56:35 Anyways, that’s my TED talk.
0:56:37 It was good, and I guess I’m wrong, so there we go.
0:56:38 There you go.
0:56:40 Well, we just – there’s some nuance there.
0:56:41 That’s what I call it.
0:56:41 It’s nuance.
0:56:44 All right, Jess, let’s take one more quick break.
0:56:45 Stay with us.
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0:56:55 What’s your relationship to the news right now?
0:56:59 Is it something you compulsively check 200 times a day until you feel sort of queasy?
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0:57:32 Episodes touch on the essential stories on topics like international conflict, the new administration, and so much more.
0:57:40 I listened to a recent episode on the situation in Ukraine and found it very even-handed and just generally, you know, kind of fact-based.
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0:57:47 If you’re looking for more news and less noise, you can listen to the Up First podcast from NPR today.
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1:00:05 Welcome back.
1:00:11 Before we go, talks between the U.S., Ukraine, and Russia over a possible ceasefire are picking up steam.
1:00:14 And the Kremlin is saying there’s some reason to be hopeful.
1:00:18 Specifically, the world’s largest nation has become a surrender monkey.
1:00:25 Anyways, after meeting with Trump’s envoy in Moscow, Putin signaled he’s open to a 30-day truce, but with conditions that are pretty one-sided.
1:00:30 He wants formal recognition of Russia’s land grabs and a promise that Ukraine will never join NATO.
1:00:39 Zelensky has stood firm on not giving up land, but lately he’s prioritizing security guarantees over getting territory back right away.
1:00:43 Meanwhile, Americans are skeptical of Trump’s handling of the situation.
1:00:49 A new CNN poll shows 59% think Trump’s approach won’t lead to long-term peace.
1:00:52 50% say it’s flat-out bad for the U.S.
1:00:57 And nearly 6 in 10 disapprove of his handling of the U.S.’s relations with Russia.
1:00:58 Jess, your thoughts here.
1:01:02 Well, I think that Oval Office debacle actually did something.
1:01:06 It moved public opinion in how Trump is handling this.
1:01:20 So that week of calling Zelensky a dictator, saying he only had a 4% approval, and then that back and forth in the Oval, you know, first with J.D. Vance and then with Trump, obviously has people soured a bit on this approach.
1:01:27 And, you know, with Russia saying that we’re making progress, that’s B.S. to me.
1:01:32 I don’t trust them as far as I could throw them, which would be zero feet anyway.
1:01:40 And there is no evidence that they have compromised any of their positions.
1:01:44 They’re still at the maximalist position in all of this.
1:01:47 And so all of the compromising is going to have to come on the part of Ukraine.
1:01:52 Now, Zelensky has been signaling for months now that he is willing to make some concessions.
1:02:02 He even said when he was speaking in Kiev a few weeks ago, I’ll resign right now if it means that we can put a stop to this and that we’re going to have the security guarantees that we need.
1:02:05 So I basically just don’t believe it.
1:02:14 I think that Zelensky continues to be between a rock and a hard place, having to negotiate with two forces that just want this over with.
1:02:20 Putin, and he wants to get whatever he wants, and us that wants this mineral rights deal, which is going to go through.
1:02:25 And if there’s a tentative ceasefire, they’re going to break it.
1:02:29 You know, Putin and Medvedev come out and say we’re making progress.
1:02:32 And that night there are 27 drones launched into Ukraine.
1:02:35 So spare me, basically, is where I am.
1:02:42 Yeah, this is – I see a silver lining here, and that is the U.S.’s surrender to Putin.
1:02:56 The decision to ignore these 80-year alliances with the largest economies in the world such that they can have sort of this, if you will, this mob deal with another autocrat and potentially thinking they can divide up the world.
1:02:58 It’s economically just really stupid.
1:03:01 And the silver lining here is the following.
1:03:16 Europe may be a union for the first time, and that is the 27 member states of the European Union have finally recognized that they need to get their shit together and can’t be this rich nephew reliant on Uncle Sam’s largesse.
1:03:20 They now actually believe there’s just no getting around it.
1:03:25 Uncle Sam has lost his shit, and we can’t depend upon him for a military umbrella.
1:03:28 The U.S. spends about $800 billion a year in defense.
1:03:32 NATO and all EU-27 member nations spend a total of about $400 and $450.
1:03:35 They have not been coordinated.
1:03:36 They’ve been sclerotic.
1:03:37 They’ve lacked investment.
1:03:38 They’ve lacked risk capital.
1:03:43 And this might be actually the moment for them to command the space they occupy.
1:03:49 And you have seen some signs of a pulse and of real leadership from the biggest leaders in the EU.
1:04:05 And I believe that they basically – the bad news is that America can’t be counted on, which is really unfortunate and tragic to support the post-World War II 80-year alliance that has created more prosperity in the last 80 years than the world has created in the modern economy or the history of the modern economy.
1:04:10 But the silver lining is that the EU may get more coordinated.
1:04:15 They’re talking about increasing their defense budgets from 1.9% of GDP to 3%.
1:04:18 And what you’ve seen is the markets are responding.
1:04:30 The quote-unquote Magnificent Seven, which consists of U.S. tech mega caps, Apple, Amazon, Alphabet, Meta, Microsoft, and NVIDIA and Tesla, have been incredible performers.
1:04:45 But this year, their year-to-date, they’re down 8%, whereas the European Defense Seven, that’s the seven largest military contractors, are up 46% and 65% over the last year.
1:04:53 And the stock 600, which is the European kind of S&P, if you will, is up 9% this year.
1:04:56 And the S&P 500 is down 2%.
1:05:09 If you look at military spending, as much as – and there’s a decent argument here that it withdraws from more productive means of spending money on social services, there is, one, a stimulative effect, and two, there is a spillover.
1:05:32 If you look at the most valuable companies in the world, whether it’s Apple or Google, they’re essentially built on the backbone of defense technologies developed early on, whether it’s DARPA, which was built to establish a communications network such that we could communicate in a post-Soviet nuclear attack that was hubless or nodeless, or GPS, which is what essentially Apple and Android are built on.
1:05:37 And that was developed such that we could put an ICBM in Gorbachev’s pocket.
1:05:41 All of these military technologies do have a stimulative and a spillover effect.
1:05:50 And I believe, and this was one of my big predictions late last year for 2025, that European stocks are going to vastly outperform U.S. stocks.
1:06:04 And the nice thing about this is we’re all talking as if, at the negotiation table, that it’s up to, first and foremost, the U.S., who kind of is acting as the propaganda wing of Russia at this point.
1:06:09 And then Russia and Ukraine isn’t being invited to the table around these defense stocks.
1:06:12 And Europe plays absolutely no role.
1:06:13 Well, here’s the good news.
1:06:26 If Europe gets its shit together and shows sort of the commitment and resolve from a spending and a boots-on-the-ground resolve that the U.S. and Russia have shown in spades, they don’t need the U.S.
1:06:29 The Russian economy is smaller than the Canadian economy.
1:06:30 It’s less than $2 trillion.
1:06:36 And the GU or the EU member nations add up to about $19 trillion.
1:06:49 So the European Union, should it show coordination, fiscal commitment, and perhaps even boots-on-the-ground commitment, which I don’t think they’ll ever need to do, but show a willingness and a resolve, they don’t need the U.S.
1:06:59 And I’m hopeful that this additional spending and coordination might finally kind of stir a sleeping giant, and that is the EU.
1:07:25 So I think this is a new era or could signal a new era where there’s some great leadership in Europe, whether it’s Macron, whether it’s Keir Starmer, there is an opportunity here for Europe to finally be a union and command the space they occupy, push back on Putin with or without the U.S.’s help, and coordinate and spend and show some resolve here.
1:07:31 They are acquiescing to a gas station that has nuclear weapons on the roof, and they shouldn’t be.
1:07:32 They are a bigger economy.
1:07:36 They have fantastic IP, fantastic weapons producers.
1:07:40 Both France and the U.K. are nuclear powers.
1:07:42 It is time for the Europeans to step up.
1:07:44 It’s going to be costly.
1:07:44 That’s the bad news.
1:07:50 The good news is they can absolutely step up and push back on a murderous autocrat.
1:07:57 And what’s just so tragic here is that Trump appears to be acting like a Russian asset.
1:08:00 There’s no evidence that he is, in fact, a Russian asset.
1:08:05 But if you were to define the actions of a Russian asset, he would fit them to a T.
1:08:11 But the good news is I’m not sure the European Union actually needs us.
1:08:17 I think they have all of the spending power, all of the military technology to push back on their own.
1:08:19 The question is do they have the resolve and the leadership?
1:08:33 I just want to add quickly to that that while I share those sentiments and as someone who spent a lot of time living in a former EU country, but I have a deep affection for the European project.
1:08:47 And I think it’s incredible that you could design something with the free flow of humans and goods and that we’re all the better for culture sharing and economic sharing, etc.
1:08:55 But all of these silver linings or all of these good things that are happening are happening for somebody else besides us.
1:08:57 And that feels terrible.
1:09:01 I don’t ever want to be rooting against my own country.
1:09:04 I don’t want to be rooting against my own government.
1:09:14 And in every single conversation that we’ve had today, that has had to be a stipulation in this, that I don’t want to be seen to be on the side of Venezuelan gang members.
1:09:20 I don’t want to be seen to be on the side of violent anti-Semites.
1:09:37 I don’t want to be seen to be on the side of the U.S. not having the important and central role that we should be playing in geopolitics in favor of a stronger EU or a chance for Ukraine to be able to survive as a sovereign nation.
1:09:43 I think I said it, used the same word at the start of the podcast.
1:09:47 I just feel despondent about all of this.
1:09:51 And it makes me feel a bit like a shitty American, too.
1:09:53 And I love America.
1:09:56 I think it’s the most fantastic country on the planet.
1:10:06 And there’s just so much that has made me feel sour about the way that we’re behaving and what the future looks like for all of us here.
1:10:08 Well, I go back to, I feel the same way.
1:10:10 And I think a lot of Americans do.
1:10:11 They feel despondent.
1:10:17 And what helps me is that I realize that, you know, as Winston Churchill said,
1:10:22 the Americans, after exhausting every other option, will do the right thing or will do the right thing after exhausting every other option.
1:10:24 And we faced really dark moments before.
1:10:28 80 years ago, we were rounding up Japanese American and putting them in camps.
1:10:32 And some of them had sons fighting in the European theater in our own uniform.
1:10:36 We, you know, we do get it wrong a lot.
1:10:41 But generally, over the medium and the long term, the arc of American justice bends towards the righteous.
1:10:45 We waited a couple of years before entering World War II.
1:10:48 Canada went over there first and started training allied pilots.
1:10:51 And finally, we decided to enter the war.
1:10:57 And I do think Americans are going to recognize that the Ukrainian people who are fighting for liberty and American values,
1:11:01 that Canada with the largest undefended border in the world are actually our friends,
1:11:08 that this move towards autocracy is so counter to everything that’s wonderful and has created so much prosperity in the U.S.,
1:11:14 that those values are steadfast, that those values matter, and that they’re willing, you know, they’re worth fighting for.
1:11:19 So I have a lot of confidence that Americans, should we actually find leadership in the Democratic Party,
1:11:22 and I believe we will, to your point, and you’ve always said this, we have a great bench,
1:11:31 I think they’re going to realize that a murderous autocrat invading Europe usually does not end well for Europe and then eventually for us.
1:11:39 And I do believe there’s a real moment, a kind of a, you know, people were calling Keir Starmer, Keir Churchill, or Winston Starmer.
1:11:45 There’s a moment here for a leader to step up and say that America needs to be America again.
1:11:47 And I’d like to think we’re getting to that point.
1:11:55 But we have been in these types of dark places before, and American values do seem to show up.
1:11:59 And I’m confident that’s going to happen again here.
1:12:02 But this is, I would describe, you know, and I think you’re articulating it well,
1:12:08 this does feel like a dark moment where we are, our American values are taking a backseat
1:12:16 to the temptation to have a strong man and that’s going to solve what are some very real problems here in the U.S.
1:12:22 But I’d like to think that over the long term, after, again, exhausting every other solution, that we get it right.
1:12:22 Me too.
1:12:23 There you go.
1:12:24 All right.
1:12:25 That’s it for this episode.
1:12:27 Thank you for listening to Raging Moderates.
1:12:30 Our producers are David Toledo and Chinanye Onike.
1:12:33 Our technical director is Drew Burrows.
1:12:36 You can find Raging Moderates on its own feed every Tuesday.
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1:12:52 Grab your tickets now.
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1:13:00 Link in the show notes.
1:13:01 See you there.
1:13:02 Jess’s kids will not be there.
1:13:04 They will not be there.
1:13:08 Jess, have a great rest of the week.
1:13:14 Realize, just make it clear to your husband, always defer to mom.
1:13:15 ADM.
1:13:17 He’s an influencer, not a decision maker.
1:13:18 I love it.
1:13:18 He’s listening.
1:13:20 So there you go, honey.
1:13:20 Love you.
1:13:21 See you at home.
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0:01:57 Today’s number, 5 inches.
0:02:03 That’s the length of a live turtle that a Pennsylvanian man attempted to smuggle through airport security in his pants last week.
0:02:04 True story, Ed.
0:02:06 I was blessed with a 7-inch dick.
0:02:09 But now the priest is in jail.
0:02:21 Ed, how are you?
0:02:22 Ed, how are you?
0:02:24 I’m just putting it together in my head.
0:02:26 We have all these young interns.
0:02:29 They’re literally just note to self, exhibit 22B.
0:02:36 If I don’t keep giving them increase, they’re literally every day balancing the money they’ll get from the lawsuit that I’ll settle out of court.
0:02:38 Only upside for us.
0:02:39 Oh, we have a new intern.
0:02:40 Wait, who’s the new one?
0:02:43 That’s probably Bella you’re talking about, who just came on full time.
0:02:44 No longer an intern.
0:02:45 Oh, Bella.
0:02:46 Hey, Bella.
0:02:47 Welcome to Prof G Markets.
0:02:48 That’s right.
0:02:50 She came to, let’s talk about me.
0:02:59 I was at Stern yesterday and I spoke to, I spoke to 500 students and Bella came and yeah, it was, I was super nice to everyone.
0:03:00 And then she told me she works for us.
0:03:01 I’m like, I pay you.
0:03:02 I don’t need to be nice to you.
0:03:03 That’s right.
0:03:04 Anyways, welcome Bella.
0:03:05 Very good.
0:03:07 Welcome Bella.
0:03:08 Let’s talk about Priest.
0:03:09 What’s going on with you, Ed?
0:03:11 I’m doing pretty well, Scott, back in New York.
0:03:16 And I’m just kind of, I just feel very good about how that South by trip went.
0:03:18 I thought that was a great show.
0:03:19 Talk about that.
0:03:20 That was awesome, wasn’t it?
0:03:21 So much fun.
0:03:26 I think the key detail is that we had 1500 people outside of the doors.
0:03:31 So that’s what I’ve been telling everyone when I just come back and brag to people about how successful this show is.
0:03:36 That’s, that’s my big takeaway that we had to turn away two thirds of the audience.
0:03:37 What was your takeaway?
0:03:38 I’m now Pete Townsend.
0:03:42 I’m the most talented member of the band, but fucking what’s his face?
0:03:43 The lead singer.
0:03:44 What’s that guy’s name?
0:03:46 I don’t even know who Pete Townsend is.
0:03:47 I know you’re going to just, you’re going to exactly.
0:03:50 You’re going to have a panic attack hearing that.
0:04:01 He was the lead guitarist of The Who, but the front man, Richard Daltrey, who starred in a great movie, Pinball Wizard, very handsome, better looking than the more talented Pete Townsend.
0:04:02 This is where I’m going.
0:04:08 Everyone’s like, oh, oh, Roger Daltrey, not giving any love to the real talent, Peter Townsend.
0:04:10 And that’s what it feels like at South by Southwest.
0:04:13 Everyone’s like, oh, Prabhji, what’s that like?
0:04:14 That’s not true at all.
0:04:24 Yeah, what did you think of the, we went to this Vox Media dinner and it was very cool for me because I got to sit next to Andy Roddick and I was a huge fan of him growing up.
0:04:25 You’re not a fan of Megan Rapinoe?
0:04:27 I think there’s a little sexism in here.
0:04:31 There are a lot of amazing female athletes that you have not mentioned at that dinner.
0:04:31 There were.
0:04:35 I wasn’t that into women’s soccer at the time.
0:04:36 Jesus, Claire, can you believe this guy?
0:04:38 Bella, I apologize.
0:04:40 And he calls himself a football fan too.
0:04:42 No love for Megan.
0:04:46 Arguably one of the greatest football players in history, but you didn’t bring her up.
0:04:46 I didn’t.
0:04:47 But Andy Roddick.
0:04:49 You brought up the white dude that plays tennis.
0:04:52 Okay.
0:04:53 You got to give Andy Roddick his credit.
0:04:55 Fastest serve in history.
0:04:56 Yes.
0:04:57 And you went to Princeton, right?
0:04:57 I did.
0:04:58 Yeah.
0:04:58 Yeah.
0:04:59 Six foot three, white male.
0:05:00 Figures.
0:05:00 Privilege.
0:05:01 The patriarchy.
0:05:03 Oh my God.
0:05:04 Thank God I’ve got Claire.
0:05:05 I totally agree with that.
0:05:12 But literally on that stage of us with us was Megan Rapinoe, arguably one of the greatest, you know, football players in history.
0:05:21 Her wife, Sue Bird, a retired WNBA player who was also, I think, won the NCAA championship two or three times.
0:05:23 It doesn’t sound as good when you’re reading the Wikipedia page.
0:05:24 Bitch, who sends your checks?
0:05:29 Is that on your Wikipedia page who pays you?
0:05:31 I don’t have a Wikipedia page.
0:05:32 Get to the headlines.
0:05:33 Okay.
0:05:34 Good.
0:05:36 Let’s start with our weekly review of Market Vitals.
0:05:45 The S&P 500 entered correction territory.
0:05:47 The dollar snapped its losing streak.
0:05:53 Bitcoin fell below $80,000 and the yield on 10-year treasuries dropped on Monday but recovered through the week.
0:05:57 Southwest Airlines will begin charging passengers for checked bags.
0:06:06 Beginning in late May, passengers get a free checked bag only with top-tier loyalty status, a business class ticket, or their airline’s credit card.
0:06:08 Shares rose 8% on that announcement.
0:06:17 Former Google CEO Eric Schmidt has acquired a controlling stake in rocket startup Relativity Space, and he will now take over as its CEO.
0:06:22 The company is known for its use of 3D printers for rocket production.
0:06:31 And finally, Saudi Arabia has reportedly invested $50 billion in its Neom project so far, with the total projected cost reaching $8.8 trillion.
0:06:34 That is more than 25 times the country’s annual budget.
0:06:40 And the project’s construction is expected to continue for another 55 years.
0:06:44 Scott, we will start with this new policy from Southwest Airlines.
0:06:53 This is very interesting because the whole free bag check thing has been central to Southwest and its brand for years.
0:06:57 In fact, they actually trademarked this phrase, bags fly free.
0:07:00 So, this was their big differentiator.
0:07:07 And last year, the company even said that the free bag policy was the third biggest reason why customers choose Southwest Airlines.
0:07:08 And now they’re scrapping it.
0:07:10 Now, why are they doing it?
0:07:11 It’s quite simple.
0:07:14 It’s because of Elliott Management, the activist firm.
0:07:18 You might remember last year, Elliott bought a 10% stake in Southwest.
0:07:21 They installed five directors to the board.
0:07:24 And this was one of their big arguments in that play.
0:07:26 They said, we want to charge fees on the bag.
0:07:29 So, I’m very interested to get your view on this.
0:07:32 This feels like almost a classic business school case study.
0:07:34 Like, there’s a fork in the road.
0:07:37 Do you charge extra on this thing you know you can make money off of?
0:07:45 Or do you forego the additional revenue and maybe you get some more loyalty and maybe some more interest from your customers in the long run?
0:07:46 What do you think, Scott?
0:07:50 This industry is arguably one of the more seminal technologies in history.
0:07:57 The ability to – my parents had to crawl across the Atlantic over seven to nine days getting seasick to get to America.
0:08:03 Now, you can get – you can realistically fly from London to New York in about seven hours.
0:08:07 And if you book well ahead, you can do it for $400.
0:08:18 I mean, it’s just – this technology has been such an unbelievable unlock for economic growth, ability to see your family more regularly, mobility of capital to its greatest return.
0:08:20 It’s been just an enormous breakthrough.
0:08:25 Airlines, if you net out all their profits and all their costs so far, are break-even.
0:08:28 Like, they just – it’s been a shitty business.
0:08:32 Differentiation is near impossible in this industry.
0:08:33 What do they have?
0:08:34 They’re all flying the same tin cans.
0:08:40 They’re all flying one of two planes from different – one of two manufacturers, Airbus or Boeing.
0:08:42 They’re all flying into the same airport.
0:08:46 It’s very hard to differentiate on labor or service.
0:08:51 And Southwest was able to find differentiation around a brand that meant freedom.
0:08:53 Okay, you just got fired.
0:08:54 You want to head to Vegas.
0:08:55 You make a reservation.
0:08:56 You need to change it.
0:08:57 No change fees.
0:09:00 We’re not going to nickel and dime you with bags.
0:09:01 It’s freedom.
0:09:03 It’s the ability – it was total cost structure.
0:09:05 Even their planes are super fucking ugly.
0:09:12 They’re orange because they found early on that that was the paint that was most overordered and they could get the lowest cost on.
0:09:17 They had all 737s for a long time to create scale around repair and maintenance.
0:09:25 Everything was about low cost to give you economic freedom to take your human capital where and when you wanted.
0:09:27 This is exactly what you just said.
0:09:36 And that is somebody has done the analysis that says, okay, this cost of free bags is greater than the brand equity bump we’re getting.
0:09:43 In the short term, they will absolutely recognize a really substantial increase to the bottom line.
0:09:52 But in an environment where it is so difficult to establish differentiation, I think they are trading off long-term margin for short-term stock gain.
0:09:58 I remember one of my first clients who started a strategy firm in my second year of business school, one of my first clients was Dryers.
0:10:07 And this CMO who was just incredibly smart, this guy named Tyler Johnston, and we were going into a recession.
0:10:08 This was 1992.
0:10:10 And I said, well, why don’t you just take down marketing spend?
0:10:17 He’s – you know, they were a company that was always about to be acquired by a bigger food company, which ultimately they were for a lot of money.
0:10:23 And he said, you can’t take down – you always have to be disciplined about brand and marketing spend.
0:10:27 Otherwise, all you’re doing is juicing your bottom line and trading off long-term strength.
0:10:31 And I think that’s what, quite frankly, what they’re probably doing here.
0:10:32 I haven’t seen the numbers.
0:10:33 The people from Elliott are very smart.
0:10:42 But in an environment that is almost near impossible to maintain – establish and maintain differentiation, this was a tangible point of differentiation.
0:10:49 So I would call this short-term financial engineering at the cost of long-term differentiation of margin power.
0:10:56 I do want to bring up a similar story in Costco, because I think this is one of my favorite stories in business.
0:11:05 So Costco is famous for their hot dogs, and specifically the fact that their hot dogs cost $1.50.
0:11:08 And they have cost that amount since 1985.
0:11:09 They are known for this.
0:11:13 Now, of course, this doesn’t really make that much sense economically.
0:11:17 Inflation has risen almost 200% since then.
0:11:23 So if they were selling it at the same price, what $1.50 was in 1985, they should be selling it for $4.50 today.
0:11:32 Several years ago, the then-CEO, this guy Craig Jelinek, he was looking at the situation, looking at the income statement.
0:11:34 He said, OK, we need to raise the price of these hot dogs.
0:11:36 We’re losing money on this.
0:11:44 So he goes to the founder of Costco, Jim Senegal, and he says, you know, hey, this isn’t really working.
0:11:49 I know the $1.50 thing, the hot dogs, it’s cute, but I think we need to raise the price.
0:11:54 And Jim responded with what I think is the most iconic line in the history of business.
0:12:01 He said to him, quote, if you raise the price of the fucking hot dog, I will kill you.
0:12:03 And that was it.
0:12:04 End of story.
0:12:08 To this day, the Costco hot dog is $1.50.
0:12:11 That happened back in 2009.
0:12:15 The stock was around $50 per share at that time.
0:12:17 It’s now at around $1,000 a share.
0:12:38 I don’t think it’s because of the hot dog, but I do think there is something to be said for sacrificing potentially short-term profits in exchange for, in the future, goodwill, a better brand, stronger brand, customer loyalty, all of these things that ultimately, over the long term, result in greater profits and more shareholder value.
0:12:51 So I think, I wonder if Elliot even cares about the long-term value of this company, because presumably they’re just trying to make as much money as they can in as short a time as possible, and then they sell their position and move on to the next thing.
0:12:53 And by the way, I love hot dogs.
0:12:58 Last night, I decided to share a hot dog with a homeless person, and he said, fuck off, get your own hot dog.
0:13:04 Anyways, let me be serious for a second.
0:13:13 So I started a company called Red Envelope, and we spent a disparate – basically, I love benchmarking, which is consultant speak for ripping off other people’s IP.
0:13:26 And I was always fascinated with Tiffany, specifically how much IP and brand associations he managed to inject into this aquamarine blue box, and that elegance, sophistication, romance, Audrey Hepburn.
0:13:33 And I said, I’m going to start a company that is the Tiffany of hip, urban, progressive, more erotic sensibilities.
0:13:43 And we came up – we spent a lot of time and a lot of money on a beautiful red box with a gorgeous bow, and we had people in our fulfillment center tie the bow with hands.
0:13:47 When a machine ties a bow, it looks like a drunk guy with big thumbs tied it.
0:13:48 It just looks weird.
0:13:57 And it was really expensive, and someone did the analysis and said that we actually have negative margin on some of our least expensive products when you put it in this beautiful red box.
0:13:58 And I said, you don’t get it.
0:14:00 That is key to our brand.
0:14:05 And so this is simply – this is why managers are supposed to get paid really well.
0:14:14 They have to trade off the temptation to add everything to the bottom line while managing long-term investments that create sustainable margin and brand power.
0:14:19 And the thing about luxury brands and the thing about great brand builders, the analogy I use is like working out.
0:14:24 When you work out, it’s time expensive, it’s a pain, and you’re sore.
0:14:25 And so is brand building.
0:14:26 It’s expensive.
0:14:28 And the next day, it just fucking hurts.
0:14:35 But if you’re disciplined about spending and offering the services that buttress your brand associations, over time, you get stronger.
0:14:39 You have an easier time getting supplier relationships.
0:14:40 You have an easier time recruiting employees.
0:14:42 You have an easier time raising prices.
0:14:50 But in a company like Southwest, I would be very careful to remove any tangible point of differentiation.
0:14:53 I mean, how on earth do these guys compete against each other?
0:14:56 What is Southwest’s value proposition or differentiation now?
0:14:57 Like, what is it?
0:14:58 Well, we’re just Southwest.
0:14:59 We’re orange.
0:15:01 I mean, what is it?
0:15:02 Yeah, exactly.
0:15:15 Let’s move on to Eric Schmidt, the former CEO of Google, who is now taking a new CEO position at Relativity Space, which is this small space startup that builds rockets with 3D printers.
0:15:19 I think most notably here, Eric Schmidt bought his way into this.
0:15:28 So he made an offer to the company to buy a controlling stake, but that offer was contingent on his becoming the CEO.
0:15:35 The then CEO who founded the company, this young entrepreneur, he has stepped aside and he will now take a seat on the board.
0:15:38 Scott, I don’t love this on a personal level.
0:15:51 Just the visual of a billionaire who sees Bezos and Musk and Branson all getting involved in the space race, then deciding not to build his own company, but to buy his way into one.
0:16:11 Combined with the visual of this young Y Combinator entrepreneur being swept to the side, it just, it all reminds me of this intergenerational wealth dynamic that we so often talk about, where you have all of these old guys who are billionaires with too much money and too much time on their hands.
0:16:19 And then they just use the money to install themselves into positions of power where they can play pretend startup or play pretend politics.
0:16:22 Maybe that’s too harsh.
0:16:28 As I’m saying it out loud, I actually think maybe I am being a little harsh, but that is where my mind goes.
0:16:30 Yeah, I think you’re being unfair.
0:16:31 So there’s two sides of this trade.
0:16:43 And that is the way corporate governance and decisions get made is that shareholders get to decide who are the board members and the board members get to decide who would be best for stakeholders, which is Latin for shareholders.
0:16:59 And the board decided that to get a guy like Eric Schmidt, who is arguably one of the most lauded successful CEOs in history to come run their firm, which sounds like it was struggling, quite frankly, is they decided, yeah, that is absolutely worth it.
0:17:03 And I would imagine the value of the company is up substantially just on that press release.
0:17:15 So there’s two sides of this trade, including, you know, if the CEO had control of the company because he didn’t have to raise a lot of money or he was doing so well that he had that kind of credibility with the board, he could have decided what to do.
0:17:19 And maybe he did decide that it makes sense for Eric Schmidt to take over.
0:17:21 Now, having said that, I would not invest in this thing.
0:17:33 I’m ageist when it comes to startups, and that is when Eric Schmidt took over Google, he was much younger and probably willing to put all relationships and all vacations aside for a while.
0:17:43 And now he’s a billionaire in his 60s who’s probably in the midst of, like many of us, of a realization that he’s going to be dead soon, and he’s not going to work his ass off.
0:17:52 He’s going to focus on St. Bart’s and relationships and time with loved ones and going to the World Economic Forum and talking about big thoughts and climate change.
0:17:57 This is – to drive a company like this is a young woman’s game.
0:18:09 And what he should have done, in my view, was taken the chairman role because I think 80 percent of his expertise right now could be leveraged 10, 20, 30 hours a week and kept someone else in the CEO position.
0:18:13 And also, I believe that luck is symmetrical.
0:18:21 And in order for a company to have the kind of extraordinary success that Alphabet has recognized, that was a lot of luck.
0:18:30 And I typically don’t invest behind a person two times in a row because if it’s super successful, I’m like, it’s unlikely we’re going to get lucky again.
0:18:37 And I know that’s a weird thing to say, but I think a guy like Eric Schmidt, I don’t get why he’s doing this personally.
0:18:41 I, you know, I think he’s in his mid-60s, maybe late 60s.
0:18:43 It feels like maybe he’s bored.
0:18:44 Maybe he wants something to do.
0:18:46 He’s just written his book.
0:18:48 By the way, respect to Eric Schmidt.
0:18:50 I really don’t want to just rag on this guy.
0:18:54 And I do respect him a lot as an operator and as a businessman.
0:18:55 But it feels like he’s bored.
0:18:58 He sees Bezos and Branson and Musk.
0:18:59 And he’s like, hey, that looks like fun.
0:19:00 I want to do that.
0:19:02 They’re CEOs of those companies.
0:19:03 Why don’t I do it?
0:19:09 Well, actually, Bezos has stepped down as CEO because he’s realized he’s about to die soon.
0:19:10 So he wants yachts and thongs.
0:19:12 I think he gets it.
0:19:16 But I think the question everyone’s asking is, Ed, why do you hate Eric Schmidt?
0:19:24 No, look, the guy is the chairman of everyone’s dreams.
0:19:27 He’s intensely smart, intensely well-connected.
0:19:34 I just don’t understand why a guy at that point in his life would want to do the work.
0:19:39 When you’re the CEO of a startup, I speak from experience here, your inbox is never empty.
0:19:44 And you have to be able to work 15 and 16-hour days.
0:19:49 The only time I’ve ever really grown shareholder value is when, quite frankly, my personal life is a bit of a shit show.
0:19:56 Because the marketplace is competitive and gives advantage to people who are willing to do nothing but work all the fucking time.
0:19:58 And this is not a Hallmark commercial.
0:19:59 I’m not saying this is aspirational.
0:20:10 And I think a lot of people go to work for big companies to leverage their IP, their distribution channels, and their platform, and their size, and the regulatory capture so they can work 40 to 50 hours a week, not 60 to 80.
0:20:11 You want to be in a startup?
0:20:13 You want to be in a company like this?
0:20:18 I think it’s table stakes, even for a guy like Eric Schmidt, to have to work around the clock.
0:20:22 And if I were him with his wealth at his age, there’s no way I would do that.
0:20:29 Anyways, I’m bullish on Eric Schmidt, but as a chairman, I think this is a bad idea for him to get back into the game like this.
0:20:33 Maybe he can run it from St. Bart’s, and all will go smoothly.
0:20:33 Look at me.
0:20:41 I have, not that I’m comparing myself to these individuals, I have Catherine Dillon run our company, so I can just make dick jokes and go to South by Southwest.
0:20:43 That’s what he should be doing.
0:20:45 Take a note out of Scott’s book, Eric Schmidt.
0:20:47 Let’s talk about Neom.
0:20:50 This is Saudi Arabia’s plan to build a new city.
0:20:54 It’s gotten a ton of coverage over the years, ton of hype, ton of interest.
0:21:03 Just for those that don’t know, the plan is to build a 105-mile-long glass-domed megacity in the desert of Saudi Arabia.
0:21:11 It’s supposed to house 9 million people with no cars, fully staffed by robots, fully powered by wind and solar.
0:21:17 It’s supposed to have its own ski resort, and my personal favorite stat, it’s supposed to have its own artificial moon.
0:21:23 I’ve thought this is ridiculous for a long time, because it’s just unrealistic.
0:21:26 And now we’re learning they’re 55 years away from completion.
0:21:29 The projected cost is $9 trillion now.
0:21:34 And I just want to emphasize, the original budget for this city was $500 billion.
0:21:41 So they are over budget by 1,700%, or in dollar terms, $8.5 trillion.
0:21:50 And I think this highlights a problem that I’ve flagged before about Saudi Arabia and their investment decisions.
0:21:52 Quite simply, I think they’re childish.
0:21:55 I just don’t think these are very serious investors.
0:22:05 The combination of the ski resort and the moon, the obsession with the Premier League, with the World Cup, with golf, with giant AI chips, that company Cerebris.
0:22:08 The obsession with esports and gaming.
0:22:12 Just last week, they bought Pokemon Go for $3.5 billion.
0:22:16 And I look at what’s happening in Saudi Arabia and what they’re investing in.
0:22:24 The whole thing, to me, is reminiscent of a rich kid with a billionaire dad who just gave him the keys to the family trust.
0:22:27 And by the way, that’s pretty much what that country is.
0:22:32 Like, the only difference is that it’s not a trust fund, it’s an oil reserve.
0:22:37 So I think these are unserious, frankly, stupid investments.
0:22:42 But I’m going to brace myself for when you call me racist in the next two minutes.
0:22:44 You’re accurate.
0:22:45 It is a rich kid.
0:22:53 My interaction with the kingdom has mostly been around involvement with hedge funds raising money and some of the investments they make.
0:23:02 And I find that they’re actually incredibly disciplined and very smart and that they hire the best and brightest from the alternative investments world to try and allocate their capital efficiently.
0:23:06 In this instance, that maybe their eyes are bigger than their stomach.
0:23:08 Maybe it’ll be scaled back.
0:23:12 But I’d like to see more big, outrageous ideas.
0:23:19 I would like to see in the U.S. them say, we’re going to spend several trillion dollars to build a national high-speed rail, at least up and down the eastern seaboard.
0:23:23 I’d like to see some big, bold infrastructure announcements in the U.S.
0:23:24 We did one.
0:23:27 Our infrastructure act was $700 billion, I think.
0:23:29 They have seven projects of over a trillion.
0:23:42 It looks as if this one is probably unrealistic, but I think that a place like the kingdom has the money and the mandate to, quite frankly, be, I don’t know, be out over their skis a little bit.
0:23:47 I do think there’s a difference between a high-speed rail and an artificial moon.
0:23:51 And there’s somewhere in that difference is where we draw the line.
0:23:54 To your point, though, they are attracting a ton of investment.
0:23:59 They’re attracting especially a lot of consulting businesses and advisory businesses.
0:24:04 The advisory business has grown 13% in the Gulf states in the past year.
0:24:08 Deloitte has nine offices in the UAE alone.
0:24:15 And there’s this stat that I love, which is that McKinsey, which is consulting on this Neom project,
0:24:22 McKinsey is reportedly earning more than $130 million per year to consult on Neom.
0:24:27 And my reaction to that is you’ve got to hand it to McKinsey.
0:24:34 I mean, they are just exceptional at finding rich people, building them PowerPoint presentations, and then charging them crazy fees.
0:24:39 And all I can think is just what a great business consulting is.
0:24:42 These huge margins, very little overhead.
0:24:45 You were a consultant for many years.
0:24:48 Do you have any thoughts on just how the consulting business works?
0:24:51 Let me give you the pluses and the minuses of consulting.
0:24:55 It’s a great company to start because it requires little capex.
0:24:58 Your expenses and your assets go home in the elevator every night.
0:25:00 And if you don’t have business, you can lay off people.
0:25:02 If you do have business, you can ramp up.
0:25:09 So in a sense, services companies are good businesses to start because they don’t require a lot of IP or dramatic capex.
0:25:13 You can start a consulting company, as I did, by just getting a client.
0:25:17 I got Dreyer’s, and I got Levi Strauss & Company, and Williams-Sonoma as my first clients.
0:25:20 It’s an incredible training if you want to be an athlete.
0:25:22 You have to be a good communicator.
0:25:23 You have to be good at analytics.
0:25:24 You have to be good at managing relationships.
0:25:25 You have to be able to sell.
0:25:29 It really is training for a triathlon or a decathlon.
0:25:38 I think it’s a fantastic – if you’re coming out of business school and think, I want a second MBA, but I want it in the private sector, consulting is a fantastic training.
0:25:39 It turns you into a great athlete.
0:25:41 You make good money.
0:25:43 You never get really wealthy.
0:25:48 That’s the downside because the barriers of entry here, it’s a multiple of EBITDA business.
0:25:56 When I started my second consulting firm, L2, which I called Business Strategy, I turned it from intermittent consulting engagements.
0:26:00 I used to charge Williams-Sonoma half a million dollars to do their internet strategy.
0:26:06 Instead, I said to Nike, give me a quarter of a million a year, and I’ll meet with you every three months and just look at data and give you advice.
0:26:09 It is a very taxing business.
0:26:11 And again, see above, it’s a young woman’s game.
0:26:18 It’s very taxing on your health and your relationships because when you’re in the services business, you’re always someone else’s bitch.
0:26:20 Actually, this happened to me three times.
0:26:25 The CMO of Audi, who was my biggest client, called and said, Scott, we love you.
0:26:26 Can you be on Ingolstadt tomorrow?
0:26:28 And the answer was always, yeah, yeah.
0:26:43 I’ll get on a fucking plane from San Francisco, flying to Munich, be in coach, because it was my money back then, with six young people trying to figure out a PowerPoint presentation of what we were going to say to Audi that they hadn’t heard from McKinsey.
0:26:50 We were going to bomb to the Kinkos when we got to Munich at 9 a.m. to print this thing out and then fly back to San Francisco the next day.
0:26:54 It takes a real toll on your relationships and your health.
0:26:56 It’s a very taxing industry.
0:27:01 It’s also you make a good living, but it’s hard to get really wealthy in consulting because it’s all current income.
0:27:03 I found it fucking exhausting.
0:27:05 I don’t want to golf or have dinner.
0:27:11 If you’re having golf and dinner with people you don’t really like, it means you’re in an undifferentiated industry.
0:27:13 What do you mean by that?
0:27:17 I mean, the truly great companies don’t need to socialize with their clients.
0:27:26 And also, if you’re spending time, a lot of time getting taken to basketball games or dinners by third-party vendors, it means you’re paying too much.
0:27:29 It means you’re getting ripped off.
0:27:39 So Vanguard’s not going to take you out to lunch, but your wealth advisor from name the brokerage who takes you a basketball game, that means she is charging you onerous fees.
0:27:40 That’s a great point.
0:27:44 Anyways, the services business is we’re all selling the same shit.
0:27:47 And the way we differentiate is relationships.
0:27:50 Anyways, that’s my TED talk on the services business.
0:27:52 I love it.
0:27:59 By the way, I think if you were still doing that today, you would be printing money in the Gulf and kissing ass in Riyadh.
0:28:01 But maybe you’ll still do that anyway.
0:28:07 We’ll be right back after the break with a look at the latest on tariffs.
0:28:13 And if you’re enjoying the show so far, be sure to give Prof G Markets a follow wherever you get your podcasts.
0:28:23 Support for the show comes from Public.com.
0:28:23 All right.
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0:30:45 Okay, that email is done.
0:30:48 Next on my to-do list, pick up dress for Friday’s fundraiser.
0:30:50 Okay, all right, where are my keys?
0:30:52 Oh, in my pocket.
0:30:53 Let’s go.
0:30:57 First, pick up dress, then prepare for that big presentation.
0:30:59 Walk, dog, then…
0:31:00 Okay.
0:31:00 Inhale.
0:31:04 One, two, three, four.
0:31:06 Exhale.
0:31:09 One, two, three, four.
0:31:13 Ooh, who knew a driver’s seat could give such a good massage?
0:31:18 Wow, this is so nice.
0:31:20 Oops, that was my exit.
0:31:22 Oh, well, that’s fine.
0:31:23 I’ve got time.
0:31:29 After the meeting, I gotta remember to schedule flights for our girls’ trip.
0:31:31 But that’s for later.
0:31:38 Sun on my skin, wind in my hair.
0:31:40 I feel good.
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0:31:58 Oh, wait.
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0:32:03 Could you pick up wine for dinner tonight?
0:32:05 Yep, I’m on it.
0:32:08 I mean, that’s totally fine by me.
0:32:13 Play Celebrity Memoir Book Club.
0:32:15 I’m Claire Parker.
0:32:16 And I’m Ashley Hamilton.
0:32:20 And this is Celebrity Memoir Book Club.
0:32:30 We’re back with Prof G Markets.
0:32:32 The tariff drama has continued to unfold.
0:32:35 Last week, so much happened.
0:32:39 So I’m just going to take you through a timeline of all things tariffs.
0:32:48 So first off, back in February, Trump announced a 25% tariff on all steel and aluminum that comes into the U.S.
0:32:53 And the big news is that that tariff officially went into effect last week on Wednesday.
0:33:04 Then, as we discussed in the previous week, the Premier of Ontario announced a 25% tariff on all electricity that comes out of Ontario.
0:33:06 And Trump got very mad about this.
0:33:12 And a few days later, he said he would double tariffs on Canada’s steel and aluminum to 50%.
0:33:16 Now, in response to that, Doug Ford backed down.
0:33:18 He suspended his tariff.
0:33:20 And then after that, Trump also backed down.
0:33:23 And he brought the tariff back down to 25%.
0:33:27 In other words, a ton of headlines and a ton of back and forth.
0:33:30 But nothing actually happened.
0:33:33 We’re still in the same position we were a couple of weeks ago.
0:33:36 Let’s just shift to what happened in Europe.
0:33:41 As I said, that steel and aluminum tariff, which applies to the whole world,
0:33:44 that came into effect on Wednesday.
0:33:45 So that does affect Europe.
0:33:49 Europe’s response was, we’re going to tariff you right back.
0:33:55 They put a tariff on American whiskey, on American jeans, on Harley Davidson motorcycles.
0:33:57 It’s a pretty hilarious lineup of items.
0:34:00 I think they’re intentionally cartoonish to make a statement.
0:34:04 But if you add up the numbers, it does actually make sense.
0:34:07 Because those tariffs will be $28 billion on America.
0:34:10 And that’s the same amount Europe will pay on the steel and aluminum.
0:34:13 Then in response to that, Trump got angry again.
0:34:16 He threatened a 200% tariff on European wine.
0:34:20 Okay, now the question is, does any of this actually matter?
0:34:23 Probably not.
0:34:28 Because for all we know, the picture will look very different in a few days.
0:34:31 They’ll be reversed, unreversed, increased, decreased, whatever.
0:34:37 And I have to say, Scott, it’s beginning to make my job a little ridiculous.
0:34:43 Because the size and scope of these policies and the financial impact they have on our economy,
0:34:45 they’re too big to ignore.
0:34:50 I can’t simply resign from understanding them and say, I don’t really know what happened with tariffs.
0:34:52 They went up, they went down, whatever.
0:34:57 At the same time, though, this is a complete and utter waste of my time.
0:35:03 And for analysts and for investors and for CFOs and CEOs, it’s even worse.
0:35:06 Because for those guys, there is actual money on the line.
0:35:11 If you’re a Jack Daniels or a Levi’s or a U.S. Steel, you do need to understand the tariffs.
0:35:13 You need to write up research reports.
0:35:18 You need to model out the economics, analyze the downside, analyze the upside.
0:35:19 It’s a lot of work.
0:35:24 And so these guys probably spent weeks figuring out what will these tariffs actually do to our business.
0:35:29 And they woke up one morning, they checked the news, and bang, none of it mattered anymore.
0:35:35 And that’s the thing that I think corporations and executives are going to be most upset about this.
0:35:37 And we’ll talk about what’s happened in the markets.
0:35:42 But, Scott, first, just your reactions to what happened last week with tariffs.
0:35:47 Well, as you know, I like to ground everything in a personal parable so I can talk more about me.
0:35:49 So tariffs coming in, you charge a tariff.
0:35:52 We charge tariff on aluminum and steel.
0:35:58 And the rationale was we need to maintain a healthy domestic production or supply of steel.
0:36:00 That kind of makes sense.
0:36:01 If we go to war, we need tanks.
0:36:03 We don’t want to be too vulnerable.
0:36:04 So great.
0:36:12 Cleveland Cliffs and U.S. Steel saw their earnings go up because their product became more competitive because foreign imports became more expensive.
0:36:28 But that additional incremental income was vastly outweighed by the decrease in demand for products that had to dramatically increase their prices because of the additional cost of the input of steel and aluminum into their products.
0:36:34 So we’re net losers even when they pay the tariff and there’s no reciprocal tariff.
0:36:37 And this comes back to my first parable.
0:36:42 I don’t know if you’ve noticed when we’re on this show, I angle my head to the left.
0:36:44 I guess I haven’t.
0:36:45 Now I’m noticing.
0:36:47 You need to start investing in this relationship.
0:36:47 You never notice.
0:36:49 You haven’t noticed all the Pilates I’ve been doing.
0:36:52 You’re trying to be more attractive to either, you awful person.
0:36:52 Oh, no.
0:36:53 I’ve noticed that for sure.
0:36:55 Oh, I fucking hate Pilates.
0:36:58 The…
0:36:59 Angle of your face.
0:36:59 All right.
0:37:00 The angle of my face.
0:37:02 My nose goes to the right.
0:37:08 And the reason why it goes to the right is when I first moved to New York, I had, I was bored, too much time on my hands.
0:37:09 I was doing yoga and I was doing boxing.
0:37:14 And I got a trainer, this guy, this boxing guy, and I’d spar with him.
0:37:16 And he convinced me, it’s like, you know, you’ve got pretty good hand speed.
0:37:17 You’re in good shape.
0:37:20 Why don’t you enter this boxing tournament at this gym, this boxing gym we belong to?
0:37:23 And I’m like, was stupid enough to think that was a good idea.
0:37:25 So I’m 6’2″, 190.
0:37:31 It ends up that a guy who’s 5’9″, and 190, and knows how to box, is fucking Mike Tyson.
0:37:33 So I get into the ring with this guy.
0:37:35 All I hear, all I remember was the bell.
0:37:40 And the next thing I remember was all of these bright lights because I was flat on my back.
0:37:45 The amount of money I would pay to watch this fight, it’s crazy.
0:37:46 Oh, my God.
0:37:48 And my nose has never straightened.
0:37:50 My nose now goes to the right.
0:37:51 And here’s the thing.
0:37:58 Strategy, one of the biggest mistakes we make in strategy is believing that we’re boxing against
0:38:01 someone we’re paying or a speed bag, that it won’t hit back.
0:38:07 And that’s where Trump’s biggest flaw is, in my opinion, is he believes that he can just
0:38:12 impose tariffs unilaterally, and there won’t be reciprocal tariffs that dampen the demand for
0:38:14 our products in bigger.
0:38:16 Most, our best companies sell issues.
0:38:20 Nike gets two-thirds of its revenue from outside of the U.S.
0:38:24 Google probably gets four-fifths of its revenue from outside of the U.S.
0:38:27 And you don’t believe that these nations are going to slap on recipients?
0:38:31 You don’t believe they’re not going to hit back and break your fucking nose?
0:38:32 Of course they are.
0:38:34 This is one of the biggest mistakes.
0:38:39 Whenever you’re doing scenario planning, you have a tendency to believe that you’re doing
0:38:44 it in a vacuum and that all of your competitors are just going to sit there and not respond.
0:38:47 This is the biggest flaw in scenario planning.
0:38:49 Well, if we do this, the following things will happen.
0:38:56 Generally, what corporate strategy executives leave out is like, okay, the moment we do this,
0:38:57 what will they do?
0:38:59 They’ll respond.
0:39:02 Well, if we decrease prices, we’re going to capture more share.
0:39:06 We’re going to roll up the industry and be able to charge monopoly rents.
0:39:09 Well, you realize the day after we lower prices, our competitors are probably going to lower
0:39:10 prices too, right?
0:39:14 So we’re just going to inspire a decrease in margin across the industry.
0:39:17 And unless we have more capital, they can go toe-to-toe with us.
0:39:21 This is Trump’s, in my opinion, one of his many flaws.
0:39:25 He’s under the impression he’s boxing against someone he’s paying or a speeding back.
0:39:34 Two, the biggest negative impact of this is that we have become an unserious partner.
0:39:39 In studies with rats, they can get food without a shock.
0:39:40 They love that.
0:39:47 They can get food with a shock every time, or they can get food with a shock intermittently.
0:39:53 And the rats that are the most stressed are not the ones who get shocked every time because
0:39:54 they know what to expect.
0:39:59 It’s the rats that are shocked half the time because they don’t know what to expect.
0:40:03 And this is where we are with our supply chain and our global alliances.
0:40:09 Every country in the world is thinking about how they diversify away from doing business
0:40:14 with America because they do not know who they are waking up next to.
0:40:19 I think this is the first time where my classics degree has ever been useful, and it’ll probably
0:40:20 be the last time.
0:40:26 But there’s a quote by Cicero that I will leave you with, and that is, quote, more is lost by
0:40:29 indecision than wrong decision.
0:40:32 Indecision is the thief of opportunity.
0:40:34 Indecision will rob you blind.
0:40:38 I think that pretty much sums up what’s happening with tariffs right now.
0:40:40 We’re not even committing to the tariffs.
0:40:47 We’re flip-flopping every second, and we’re wasting both our partner’s time and our own time.
0:40:55 And one final story that I think is quite interesting, and I want to get your quick reaction to, on tariffs.
0:41:03 So, Walmart was recently summoned by the Chinese government, who was very upset with them.
0:41:11 Because apparently, Walmart has been asking Chinese suppliers to reduce their costs because Walmart is so worried about these tariffs.
0:41:15 So, they went to these Chinese suppliers and said, hey, we have to deal with these tariffs.
0:41:17 Is there any way you could bring costs down?
0:41:20 The CCP got very, very angry about this.
0:41:24 They called up Walmart and their executives, and they discussed the issue.
0:41:29 And the Chinese authorities, the state media, they said publicly, quote,
0:41:33 if Walmart insists, then what awaits Walmart is not just talk.
0:41:43 So, it’s so interesting how what started as a political altercation is now implicating companies and their executives.
0:41:51 Walmart is now stuck in the crosshairs of this trade war, and they’re being threatened by national governments.
0:41:58 And so, this is yet another reason why I think it’s not just, you know, anti-MAGA people who are upset about this.
0:42:04 I think it’s basically the entire corporate world who has to deal with the fact that they are on the wrong end of the stick
0:42:09 when it comes to the president’s foreign policy and his decisions on these tariffs.
0:42:16 You’re a classics major from Princeton who likes a white tennis player.
0:42:19 Seriously, you’re the most translucent person I know right now.
0:42:22 You’re literally the whitest guy in the world right now.
0:42:24 By the way, let me get to a point.
0:42:27 This is how a real man quotes people.
0:42:33 General Eisenhower said, the wrong decision is bad, no decision is worse.
0:42:34 Not fucking Cicero.
0:42:35 Better when Cicero said it.
0:42:36 Jesus Christ.
0:42:40 Anyways, your point is exactly the right one.
0:42:45 The inconsistency and uncertainty is worse than the actual tariffs themselves.
0:42:51 You can’t operate a company, much less a business or a country this way.
0:43:00 We’ve taken for granted the fact that most nations, when they enter into an agreement, they respect us.
0:43:07 They think that we’ll do our best, that the laws, the contract law applies to them and applies to us.
0:43:10 That there’s a rule of fair play, consistency.
0:43:12 We do what we say we’re going to do.
0:43:15 And you know who the big winner here is China.
0:43:22 Chinese officials are roaming around the EU right now and saying, hey, we’re the devil you know.
0:43:23 We’ll do what we say.
0:43:24 We’re open for business.
0:43:26 You want a trade relationship?
0:43:27 You’ve been buying all this stuff from America.
0:43:28 You can’t count on them.
0:43:28 Guess what?
0:43:29 You may not like us.
0:43:31 But you know what?
0:43:32 We do what we say.
0:43:33 You can count on us.
0:43:41 If we enter into a trade relationship or an agreement between this supplier and your company assembling this in Stockholm, you can count on us.
0:43:43 You know who you’re waking up next to.
0:43:48 We’ll be right back after the break with a look at the $4 trillion market sell-off.
0:43:52 If you enjoyed the show so far, hit follow and leave us a review on Proftree Markets.
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0:46:31 We’re back with Prof G Markets.
0:46:39 U.S. stocks have faced their toughest start to a presidency since 2009, with the market losing $4 trillion in value.
0:46:47 Amid a three-week sell-off, the VIX, or the market’s fear gauge, surged to its highest level since December.
0:46:52 Bitcoin fell below $80,000 and Treasury yields fell as well.
0:46:58 Across asset classes, the so-called Trump bump we saw after the election has disappeared.
0:47:08 So, Scott, in terms of the stock market, since Trump entered the office, the S&P has dropped 7%, the Nasdaq has fallen 11%.
0:47:10 We’re starting to hear the word recession a lot more.
0:47:12 In fact, we discussed that in the live podcast.
0:47:15 I’m also hearing people say bear market.
0:47:18 I’ve also seen some comparisons to the dot-com bubble.
0:47:26 In fact, it was exactly 25 years ago, as of last week, that the dot-com bubble burst and the stock market crashed.
0:47:35 And so, I’ve been seeing speculation that maybe we’re in for dot-com bust 2.0 here, or that the stock market might fully collapse.
0:47:42 So, you lived through that crisis in the year 2000, which many people are comparing this period to.
0:47:45 Do you think we’re anywhere close to that?
0:47:48 Are we close to a bear market, perhaps?
0:47:53 First off, you could say that, okay, all we’ve lost is the Trump bump.
0:47:57 The stock market is still at a pretty near historical high.
0:48:06 Now, Warren Buffett timed it perfectly as soon as they announced the tariffs and he saw Apple at $250 trading at 38 times earnings when it usually trades at about $18 over its history.
0:48:08 He’s gone straight to cash.
0:48:10 So, America just looks expensive.
0:48:17 You could argue that some of the air being let out here is just a natural part of the cycle, and it’s still at fairly robust highs.
0:48:20 The question is, what do you do about it?
0:48:21 And a lot of people are saying, I’m moving to cash.
0:48:25 I believe that moving to cash, it’s very hard to time the markets.
0:48:27 I’m always invested.
0:48:34 What I am doing, and the lesson or the advice I would give around this, around how to respond, I learned from my mistakes.
0:48:40 In 2016, when Trump was elected, I thought, this guy is a fucking idiot, and the market’s going to crash.
0:48:41 He’s stupid.
0:48:43 And so, I sold pretty much everything.
0:49:02 So, in addition to paying capital gains on the stocks that I ended up buying back into six months later at a higher price when I realized what an idiot I was trying to time the markets and probably not acknowledging that the president has less impact on the markets than we’d like to think and gets more blame and credit than they deserve.
0:49:03 It was an emotional reaction.
0:49:04 It was an emotional reaction.
0:49:06 So, now I’m not going to have the same emotional reaction.
0:49:16 What I am doing, though, is deciding, okay, over the medium and long term, because of demographics and productivity and innovation, the markets globally do tend to go up and to the right.
0:49:20 So, what I am doing is diversifying out of U.S. stocks.
0:49:21 I won’t sell everything.
0:49:35 I still have a lot of money in the private markets here and in real estate, but I’m getting more exposure to European and Latin American stocks because the way I have really fucked up my economic health and economic well-being is through a lack of diversification.
0:49:42 And that is, I was all in on tech in 1999 and then all in on growth in 2007.
0:49:47 And by the middle of 2000 and the middle of 2008, I was broke.
0:49:50 I went from wealthy to broke.
0:49:51 And I’m not doing that again.
0:49:55 And the way you try not to do that again is through diversification.
0:50:03 But trying to time the markets and moving to cash, I believe you should always be invested, but you want to diversify.
0:50:12 And I think if you just look at the relative valuations, it’s not a bad idea to take some money off of the table in U.S. and put it into global index funds.
0:50:17 I think there’ll probably be some people out there who are saying, but we’re down 10%.
0:50:18 You know, the market’s down.
0:50:20 Why would I want to sell now?
0:50:24 Or freaking out that, you know, we’re in the middle of this big crash.
0:50:29 I do want to point out, so far at least, this is very much a correction and not a crash.
0:50:31 The market’s down 10% from its high.
0:50:36 If we were to enter an actual bear market, it would need to come down 20%.
0:50:37 So we’re not there yet.
0:50:45 And if you look at the historical P.E. of the S&P 500, last month it was trading at 25 times earnings on average.
0:50:52 And you compare that to the long-term P.E. of the S&P 500, which is 16 times earnings.
0:50:57 So even still, it is still a richly valued market.
0:51:08 So if you’re thinking of unwinding some of your positions and diversifying elsewhere, yeah, it’s maybe a little annoying you didn’t do it a month ago, two months ago, three months ago.
0:51:11 But big picture, it really isn’t a big deal at all.
0:51:15 The market is still doing pretty well on a price-to-earnings basis.
0:51:19 Okay, so Apple’s P.E. has crashed from 38 to 34.
0:51:25 I bought Apple, and it’s better to be lucky than good, in 2011, and I paid nine times earnings.
0:51:33 So to think that all of a sudden, wow, Apple is cheap, okay, it’s not as insane as it was a month ago.
0:51:38 But to believe that the markets are on sale right now in the U.S., no.
0:51:42 I mean, they’re not at all-time highs, but by any metric, they’re still expensive.
0:51:45 Let’s just go through some of the winners and the losers in this sell-off.
0:51:49 We touched on it a little bit in our last episode, but I think it’s worth examining more.
0:51:51 I’ll start with the winners.
0:51:58 I mentioned at South by Southwest, a big winner here are these traders who are trading on the volatility.
0:52:00 Let’s focus on stocks for this session.
0:52:02 I have two groups of winners here.
0:52:06 First off, we have the domestic steel and aluminum stocks.
0:52:10 That’s basically two or three companies.
0:52:13 It’s like U.S. Steel and its new core.
0:52:21 There are very few companies that are actually benefiting from the tariffs from a steel and aluminum perspective.
0:52:24 And actually, if you look since Inauguration Day, they’re almost flat.
0:52:25 So they’re barely winners.
0:52:30 But I think we can count them because last week when the tariff stuff happened, they rose a little bit.
0:52:34 The second group of winners is what I will call the defensive stocks.
0:52:40 And these are stocks that are highly unspeculative, no tech, very old, very mature.
0:52:43 And crucially, these are the stocks that issue dividends.
0:52:50 So companies like Johnson & Johnson and Coca-Cola, they are up since Trump took office.
0:52:52 Again, not by that much.
0:52:55 It’s not a huge win, but they are outperforming.
0:53:00 And I think the dynamic we’re seeing here is investors are now looking for safety.
0:53:09 They’re not interested in these moonshot AI bets or software plays or anything, basically, that depends on an optimistic future.
0:53:14 Instead, they’re going to the stocks that can hand you cash in your pocket today, the dividend stocks.
0:53:16 Let’s go to the losers.
0:53:18 First off, the tech companies.
0:53:21 Amazon down 10% year-to-date.
0:53:22 Apple down 11%.
0:53:24 Google down 12%.
0:53:26 NVIDIA down 17%.
0:53:28 Also, the banks.
0:53:31 Citigroup, Morgan Stanley, Goldman Sachs.
0:53:33 They are all suffering since Trump was elected.
0:53:35 Small cap stocks.
0:53:39 So these are the small market cap companies, companies in the Russell 2000.
0:53:41 They are taking a beating right now.
0:53:42 Also, Tesla.
0:53:44 Of course, that’s its own story.
0:53:46 But it’s down 35% on the year.
0:53:49 Now, what do all of these companies have in common, all of these losers?
0:53:51 It’s so interesting.
0:53:53 They are all the Trump trades.
0:53:59 These are the very companies that we talked on this podcast that were supposed to benefit
0:54:00 from the administration.
0:54:02 You remember we spoke with Tom Lee.
0:54:05 He was bullish on these companies specifically.
0:54:07 And to be clear, I agreed with him.
0:54:12 But the market is basically telling us right now, hey, remember everything we said about Trump
0:54:15 and who he’s going to help and which companies are going to benefit?
0:54:16 Forget all of that.
0:54:17 No longer true.
0:54:19 We misjudged him.
0:54:20 We didn’t realize.
0:54:21 Sorry, our bad.
0:54:26 And this is all reminding me of something that Anthony Scaramucci told us nine months
0:54:27 ago.
0:54:30 When we were in the middle of the election, no one knew what was going to happen.
0:54:33 And Trump was beginning to talk about this tariff thing.
0:54:36 And there was this consensus view on Wall Street.
0:54:41 And I had many discussions with many investors and many people on this podcast.
0:54:44 There was this view that it’s all just talk.
0:54:46 He doesn’t really mean it.
0:54:48 He’s just he’s throwing meat to the base.
0:54:49 He’s not going to go through with this.
0:54:51 Think what it would do to the markets.
0:54:52 He doesn’t want to do that.
0:54:53 Why would he do that?
0:54:56 Anyway, we had that conversation with Anthony Scaramucci.
0:54:59 And I put forward that thesis to Anthony.
0:55:07 He’s calling for sky high tariffs, which will cripple poor people.
0:55:11 Tariffs, as you both know, are regressive taxes on poor people.
0:55:13 Do you think he’s serious about those?
0:55:18 So, Ed, this guy knows how to boil a frog better than anybody that I’ve ever met, right?
0:55:23 You’re in the cold water and he simmers the frog until the frog is dead.
0:55:31 Do you know how many things from 2016 to today that we could say, is he serious about that?
0:55:34 And then you say, oh, no, he’s not serious about that.
0:55:36 And he fucking does it.
0:55:39 And you’re like, holy shit, he is serious about that.
0:55:41 And then he does it again.
0:55:43 I mean, he completely nailed it.
0:55:48 And I think it is very interesting to see what’s happening in the markets right now.
0:55:56 The fact that the markets are down and Wall Street and corporations are suddenly realizing, oh, my God, he was serious.
0:55:58 Maybe he’s not on our side.
0:56:05 And I think that’s the vibe shift that is making Wall Street and investors so freaked out right now.
0:56:07 We thought that Trump was one of us.
0:56:08 Maybe he isn’t.
0:56:13 Let’s take a look at the week ahead.
0:56:17 We’ll hear the Fed’s interest rate decision for March.
0:56:20 We’ll also see earnings from Nike, FedEx, and Five Below.
0:56:22 Scott, any predictions?
0:56:36 So supposedly, SoftBank was about to lead a round into OpenAI at a valuation of between $260 and $300 pre-money, putting a $40 billion round, putting it a post of $300 or post of $340.
0:56:48 I think the insecurity in the market right now is probably going to give them a reason to hit the sanity button and either get different terms or better terms or not do this investment.
0:56:57 It strikes me that valuing OpenAI as amazing a company as it is, as valuable or as impactful as AI is going to be.
0:57:02 I would imagine a lot of his investors are like, it’s beginning to smell a lot like WeWork.
0:57:10 I guess my prediction is I’m not sure this round is going to close on the terms initially reported in the press because it hasn’t closed yet.
0:57:14 And it just feels to me this is too rich.
0:57:28 If you’re a limited partner in SoftBank, basically Masayoshi-san has tried to convince you that within five years, this will be one of the 10 most valuable companies in the world because it’s going to have to have a trillion-dollar-plus market cap to justify the kinds of returns for this type of risk.
0:57:33 I think that is a difficult argument to make with any level of certainty right now.
0:57:36 Is OpenAI an amazing company at $50 or $100 billion?
0:57:37 Absolutely.
0:57:39 At $300 billion?
0:57:40 I don’t know.
0:57:43 That feels very toppy to me, Ed.
0:57:50 This episode was produced by Claire Miller and engineered by Benjamin Spencer.
0:57:52 Our associate producer is Alison Weiss.
0:57:53 Mia Silverio is our research lead.
0:57:55 Isabella Kinsel is our research associate.
0:57:57 Drew Burrows is our technical director.
0:57:59 And Catherine Dillon is our executive producer.
0:58:03 Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
0:58:08 Join us on Thursday for our interview with Lynn Alden, only on Prof G Markets.
0:58:43 We’ll see you next time.
0:58:45 Thank you.

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0:02:02 As President Trump upends the post-World War II order,
0:02:07 it’s finally dawning on Europe that it can no longer rely on America.
0:02:12 Europe becomes a union, as read by George Hahn.
0:02:22 The president is pulling back the security blanket that’s protected Europe since 1945
0:02:27 and imposing 25% tariffs on steel and aluminum imports,
0:02:32 claiming the European Union was formed to screw the United States.
0:02:35 As the U.S. upends transatlantic ties,
0:02:40 the EU is awakening to the reality that its rich uncle has lost his shit
0:02:44 and can no longer be trusted, much less depended on.
0:02:48 As dangerous as this is, we should ask,
0:02:50 what could go right?
0:02:56 This rift presents an opportunity for the EU to harness its economic strength
0:02:59 and finally become a union.
0:03:02 Skepticism is warranted.
0:03:06 The bloc of 27 member states has a host of problems,
0:03:09 waning competitiveness against the U.S. and China,
0:03:11 lagging investment,
0:03:13 costly regulation,
0:03:15 lack of coordination,
0:03:17 sclerotic decision-making,
0:03:18 and political division.
0:03:24 Only four of the world’s top 50 tech companies are European,
0:03:28 according to a report last year led by Mario Draghi,
0:03:31 the former president of the European Central Bank.
0:03:33 Without radical change,
0:03:35 Draghi said,
0:03:39 Europe’s reason for being is at risk.
0:03:44 But with American brand equity eroding at a breathtaking pace,
0:03:46 Europe could fill the void.
0:03:48 Under Trump,
0:03:50 the U.S. is caving to Russia,
0:03:51 a murderous autocracy.
0:03:56 The pre-orchestrated ambush of a democratically elected leader in Ukraine
0:03:58 was a low point in American history.
0:04:03 Typical head-up-your-ass thinking from a leader who’s decided to alienate allies,
0:04:06 raise costs for American consumers,
0:04:09 and reduce demand for our products overseas.
0:04:14 The definition of stupid is harming yourself while harming others.
0:04:18 These policies are stupid.
0:04:20 So how should Europe respond?
0:04:26 First, it’s critical the EU significantly boost its spending.
0:04:32 EU defense investment last year accounted for just 1.9% of its GDP,
0:04:40 well short of the level of 3.5% that’s needed to respond to today’s existential crisis.
0:04:44 Europe is finally getting serious about security.
0:04:46 Ursula von der Leyen,
0:04:48 president of the European Commission,
0:04:54 set out a plan to mobilize 800 billion euros for defense,
0:05:00 including a 150 billion euro loan program to pay for weapons and technology,
0:05:04 while Germany’s chancellor-in-waiting, Friedrich Mertz,
0:05:07 stressed the need for independence from the U.S.
0:05:10 Mertz’s center-right Christian Democrats
0:05:13 and the leaders of his likely coalition partner,
0:05:15 the center-left Social Democrats,
0:05:19 have agreed to relax limitations on German borrowing
0:05:23 and inject hundreds of billions into the country’s military and infrastructure.
0:05:37 Europe has a GDP 10 times the size of Russia’s,
0:05:45 but Putin is spending 40% more on the war than Ukraine and all its allies, including the U.S., combined.
0:05:54 The next step is seizing more than 200 billion euros of frozen Russian assets held in Brussels.
0:06:13 European countries stopped short of confiscating the funds amid fears that it could breach international law and undermine trust in Europe as a place to invest.
0:06:36 It’s worth noting that about 2.5 billion pounds from the sale of Chelsea football club by Russian billionaire Roman Abramovich is just sitting in a bank account amid protracted talks about how the money will be unlocked.
0:06:40 It’s time to pull the trigger on the frozen funds.
0:06:48 This would move the EU upstream of the policies of the U.S. president and remove his leverage to force a surrender.
0:06:57 Another positive emerging from the chaos is stronger collaboration between the EU and the U.K.
0:07:04 Almost nine years after Britain voted to leave the bloc, one of the biggest self-inflicted injuries in history,
0:07:07 the U.K. is moving closer to Europe again.
0:07:18 Prime Minister Keir Starmer has proposed forming a coalition of the willing to police any ceasefire in Ukraine with his country ready to,
0:07:23 quote, put boots on the ground and planes in the air, unquote.
0:07:30 Britain has also shown support for a multilateral fund and joint military financing to fortify Europe’s defenses.
0:07:38 At a time when European countries are already under financial pressure, pouring more money into defense will be painful.
0:07:43 In the U.K., Starmer has drawn fire over his plan to cut the foreign aid budget to fund the military.
0:07:51 But the prime minister has, quote, found a new purpose abroad, unquote, after getting off to a shaky start,
0:07:56 as The Economist notes in a cover story this week under the headline, Winston Starmer.
0:08:07 Putting the moral argument to support Ukraine aside, leaders can make an economic case for military investment as it paves the way for innovation.
0:08:11 Consider the U.S. Defense Advanced Research Projects Agency.
0:08:23 The agency, better known as DARPA, played a critical role in breakthroughs including GPS navigation, stealth technology, and mRNA vaccines.
0:08:31 In Israel, where technology and national security go hand in hand, the military serves as an incubator of startups.
0:08:36 Or look at Ukraine, which has revolutionized drone warfare.
0:08:43 The Trump administration fails to see what may have been the best investment by the U.S. in recent history.
0:08:51 The 67 billion dollars the U.S. has provided in military aid to Ukraine is a significant sum.
0:09:00 And Americans justifiably question funding a war thousands of miles away when they can’t find jobs or afford diabetes medication.
0:09:09 However, much of that spending benefits U.S. military suppliers, creating jobs and stimulating the economy.
0:09:14 As it happens, mostly in red states, but that’s a different post.
0:09:27 What’s more, using the equivalent of about 7% of our defense budget, we’re crippling Russia’s army, hobbling Putin’s economy, and castrating proxies that pose a terrorist threat.
0:09:31 All without putting a single American boot on the ground.
0:09:42 We’ve taken out a third of an enemy’s kinetic power and sent a message to China regarding its long-contemplated invasion of Taiwan.
0:09:53 They’ve no doubt taken notice of how formidable a motivated fighting force can be defending their homeland when armed with Western armaments and intelligence.
0:10:04 The U.S. retreat presents an opportunity for Europe.
0:10:15 In Germany, bold plans to step up investment in defense and infrastructure are sparking optimism that the manufacturing sector will get a much-needed boost.
0:10:22 Weapons maker Rheinmetall aims to convert some car part plants to produce military equipment.
0:10:29 And Hensold, which makes sensors and radars, is considering hiring software engineers from automotive suppliers
0:10:31 that have experienced huge job cuts.
0:10:39 Rheinmetall, French warplane maker Dassault Aviation, Italian defense and aerospace company Leonardo,
0:10:48 Britain’s BAE Systems, and Sweden’s Saab, a maker of jets, submarines, and anti-tank systems,
0:10:56 have all seen dramatic rallies in their share prices as investors anticipate an increase in military spending.
0:11:03 The benefits could spill over into other sectors, too, giving a lift to a sluggish European economy.
0:11:11 It’s estimated that a debt-financed increase in defense spending to 3.5% of GDP,
0:11:17 with those funds directed to infrastructure, R&D, and manufacturing from European sources,
0:11:22 could increase economic output by as much as 1.5% per year.
0:11:30 If Europe successfully adapts, it will expand in promising areas including AI,
0:11:34 semiconductors, digital infrastructure, and quantum computing.
0:11:40 Building on its manufacturing, technology, and intellectual property prowess,
0:11:55 Europe has economic influence, but it also needs resolve, a resource in abundance in Russia.
0:11:59 Think about what Ukraine and its allies are up against.
0:12:04 Putin has shown a willingness to shed a staggering amount of blood,
0:12:10 sending waves of young men forward into a meat grinder, as the strategy is known,
0:12:12 in a bid to overwhelm the enemy.
0:12:20 Ukraine estimates Russia lost 150,000 soldiers in 2024 alone,
0:12:24 almost three times the number of Americans who died in the Vietnam War.
0:12:27 How does Russia recruit?
0:12:31 In some regions, through substantial upfront payments.
0:12:39 U.S. Defense Secretary Pete Hegseth plays down the importance of values relative to hard power.
0:12:41 He says, quote,
0:12:45 You can’t shoot values, you can’t shoot flags, unquote.
0:12:48 He’s wrong.
0:12:57 Afghanistan, Vietnam, 1939 Britain, and the 13 American colonies all faced bigger fighting forces.
0:13:00 And they prevailed.
0:13:05 The EU lacks the funds, but this can be fixed.
0:13:08 The real question is, do they have the resolve?
0:13:15 When my mom was a young girl growing up in London during World War II,
0:13:18 she and her family had to endure the Blitz.
0:13:26 They were forced to sleep in dark tube stations where they’d pass out gas masks shaped like Disney characters
0:13:28 so scared children would agree to put them on.
0:13:31 Eight decades after Germany surrendered,
0:13:36 How many Europeans are willing to sleep underground to live through the night?
0:13:45 Achieving peace, security, and stability will require tough decisions and sacrifices,
0:13:49 the kind of sacrifices that win wars.
0:13:52 Is the EU willing to make them?
0:13:56 As Trump advances with his America First agenda,
0:13:59 it’s easy for proponents of liberty and democracy to despair.
0:14:04 But there’s nothing like the threat of a brutal autocrat in Russia
0:14:09 and an unpredictable president in the White House to bring unity to the continent.
0:14:14 The bad news is the EU can no longer count on the US.
0:14:16 The good news?
0:14:18 They may not need us.
0:14:23 Life is so rich.
0:14:40 It’s been reported that one in four people experience sensory sensitivities,
0:14:45 making everyday experiences like a trip to the dentist especially difficult.
0:14:50 In fact, 26% of sensory sensitive individuals avoid dental visits entirely.
0:14:57 In Sensory Overload, a new documentary produced as part of Sensodyne’s sensory inclusion initiative,
0:15:01 we follow individuals navigating a world not built for them,
0:15:06 where bright lights, loud sounds, and unexpected touches can turn routine moments
0:15:09 into overwhelming challenges.
0:15:14 Burnett Grant, for example, has spent their life masking discomfort in workplaces
0:15:16 that don’t accommodate neurodivergence.
0:15:20 I’ve only had two full-time jobs where I felt safe, they share.
0:15:22 This is why they’re advocating for change.
0:15:28 Through deeply personal stories like Burnett’s, Sensory Overload highlights the urgent need for spaces,
0:15:32 dental offices, and beyond that embrace sensory inclusion.
0:15:37 Because true inclusion requires action with environments where everyone feels safe.
0:15:41 Watch Sensory Overload now, streaming on Hulu.
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0:15:51 Okay, that email is done.
0:15:54 Next on my to-do list, pick up dress for Friday’s fundraiser.
0:15:56 I’ll write, okay, I’ll write, where, where are my keys?
0:15:58 Oh, in my pocket.
0:15:59 Let’s go.
0:16:03 First, pick up dress, then prepare for that big presentation.
0:16:05 Walk, dog, then…
0:16:06 Okay, inhale.
0:16:10 One, two, three, four.
0:16:12 Exhale.
0:16:15 One, two, three, four.
0:16:19 Ooh, who knew a driver’s seat could give such a good massage?
0:16:24 Wow, this is so nice.
0:16:26 Oops, that was my exit.
0:16:28 Oh well, that’s fine.
0:16:29 I’ve got time.
0:16:35 After the meeting, I gotta remember to schedule flights for our girls’ trip.
0:16:37 But that’s for later.
0:16:44 Sun on my skin, wind in my hair.
0:16:46 I feel good.
0:16:48 Turn the music up.
0:16:54 Your all-new Nissan Murano is more than just a tool to get you where you’re going.
0:16:56 It’s a refuge from life’s hustle and bustle.
0:17:02 It’s a place to relax, to reset, into spaces between items on your to-do lists.
0:17:05 Oh, wait, I got a message.
0:17:09 Could you pick up wine for dinner tonight?
0:17:10 Yep, I’m on it.
0:17:14 I mean, that’s totally fine by me.
0:17:19 Play Celebrity Memoir Book Club.
0:17:21 I’m Claire Parker.
0:17:22 And I’m Ashley Hamilton.
0:17:26 And this is Celebrity Memoir Book Club.
0:17:34 This episode is brought to you by On Investing, an original podcast from Charles Schwab.
0:17:37 I’m Kathy Jones, Schwab’s Chief Fixed Income Strategist.
0:17:40 And I’m Lizanne Saunders, Schwab’s Chief Investment Strategist.
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0:01:09 Do you mind if I ask you a few questions?
0:01:11 Sure, if it’s correct.
0:01:15 Just how worried should we be about artificial intelligence?
0:01:18 So I’ll tell you a story.
0:01:25 This week on Unexplainable, the first episode of Good Robot, a four-part series from Julia Longoria.
0:01:33 It’s a series about the stories we tell about AI and how those stories are shaping AI itself.
0:01:37 Follow Unexplainable wherever you get your podcasts.
0:01:40 Episode 340.
0:01:42 3-4-0 is the area code for the Virgin Islands.
0:01:44 In 1940, McDonald’s was found.
0:01:45 A true story just last week.
0:01:50 I saw this ridiculously hot guy spank his son for throwing his fries on the ground.
0:01:52 So I threw my fries on the ground.
0:02:12 Welcome to the 340th episode of the Prof G-Pod.
0:02:12 What’s happening?
0:02:15 The dog is back from Austin.
0:02:15 That’s right.
0:02:21 Came in last night and is in New York for a few days before heading off to Tulum.
0:02:22 South by Southwest is wonderful.
0:02:23 I love Austin.
0:02:28 I think that people have a tendency to sort of stereotype all of Texas.
0:02:37 I just think that’s like trying to stereotype all of Europe or, I don’t know, the Democrats trying to stereotype all of Latinos and thinking that they look at every issue through their identity.
0:02:41 I love Austin and just very much enjoy South by Southwest.
0:02:44 I pony up to the proper hotel.
0:02:47 I pony up to the bar and I was a little bit drunk and a little bit high.
0:02:48 I took an edible, sea above.
0:02:53 It was a Sunday night and I found this really hot guy and I said, you know, I have an enormous dick.
0:02:55 And he said, I don’t like big dicks.
0:02:58 And so I leaned in and asked, well, do you like liars?
0:02:59 That’s good.
0:03:00 That’s good.
0:03:05 Anyways, I’m back in New York and I am going to, what am I going to do?
0:03:10 I was just on PBS of all places talking about the Trump administration.
0:03:16 I’m going on with Anderson Cooper tomorrow, here to see some friends, going out to the new clubs, the new membership clubs.
0:03:17 It’s crazy.
0:03:20 There’s one opening every month.
0:03:26 I’m at the stage of my life where I like that because I want an easy plan B just to roll up and not have to, I don’t know.
0:03:30 I kind of just want to be in places that 10 years ago would not have me as a member.
0:03:32 So I enjoy it.
0:03:33 But there’s one opening every week.
0:03:35 They’re definitely all going to put each other out of business.
0:03:45 And the downside to all of this is that we continue to sequester the 0.1% or the 1% from the rest of the population.
0:03:47 And that is it’s never been a better time to be rich.
0:03:55 It’s just if you’re wealthy now, you can go to these amazing places with a curated crowd and always get in.
0:04:02 And I think it’s sort of, I kind of miss, what should I say, I miss, like rolling up to a place in New York and not being sure if you were going to get in.
0:04:03 But everyone sort of had a shot.
0:04:09 Now, granted, if you were hot, you had a much bigger shot or if you knew who was throwing the party or the club promoter.
0:04:10 Quick story.
0:04:20 One of the club promoters I met in the early 2000s when I moved to New York and I was single, I wanted to go to hot places with people much hotter and much younger than me.
0:04:21 Pretty much everybody.
0:04:25 And I got to know this guy named Scott Sartiano as he was sort of a club promoter.
0:04:35 And then, so you got to know Scott if you were, you know, a guy like me, douchebag, trying to hang out with wealthy men and young, attractive women.
0:04:47 Scott basically went to Argentina and then had sort of an awakening and returned to his Christian roots and decided that he wanted, that his kind of life was void of meaning and decided to go to Africa.
0:04:54 And we started getting messages and emails from Scott where he was on this thing called the Mercy Ship where they did surgery on kids.
0:05:07 And he was there as a photographer sending back images that would help raise money of kind of before and after these surgeries from these wonderful medical personnel donating their time, their treasure, and their talent to try and do basic surgery on children living in poverty.
0:05:10 And then he came back and he said, you know, I have this idea.
0:05:14 I want to raise $5,000 for my friends and go back and build a well.
0:05:15 And he did that.
0:05:18 And he said, I can bring safe potable water to 400 people.
0:05:20 And then he came back and said, okay, I did that.
0:05:24 I want to raise $15,000 and build three wells.
0:05:33 Anyways, fast forward about 20 years later, I think Scott’s going to raise $120 million this year and has brought safe drinking water to literally millions of people.
0:05:45 And it kind of reminds me or it takes me back to what is the silver lining that I continue to have to remind myself of as I struggle with anger and depression and have a tendency to see things kind of as a glass half empty, if you will.
0:05:58 And that is the number of people spending time helping people they will never meet, either through nonprofits or special interest advocacy, whatever it might be, is the highest it’s ever been in history.
0:06:01 For the first time in my life, I’m sort of triggered by what’s going on.
0:06:05 I’ve always been able to sort of disassociate from the news.
0:06:13 I’m self-absorbed and indulgent and was just focused on me all the time and whatever was happening in D.C. or across different groups.
0:06:13 I didn’t really care.
0:06:19 One, because the majority of the prosperity was crammed into my group, essentially white heterosexual males.
0:06:22 Think about the tailwind I’ve had.
0:06:23 And I’m not being humble.
0:06:24 I’m a fucking monster.
0:06:25 I’m really talented.
0:06:26 I’m hardworking.
0:06:40 But if you look at America from when I was born, 1974, 64, to about 2000 and call it 14, before like young men kind of became the enemy, according to everybody.
0:06:52 Essentially, you had all of the prosperity of the most prosperous economy, economic model in history, kind of the 50 years between the 60s and the 10s or the aughts in the United States.
0:07:02 And almost all of that prosperity was crammed into a subset of America of about a third of its population, specifically straight white males.
0:07:08 So think about just literally the Category 5 hurricane winds that have been in my sails.
0:07:09 And this isn’t guilt.
0:07:12 This isn’t I don’t even think this is that kind of progressive.
0:07:14 It’s just it’s just data.
0:07:18 America grew its GDP faster in those 50 years.
0:07:26 And I think the rest of the world, maybe the exception of China, if you took out China, we had more GDP growth, more income, more prosperity than the entire world combined if you took out China.
0:07:30 And all of that prosperity was crammed into one third of its population.
0:07:34 I mean, it’s just as I think about it, it’s just extraordinary.
0:07:35 Anyways, back to Scott.
0:07:53 Here’s a guy who decided rather than trying to draft off of the alcohol abuse and need to feel social and the midlife crisis that I’ve been going through for the last 40 years and promote clubs that attracted those type of types of individuals, that he was going to try and plant trees the shade of which he would never sit under.
0:08:01 And what’s so impressive about his firm, Charity Water, is that he brought so much innovation in the nonprofit sector.
0:08:06 I think the nonprofit sector, I would argue the nonprofit sector is one of the worst run sectors in the world.
0:08:08 I find that the majority of it, not the majority, is that fair?
0:08:25 A lot of it is virtue signaling and basically let’s throw parties and give people a sense that they have purpose in their lives and they end up spending almost as much money as they raise such that they can have a brunch in a windowless hotel room somewhere in Palm Beach and feel good about themselves.
0:08:37 And they’re right, and I found that Scott is both right and effective and spent a lot of time on things like design and an app and doing incredible content marketing.
0:08:38 And he’s just very savvy.
0:08:43 He takes some of his biggest donors each year to Africa and obviously gets them very invested in the project.
0:08:48 He spends the majority, the vast majority, runs a very lean organization of the money that goes in.
0:08:56 He does something called the well, where a small number of donors cover all of the overhead such that he can legitimately raise money and say all of it’s going to wells.
0:09:10 Anyways, there’s tremendous innovation there, and it strikes me more than anything that what is it about, as you get older, the void, if you’re feeling a certain void and you’re fortunate to have to some level of economic security or you don’t have a lot of economic dependence,
0:09:14 around trying to find some sort of purpose or help others.
0:09:23 And one of the things I have found that helps me when I’m feeling down is to start thinking a little bit about trying to be in the service of others,
0:09:28 whether it’s either giving a little bit of money away to a charity, volunteering somewhere.
0:09:29 I don’t do a lot of that.
0:09:30 I’m generous with everything but my time.
0:09:34 But trying to get out of your own headspace and focus on other people.
0:09:40 And I have found that people who generally are in the service of others are the happiest.
0:09:53 And it’s very anthropological because if you think about what’s going on in your amangala or wherever it is that decides if you’re happy or if good or bad cholesterol should be flushed into your system to either make you die faster or live longer,
0:09:59 you essentially have a security camera on in your brain that’s keeping track of your value add to the species.
0:10:01 So that’s the bad news.
0:10:07 The good news is it’s very grainy and has very low resolution so you can fool it.
0:10:14 So when you’re on a Stairmaster or you’re lifting weights for CrossFit, it’s under the impression that you’re hunting prey or building housing and it decides to let you live a little bit longer.
0:10:21 If you are doing a crossword puzzle and think so, you’re making important decisions for the clan or the tribe, we’re going to let you stick around for a little bit longer.
0:10:32 If you are caring for other people, the physical act of caring for children and other people or being concerned about other people or being social, which in mistakes for caring for other people,
0:10:37 it again secretes a hormone that clears out the bad cholesterol and decides to let you live a little bit longer.
0:10:47 Back to me when I first moved to New York, I was pretty much just leaving my cave for food and sex or an attempt to have sex.
0:10:48 And I was sequestering from everybody.
0:10:50 I’d gone through a divorce.
0:10:52 I’d left the Bay Area.
0:10:53 I hated technology.
0:10:54 I hated VCs.
0:10:58 I wasn’t even that big a fan of my kind of cohort or community out there.
0:11:02 And I basically said to my ex, you can have almost everything, including our friends.
0:11:02 I’m out.
0:11:05 Still don’t go back to San Francisco much.
0:11:07 I think I’m traumatized is the wrong word.
0:11:09 Just didn’t enjoy that part of my life very much.
0:11:21 And moved to New York and immediately started kind of sequestering from everything and kind of thinking, okay, I’m going to just be selfish and be on my own.
0:11:27 And something kicked in and I immediately figured out, okay, if I do this, I’m going to die.
0:11:28 If I continue this.
0:11:39 I mean, being totally selfish and going out and having an amazing time in New York with a little bit of money, it was a really meaningless and empty kind of existence.
0:11:43 Now, as far as meaningless and empty existences go, it was pretty good.
0:11:47 But I definitely realized I’m probably going to die in my 50s if I continue to do this.
0:11:54 And I worry that a lot of young people are being convinced mostly by technology that they can sequester from society and have productive lives.
0:11:55 And that’s just not true.
0:11:56 You lead a very unhealthy life.
0:12:03 Now, especially men who don’t cohabitate with someone else have a life expectancy of like a decade less than people who do.
0:12:06 Let’s get back to the regularly scheduled program.
0:12:13 In today’s episode, we’re speaking with Barry Ritholtz, the co-founder, chairman, and chief investment officer of Ritholtz Wealth Management.
0:12:17 He’s also the host of Masters in Business, the most popular podcast on Bloomberg Radio.
0:12:26 We discussed with Barry his new book, How Not to Invest, the Ideas, Numbers, and Behaviors that Destroy Wealth and How to Avoid Them.
0:12:27 I love Barry.
0:12:29 I think he’s got a great brain and he’s a good guy.
0:12:31 He actually, him and his wife actually adopt dogs.
0:12:35 How can you not like a guy that adopts rescue dogs?
0:12:39 And his partner, Josh Brown, who’s on CNBC, you know, like 11 hours a day.
0:12:47 He’s literally the Joe and Mika of CNBC has kind of this fantastic, pragmatic approach to the markets.
0:12:51 And I like the way these guys approach investing and wealth management.
0:12:52 And I always learn a lot from them.
0:13:00 And they’re sort of, I think there’s sort of a throwback to the initial kind of alternative investments community where they’re kind of these Long Island guys that just keep it very real.
0:13:03 They really enjoy their conversation.
0:13:10 And I find that they’re really sober and honest and give great advice.
0:13:12 They’re not going to tell you like which stock to buy.
0:13:13 They’re going to tell you about diversification.
0:13:19 They’re going to tell you about low cost ETFs and index funds and how you build wealth slowly,
0:13:25 which is kind of the best way to build wealth in the sense that, like I’ve always said, I know how to get you rich.
0:13:26 That’s the good news.
0:13:27 The bad news is the answer is slowly.
0:13:29 Anyways, I have a lot of respect for these guys.
0:13:31 I generally think they’re good fiduciaries for other people’s money.
0:13:41 And I think they’re avoiding what is the biggest grift in history, and that is this general myth that there are certain individuals and funds that can outperform the market over the long term.
0:13:42 They can’t.
0:13:50 And in exchange for fooling you into thinking this, they’re going to charge you onerous fees, which over the medium and long term are going to create an underperformance relative to the market.
0:13:53 And they’ve always been very sober and honest about that.
0:14:00 So anyways, with that, please stick around for our conversation with Barry Ritholtz, co-founder, chairman and chief investment officer of Ritholtz Wealth Management.
0:14:05 Barry, where does this podcast find you?
0:14:11 I’m sitting at 731 Lex in my regular podcast studio at Bloomberg.
0:14:15 I think you were some of the first podcasts I ever came on at Bloomberg.
0:14:17 I mean, I remember coming in there seven or eight years ago.
0:14:18 Yeah, you’re a great interviewer.
0:14:21 So let’s bust right into it.
0:14:24 Your book, How Not to Invest, is out next week.
0:14:31 In it, you grew common investing mistakes into three buckets, bad ideas, bad numbers, and bad behavior.
0:14:33 Break these down for us.
0:14:33 Sure.
0:14:37 So first, we have a century of books telling us what to do.
0:14:44 And despite, I don’t know, tens of thousands of books, most people are still pretty mediocre investors.
0:14:47 So I took a page from the two Charlies.
0:14:51 Charlie Ellis, who compared investing to tennis.
0:14:54 Most people are not professional tennis players.
0:14:56 Professionals win by scoring points.
0:14:59 Amateurs lose by unforced errors.
0:15:06 And if you just bring that approach to investing and say, rather than try and find the next NVIDIA
0:15:12 or jump in and out of the market before and after the next crash, how about we just make fewer mistakes?
0:15:16 And it turns out that puts you 90% ahead of everybody else.
0:15:22 And the other Charlie is Charlie Munger, who in his inimitable fashion was asked,
0:15:24 are you and Warren smarter than everybody else?
0:15:26 Is that why you’re so successful?
0:15:30 And Munger responded, no, we’re just less stupid.
0:15:34 Less stupid is better than smarter, at least in investing.
0:15:44 So when I was trying to put the book together, I just started thinking about all the errors I had come across over 30 years.
0:15:49 And they neatly fit into, we believe things that aren’t true.
0:15:54 We don’t understand the numbers that drive the markets, the economy, investing.
0:15:58 And then we engage in behavior that is super self-destructive.
0:16:04 You mentioned that you never planned on becoming a wealth manager, but we’re driven by frustration with Wall Street’s practices.
0:16:14 What are some of those practices that are kind of potentially put a money manager or Wall Street not on the same side as its investor base?
0:16:15 So I didn’t go to business school.
0:16:16 So I didn’t go to business school.
0:16:18 I went to law school.
0:16:27 And a big part of the legal education is understanding your fiduciary obligation to your clients, your ethical obligation.
0:16:32 Something similar applies to accounting, to the medical practice.
0:16:36 Doctors have a similar obligation to their patients.
0:16:48 And yet money is so important to our safety and security and financial well-being, our retirement, what we pass down to our children and to our philanthropy.
0:17:00 But the rules were such that there’s no greater obligation to you from traditional financial practice than you get from a used car salesman.
0:17:02 It made no sense to me.
0:17:06 Wait, you just can’t misrepresent that the transmission is bad?
0:17:09 And other than that, it’s an arm’s length transaction?
0:17:12 That never made any sense.
0:17:19 You can just do what you want to do with the client, harvest their organs, sell them on the black market.
0:17:20 That’s fine.
0:17:25 It simply was inconsistent with all the other professional relationships we had.
0:17:35 And following the financial crisis, which I more or less got the top and bottom right, lots of people started throwing money at me.
0:17:40 I wasn’t comfortable referring those people to other places.
0:17:50 And I wasn’t comfortable even at the firm I was at at the time because they were a little bit, you know, it’s called a hybrid model, a little bit of a fiduciary, except when it’s inconvenient.
0:17:57 Then they swap hats and suddenly they can just be a broker and maximize profits.
0:18:01 And it was really out of just absolute frustration.
0:18:04 All right, we can’t turn these people loose to the wolves.
0:18:09 Let’s see if we can give them a provide a service that puts them first.
0:18:15 And, you know, over the past 20 years, Wall Street has slowly drifted in that direction.
0:18:20 It’s still not quite all the way there, but it’s much further along than it was 10, 15 years ago.
0:18:29 So on up before, and by the way, Barry and his partner, Josh, and I get together, not regularly, but we do get together and they kind of save me for myself.
0:18:36 I want to throw out a couple of theses around biases or some of the things that have haunted me in terms of investing and have you comment on them.
0:18:41 And then just some general structural impressions or thoughts.
0:18:45 The first is that your emotions are your enemy.
0:18:49 And that is when I get hurt really badly, I’m just like, I can’t take any more pain.
0:18:57 I want to sell when I do well, my greed glands get going and I start thinking about levering up with margin because I start believing I’m actually good at this.
0:19:08 And I find, and I have to check myself, I think of that Seinfeld episode where George Costanza decides to do everything that he instinctively, he does the opposite of what he thinks he should do and his life gets much better.
0:19:26 So think about why we even have a limbic system and an amygdala and an emotional response to external input.
0:19:30 Humans now dominate planet Earth.
0:19:32 Wasn’t always that way.
0:19:38 We’re soft, chewy, delicious creatures without fangs or claws.
0:19:39 Or armor.
0:19:41 So, yeah, so we’re super vulnerable.
0:19:53 And we developed a series of subroutines that allowed us to not only stay alive, but adapt and eventually dominate the planet.
0:19:59 And what kept you alive on the Savannah is your fight or flight response.
0:20:06 The ability to quickly identify a potential threat and respond in the most effective way.
0:20:14 That turns out to be great if you’re a biological organism that’s constantly under threat.
0:20:22 But making risk-reward decisions in the market, it goes right to Danny Kahneman’s thinking fast and slow.
0:20:24 Thinking fast keeps you alive.
0:20:29 Thinking slow is how you make money in the markets.
0:20:34 And emotions, your limbic system, are clearly part of that thinking fast.
0:20:41 I love the quote from Dr. William Bernstein, former neurologist and doctor who became an investor.
0:20:49 He said, your entire level of success as an investor is determined by your limbic system.
0:20:53 If you can’t get that under control, you will die poor.
0:20:58 And that is really quite the warning about emotionality and investing.
0:21:09 You’ve actually been an advocate and have been pretty vocal about saying investors are better off buying index funds rather than trying to pick individual stocks.
0:21:17 And yet you’re a money manager and you make fees trying to find alpha, I think.
0:21:24 Help me reconcile why you tell your clients not to just go invest in Vanguard.
0:21:27 Well, we’re big Vanguard investors.
0:21:29 We’re Vanguard, Wisdom Tree, BlackRock.
0:21:40 Our approach is a combination of core and satellite, where the heart of the investing are pretty broad indexes.
0:21:48 U.S. total market, XUS developed some emerging markets.
0:21:56 The idea is, look at, this is a perfect example, recording this towards the end of the first quarter.
0:22:01 And the U.S. is up a percent or two.
0:22:03 Europe is up 15%.
0:22:10 So when you’re diversified over a long period of time, different parts of the world are going to do better or worse.
0:22:17 And that’s the core that should lock the beta in for your portfolio.
0:22:21 Beta being take what the market gives you and be happy.
0:22:24 The satellite are all the things you do around that.
0:22:35 So if you believe in momentum or value or maybe you like technology or India or, you know, there’s a thousand different variations.
0:22:39 Think of it as the Christmas tree is the core index.
0:22:47 The garland and all the ornaments are the stink you put on your portfolio with those satellite things.
0:22:50 However you want to flavor it, you could do that.
0:22:58 There are some other technologies and some other things that we really like that helps us find tax alpha.
0:23:09 And we’re also big believers in what we call advisor alpha, which is what can we do to prevent investors from hurting themselves?
0:23:18 So we have a very simple tactical model that we put a small percentage of the portfolio in and its purpose is not to generate alpha.
0:23:26 Its purpose is to prevent people from touching their real money when things get hairy, as we’ve seen the past week or two.
0:23:30 We don’t learn this lesson, but whenever I’ve met with you and Josh, you guys is drilling home.
0:23:44 And that is people, I think one of the most underappreciated strategies for a risk adjusted return and also limiting your emotional downside is diversification.
0:23:45 It’s so boring.
0:23:58 And yet I just don’t think most of us really think about how powerful it is and really add up our assets and say, OK, if I’ve got 90 percent of my wealth in my home and my vacation home, that’s probably not a great idea.
0:24:03 Or if I’ve got, at some point, U.S. growth will slow down or U.S. tech growth.
0:24:10 My two biggest mistakes, I’ve been wealthy three times, which means I’ve lost it all twice.
0:24:17 And the reason I lost it all twice, and it was hugely emotionally and mentally trying, was I didn’t appreciate the power of diversification.
0:24:19 I was always highly levered to U.S. tech.
0:24:25 And so what do you know, in 2000 and 2008, I was no less a person or no dumber.
0:24:26 I just got wiped out.
0:24:32 Talk about the power of diversification and why we just naturally don’t learn that lesson.
0:24:33 Sure.
0:24:44 So there are two emotional impediments to being and staying emotionally diverse, invest-wise diversified.
0:24:51 The first is being diversified means there’s always something in your portfolio that’s not doing well.
0:24:56 You know, the past decade, it’s been Europe.
0:24:58 Europe has wildly underperformed.
0:25:02 Suddenly, Europe is now doing much, much better than the U.S.
0:25:14 Value has done really poorly over the past decade, in large part because of the shift in markets away from hard industries and towards intellectual property.
0:25:19 And value, at least as historically described, hasn’t adjusted.
0:25:32 So when you’re looking at your portfolio and why is my emerging markets doing poorly and why is this value sleeve underperforming, it’s very easy to get frustrated and walk away from that.
0:25:41 The second factor is we all have a tendency to lean into whatever’s working.
0:25:47 So for the past decade, technology has been great, just as it was in the 90s.
0:25:52 But at a certain point, those things come to an end.
0:26:01 Every cycle turns, every bull market ends, every bear market ends, every period of economic expansion eventually hits a recession.
0:26:05 And so one of the free lunches and there aren’t many on Wall Street.
0:26:18 One of the free lunches is occasionally rebalancing towards a core set of allocations so that one part of your portfolio doesn’t run amok.
0:26:25 And suddenly half of your exposure is to or more is to technology.
0:26:42 We regularly see people come into the office who 10 years ago took a flyer on NVIDIA or Apple or Amazon, and they’re paralyzed because three quarters of a not insubstantial chunk of wealth is one company.
0:26:56 And that single stock risk, not everything is going to be Lehman Brothers and go to zero, but look at General Electric, you know, one of the most beloved stock.
0:26:56 Cisco.
0:26:57 Yeah.
0:26:58 Oh, Cisco.
0:27:00 I have a whole chapter on Cisco.
0:27:02 Amazon, 99 to 2001, lost 90% of its value.
0:27:03 Right.
0:27:04 It was single digits.
0:27:07 People forget Amazon was trading for single digits.
0:27:17 So you give up, you willingly give up potential upside in a single stock because for many, we have no minimums in the firm.
0:27:18 So we have people with $50,000.
0:27:20 We have people with 50 million.
0:27:25 When you hit a certain point, you have to recognize, hey, I won.
0:27:28 There’s no reason to take all this additional risk.
0:27:38 Let’s trade off upside in exchange for steady, ready gains without the possibility of a 90% collapse.
0:27:41 We’ll be right back.
0:27:55 It’s been reported that one in four people experience sensory sensitivities, making everyday experiences, like a trip to the dentist, especially difficult.
0:28:01 In fact, 26% of sensory sensitive individuals avoid dental visits entirely.
0:28:07 In Sensory Overload, a new documentary produced as part of Sensodyne’s sensory inclusion initiative,
0:28:19 We follow individuals navigating a world not built for them, where bright lights, loud sounds, and unexpected touches can turn routine moments into overwhelming challenges.
0:28:26 Burnett Grant, for example, has spent their life masking discomfort in workplaces that don’t accommodate neurodivergence.
0:28:30 I’ve only had two full-time jobs where I felt safe, they share.
0:28:33 This is why they’re advocating for change.
0:28:43 Through deeply personal stories like Burnett’s, Sensory Overload highlights the urgent need for spaces, dental offices, and beyond that embrace sensory inclusion.
0:28:48 Because true inclusion requires action with environments where everyone feels safe.
0:28:52 Watch Sensory Overload now, streaming on Hulu.
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0:30:03 This week on Property Markets, we speak with Jonathan Cantor, former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice.
0:30:11 We discuss which sectors he believes most need antitrust enforcement and how businesses actually feel about antitrust.
0:30:14 The dirty little secret is that business actually likes what we do.
0:30:19 They’re the ones encouraging us to bring cases because they want access to markets.
0:30:20 They want supply chains that are affordable.
0:30:25 They want greater supply of key inputs, right?
0:30:27 This is something that’s quite popular in business.
0:30:31 You can find that conversation exclusively on the Prof G Markets podcast.
0:30:36 A couple more theses.
0:30:40 We’ve talked about index funds and fees.
0:30:46 I still don’t think the market is really cognizant of how much of your return fees will eat up.
0:30:51 And I would argue, and I’ll put forward a thesis, that the alternative investments community,
0:30:55 and I would say a good 50% of my friends are in this community,
0:31:01 who recognize the most extraordinary gains relative to their talent.
0:31:02 And by the way, they’re exceptionally talented.
0:31:09 But from kind of 1995 to 2015, I think that 20-year period will be remembered
0:31:17 as the period where a small group of people made more money on a risk-adjusted basis than any sector in history.
0:31:30 I had friends who were good, hardworking, work at hedge funds, and the good, hardworking people in other industries were making $200,000 to $2 million a year, and they were making $20 to $30 million a year.
0:31:37 And then that came to an end, or slowly but surely, I would say the majority of them were even out of the business over the last five or 10 years.
0:31:41 They stayed in the business, but their AUM’s gone from, you know, $3 billion to $300 million.
0:31:52 And my thesis is that the alternative investment sector could best be described, that’s mutual funds, hedge funds, as San Francisco real estate, and that is expensive but bad.
0:31:59 And that is, the returns have been in stocks that everybody knows, so no one’s going to pay you $2 and $20 to buy NVIDIA.
0:32:07 And they’ve been left trying to find alpha in a narrow part of the market, and they’ve just vastly underperformed.
0:32:16 I think the analysis shows if you added up all the people on CNBC who come on and pitch stocks, they have underperformed the S&P by the amount of their fees.
0:32:21 Isn’t this arguably one of the biggest grifts in economic history, the alternative investment community?
0:32:34 The Financial Times called the hedge fund a scheme to transfer money from naive investors to savvy managers, and I think that overstates it a little bit.
0:32:41 You know, the golden age of hedge funds was pre-Reg FD, where you could have an information edge.
0:32:57 And before quants were really everywhere, to say nothing of the few quants that really put up killer numbers in the 80s, 90s, and 2000s, right up to the financial crisis.
0:33:00 Jim Chanos has a wonderful quote in the book.
0:33:05 When he started in the 1980s, there were 100 hedge funds, and they all create alpha.
0:33:12 Today, there’s 11,000 hedge funds, and more or less those same 100 are the ones that generate alpha.
0:33:15 So my thinking on alternatives has evolved.
0:33:25 If you can get into the elite hedge funds, the top, let’s call it decile, the DE shores of the world, if they’re willing to take your money,
0:33:36 and it’s their money-making fund, not their secondary under any hedge fund that’s successful, always rolls out a, you know, a plan B for the masses,
0:33:41 and it never does as beautifully as the first one does, yeah, that’s a great opportunity.
0:33:54 What we’ve seen since the financial crisis and the era of zero interest rate has been a shift in assets instead of flowing into hedge funds,
0:33:57 and they’re still going in to some degree.
0:33:58 It’s $3 trillion.
0:34:03 They have moved to private credit and private equity.
0:34:12 And that seems to be the alternative that, if not generating alpha over and above what the market does,
0:34:18 at least they can make a plausible case that it’s not correlated and it’s diversified.
0:34:21 We’re not putting money into publicly traded stocks.
0:34:23 We’re not putting money into bonds.
0:34:32 We are buying credit and or private companies and therefore underexposed to the equity markets.
0:34:34 At least that’s a plausible argument.
0:34:44 I’m not so sure I fully buy into all of it, but it’s a better argument than I’m going to aggressively trade on a leveraged basis public equities.
0:34:49 I still can’t help but stock pick, and I want to put a couple of my core theses out there and have you respond to them.
0:34:55 One is regarding what you said about Europe, and every year at the end of the year, I make a much prediction.
0:35:04 One of my predictions in November of 2024 was that we were finally going to see the flows, the rivers reverse.
0:35:10 And that is someone told me that if you added in debt, the U.S. market accounted for 70% of the world’s value.
0:35:19 If it’s just equities, it’s 50%, but if you added debt, the total value of the world, if you put a price tag on it, is represented.
0:35:21 70% of that is the U.S.
0:35:27 And I thought, okay, if I could buy the U.S. for $70 or the rest of the world for $30, I would buy the rest of the world for $30.
0:35:34 And so I’ve started rotating out of U.S. growth and into value, some in LATAM, some in China, and some in Europe.
0:35:45 And I read that U.S. growth is at 98%, meaning on a scale of 1 to 100, it’s only been more expensive, 2% of its history.
0:35:48 And this is about a month old, so I’m sure it’s changed.
0:35:53 But European value was at 2%, meaning 98% of its history had been higher.
0:36:03 So granted, this is just stock picking on a more meta level, but doesn’t the U.S. just generally speaking, and I’m curious if you’re telling your clients this, just look overvalued?
0:36:08 So let’s start 30,000 feet and drill down.
0:36:22 First, you have that itch, and the advice we always give people with that itch is set up a separate cowboy account, put 5% or 10% of your money into it,
0:36:24 and pick stocks to your heart’s delight.
0:36:24 Who cares?
0:36:25 That’s no fun.
0:36:28 5% to 30, 5% to 10%.
0:36:29 All right.
0:36:33 Well, you know, you’re risking another 2,000 and 0,8, 0,9.
0:36:36 If you blow up 5% or 10%, who cares?
0:36:38 It hurts, but it’s not fatal.
0:36:40 So that’s number one.
0:36:46 Number two, sometimes stocks are expensive or cheap for a reason.
0:37:00 You could look back for the past 15 years, other than really briefly after the financial crisis, it’s hard to say U.S. stocks have been cheap any time in the past 10, 15 years.
0:37:02 They’re expensive for a reason.
0:37:04 It’s the highest profit growth.
0:37:16 It’s the best, or at least it was up until the craziness we’re dealing with now with tariffs and all sorts of other potential risk raisers.
0:37:25 But when you look around the world, Europe has a structural problem and has had that problem for a long time.
0:37:27 We have a lot of advantages.
0:37:28 We have the reserve currency.
0:37:35 You know, it’s not a coincidence that all of the big tech companies primarily start here.
0:37:41 I have a vivid recollection of a business trip in 2000 to London and Brussels.
0:37:47 And in the U.S. during the dot-com collapse, you walk down the streets in Manhattan.
0:37:49 The fear was palpable.
0:37:52 Shit, if I get fired, I lose my health care.
0:37:53 My kid can’t get that surgery.
0:37:55 Cobra is crazy expensive.
0:37:56 I’m screwed.
0:37:59 In Europe, it was kind of like, well, I got unemployment.
0:38:02 My student loans – I don’t have student loans.
0:38:03 My education is paid for.
0:38:05 My retirement is paid for.
0:38:06 My health care is paid for.
0:38:08 All right, so we have a recession.
0:38:08 Who cares?
0:38:18 The flip side of that is you don’t get the, you know, the Larry Ellisons, the Bill Gates, the Steve Jobs in Europe the way you get them here.
0:38:26 So sometimes stocks are cheap for a reason, and they can stay cheap for far longer than we would expect.
0:38:29 Ninety-eight is kind of a warning.
0:38:30 So that’s number one.
0:38:41 Number two, I’m not a fan of putting money into China because they basically say if you’re not a local Chinese investor, you’re a second-class citizen.
0:38:46 And I think the numbers are from 1989 to 2023.
0:38:49 You’re essentially flat in China.
0:39:01 I mean, you missed two of the greatest bull markets in history, and China gave you nothing because the B shares don’t trade the same way the A shares do.
0:39:04 And there’s a lot of friction, unlike in the U.S.
0:39:09 So I know everybody seems to think China is the big winner.
0:39:31 It turned out the way to get exposure to China was not through putting money into China, but buying Australia, who supplied a lot of energy, a lot of commodities, a lot of things to China, and did really well on a much more steady basis without the governments, the Chinese centrally planned government putting a thumb on it.
0:39:43 But the other aspect, and you and I have talked about what I’m about to say before, most investors never find their edge, right?
0:39:51 Ninety-plus percent of us, we have some idea as to what’s going on, but really not a full understanding.
0:39:54 We’re overconfident.
0:39:54 We’re arrogant.
0:39:59 We suffer from all the Dunning-Kruger effects, and so we make bad decisions.
0:40:05 But some of us, and I include you in that group, have an edge.
0:40:18 You have an expertise, digital marketing, content creation, look at your successful history on the entrepreneurship side.
0:40:38 If you can trade your expertise for entree into some of these alternatives where you’re getting a, hey, let’s swap, I’ll swap my, not charge you a fee and you don’t charge me a fee, that’s a tremendous advantage that you should be very comfortable taking advantage of.
0:41:06 When I, you know, I first found you because of your presentation on The Four, which eventually became the book, The Four, and it was clear to me that you had a huge insight into these companies, even as late as the early 2010s, I would say, check yourself and say, do I still have the advantage that I had when I bought these companies at a fraction of where they are today?
0:41:08 Let me ask you this.
0:41:15 There’s two big exogenous factors that I think you have to acknowledge and maybe adjust for.
0:41:21 And I’m curious how you’re adjusting your clients’ portfolios to these two opportunities, risk, whatever you want to call it.
0:41:32 The first is the Trump administration and all that brings kind of, you know, America first generously or tariffs, however you want to frame it, and two, AI.
0:41:36 How are you adjusting your clients’ portfolios based on those two factors?
0:41:39 So let’s start with AI first.
0:41:50 You know, and you and I are not that far apart age-wise, so we’ve lived through the financial crisis, we’ve lived through the dot-com implosion, what happened with the internet.
0:42:00 I think we’re both old enough to remember when computers, desktop computers first came out, and there’s this sort of land rush.
0:42:03 And by the way, this has happened with every technology.
0:42:10 Go back to telegrams, radio, telephones, computers, internet, AI is no different.
0:42:15 There’s a rush to try and find the winners, the NVIDIAs.
0:42:31 But what ends up happening is we’re not a dot-com company, but every modern company today has a website, has email, uses business intelligence and connectivity to make themselves more efficient, more productive, more profitable.
0:42:35 So with AI, the thought process is, is NVIDIA too expensive?
0:42:36 Is it too cheap?
0:42:45 When does Netflix and Microsoft and Apple, when do those companies achieve full value, overvalue?
0:42:47 I don’t know.
0:42:48 I have no idea.
0:42:52 People have been betting that it was over for forever, and they’ve been wrong.
0:42:56 To me, what makes AI so exciting isn’t the Magnificent Seven.
0:43:11 It’s the other 493 companies in the S&P 500 that every single one of them is going to be using artificial intelligence to make themselves more productive, more efficient, more profitable.
0:43:13 And that’s the upside.
0:43:16 Sure, NVIDIA is a $3 trillion company.
0:43:18 Is it going to be a $4 or a $5 or a $6 trillion?
0:43:21 I haven’t the slightest idea.
0:43:27 But I can tell you the rest of the S&P 500 is going to benefit from AI and become much more productive.
0:43:31 So that’s your second question first.
0:43:42 The Trump issue is kind of fascinating because there are two sides to this, and you have to be able to hold two conflicting thoughts in your head at once.
0:43:53 The first is if I’m investing for retirement, generational wealth transfer, philanthropy, I’m thinking out 10, 20, 30 years.
0:43:57 I’m certainly thinking out beyond 2028.
0:44:04 And so you have to kind of tune out the noise and look past all of the craziness that’s going on today.
0:44:10 But the flip side of that, and, you know, I’ve never met a one-handed economist.
0:44:12 It’s always on the one hand and on the other hand.
0:44:19 But the flip side of that is there can be no doubt that risks are rising.
0:44:34 This is a piece I put out last Monday, and we identified seven areas where the possibility of risks, they’re still low, but they’re higher than they were before January 20th.
0:44:45 And that includes the risk of a recession, the risk of a contraction in the economy, the risk of a volatility spike, which we’ve already seen.
0:44:51 We’re now over 23, which is a big, relatively higher number.
0:44:54 Not high enough to say, gee, I got to start buying with both hands.
0:44:56 But it’s above where we were.
0:44:57 That was kind of steady.
0:45:01 I’m concerned about the risk of the rule of law.
0:45:07 I don’t understand this nonsensical strategic crypto reserve.
0:45:15 The world using the U.S. dollar as the reserve currency of choice has been called America’s exorbitant privilege.
0:45:19 Why on earth would you do anything to put that at risk?
0:45:23 Sam, why is it put at risk with the Bitcoin reserve currency?
0:45:29 Why would you want to create an alternative to the dollar and endorse that?
0:45:37 You know, if you have an asset that’s enormously valuable, you don’t want to do anything to screw that up.
0:45:43 And arguably, I try and think of Bitcoin as like a large tech company.
0:45:48 It’s halfway between Facebook and Google, to put it into context.
0:45:52 At like a trillion, seven trillion, eight, it’s right in between the two of them.
0:46:01 Although Bitcoin came out a year or two after the iPhone, the iPhone is ubiquitous and indispensable.
0:46:07 We’re still waiting for Bitcoin to actually become an actual functionality.
0:46:18 But back to the question about Trump and tariff and layoffs that the federal government, you know, we’re sort of in a wait and see.
0:46:20 Will these things withstand judicial scrutiny?
0:46:25 Do they actually have the authority to not spend money that Congress authorized?
0:46:31 There’s a lot of questions, but you can’t just completely tune everything out.
0:46:35 You have to be aware we’re seeing risks rise.
0:46:38 We’re seeing the possibility of recession increase.
0:46:48 I’m not a giant fan of the various Federal Reserve GDP real-time measures before you get the quarterly update.
0:46:57 But the Atlanta Fed’s GDP now just printed yesterday negative 2.8% for Q on GDP.
0:47:04 That’s the first two months or so of data imply that we’re going to be in a contraction when all these tariffs
0:47:09 and all these layoffs get calculated in Q1.
0:47:11 That’s obviously a substantial risk.
0:47:18 You just can’t tell how much of this is negotiating, how much of this is going to go in effect.
0:47:23 We’re recording this 12 hours after the tariffs went into effect.
0:47:25 The first time they were postponed.
0:47:33 I’m hoping, I have a little wishful thinking on my part, that this will be negotiated away.
0:47:38 But in the meantime, you know, the market’s still within 5% of its all-time highs.
0:47:46 It’s a little early to panic, but it’s not too early to say, gee, this is starting to get a little more volatile and a little more choppy.
0:47:56 And lots of areas that have been pretty, you know, sedate and operating properly are now starting to tick up.
0:48:02 They’re still low, but they’re much higher than they were four weeks ago, six weeks ago.
0:48:05 We’ll be right back.
0:48:17 I’m Josh Muccio, host of The Pitch, where startup founders raise millions and listeners can invest.
0:48:25 For Lucky’s Season 13, we looked at 2,000 companies and selected 12 of the very best founders to pitch in Miami.
0:48:29 They flew in from all over the country and the world.
0:48:30 My name is Michele.
0:48:31 And I’m from Italy.
0:48:34 I’m originally from Medellin, Colombia.
0:48:36 I was born and raised in Maisel, Kentucky.
0:48:38 I’m from Baltimore, Maryland.
0:48:39 And I am from Finland.
0:48:44 This season, we’re diving even deeper into the human side of venture.
0:48:48 As these founders pitch the sharpest early stage VCs in the game.
0:48:51 I normally don’t like ed tech, but I really like you.
0:48:52 I echo those sentiments.
0:48:54 I do want to push back, though.
0:48:55 Puffing up there, lady.
0:48:56 That’s healthcare.
0:48:58 I feel like I’m the lone dissenter.
0:48:59 Ooh, Charles, spicy.
0:49:00 So I’m out.
0:49:04 I’m sure when they air this episode, they’ll be like, Charles was really dumb.
0:49:06 For those who can’t see, my jaw is currently on the floor.
0:49:08 Season 13 of The Pitch is out now.
0:49:13 Episodes are available to watch on YouTube or listen on your podcast player of choice.
0:49:16 So subscribe to The Pitch right now.
0:49:26 We’re back with more from Barry Ritholtz.
0:49:30 So I can’t help it.
0:49:35 I want to talk about individual theses looking for alpha and get your response.
0:49:40 I’m wondering, I’m trying to find the silver lining and basically America abandoning its allies
0:49:47 with respect to Ukraine and ignoring 80-year-old alliances with huge economies in Europe.
0:49:50 And I’m obviously laying bare my political bias here.
0:49:52 But it just seems insane to me.
0:50:01 And the silver lining I see is that the Europe is about to substantially increase its military spending.
0:50:10 And I see that possibly as a form of stimulus, not only economically, but it might inspire a decent amount of technology spillover into the private sector.
0:50:21 If you look at Israel spending on the military, I would argue that on the whole, you could argue in addition to the actual defense buttressing.
0:50:24 It’s been in many ways good for the economy long term.
0:50:31 I think of basically the most valuable companies in the world have just built a thick layer on top of technology innovation that originally came out of the defense sector.
0:50:48 Do you think that there’s a possibility, and this is me trying to talk myself into the fact that Europe becomes a union again, spends more on military, and that it kind of ignites through stimulative impact and kind of an inspiration in its tech sector,
0:51:03 that Europe might become a union, and this might kind of set off not only leadership, where they kind of command the space they own, largest economy in the world, take us a whole, but it might be a starting gun for kind of a bull run in Europe?
0:51:07 Or am I just painting a story to make myself feel better here?
0:51:16 So we have a tendency to think of the world in black and white and binary terms, and it’s never that clear cut.
0:51:23 It’s always nuanced and complex, and so you’re touching on a couple of really interesting things.
0:51:32 So let me caveat this by saying I am neither a defense expert nor a foreign policy expert nor a geopolitical expert.
0:51:34 Doesn’t stop me, Barry. Stop being so fucking measured.
0:51:37 Just make declarative statements.
0:51:42 Well, that’s where I was going with this, where I was going in one direction, but in the book—
0:51:47 Pretend we’re on CNBC. Just say shit like it’s God’s gospel.
0:51:53 So the funny part about what you’re saying is this chapter in the book called Epistemic Trespass,
0:51:58 and experts in one area have a tendency to believe that their expertise—
0:51:59 Dunning-Kruger, 100%.
0:52:06 Right. In fact, it was Professor Dunning who introduced me to Nathan Ballantyne at Arizona University,
0:52:15 who’s the expert on epistemic trespass. What happens when people with legitimate expertise in one area bleed over to another?
0:52:19 And the answer is exactly what you would think. They’re terrible in those adjacent spaces.
0:52:34 But all that said, I think the nuance of the realignment is such that Europe has been skating by under the NATO alliance and the American leadership and umbrella.
0:52:44 And while it certainly appears to be an unforced self-error, you know, your own accidentally own goal by giving that up, the United States giving that up,
0:52:49 It is going to make Europe much more cohesive, much tighter.
0:52:58 And whereas we used to be the counterpart, the offset to the Soviet Union, now Russia, Europe is going to become that.
0:53:00 So that’s the first part.
0:53:12 The second part that’s kind of interesting is an amazing article in the New York Times yesterday about not only how bloody and horrific the war in Ukraine has been,
0:53:24 But how over the course of three years, the casualties, the injuries and deaths are now 70 percent inflicted by drones.
0:53:36 The old regime of tanks and artillery and expensive aircraft has moved to a totally different type of warfare.
0:53:40 It’s no longer Lockheed Martin, it’s now Palantir.
0:53:42 It’s that sort of shift.
0:53:59 And so whereas we have whereas we have all of these legacy issues, those other companies and and to some degree, the new European alignment are not stuck with that.
0:54:08 And so it potentially can kick off a whole new wave of innovation, not just in defense, but other areas.
0:54:09 We see it in the U.S.
0:54:10 We see it in Europe.
0:54:22 I can’t imagine the United States is going to sit by and let Europe sell all these expensive, profitable weapons to everybody else.
0:54:25 They’ll they’ll have a lead if we back off.
0:54:31 And so it’s really hard to judge how any of these things are going to work out.
0:54:37 There’s always ramifications and unintended consequences and reflections.
0:54:39 It’s not just that.
0:54:45 I think I don’t know what’s going to happen geopolitically, but it’s never clean and neat.
0:54:52 There’s always so many variables, which is why predicting the future has become all but impossible.
0:54:55 A thesis, I want you to respond to this.
0:54:56 We talked about this when we were at dinner.
0:55:07 I’ve determined that the 0.1 percent all want to live in a handful of places, Dubai, London, New York, Palm Beach, Aspen, some in L.A.
0:55:09 And then I’m sure there’s one city in Asia I’m missing.
0:55:15 Do you think there’s a strategy or do you think it makes sense to invest or what I’ve been doing is I’ve been buying real estate in those places?
0:55:19 Do you buy into this 0.1 percent strategy as an investment thing?
0:55:29 Well, on the one hand, we just got the most recent data that says half of consumer spending in the United States are driven by the top.
0:55:32 Yeah, it’s bonkers.
0:55:38 And, you know, when you have a certain amount of money, you become pretty price insensitive.
0:55:45 I jokingly, if you’ve ever dealt with a contractor in the Hamptons, I’m assuming it’s the same in Aspen.
0:55:47 I know it’s the same in Manhattan.
0:55:48 Crazy time.
0:55:50 There’s a Hamptons tax that you’re going to pay.
0:55:51 It’s crazy.
0:55:58 And that’s the contractors know they can mark it up and say they they want a part of that.
0:56:00 That’s on the one hand.
0:56:16 What we talked about at dinner with the and we’ve talked about this for years, the widening inequality, both on the wealth side and the income side, although on the income side, it surprisingly got better post pandemic with a lot of Keynesian fiscal stimulus.
0:56:20 I mentioned unintended consequences earlier.
0:56:26 We weren’t all that far from a president, Bernie Sanders.
0:56:28 That that could have happened.
0:56:37 And as much as I see the far right sniping at AOC, it’s completely understandable.
0:56:40 We were never close to a president, Elizabeth Warren.
0:56:52 But but I think a president AOC is a genuine issue, at least for the point one percent you’re talking about.
0:56:57 And I’m not I’m not referring to the carried interest deduction or any of the other loopholes.
0:56:59 I’m talking about, hey, guess what?
0:57:01 There’s going to be a new tax bracket.
0:57:06 And if you make ten million dollars a year, there’s an alternative minimum tax and you’re going to pay it.
0:57:18 And so the risk with all this mania that that we’re seeing now is and the risk with wealth inequality is when the backlash comes.
0:57:32 So I don’t think the U.S. is ever going to become a socialist or communist regime, but we could go back to a 1950s or 60s era of taxation that look.
0:57:48 You look at the history of taxes over the past century, individual mom and pop citizens pay a much higher share today than they used to versus corporate America and the top 10, 1 or even 0.01 percent.
0:57:52 And don’t be surprised if that pendulum swings the other way.
0:57:58 I’m not smart enough to figure out an investment thesis for that five years down the road.
0:58:01 But it’s certainly a factor that should be considered.
0:58:09 Barry, you’ve literally interviewed 500 of the most successful investors or influential people in the world of finance.
0:58:12 I mean, you were sort of in this game of podcasting before it was cool.
0:58:18 What are the two or three things you’ve taken away, not only around investing, but kind of life lessons?
0:58:24 I have a few lessons or sayings that I’ve always held on to that have been nice guiding lights for me.
0:58:25 What have those been for you?
0:58:42 The single biggest one, which kind of surprised me, and I’m pretty alert to false modesty when people are bullshitting, blowing smoke up my ass, has been the role of luck and serendipity in people’s lives.
0:58:51 There were a group of fund managers who, as business school majors at Columbia, carpooled together.
0:58:54 And it was like a crazy Leon Cooperman.
0:59:05 And I’m trying to remember one of them told me like these four guys who all would go on to become billionaires were carpooling together at school.
0:59:21 And one of them had said, every person I went to school was as smart as me or smarter, was as hardworking or, or, but sometimes they just didn’t catch that break where they’re in the right place, right time at the right moment.
0:59:23 And things just fell their way.
0:59:29 And it, you know, if you hear it once or twice, it’s false humility.
0:59:29 Stop.
0:59:39 When you hear it a hundred times from people who are just wildly, wildly successful, that’s the, the first thing that really stood out.
0:59:43 Like luck really, Hey, listen, hard work and smarts.
0:59:44 Those are table stakes.
0:59:47 That’s just what it takes to enter the arena.
0:59:55 The second thing is, and this really took me a while to like the luck thing I got right away.
1:00:05 The second thing that really kind of surprised me is, uh, the concept of being grateful for what you have.
1:00:15 And look, if you want to be miserable, go to Zillow, circle the area around East Hampton or Amagansett and click sold.
1:00:20 And look at the houses that sold for 25, 30, 35, 40 million.
1:00:22 These aren’t outliers.
1:00:25 This is like every other fucking house is 10, 20, $30 million.
1:00:27 Your, your head explodes.
1:00:33 And your first instinct is to say, what the hell am I doing wrong in my life that I don’t have access to one of those.
1:00:38 And then the second thought is because you didn’t get lucky there.
1:00:48 You have a very nice house and a very nice car and a very nice, this, and that be grateful for what you have and stop comparing yourself to other people.
1:00:51 There’s always someone with a bigger boat.
1:00:56 If that’s your measure of success, you’re always going to be unhappy.
1:01:15 Instead, not to get, you know, Zen on you, but if you pre, you know, count your blessings, appreciate what went your way and be grateful for what you have, you’ll be much happier and enjoy life more than say somebody who is, you know, pretty consistently comparing themselves.
1:01:19 You know, hey, you’re Bill Gates, you were the wealthiest person in the world.
1:01:21 And then Elon Musk comes along.
1:01:30 If there’s always going to be somebody that’s going to surpass you, that should never be your measure of happiness and life satisfaction.
1:01:35 Barry Ritholtz is the co-founder, chairman, and chief investment officer for Ritholtz Wealth Management.
1:01:40 He’s also the host of Masters in Business, the most popular podcast on Bloomberg Radio.
1:01:45 Barry’s latest book, How Not to Invest, The Ideas, Numbers, and Behaviors That Destroy Wealth and How to Avoid Them.
1:01:47 It’s out next week.
1:01:57 This episode was produced by Jennifer Sanchez.
1:01:59 Our intern is Dan Chalon.
1:02:01 Drew Burrows is our technical director.
1:02:04 Thank you for listening to the Prop G pod from the Box Media Podcast Network.
1:02:09 We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn.
1:02:15 And please follow our Prop G Markets pod wherever you get your pods for new episodes every Monday and Thursday.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:18 We will catch you on Saturday for No Mercy.
1:02:19 We will catch you on Saturday for No Mercy.
1:02:19 We will catch you on Saturday for No Mercy.
1:02:20 We will catch you on Saturday for No Mercy.
1:02:21 We will catch you on Saturday for No Mercy.

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0:01:54 Welcome to Office Hours with PropG. This is the part of the show where we answer questions about business,
0:01:59 big tech, entrepreneurship, and whatever else is on your mind. If you’d like to submit a question,
0:02:04 please name my little voice recording to OfficeHours with PropGmedia.com. Question number one.
0:02:14 Hi, Prop G. This is Jake from Washington, D.C. I’m a big fan of all your podcasts. I think when it
0:02:18 comes to marketing and building businesses, you’re spot on. I also think you’ve come up with some
0:02:22 fantastic policy ideas that make sense, and I hope more moderate members of Congress reach out to you.
0:02:27 I’ve been thinking about your post-election analysis, where you discuss podcasts becoming
0:02:33 the dominant campaign medium in the next election, potentially replacing traditional door-to-door
0:02:40 outreach. This brings me to my question. How do you envision monetizing the monetization of political
0:02:45 campaigns on podcasts evolving? Are we going to be listening to you read, this ad was paid for by
0:02:50 Friends of Candidate X, as is required for all political ads? I’m curious to hear your thoughts on
0:02:56 how you think this emerging campaign medium will develop, and how would you maintain your authenticity
0:03:01 and credibility with your audience? Look forward to hearing from you, and keep up the great work.
0:03:06 Thanks for the thoughtful question, Jake from D.C. The 2024 cycle was the most expensive election in
0:03:14 American history, with political ad spending totaling over $11 billion. However, it wasn’t all disco for
0:03:20 broadcasters. This was the first election where their share of total spending fell below 50%. Since the
0:03:27 2020 election, ad spending increased over $2 billion. But traditional broadcasters only saw $100 million of this
0:03:31 growth. First off, I think it was Hearst, or one of the big family-owned media companies, was really smart.
0:03:35 About 20 years ago, they went and bought all these local TV stations in swing states, thinking,
0:03:41 okay, these are shitty businesses for about 20 months every two years. And then for four months,
0:03:45 they’re amazing businesses because they quintuple their ad rates and campaigns which think,
0:03:49 okay, old people vote. What do old people do? They want to watch the weather and see that handsome,
0:03:56 handsome young thing talking about the news. And they turn on their local news. And they can trap old people,
0:04:00 and they can run ads basically saying that, you know, the other guy is a pedophile and she’s
0:04:04 addicted to diet pills and you should vote for our guy. It’s really weird. Human condition. It’s much
0:04:08 easier for us to believe something negative about someone than something positive. So as Newt Gingrich
0:04:15 convinced his party 20 odd years ago, go negative, go early. Anyways, they bought these stations and
0:04:19 they’ve been the gift that keeps on giving. They were able to scoop them up fairly inexpensively
0:04:24 and they’re just cash machines. I think that is about to come to an end for two reasons. First reason,
0:04:29 Joe second Rogan. And that is when Trump went on Rogan, he got about 15 million downloads
0:04:37 on audio and about 40, 45 million views on YouTube. So call it 60 million. For Vice President Harris,
0:04:41 who by the way, totally fucked up and should have gotten on a plane. Joe Rogan is now more important
0:04:47 than her or was at that point to Austin and done an interview. I think Joe actually would have been
0:04:52 kind to her. He’s not about calling people out. He’s pretty good that way. As a matter of fact,
0:04:58 he doesn’t call people out enough. Oh, mRNA vaccines alter DNA. Really? Really? Oh, okay.
0:05:02 You’re not a fucking quack spreading misinformation that result in unnecessary death, disease, and
0:05:07 disability. Really? Oh, that makes sense. No, it doesn’t. Anyway, she should have done it. But for
0:05:17 for her to reach the same number of people, she would have had to go on CNN, MSNBC, and Fox every night for
0:05:24 three hours for an entire week. As a matter of fact, a woman I really respect a lot who has a, I believe
0:05:28 it’s a Sunday morning show on CNN, asked me to come on every week and do this thing like, what’s on your
0:05:35 mind? Where I talk for six to 10 minutes. And I said, I’ve done the math. No one 25 to 54 is watching CNN.
0:05:38 And for me to do the work I would need to do because I like you and I think you’re smart,
0:05:43 it’s just not worth, the juice isn’t worth the squeeze. And I would have killed to go on Anderson
0:05:49 Cooper or Michael Smirconish or Stephanie Ruhle. By the way, all three friends, all wonderful people
0:05:55 or any of these guys. I occasionally go on Chris Cuomo because I like, I only go on with my friends.
0:05:59 I know I’m name dropping right now, but it’s just not worth it. The people I’m trying to reach,
0:06:03 I’m trying to reach a young man. I’m trying to reach young people that want to develop economic
0:06:07 security. And guess what? They’re not walking. They’re not watching fucking CNN. Get this. The
0:06:14 average age, the average person watching MSNBC is a 70 year old white woman. Oh, but it makes sense for
0:06:18 politicians to go there. What do you think a 70 year old white woman has a made up her mind around who
0:06:24 she’s voting for? Having said that podcast, 34 year old male, 34 year old males, what do they vote on?
0:06:29 They don’t vote on issues or values. They vote on economics. They’re at a point in their life where
0:06:33 they’re trying to build economic security and the economic issue is more dynamic. What do I mean by
0:06:39 that? Every two or four years, it’s not entirely clear which party will become the party of economic
0:06:44 growth or become more favorable in the eyes of voters around economics. Traditionally, Republicans
0:06:48 are the business people, low taxes, but people are starting to pay attention that under Democratic
0:06:52 administrations, the last 50 years, there’s been 50 million jobs created. Under Republican
0:06:57 administrations, there’s been 1 million jobs. The markets tend to go up more during Democratic
0:07:02 tenure. So people are kind of saying, okay, whoever can sell me is going to get my vote at the age of
0:07:07 34 if they’re male. Whereas a 70 year old woman, so where is everyone going to go? I think to podcast.
0:07:12 Now, having said that, your notion is how do they monetize it or how do we monetize it? I don’t see why
0:07:16 it would be any more difficult to run a 30 second ad saying, he fucking sucks. And then having the
0:07:22 candidate go, I approve this ad. I think you’re going to start to see political ads. The reason I know
0:07:29 that this fear of influence is massively shifting, and I’m not exaggerating here. I bet 50% of the
0:07:35 candidates, mostly Democrat, but also Republicans, I’m seeing as somewhat moderate, have reached out to
0:07:40 me for quote unquote advice. When people reach out to me for advice, it’s not because they care about
0:07:45 what I think. It means they want help finding a job, they want money for their campaign, or they want to
0:07:51 come on the podcast. And I think that there’s probably a hundred senators and congresspeople
0:07:57 and governors who look in the mirror every morning and say the following, hello, Mr. President, or hello,
0:08:02 Madam President. And I’ve heard from most of them, and they claim they really are interested in my
0:08:05 advice. And they say, hey, wouldn’t it be a great idea for me to come on the pod and talk about it?
0:08:09 What’s interesting is the political candidates don’t do well on podcasts. People would much rather hear
0:08:17 from, I don’t know, Kim Kardashian, or a guy like Freed Zakaria gets unbelievable downloads.
0:08:22 Yeah, he does so well. Anthony Scaramucci does incredibly well. He’s not a political candidate,
0:08:27 but he’s a political commentator. Ian Bremmer, these geopoliticians, Josh Brown on the markets,
0:08:33 Aswad Damoner, and Kyla Scanlon, a young person on the market. These people get huge downloads. Mel
0:08:38 Robbins, I had her on, people love talking about emotions and raising their kids. When I bring
0:08:46 senators or congresspeople on, people just don’t care. It’s really interesting. But I am committed
0:08:52 to bringing more and more politicians on, specifically moderates on the left and on the right, although
0:08:58 I’m having trouble finding moderates on the right. I’m a moderate, but that wasn’t a Nazi salute. Yeah,
0:09:04 okay. Okay. What are your pronouns, he and Himmler? Anyway, I do think that if you get attention,
0:09:08 you can monetize it. And if you have attention and influence, which podcasts will have,
0:09:15 they’re going to be able to grab a disproportionate amount of that, what it’ll probably be 15 or 20
0:09:19 billion going into the next election. So if you have influence and attention, you’ll figure out a way
0:09:24 to monetize it, whether it’s ads, sponsored events, I don’t know, what have you. But we’re going
0:09:29 to see, I think we’re going to see for the first time, these local news stations start to feel some
0:09:33 of the same pressure that every other media company has felt. And then we’re going to see a massive
0:09:40 transfer of influence, attention and monetization to podcasts. In terms of conflict of interest, I read
0:09:45 ads. I don’t do crypto ads anymore because I worry it’s gambling and I worry there’s too many young men
0:09:52 staring at their phone, losing money or making money on crypto. But I have no problem advocating for
0:09:56 products. And if it’s a conflict, if I’m talking about a company, I’m an investor and I try to be
0:10:01 transparent. I’m here because I enjoy this, but I am a close second here because I want to make money.
0:10:06 And I don’t think people mind that. So what I think they mind is when they feel like you’re abusing
0:10:11 their trust and not being upfront about your intentions or your investments. So as long as
0:10:16 you’re transparent, I think that’s fine. But coming your way, I’m Joe Bob and I approve this ad.
0:10:20 Thanks for the question. Question number two.
0:10:27 Hey, Prof G. Love your show. Question for you. What advice do you have for federal workers considering
0:10:34 leaving public service? As you know, the DOGE efforts are cruel and chaotic. They’ve created a
0:10:40 stressful work environment that leaves me full of anxiety. Wondering if I’ll be the next to lose my job.
0:10:45 I joined the federal workforce as a military spouse five years ago. Prior to that, I spent my career in
0:10:52 the private sector. Despite high evaluations, leadership programs, and a graduate degree,
0:10:58 I’m still concerned I could lose my job. I live in Virginia with a high concentration of federal workers.
0:11:05 Should I jump ship before the job market is oversaturated? Should I stay put? Am I overthinking
0:11:10 this? I’d love to hear your thoughts. Anonymous for Virginia. The first is, I’m really sorry you’re
0:11:16 being, you’re stressed out. It’s sort of the unknown sometimes is more stressful than the actual known. And
0:11:22 that is a means of, I think, trying to assuage your stress. And there’s the basics, spending time with
0:11:29 loved ones, working out, meditation, breath work. I tried breath work. I tried this straw method from this
0:11:34 guy named Dan Reeves, who I love, who’s fantastic, this very soulful guy who does this 10% happier
0:11:40 podcast. Here’s the straw method. Breathe in. Two seconds. Then breathe out.
0:11:50 Four seconds. Okay. That shit does not work for me. It does not work for me. The breath work does not work.
0:11:58 I understand that you’re stressed out, but anytime there’s change or chaos, there is a silver lining, and that is
0:12:04 sometimes there’s opportunity where you don’t see it. What do I mean by that? What is happening in the federal
0:12:09 government level right now? I’m of two minds about it. The first is, to be blunt and coarse, welcome to
0:12:14 the work week. The idea that you get a random email from someone who might be laid off and have insecurity
0:12:21 and anxiety, people feel that across every business sector in America. In America. At the same time,
0:12:27 the injustice I get, but there’s tons of injustice in the private sector. The thing that I find most
0:12:33 troubling about it is not what people, most media is reporting on. It’s the incompetence. It’s laying off
0:12:37 workers who oversee our nuclear stockpile and then rehiring them thinking, oh, maybe we should,
0:12:42 in fact, look after this shit such that it doesn’t, you know, such that we can ensure that nobody,
0:12:47 the babies don’t start playing with it before it becomes less radioactive in 60,000 odd years.
0:12:52 The way they’re going about it, it just feels stupid and ineffective to me. And also the corruption,
0:12:59 firing people that happen to be investigating Musk’s business dealings, and also just the general
0:13:05 incompetence. Oh, we saved $8 billion. Well, actually, it’s $8 million that you saved. Oh,
0:13:10 we’re saving a million and a half dollars here. No, you’re not. They already spent the million and a
0:13:16 half. There’s no way to get it back. So I find the whole Keystone Cops fucking incompetence that
0:13:21 doesn’t reflect the general competence you find across most government agencies. I think I’m sort of of
0:13:27 that attitude of let them. I think it’s just so weird that the genius of the Republican Party is its
0:13:32 ability to convince people who are going to get hurt the most that this is a good idea for them. In
0:13:39 general, the reddest districts are the ones that are the biggest takers. The Department of Education
0:13:46 sends the most money per capita to these deep red states in the South. Okay, you want to eliminate the
0:13:53 Department of Education? Fine. You want to eliminate Medicare or take money out of Medicare where six in
0:14:01 10 kids in poor households in red states get the medical treatment they need? Okay, have at it. Let
0:14:06 them. You’re about to see just how incompetent you think government really is and when these cuts come
0:14:13 home to you. So I’m sort of of the attitude of, okay, you wanted it, you broke it, you own it.
0:14:21 Now, coming back to your specific situation, one, until you actually get laid off, unless it’s never
0:14:25 a bad idea to do a market check, see what’s out there, start investigating, start having coffees,
0:14:32 do interviews if you have ideas on who you want to speak to. I don’t think that’s a bad idea in any
0:14:37 situation to be kind of on a regular basis doing a market check. Having said that, I would not jump,
0:14:42 I would certainly not quit until you have another job. And also, a couple things can happen. One,
0:14:47 if you do get laid off, you’ll probably get some sort of severance. And two, when there’s change,
0:14:51 say they left 10 or 20% of the people at your organization, they’re pretty soon going to
0:14:55 realize they need people to actually run the fucking organization. And the top of the pyramid
0:15:01 will, quite frankly, get broader. And that is, you might find that you’re in a position to be
0:15:05 promoted sooner than you thought because there’s fewer people around. I’ve always told people when
0:15:09 there’s a transaction in the private sector, when their company gets acquired or there’s layoffs,
0:15:16 stick around because churn and chaos results in a lot of anxiety, oftentimes a lot of negative things,
0:15:22 but oftentimes a lot of opportunity because the company is being reconfigured and you might wake
0:15:29 up with a bigger and a better job. So in sum, find things and people that help manage your anxiety.
0:15:33 Two, it’s never a bad idea to do a bit of a market check and talk to people. And three,
0:15:39 think to yourself, what could go right? Right? We’re always about what could go wrong. Well,
0:15:44 what could go right? Maybe the organization, maybe people get laid off, maybe you’re good at what you
0:15:50 do, and maybe it ends up creating more avenues or arteries of opportunity for you. I appreciate the
0:15:55 question, Anonymous from Virginia. We have one quick break before our final question. Stay with us.
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0:19:28 Welcome back. Question number three.
0:19:34 Hey, Prop G, this is John Ward from Los Angeles. I took a marketing class from your company, Section,
0:19:40 a couple of years ago, and it was called Section 4 and really enjoyed it. Can you give us an update
0:19:45 on the company? Has it gone as expected? What’s working? What’s not? Have you taken more money?
0:19:51 Just really interested in that as an entrepreneurial journey and what’s going on with that company.
0:19:52 Thanks so much.
0:19:57 John from LA. Thanks for the kind words. I pride myself on being transparent. Everybody talks about
0:20:03 their wins and people don’t want to talk about their failures. Section is still got a question mark around
0:20:09 it. And that is the initial vision was find, build this all-star team of the best professors at business
0:20:15 schools and offer 80% of an amazing class. At every business school, there’s five or six ringers that
0:20:19 everybody has to take regardless of what they’re teaching because they’re so good. My thought was,
0:20:25 I’m going to aggregate all these ringers from the top 20 schools, put them online, really highly invest in
0:20:32 marketing and graphics and production quality, and give you 80% of the valuation class from Demodaran or from
0:20:41 Adam Alter’s marketing class or, God, I forget his name, this wonderful guy from Kellogg, Sarah Beckman from the
0:20:48 Haas School, and give you 80% of her course for $1,000 instead of $7,000, which is what it costs to take these courses at a
0:20:54 private university. I’m not sure if that’s true at the Haas School. Anyways, in sum, it wasn’t working. We were
0:20:58 spending a lot more money, and without the certification you get from an MBA, we had trouble
0:21:05 charging even $1,000. We got this incredible sugar high of COVID, and that is I put in, I raised a seed
0:21:13 round of $7 million. I put in, I think, $2 million of my own money, maybe $3 million, and it just took off
0:21:17 during COVID because everyone had a lot of time. And I knew that we were in a sugar high, but I didn’t realize we
0:21:22 were in like a speedballed meth cocaine high. And the company went from like $1 to $10 million overnight.
0:21:28 I went out, and I raised another $30 million. That was a mistake. I should have kept it small. I should
0:21:31 have been more judicious with the capital because once we had $30 million, we brought in a management
0:21:36 team, and they started spending money like fucking drunk sailors on shit that didn’t work. We hired
0:21:40 Malcolm Gladwell to speak to our audience for $100,000, or Adam Grant, who I love and think it’s great.
0:21:46 We paid him $100,000. They’re not worth that much money to speak to a bunch of prospective students, as good as they
0:21:52 are. So we were just wasting money. We went from 20 employees to 120. And here’s the mistake I made that I
0:21:59 continue to make in the private markets. And that is once I have access to capital, I try and grow too fast. I spend way
0:22:06 too much fucking money hire mediocre people and then end up having to lay off 60 or 80% of them. And that is what
0:22:13 happened here. As soon as we came out of COVID, revenues crashed, our burn was unsustainable, and we had to lay off
0:22:20 60, 70% of the staff. Now the company is about 25 or 30 people. We have pivoted to AI. What do I mean by that?
0:22:28 We found a lot of people and companies coming to us and say, could you upskill our media department at
0:22:34 L’Oreal on how to use different AI tools to make our department much more robust, give us this great…
0:22:39 L’Oreal has always had amazing media buying. That’s kind of, I would argue, their core confidence is
0:22:44 they’re just fantastic media buyers. And they said, how do we take the most cutting-edge tools and turn
0:22:49 every media planner or every media buyer into a warrior and make them just much better at what they do?
0:22:54 So we have pivoted section to basically AI upskilling for the enterprise.
0:23:00 And this is more my ballywick. I’ve always done B2B businesses. I’ve never done B2C.
0:23:05 I like B2B more. It’s based on individual relationships. Corporations, if you can move
0:23:09 the value or move the shareholder needle for them, are much less price sensitive
0:23:14 than consumers. I’ve just always been in B2B businesses. Anyways, we pivoted.
0:23:18 Really wonderful investors. General Catalyst is my lead,
0:23:23 and they’ve been incredibly supportive and nice and smart. And I have a good CEO, Greg
0:23:27 Shove, running the business now. We have some very talented people in the organization,
0:23:32 and it is starting to grow again. And we are now, I think, almost two-thirds subscription
0:23:37 revenue, back towards a $10 million run rate and working with very large corporations,
0:23:43 helping them, again, upskill certain departments within their organization around how to leverage these
0:23:50 new AI tools. So I’m hopeful, but the last five years have been really mediocre. I have wasted a ton
0:23:55 of time and money. Is that fair? Not wasted. Have not gotten the return I was originally hoping for.
0:24:00 I would bet, if I had to bet what’s going to happen, there’s an outside shot. It does really well. I think
0:24:04 there’s a good shot. We’re going to get our money back. Keep in mind, we’ve raised $38 million,
0:24:10 so I need to get my investors $38 million back before we start really showing any return. I’m
0:24:15 fairly confident. Is that right? I think I’m fairly confident that’ll happen. And we seem to finally
0:24:19 have found our footing. Having said that, this is kind of the story of my life in most of these
0:24:23 companies. I’ve had a couple companies where it’s just been up and to the right. But usually,
0:24:29 I start something, it does okay, then it doesn’t do okay. And the key is agility and kind of zero in
0:24:36 on something that works. And I think we have finally done that after five years and spending 25 or $30
0:24:42 million. I think we finally zeroed in on something. They’re signing up corporations and it’s actually
0:24:50 doing quite well and growing again. But this is, you know, this shit is hard. This is chestnut
0:24:55 checkers. But it’s finally, it seems to me kind of on its, found its footing again and doing
0:25:04 really well. But again, one out of seven companies succeeds. I’ve started nine. I’ve had two do really
0:25:08 well. I’ve had two or three just do okay. And I’ve had four just like flaming balls of shit hit a giant
0:25:14 wall and spray and everyone gets their face burned off. That was a little graphic. That was a little
0:25:19 graphic. Anyways, thanks for the question. I hope that satisfies your need to understand what is
0:25:28 happening at a section and it’s now called section AI. That’s all for this episode. If you’d like to
0:25:32 submit a question, please email a voice recording to officehours at propgmedia.com. Again, that’s
0:25:35 officehours at propgmedia.com.
0:25:47 This episode was produced by Jennifer Sanchez. Our intern is Dan Chalon. Drew Burroughs is our
0:25:50 technical director. Thank you for listening to the Prop G pod from the Vox Media Podcast Network.
0:25:56 We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow
0:26:01 our Prop G Markets pod wherever you get your pods for new episodes every Monday and Thursday.

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0:01:17 Thumbtack presents the ins and outs of caring for your home.
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0:01:51 Welcome to Raging Moderates.
0:01:52 I’m Scott Galloway.
0:01:53 And I’m Jessica Darla.
0:01:54 Jess, how are you?
0:01:54 I’m great.
0:01:55 How are you?
0:01:56 I’m good.
0:01:59 I’m in the great state of Texas at South by Southwest.
0:02:00 I’ve been seeing on social.
0:02:01 You’re all over.
0:02:02 Really?
0:02:03 Oh, your own social.
0:02:04 Your team’s doing a great job.
0:02:06 I’m all over.
0:02:07 I just love me.
0:02:14 I did a big, when I went on stage yesterday for Pivot, I danced around with my belly hanging out, screaming.
0:02:15 That was a big hit.
0:02:15 Yeah?
0:02:16 That was a big hit.
0:02:20 Yeah, no, mockery is always, the algorithms love mockery.
0:02:20 It’s true.
0:02:22 The algorithms are pretty mean.
0:02:26 And they were mean, actually, even before Elon Musk, but meaner now.
0:02:27 And what have you been up to?
0:02:29 How’s your, or how was your weekend, I should say?
0:02:30 Oh, it was great.
0:02:30 It was my birthday.
0:02:34 Yesterday, I was in Jamaica, sans children.
0:02:36 So we finally got away.
0:02:37 And it was fabulous.
0:02:41 I had, my husband loves Jamaica, always has.
0:02:43 I have never, had never been.
0:02:44 And he loves Jamaica?
0:02:46 He’s obsessed with Jamaica, him and his friends.
0:02:50 Yeah, it’s, it’s a pretty amazing place.
0:02:54 But we went to Goldeneye, Ian Fleming’s old house.
0:02:56 And now Chris Blackwell, who started Island Records, owns it.
0:02:57 I’ve heard it’s great.
0:02:59 Oh, it’s fantastic.
0:03:01 And it feels completely empty.
0:03:04 Like, we were wondering the whole time if there were other people around.
0:03:07 And there was a happy hour, which saw like 20 people at.
0:03:09 And that was the max the whole time.
0:03:11 So it was very cool and secluded.
0:03:14 And my best friend has the same birthday as me.
0:03:17 We met in preschool and she came with her husband.
0:03:18 They live in Florida now.
0:03:19 So it was cool.
0:03:22 And you’re, you’re 37, 38?
0:03:23 No, the big four ones.
0:03:26 So seven years until my midlife crisis, according to you, right?
0:03:31 Where I started traveling only with my girlfriends and dancing with my belly out.
0:03:35 But the good news is, is that for men, 50 is the new 30.
0:03:36 And for women, 40 is the new 80.
0:03:38 I haven’t heard that one before.
0:03:38 That’s good.
0:03:39 It’s not really.
0:03:40 It’s upsetting.
0:03:41 But thank you.
0:03:42 That’s good.
0:03:44 Yeah, that’s, that’s, there’s a term for that.
0:03:44 New York.
0:03:45 All right, enough of that.
0:03:46 Let’s get into it.
0:03:51 President Trump sent financial markets into a tailspin last week.
0:03:54 Today, we’re going to talk about Trump backtracking on tariffs.
0:03:59 Representative Al Green getting censored for protesting Trump’s trying to address what Governor
0:04:01 Newsom really thinks about trans rights.
0:04:05 And James Carville’s surprising advice to Democrats, do nothing.
0:04:12 So markets kind of very volatile this week or last week with this ever-changing trade policy.
0:04:17 On Thursday, he delayed tariffs on goods from Canada and Mexico, giving industries a brief
0:04:22 bit of relief, but on Friday, he was back on offense, threatening new tariffs on Canadian
0:04:27 lumber and dairy, claiming Canada has been ripping us off for years.
0:04:32 The back and forth has left businesses scrambling and critics warning of economic fallout.
0:04:37 Jess, how did these sudden shifts in trade policy impact businesses and global markets?
0:04:38 Really badly.
0:04:44 And the strangest part to me has been how little he seems to care.
0:04:48 Because he was totally, like, live by the market, die by the market.
0:04:51 And he’s taking a very laissez-faire attitude towards it.
0:04:53 He was interviewed by Maria Bartiromo.
0:04:58 And she was asking him about this because, you know, business anchors, no matter their
0:05:03 partisan affiliations, have been freaking out over the last week with the Canada and Mexico
0:05:05 25 percent threat.
0:05:10 And he went with the, like, there could be a little bit of pain or, you know, maybe we’ll
0:05:13 see a recession and kind of shrugged it off.
0:05:17 And Howard Lutnik is out there, you know, doing his best dancing around it.
0:05:18 Like, we’re all going to be fine.
0:05:19 And Scott Besson, we’re all going to be fine.
0:05:27 And Trump seems oddly comfortable to me with whatever the fate of the market or the American
0:05:31 economy is going to be as a result of these policies that he hasn’t done a particularly
0:05:33 good job in defending.
0:05:39 And I’ve been thinking a lot about the difference between the first Trump term and the second
0:05:44 Trump term and how the chaos of this term is actually what we thought would happen the
0:05:45 first time.
0:05:49 But it was remarkably calm on a comparative basis.
0:05:54 And how central to that calmness Steve Mnuchin actually was.
0:05:57 And I thought, like, oh, is this something that people are thinking about?
0:05:59 So I started keyword searching for Mnuchin.
0:06:05 And I see that there are a lot of people who are talking about what a good Treasury Secretary
0:06:08 he actually was and that he managed to stay under the frame.
0:06:13 And he had a few incredible photo ops and things like that with his wife holding all the money,
0:06:13 et cetera.
0:06:16 But that he was really an even hand.
0:06:22 And there was someone who pointed out how Trump 1.0 put two of the best financial bureaucrats
0:06:24 in power, Jerome Powell and Steve Mnuchin.
0:06:27 And then Trump 2.0 hired knuckle dragging cultists.
0:06:30 And I thought that summed it up pretty well.
0:06:33 Yeah, it’s really it’s almost getting a little bit comical.
0:06:38 I think a key to these negotiations is it’s really difficult to even understand what he wants.
0:06:41 When I think about he says, OK, Canada has been ripping us off.
0:06:44 It’s it’s hard to exactly discern what it means.
0:06:48 And then he’ll go to, well, they need to stop shipping fentanyl across the border.
0:06:50 And that might might be true of Canada.
0:06:50 It’s not.
0:06:55 It might be true, excuse me, of Mexico and China, or you could at least make a philosophical
0:06:55 argument.
0:06:58 The amount of fentanyl that’s coming across the Canadian border, I think, could fit in a
0:06:59 backpack.
0:07:01 It’s less than one percent of the fentanyl that comes into the nation.
0:07:07 And in addition, we’re now at a point where I don’t even know if the tariffs are on or off
0:07:12 based on what hour it is, where people are going to start clearing the shelves or developing
0:07:17 alternative supply chains and alternative alliances, regardless of whether he takes the tariffs
0:07:20 off again, because we just have no credibility.
0:07:26 And the Atlanta Fed tracker, or they basically have a mechanism for predicting GDP growth, has
0:07:30 gone from positive four percent to negative two point eight.
0:07:34 Consumer sentiment has had its largest fall since COVID.
0:07:38 The economy is contracting at its fastest rate since the lockdowns.
0:07:43 It’s just really difficult to understand what the endgame here is.
0:07:47 If he’s putting this out to try and accomplish some big, beautiful deal that it can take credit
0:07:51 for it, any thoughts on what’s motivating the administration right now?
0:07:53 Well, he has always loved tariffs.
0:07:56 Like, the McKinley obsession is legit.
0:08:03 And he can, at certain moments, wax quasi-lyrical about the beauty of tariffs and McKinley.
0:08:07 And, you know, we have Mount McKinley now in Alaska as well.
0:08:11 So I think there is a fundamental affection that he has.
0:08:14 And that’s not to say that all tariffs are bad.
0:08:19 And I saw, actually, your markets co-host, Ed, pointed this out.
0:08:23 There was an op-ed in The New York Times by a Rust Belt Democrat, Chris DeLuzio.
0:08:29 It’s he replaced Conor Lamb, who also ran in the Senate primary against John Fetterman.
0:08:37 And he wrote a piece defending tariffs and saying that anti-tariff absolutism is not good policy.
0:08:43 And there was a very strong argument to make that we need some protectionist tariffs, even
0:08:48 when it comes to Canada and Mexico, to make sure that we are producing things at home, that
0:08:52 people can earn a good wage, which I know is fundamental to what you’re doing with that
0:08:54 Project 2028, which I think is so cool.
0:08:57 And I was pretty taken with his argument.
0:09:01 And he mentioned how we’re all OK with the China tariffs, right?
0:09:06 So Trump had the 10 percent tariff on China, and Biden actually tripled it when it comes
0:09:07 to steel and aluminum.
0:09:12 And we get basically all of our construction supplies from Canada, including a lot of steel
0:09:15 and aluminum, plus a ton of cement and lumber.
0:09:23 So why I’m not saying a 25 percent tariff, but using the same logic that we do against
0:09:29 China, which is obviously an adversary versus a friend, but there’s some good economic policy
0:09:30 to it, right?
0:09:33 We’re not just punishing China because it’s run by an authoritarian and they’re terrible
0:09:34 on human rights.
0:09:37 There’s a reason we’re trying to protect the American worker there.
0:09:40 So why wouldn’t we think about maybe like a five percent, right?
0:09:41 Or a 10 percent?
0:09:46 Yeah, so my understanding of tariffs is that they do make sense when they’re used as a
0:09:50 weapon to try and restore asymmetry and imbalance in trade.
0:09:55 If the U.S. doesn’t have access to the Chinese auto market, then fine, you want to bring your
0:09:56 cars over here, we’re going to tariff them.
0:10:00 You might want to protect certain key strategic industries.
0:10:03 The steelmaking industry, you can make an argument for, we need to at least have a few
0:10:10 mills kind of always fired up such that if we need to make tanks or our primary source
0:10:14 of steel goes dark, like what happened with Putin and oil in Germany, we’re not caught
0:10:15 sort of flat-footed.
0:10:22 But just a sweeping tariff at these levels is nothing but an increase in costs.
0:10:28 I read that the average car, should these tariffs hold, is going to go up in price somewhere between
0:10:29 $8,000 and $12,000.
0:10:36 The way cars are manufactured is you actually have certain parts that leave Lansing, Michigan,
0:10:41 go to Canada, have work done to them, then go all the way down to Mexico, have more work
0:10:45 or assembly, and then come back to Lansing, Michigan for assembly at a Ford plant.
0:10:50 Some of these, some of the parts used to assemble a car go back and forth a half a dozen times
0:10:51 across borders.
0:10:54 So $8,000 to $12,000 increase per car.
0:10:58 They’re talking about an average increase per household of $1,200.
0:11:01 I mean, this is, this is really weird.
0:11:08 And even more so than the actual tariffs is the sclerotic reputation we’re establishing.
0:11:12 Because even if you decide, okay, we’re going to do a deal and we’re going to come to some
0:11:14 sort of accommodation that works for both.
0:11:18 You know, who can trust that we’re actually going to do what we said we’re going to do?
0:11:23 We’re now talking about, supposedly Trump wants Iran to think about another, another deal.
0:11:30 We’re, we’re shutting off intelligence to Ukraine and then they bomb a hotel where Americans are.
0:11:33 We, we talk about putting it back on and putting sanctions back on Russia.
0:11:39 I mean, it’s just the world economic policy is being run on this guy’s blood sugar level
0:11:45 at that moment, which means that if you’re going to base billions or if you’re the EU or
0:11:51 trillions of dollars in trade and alliances and supply chain on one man’s blood sugar, you
0:11:55 decide, no, I’m going to just have workarounds, even if they’re more expensive.
0:11:57 It’s just the automobile industry right now.
0:12:03 I’m at South by Southwest and a key theme here when I talk to advertisers is that their
0:12:05 advertising business is down.
0:12:07 I mean, this has so many ripple effects across the economy.
0:12:11 Their advertising business is down because some of the biggest advertisers are automobile companies
0:12:14 and they literally are just, we don’t know what to do.
0:12:19 We’ve paused all marketing and spending because as far as we know, we’re not going to have
0:12:22 cars on a lot and we’re just not sure what’s going to happen.
0:12:23 So they can’t even plan.
0:12:27 If the tariffs were absolutely going in, they would say, okay, we need to plan our business
0:12:27 model.
0:12:31 We’re going to raise prices, find alternative routes or supply chain, but they would have
0:12:31 a business plan.
0:12:35 Right now, this is the worst of all worlds.
0:12:36 I think that’s what Eisenhower said.
0:12:39 The wrong decision is bad, but no decision is worse.
0:12:43 And there are entire companies who have to make essentially no decision because they don’t
0:12:45 know what environment they’re going to be operating.
0:12:50 Yeah, well, Trump backed off of this round of tariffs because the CEOs of the major car
0:12:52 companies reached out to him, right?
0:12:53 And called and said, you can’t do this.
0:12:57 I mean, it’s $8,000 to $12,000 extra for a regular car.
0:12:59 It’s $20,000 for a truck.
0:13:05 So anyone who’s actually using their car for work is facing an extra $20,000, which is obviously
0:13:05 unaffordable.
0:13:07 I agree with what you’re saying.
0:13:11 I don’t think that it means that tariffs aren’t going to end up being a tax on the consumer.
0:13:16 A majority of Americans know that I think it could go up to $1,800 actually per annum,
0:13:21 per family, the cost of these if they’re implemented in the way that they’re being
0:13:22 posed or pitched.
0:13:30 But the result that I’m seeing most clearly from the wobbly or frenetic nature of this
0:13:35 administration is that our allies are getting stronger on their own.
0:13:39 So you look at Claudia Scheinbaum, who I think has been great in handling President Trump.
0:13:41 She has an 85% approval rating.
0:13:45 Do you know of any world leader with an 85% approval rating who isn’t like Vladimir Putin
0:13:46 has fake polling?
0:13:47 The queen.
0:13:48 I don’t know.
0:13:48 You’re right.
0:13:49 That’s insane.
0:13:50 It’s remarkable.
0:13:56 And also for a female head of state, right, on top of it, which I wouldn’t expect.
0:13:57 A Jewish climate scientist.
0:14:04 A Jewish climate scientist lady has an 85% approval rating in Mexico during a time when
0:14:09 dealing with one of the more xenophobic American presidents in history.
0:14:10 Which is crazy.
0:14:11 It is crazy.
0:14:16 Or like Mark Carney, who’s going to be the new prime minister of Canada, won the race to be
0:14:21 head of the Liberal Party over the weekend, has no technical political experience, but he
0:14:24 was a central banker, which is why people picked him.
0:14:28 And he went after Trudeau consistently about how poorly he had handled the economy.
0:14:33 And the major thing that he said was, you need someone who can steer Canada through this
0:14:34 war with America.
0:14:40 When would you ever think that that would be a platform that a Canadian premier would
0:14:41 have to run on, right?
0:14:46 This idea that we are going to be at war with our neighbor, that we are on incredibly friendly
0:14:50 terms or, historically speaking, have been on incredibly friendly terms with.
0:14:51 So that’s happening there.
0:14:55 You look at the European countries that are building up their own defense.
0:14:59 They’re thinking about, you know, what nuclear arsenal can they get to to help with sharing
0:14:59 there?
0:15:04 We’re cutting off the intelligence sharing with Ukraine at this moment.
0:15:06 They’re being embraced by Europe.
0:15:11 We’re on the wrong side of everything with that vis-a-vis cozying up to Putin.
0:15:17 And I see everybody else getting a lot stronger while we’re getting weaker at home and abroad.
0:15:18 Yeah, it really is.
0:15:20 It’s very difficult to understand the trade.
0:15:22 And the trade right now at a very macro level is the following.
0:15:29 We’re basically trashing and fraying and making much more brittle and fragile these 80-year
0:15:34 alliances with the world’s largest economies that, through free trade, cooperation,
0:15:39 coordination, general goodwill, cooperation towards each other, lower costs for Americans,
0:15:41 and increase the sales of our products abroad.
0:15:45 And now these nations are just going to figure out different alliances.
0:15:48 And even if we go back and say, hey, just kidding.
0:15:49 We didn’t mean it.
0:15:50 Love you.
0:15:52 Come down to Mar-a-Lago.
0:15:53 They’re going to say, sorry, boss.
0:15:54 You’re just not a reliable partner.
0:15:58 I don’t know who I’m waking up next to.
0:16:00 And for me, everything comes back to high school.
0:16:05 And then as I saw this fantastic study that attempted to figure out and get to the bottom
0:16:08 of why popular kids were popular.
0:16:11 So they looked at the most popular kids in high school.
0:16:12 Were they the best looking?
0:16:12 No.
0:16:14 Were they the best athletes?
0:16:14 No.
0:16:15 Were they the smartest?
0:16:16 Again, no.
0:16:20 The thing they had in common was they liked the most other people.
0:16:26 They were that kid that would, going down the hallway, would yell, hey, you know, Lisa,
0:16:27 Jim, good to see you.
0:16:28 What’d you do this weekend?
0:16:32 And was confident enough to like other people that those were the most popular kids.
0:16:38 And I read this data showing that about three quarters of Americans feel pretty good about
0:16:38 Canada.
0:16:40 They’re like, yeah, Canadians, go on.
0:16:44 But now two thirds of Canadians don’t think of us as an ally.
0:16:49 They have really been, I don’t want to use the word traumatized, but really feel, quite
0:16:51 frankly, just poorly treated.
0:16:56 And it’s not like they’re going to get over that in six or even 12 months.
0:17:00 We are basically saying to the world, we’re going to be the least popular kid.
0:17:05 And as a result, have fewer alliances, fewer treaties, less cooperation, because we’re acting
0:17:07 as if, you know, we think you’re a fucking idiot.
0:17:14 And where we keep yelling expletives or hurling insults at the other kids, you know, rolling
0:17:15 by us.
0:17:19 And the next day we don’t, the kid doesn’t even know what we’re going to say about that
0:17:19 kid.
0:17:25 We’re just so unpredictable and big and flexing our power and flexing our muscles and just being
0:17:27 somewhat, somewhat abusive.
0:17:34 This is going to have, unfortunately, it’s really going after what is a key attribute in any brand.
0:17:36 And be clear, the brand is incredibly important.
0:17:37 It’s what precedes you.
0:17:42 It’s what puts you in the room before you’re there in terms of negotiations and expectations.
0:17:46 But one of the key things about our brand that people don’t appreciate until now is the U.S.
0:17:48 is actually fairly, is this fair?
0:17:50 I think it is, is fairly consistent.
0:17:55 There are certain standards around free trade, rule of law, consistency.
0:17:58 Quite frankly, we’re slow to change things.
0:18:03 We have, you know, checks and balances government that any large treaty you, you could believe
0:18:06 that we just weren’t overnight going to do away with NAFTA, that there was, you could
0:18:13 invest around it, Mexico and Canada, because it would probably stay in place for a long time.
0:18:17 And the only way it would be changed is if all three houses of government agreed on it, not
0:18:23 that, you know, someone had given the campaign $285 billion showed up with just a bunch of
0:18:23 kids.
0:18:27 By the way, I went to dinner with one of the, I was at a dinner with one of the doge kids.
0:18:27 Oh, really?
0:18:28 Yeah.
0:18:29 I didn’t speak to him.
0:18:31 He’s, I think, about 19.
0:18:32 And it felt everyone.
0:18:35 Did you like slip him a drink and say, don’t worry?
0:18:40 I’m not going to tell anyone you’re underage and that you’re in my social security payment.
0:18:42 I’m just getting, you’re too young for social security.
0:18:45 Yeah, no, I’m pretty sure I’m going to be getting mail from the AARP.
0:18:47 But yeah, it was, it was sort of interesting.
0:18:51 And I, I, I was initially going to go over and talk to him and I thought that’s just going
0:18:52 to depress me.
0:18:58 Anyways, I’m now going to parties with the doge children, but this is, it’s hard to see how
0:19:01 we don’t come out of this pretty structurally damaged.
0:19:03 It just doesn’t, doesn’t make any sense to me.
0:19:05 All right, let’s take a quick break.
0:19:06 Stay with us.
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0:22:26 Welcome back.
0:22:32 Last week, Texas Representative Al Green was formally censured after interrupting President Trump’s address to Congress, shouting,
0:22:36 No mandate to cut Medicaid, as he waved his cane.
0:22:44 The moment led to his removal from the chamber and a 224-198 vote to rebuke him, with 10 Democrats joining Republicans in the censure.
0:22:49 This split underscores ongoing divisions within the party over how to push back against Trump.
0:22:57 Green, who has a history of direct action, including being arrested alongside the late Representative John Lewis, seems unbothered by the consequences, saying,
0:22:59 You have to be willing to suffer the consequences.
0:23:05 Jess, what do you think this says about the Democratic Party that 10 of their own members voted to censure Green?
0:23:08 Is this about decorum, or is it a sign of deeper fractures?
0:23:15 Well, I think that there is an unfair expectation that Democrats are supposed to have it perfectly together at this moment.
0:23:20 Like, after Romney lost in 2012, they spent years trying to figure out what to do.
0:23:26 And they had a plan, and they ended up with Donald Trump as the nominee in 2016 anyway, and that definitely wasn’t their plan.
0:23:39 So, I’m trying to take a step back and look at this like, everybody is out to win their race, or to at least win their day, in terms of coverage, what they’re putting out there.
0:23:44 And those 10 members who voted to censure Al Green are from swing districts.
0:23:45 They’re representing Trump voters.
0:23:50 It may just be how they feel also personally, but you look at the character of these people.
0:23:56 We had Tom Swasey on the podcast before, like, a Chrissy Houlihan, Jared Moskowitz, Ami Barra.
0:24:02 Like, these are really great, dependable Democrats that believe strongly in the mission of the party.
0:24:03 They’re great representatives.
0:24:06 And I think they’re just running their own races.
0:24:08 That it wasn’t personal about Al Green.
0:24:13 I don’t think it was about, you know, taking a stand as a unified Democratic Party.
0:24:28 I think that they felt like the way that it looked to have Al Green not only doing that and disrupting to that level, and it should be noted that Marjorie Taylor Greene and Lauren Boebert and Joe Wilson from years ago when Obama was president, have been hugely disruptive.
0:24:36 And Republicans didn’t care, and they didn’t censure them, and everyone just kind of moved on because that’s their character and that’s who they are.
0:24:43 But Democrats always hold ourselves to higher standards, and it can be tough electorally, but I do like that about us, that we have some sort of moral compass.
0:24:56 But the big problem with what happened during Trump’s speech is that there were these incredible guests that he brought, including this 13-year-old who has had brain cancer.
0:25:03 I think he’s had 13 operations, and he was essentially like a make-a-wish kid, right, who got to become a Secret Service agent.
0:25:08 And a bunch of Democrats didn’t even bother to look up from their phones while he was being honored.
0:25:29 And I think that that’s really what turned a lot of those Democrats who voted to censure Al Green and even some who didn’t vote to do that, like a Ro Khanna, but spoke out against how awful that looked, that we just didn’t seem up to the challenge in that particular moment.
0:25:41 Like, there is a way to not normalize some of the things that Trump is saying, and there were tons of lies, and his speech was an hour and 44 minutes, so the fact-checkers couldn’t even keep up with what was going on.
0:25:50 But when you have guests like Lake and Riley’s family was there, hostage families, this kid with brain cancer, you got to stand up and you got to applaud.
0:25:52 And they didn’t do that.
0:26:01 Yeah, I thought it was really, really telling in the sense that, one, it was just, I think we came out of that, when I say we Democrats, big losers.
0:26:04 We looked reckless, overly emotional.
0:26:11 I think our behavior just turns off moderates and emboldens Republicans.
0:26:19 Because, look, at the joint address or gatherings of Congress, the president wins.
0:26:33 It’s a bully pulpit, there’s a lot of majesty, and what you do in that situation, quite frankly, is you sit quietly, you say nothing, and in instances where they bring in a hero or a kid who’s endured a lot of surgery, you stand up and you applaud.
0:26:36 You show you’re, you know, you show you’re still a human, right?
0:26:43 Instead, all of the disruption and the woman following around with the sign saying, this is not normal.
0:26:48 I mean, Marjorie Taylor Greene and Lauren Boebert look like idiots, and we didn’t like it when they did it.
0:26:51 And we shouldn’t, we shouldn’t copy that kind of behavior.
0:26:54 It really made us look weak.
0:26:58 I actually thought, you know, the best moment for the Republicans was when they removed him.
0:27:01 I thought Speaker Johnson came across as authoritative.
0:27:07 And we’re starting to look like, I mean, it kind of made me sad just for America.
0:27:12 It feels like we’re two steps away from being, whereas in South Korea, where occasionally the Congress just breaks out into fisticuffs.
0:27:16 It’s like we’re about to become that nation.
0:27:22 And the other thing I think it reflects poorly on Democrats is clearly our leadership has no control over these people.
0:27:25 Because this just didn’t make sense for the Democratic Party.
0:27:27 Your point is an interesting one.
0:27:31 And that is, I’ve never understood why the Democratic Party eats our own.
0:27:38 I’m still pissed off at Senator Gillibrand for getting all high and mighty and chasing Senator Franken out of office.
0:27:38 So I think would have been…
0:27:43 And did you say she didn’t have the same kind of words for Andrew Cuomo getting back in the mayoral race?
0:27:44 She got her seat.
0:27:46 She was essentially an unknown.
0:27:48 And in my view, she kind of brightens up her room by leaving it.
0:27:54 And the Clintons appointed her, right, to the Senate seat that was vacated.
0:27:55 My understanding is by Secretary Clinton.
0:28:01 And the Clintons don’t speak to her anymore because I think that she’s not a very consistent person.
0:28:04 But for her to basically eat one of…
0:28:12 For us to allow her to ruin the career of one of our most articulate and, quite frankly, humorous voices counter to Trump,
0:28:17 so that she could have an 11-second run for presidency, that was the ticket no one was asking for.
0:28:19 Remember that?
0:28:23 The former mayor of New York and Kristen Gillibrand were both running for president.
0:28:27 And my favorite was she said she wanted to represent other young mothers.
0:28:28 I’m like, you’re a young mother?
0:28:30 Anyway, is that rough?
0:28:31 Is that rough?
0:28:31 Not cool.
0:28:33 I’m a 41-year-old woman.
0:28:35 No, but she’s much older than you.
0:28:37 I know, but just don’t do…
0:28:39 Just, you were good before that.
0:28:40 I was good.
0:28:43 Snatching defeat from the jaws of victory.
0:28:45 I am who I am.
0:28:48 But, yeah, I agree with you.
0:28:50 At first I thought, it’s good they censured him.
0:28:55 And then I thought, why are we always deciding to eat our own and hold our…
0:28:58 Like you said, we shoot ourselves in the foot.
0:29:01 And I’m not sure we should be disarming unilaterally.
0:29:04 But I thought it was a terrible look for Democrats.
0:29:08 Yeah, I wanted to add to that with the eating your own.
0:29:12 Al Green, by the way, is in a Democrat plus 53 seat.
0:29:19 He doesn’t have to think about what his constituents are going to say, right, if he causes a ruckus.
0:29:21 I mean, inevitably, I’m sure they like it.
0:29:22 He’s been their representative a long time.
0:29:30 But what really pissed me off was seeing progressives criticizing Alisa Slotkin, who gave the Democratic response.
0:29:34 So Bernie did his own thing, as usual, and he did great.
0:29:36 He had millions of social media impressions.
0:29:40 He is a viral machine in the best possible way.
0:29:43 But Alisa Slotkin gave the Democratic response.
0:29:46 She did an amazing job.
0:29:49 There were conservatives all over social media saying she did a great job.
0:29:56 She talked about being called to service, you know, in New York on 9-11, went and joined the CIA, did three tours.
0:29:59 She just won a swing state that Donald Trump won.
0:30:00 She managed to pull that off.
0:30:05 She talked about growing up in a household with a mom who voted for Democrats, a dad who voted Republican.
0:30:16 She talked about how happy she was that we had Reagan during the Cold War and not Trump because he would have ceded the world to the USSR.
0:30:23 And progressives are dumping on her because she said that George Bush was a patriot and that she said anything nice about Reagan.
0:30:27 And I saw a lot of comments like, oh, well, why isn’t she talking about FDR?
0:30:33 FDR is not a touchpoint for many people who are alive right now.
0:30:36 I understand on a historical basis why that makes sense.
0:30:53 But if you think that talking about Reagan and Bush being of good character isn’t smart if you are trying to get swing voters, moderate voters, left-leaning independents, even some right-leaning independents to vote for you, or even just that she’s telling us how she won her election.
0:31:02 I mean, we should just be having tutorials all the time from Democrats that pulled these miracles off in this environment.
0:31:04 And it really upset me.
0:31:12 I was like, this is—if you think she’s too conservative, you don’t like that she voted for the Lakin-Riley Act, you’re concerned about, you know, how she’s going to be on trans issues, etc.
0:31:13 That’s fine.
0:31:15 There’s a time and place for that.
0:31:28 But when you see someone that gets up after Trump’s speech, which had a very high approval rating in terms of the audience, which was skewed Republican, of course, but still, like, he did well in terms of his delivery.
0:31:29 She gets up there.
0:31:40 She gives a succinct response to it that talks about what really should matter to the party, like the economy, our national security, making sure that the day-to-day lives of Americans is improved and better.
0:31:43 And you want to shit on her?
0:31:46 Like, I have no time for that at all.
0:31:51 Yeah, what the Republicans have that the Democrats lack is a certain level of synchronicity and coordination.
0:32:01 And that is, if you look at the relationship between these kind of conservative think tanks, conservative media, and Republican talking points and discipline, they’re coordinated.
0:32:11 And the sum of its parts, or the whole is greater than the sum of its parts, whereas the Democrats look sclerotic, like, oh, we don’t like the person giving the response because they were too moderate.
0:32:14 Oh, we’re, you know, we’re going to have these random interruptions and yell out.
0:32:16 We just look all over the place and disorganized.
0:32:19 And, like, quite frankly, like, we just don’t have our shit together.
0:32:34 And something that people vote for is they would rather vote for someone who seems resolute and youthful and vigorous and competent than someone who just seems to be kind of, like, flailing and don’t know, you know, you don’t get a sense for where they stand.
0:32:42 And the same reason why I think our, you know, our trading partners are going to not trust the U.S. around different alliances.
0:32:47 I think that the American public right now looks at the Democratic Party and is like, Jesus Christ, pick a theme.
0:32:49 Like, what, who are you guys?
0:32:50 What are you?
0:32:58 And, you know, the response to this has been, you know, ranges from ineffective to kind of overly, overly emotional.
0:33:01 It’s just a, it’s just not a good look for us.
0:33:01 All right.
0:33:03 Let’s take one more quick break.
0:33:03 Stay with us.
0:33:07 Hey there.
0:33:11 I’m Peter Kafka, the host of Channels, the podcast about tech and media and the way they’re colliding.
0:33:17 And this week I’m talking about the state of the movies and the state of TV and how they all get melded together in the Oscars.
0:33:21 A huge event that looks like it’s going to get smaller every year.
0:33:28 Here to explain what happened this year and what’s going to happen in the future is Matt Bellany, the veteran Hollywood journalist from Puck.
0:33:32 Matt is smart and he’s going to make you feel smart for listening in.
0:33:37 You can hear our chat on channels from the Vox Media Podcast Network.
0:33:51 This week on The Vergecast, we are asking existential questions about laptops.
0:33:53 What do we want our laptops to be?
0:33:54 We’ve had them for decades.
0:34:00 And every time somebody has a big, wild new idea about laptops, it tends to go terribly.
0:34:06 So this week we got new MacBook Airs from Apple, which have new chips, but are just the same as they’ve ever been.
0:34:14 And then there are companies like Framework, which want us to rethink the way that we buy and upgrade and repair and use our laptops.
0:34:17 So what do we want from our computers?
0:34:33 This week on Prof G Markets, we speak with Jonathan Cantor, former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice.
0:34:41 We discuss which sectors he believes most need antitrust enforcement and how businesses actually feel about antitrust.
0:34:43 The dirty little secret is that business actually likes what we do.
0:34:48 They’re the ones encouraging us to bring cases because they want access to markets.
0:34:50 They want supply chains that are affordable.
0:34:54 They want greater supply of key inputs.
0:34:55 Right.
0:34:57 This is something that’s quite popular in business.
0:35:01 You can find that conversation exclusively on the Prof G Markets podcast.
0:35:04 Welcome back.
0:35:15 Before we go, California Governor Gavin Newsom is under fire from LGBTQ plus activists after saying it’s deeply unfair for transgender girls to compete in high school girl sports.
0:35:22 He made the comments on the debut episode of his new podcast while chatting with right wing provocateur Charlie Kirk.
0:35:31 Newsom, once a trailblazer for LGBTQ rights, also agreed that a Trump campaign ad attacking Kamala Harris over gender affirming care was politically devastating.
0:35:39 Speaking of Harris, she’s reportedly considering a run for California governor in 2026, and she’s told allies she’ll decide by the end of the summer.
0:35:45 One could cement her leadership in the Democratic Party, but take her out of the running for president in 2028.
0:35:49 Meanwhile, Democratic strategist James Carville has a message for the party.
0:35:51 Do nothing.
0:35:56 He argues that Republicans are so bad at governing their own chaos will sink them.
0:36:01 Jess, does Newsom’s stance on trans athletes hurt his 2028 chances, especially with progressives?
0:36:03 I mean, they’re not going to like it.
0:36:06 It’s part of him tacking to the center.
0:36:18 And I think a little bit of a fulfillment of him coming out and probably what he naturally thinks versus how he’s been campaigning or governing over the course of his career.
0:36:24 But I saw there was a New York Times-Ipsos poll out on the issue of transgender women in women’s sports.
0:36:30 So it’s an 80-20 issue, like across the general public, against it.
0:36:37 But it’s also 67 to 31 percent of self-identified Democrats do not think that transgender women should be playing in women’s sports.
0:36:41 So this is the common sense position, right?
0:36:48 This is the stuff that we’ve been talking about since the Charlemagne and the God ad came out, but really for several years, right?
0:36:50 Like what Bill Maher has been going on and on and on about.
0:36:55 Just say the normal thing, which this is biologically unfair.
0:36:59 We are not trying to tamp down on someone’s civil rights.
0:37:07 It’s hard to make an argument that it is the civil rights issue of our time that transgender women get to compete on a collegiate level against women.
0:37:14 We’re not talking about having equal access to all the amenities of society being treated equally under the law.
0:37:18 We’re talking about a very specific test case of this.
0:37:23 And Tim Ryan was talking about it a few weeks ago, actually, when he was on Maher.
0:37:31 And Maher was quickfire asking him, you know, is this the hill to die on about several issues and brought up this issue.
0:37:34 And Tim Ryan said, no, it’s not the hill to die on.
0:37:42 There’s a way to say that you want to make sure that rights are protected without saying that Leah Thomas should be swimming against biological women.
0:37:47 I get it. Gavin Newsom wants to run.
0:37:55 He’s doing what he can to make sure that he is more palatable to a larger, more moderate electorate when that time comes around.
0:38:00 But I do think that there’s going to be a lot of mea culpa-ing over the course of the next few years.
0:38:11 People are going to have to talk about why it is that they said that Biden was completely fine and that they didn’t think that there were any legitimate concerns about him serving for the next four years.
0:38:13 And certainly a policy like this is going to be one of them.
0:38:15 They’re going to have to talk about the border as well.
0:38:23 Why did you not say anything for a lot of them for the first three years of the Biden administration when there were hundreds of thousands of people crossing the border on a monthly basis?
0:38:26 Did you see the new CBP numbers?
0:38:31 It’s down to, I think, 8,100 crossings in February.
0:38:36 It was 250,000 peak on a monthly basis under Biden.
0:38:39 And this started under Biden, for sure, coming down.
0:38:42 But it’s quite clear there have been no new laws passed.
0:38:49 The rules on the books, if they are enforced, can do a lot in stemming illegal immigration.
0:39:00 I think in general, people look at the Democratic Party and are drawn to some of the ideals and some of the people and then go, oh, wait, but they’re fucking insane.
0:39:02 And this is one of those issues.
0:39:06 I said this two, two and a half years ago on Pivot and got a lot of pushback.
0:39:17 But when there was a bicycle race or a bike race in North Carolina, not a big race, but a race that was big enough that it had cash prizes.
0:39:22 And a transgender woman came across the finish line five minutes before the rest of the crowd.
0:39:32 And then you saw the footage of basically a six foot four swimmer with a just enormous wingspan shows up and takes the NCAA finals and like shatters every record.
0:39:36 And I think America looks at that and goes, they’ve gone fucking insane.
0:39:45 And they’re defending this because they decided this was some sort of woke to establish a woke bona fides who immediately had to go, OK, I’m going to ignore all common sense.
0:39:51 And it was just it’s done enormous damage that we don’t have basic common sense.
0:40:02 And I think I believe our view on this should be, look, if a local school board, we believe let’s embrace the Republican ideology that on decisions around nuance, individual schools and parents should make up their own mind.
0:40:14 If there’s a school where they say, look, a 14 year old transgender woman would really benefit from participating in junior high school or high school sports, where quite frankly, the stakes aren’t that high.
0:40:19 Then fine, they can decide to let to let her participate.
0:40:29 But anything involving scholarships, money, accolades, admissions to colleges, whatever it might be, or contact sports, quite frankly.
0:40:33 No, and I don’t see the crime against humanity here.
0:40:35 I will never play basketball.
0:40:37 I don’t have those skills.
0:40:38 I wasn’t born with those skills.
0:40:45 And I believe if you’re born with testicles and a penis and the advantage of testosterone and that bone structure, unfortunately, you know,
0:40:51 you don’t get to play women’s sports because it, to me, the math was just so simple.
0:41:08 And that is, if we’re going to permit this and have no regulation around it, then essentially what you’re saying is all the accoutrements of athletics, all the money, the fame, the prestige, the relevance, the self-esteem is going to slowly but surely be sequestered to people born with a penis.
0:41:13 I was just shocked feminists didn’t say, no, we can’t, we can’t have this.
0:41:19 And we just allowed this just strategically on an issue that really doesn’t impact that many people.
0:41:25 And I’m sure we’ll get emails on that, to the, that was where we were going to say, okay, this is a big issue for us.
0:41:27 And we just come across, it’s just insane.
0:41:35 And the one commercial that moved the needle more than anything during the presidential campaign was that commercial basically saying, you know, I think it was accusing the Democrats.
0:41:42 And of course, I believe it was somewhat of an exaggeration or taken out of context that we were paying for the transgender surgery of inmates.
0:41:51 This to me, I think this is Governor Newsom, who we know is running, you know, triangulating to the middle.
0:41:57 And quite frankly, pissing off the left is a feature, not a bug in terms of your electability.
0:42:03 Somebody is going to have to, you know, someone was saying to me, who’s the leading candidate for Democratic nomination in 2028?
0:42:06 And I said, it’s, it’s probably governor you really haven’t heard of right now.
0:42:08 Someone will rise to the moment.
0:42:11 And I’m not even sure we know this person right now.
0:42:17 I’ve always thought Governor Newsom would make a really strong candidate because I’m convinced we’re a very luxurious nation and he just looks presidential.
0:42:19 Also, I think he’s a fantastic debater.
0:42:26 I think he’s one of maybe a handful of Democrats that goes behind enemy lines as evidenced by the fact he went on with very conservative commentator, Charlie Kirk.
0:42:31 But this, this needs to be an issue that the Democrats need to pivot very aggressively.
0:42:39 People, people should have rights if a local school wants to let a transgender girl play sports, more power to you.
0:42:45 But with respect to anything regarding, you know, advantage, no, this just doesn’t make any sense.
0:42:51 They need to pivot hard on this because otherwise they are just handing a gift, the gift that keeps on giving to Republicans.
0:43:00 Yeah, they also need to talk about it in the framework of fairness, because that has been where Bernie Sanders has been so successful, right?
0:43:07 And talking about the oligarchy that’s out there and how unfair things are for the average American, the American worker, et cetera.
0:43:16 And so that’s how Governor Newsom and Charlie Kirk were talking about the issue on his podcast, where he said, you know, I was a college athlete, so was my wife.
0:43:17 I have two daughters.
0:43:19 I know that it is not fair.
0:43:33 And my conservative co-hosts on The Five have obviously been relentlessly talking about this, but they picked up on exactly what you said, which is where are the feminists in all of this?
0:43:42 And you’ve seen very few, you know, champion female athletes, including for Martina Navratilova, who is incredible on this issue, speaking out about it.
0:43:45 You can’t get an answer from like a Billie Jean King, for instance, on this issue.
0:43:56 You have a Megan Rapinoe, Sue Bird, et cetera, defending trans women’s rights to be in seriously competitive women’s sports.
0:44:05 And I think a lot of that comes down to the fact that people are just denying what biological advantages are afforded to men.
0:44:12 And that has been something that we just haven’t been able to have, you know, serious, clear-headed conversations about.
0:44:16 And some of that gets into the language police stuff that we have, you know, weird terms for things.
0:44:20 And we’re talking about inseminated people and struggling to find men and women.
0:44:29 Not that we don’t know that there are, you know, 30 intersex combinations that can happen and that the law needs to make sure that it protects as many people as possible.
0:44:43 But when you can’t have a straight, normal, common-sense conversation with someone where you can talk about men and women and talk about where it is appropriate to have transgender athletes competing and where it is inappropriate to do so,
0:44:49 we become like aliens to regular people.
0:44:58 Even seeing that 30 percent of Democrats versus 18 percent of the general electorate are in favor of transgender women and women’s sports, that’s a pretty big difference.
0:45:02 Obviously, you know, you have a bunch of Republicans in the general sample.
0:45:04 They’re going to be pulling it to the other side.
0:45:08 But when you have a conversation with somebody, if you just went out to lunch with them and said, what do you think about this?
0:45:13 I think odds are that they would think the same way that we do about it.
0:45:18 And there’s definitely, I felt that a couple of years ago when we were speaking about this issue, there’s definitely a narrative you’re supposed to sign up to.
0:45:21 It’s almost like the narrative around being a MAGA.
0:45:26 You have to be MAGA or you could be alienated or voted off the island or Trump will go after you in primary you.
0:45:34 On the left, it’s more nuanced in the sense that if you don’t sign up to the narrative in this kind of certain ideology, you’re treated like an apostate.
0:45:39 And the blowback on this, if you didn’t sign up for the narrative, and there was just no critical thinking.
0:45:42 This kind of seemed like an easy one.
0:45:44 But I think we lost a lot of credibility.
0:45:48 Anyways, what do you think of the idea of a Governor Harris, Jess?
0:45:49 I don’t think we’re going to have a President Harris.
0:45:56 So I think that it is a much more reasonable idea for her to run for governor if she wants to continue to serve the country.
0:46:02 I know that she’s technically the frontrunner in the early polls for 2028, which is what happens.
0:46:05 The last nominee is always the person that’s furthest ahead.
0:46:14 And she did save us from certain electoral disaster because I think if Biden had stayed on top of the ticket, Trump would have won over 400 electoral votes.
0:46:20 And those swing state senators like the Alyssa Slotkins of the world would not have been able to win their competitive races.
0:46:33 But, you know, I assume that people would line up for her in California and that there are a lot of people who are considering running who would kind of bow down to the idea of Kamala getting in.
0:46:36 And perhaps that’s the right route for her.
0:46:42 But I just I feel strongly that the national stage is not going to be where she ends up again.
0:46:45 I’m really split on this because she’s a competent person.
0:46:49 Right. And I think she was a good attorney general, good good senator.
0:46:53 And she’d probably be, I’d like to think, a competent governor.
0:47:00 The problem is, I think when you run for president and you lose against Donald Trump, quite frankly, just I think you go away for a while.
0:47:08 I don’t think I think she’ll be a talking point for for Republicans and their races if she maintains her national profile.
0:47:17 I think when you lose her president, quite frankly, I think the best thing for the party would be if she just went dark until we have a Democratic president and she’s appointed to the Supreme Court.
0:47:18 I think she’d be an outstanding justice.
0:47:20 Yeah, I think she’d be an outstanding justice.
0:47:22 Yeah, I hadn’t thought about that, actually.
0:47:28 I mean, I know people say things like Obama, but I hadn’t thought about it for Kamala.
0:47:31 Anyways, but my sense is she’s going to be a continued talking point.
0:47:36 I don’t think I think she’ll continue to be a flashpoint for for Republicans.
0:47:37 And I wouldn’t be surprised.
0:47:53 I mean, I’ll be curious, but given I think she’s setting herself up for real challenge and embarrassment here, because about every couple of decades, a quote unquote lifestyle mayor governor wins in California cities and in the state.
0:48:08 Because the quality of life in some of our bigger cities in California is is eroded so much that I think the moons are lining up for what I call like a no nonsense kind of Pete Wilson ish kind of kind of governor.
0:48:12 And I would just say I would hate to see her run and lose.
0:48:21 I think it would it would basically send a signal to the entire nation that Democratic ideals are kind of just just totally done and gone.
0:48:26 So torn on this because I think she’s a competent person and would probably be a decent governor.
0:48:42 But I think she her brand and the possibility of a loss and her as a constant talking point for Republicans reminding them of why, you know, Americans didn’t vote for her in the first place will be a real another cudgel or a weapon that will benefit benefit Republicans.
0:48:47 Well, she has a lot of those loony positions that we’re talking about with Newsom that she’s taken.
0:49:03 We only ended up with the Charlemagne the God ad because Kamala signed yes on like an ACLU questionnaire when she was running for president in 2020, saying that she would be supportive of transgender operations for people who are currently incarcerated.
0:49:12 And the New York Times has an analysis, by the way, there are plenty of transgender people who got their gender affirming care while Trump was president.
0:49:16 So he was lying about that and saying that this was just something that happened under the Biden administration.
0:49:22 But this comes that whole conversation was rooted in the fact that Kamala had taken a far left position.
0:49:42 One of the most important propositions or ballot proposition ballot measures was Prop 36 for California this year, which was undoing a 2014, what was it, Prop 47 from 2014, which allowed people to shoplift up to $950 without being arrested.
0:49:43 That’s right.
0:49:47 Right. And it passed with 70 percent of the vote, 68, 70 percent of the vote.
0:49:49 And Newsom opposed it.
0:49:50 And Kamala wavered on it.
0:49:55 She was asked the weekend before the election on like Saturday or Sunday before we all went to vote on Tuesday.
0:49:57 And she demurred.
0:49:59 She didn’t say where she would stand on it.
0:50:02 You can’t be like that anymore.
0:50:04 You can’t certainly can’t run for governor of a state.
0:50:17 We have 70 percent approval rating for something and not take a stance at all, let alone pick the thing that the majority of people are in favor of and not have a good defense for why.
0:50:25 That is. And Governor Newsom had a whole thing about, you know, the issue with privatizing prisons and that it was going to cut out money for drug rehabilitation programs, et cetera.
0:50:34 But as an elected official or someone who wants to be an elected official, being on the wrong side of a 70 30 issue does not bode well for you.
0:50:44 Yeah. So speaking, speaking of being on the or kind of political strategy, what do you think of Carville’s notion that Democrats should step back and let Republicans implode?
0:50:47 Do you think this is a dangerous gamble, this notion of just do nothing?
0:50:55 I think it’s a little more nuanced than do nothing because it’s important that you continue to amplify what is going on.
0:51:05 So the the best message tested line of argumentation right now is around the cuts to Medicaid and that Trump isn’t focusing on the economy.
0:51:09 So over 80 percent want him to focus on the economy. Only 36 percent think that he actually is.
0:51:13 Nobody Republican, Democrat, independent wants these Medicaid cuts.
0:51:17 And I’m sure you’ve seen the coverage of the town halls that are occurring all over the country.
0:51:19 And the Republicans, you know, are saying that they’re astroturfs.
0:51:23 It’s all Democratic plans. And George Soros is setting everyone up for it.
0:51:30 But the Republicans now don’t want swing district congresspeople to have these town halls because it’s gotten so brutal.
0:51:35 And they have veterans showing up who are saying, like, you’re slashing our benefits.
0:51:38 You’re firing me. You know, we don’t like what Doge is doing.
0:51:40 Hands off our Medicaid, et cetera.
0:51:53 And so I think, quote unquote, do nothing if that means amplifying what their spending bill is actually going to do, amplifying what Elon Musk is doing, which he’s the weakest link in the administration.
0:51:56 People like the idea of getting rid of waste, fraud and abuse.
0:52:03 They don’t like the approach that he’s taking to it and don’t really see that as what’s being executed.
0:52:08 Then I say Carville’s right. But he’s also taken a lot of big swings and missed.
0:52:14 Like he said Kamala was definitely winning. You know, he’s a it’s part of his charm for sure.
0:52:20 Right. Yeah. He’s well, whenever he speaks, you listen, because he’s just so compelling and so matter of fact.
0:52:22 But he’s a winner and we like winners.
0:52:24 That’s right. But you’re I think your instincts are right on.
0:52:34 And that is it’s not do nothing as much as it is demonstrate more discipline instead of running over here and going, oh, my God, the Gulf of Gulf of America.
0:52:36 Or male versus female. No, no, no, no. Be more disciplined.
0:52:45 Talk about surrender in Ukraine and that they’re coming after your Medicare and have experts and data and look like an adult and just hammer them.
0:52:50 The difficult thing about Democrats is not what to talk about. It’s what not to talk about.
0:52:58 And specifically, they need to stop taking the debate around these ridiculous, stupid issues that don’t affect anybody that are clearly being thrown out there as weapons of mass distraction.
0:53:02 Even Doge, I believe, is a weapon of mass distraction.
0:53:06 And instead of getting all angry about 19 year olds, whether they should be in there, I get it.
0:53:13 But the majority or a lot of moderates, quite frankly, see some of these firings and under the breath are like, well, welcome to the work week.
0:53:21 This has happened to me and other people. What they should, in my opinion, be focused on is a much more boring but impactful piece of data.
0:53:28 And that is this is all a distraction to the notion that, one, they’re going to increase the deficits by $800 billion a year, which is nothing but a tax increase.
0:53:34 We’re about to experience the greatest tax increase in history on young people in the form of unprecedented deficits.
0:53:40 And two, they’re coming for your Medicaid. There’s no way. Look at what they’re planning here.
0:53:43 They’ve tasked the Energy and Commerce Department with cutting $800 billion.
0:53:46 That means they’re coming. They’re coming for Medicaid.
0:53:50 And just, and anything else, again, it goes back to the same notion.
0:54:01 The Democratic leadership doesn’t have the discipline that McConnell imposed or that, you know, it appears that Speaker Johnson and Trump are imposing on the Republican Party.
0:54:04 We just lack, they just lack sort of that.
0:54:10 And instead, they just, they take the bait and they start saying, can you believe he said this?
0:54:13 And it’s like, well, okay, that, that, yeah. All right.
0:54:24 We all know he’s reckless and he’s weird, but focus on the things that are indefensible on Republicans’ part that are popular among Americans and hammer away on those one or two issues.
0:54:28 So it’s, again, it’s not doing nothing. It’s more discipline.
0:54:37 Just, just before we wrap up here, what do you think of what happened recently that supposedly Trump has directed, has basically said, all right,
0:54:45 Doge is now an advisory or almost like a service to different cabinet members, but they ultimately get to make the decision around layoffs.
0:54:45 Any thoughts?
0:54:48 Seems like Elon Musk is ruffling some feathers.
0:55:04 There was some reporting of what went on in that cabinet meeting and that Secretary Duffy, who oversees transportation, and Secretary Rubio, our Secretary of State, were both forthcoming in their criticisms of Musk and basically said, like, what the fuck do you want us to do?
0:55:13 Like, Sean Duffy said, we’re having plane crashes, right, at an unprecedented level, and you’re cutting air traffic controllers.
0:55:18 And that apparently Trump sided with them over Musk.
0:55:22 So I don’t know, you know, I’m not a Musk whisperer.
0:55:26 I have not deeply studied him as much as you or certainly as Kara has.
0:55:47 But it feels like he is on more tenuous ground than he certainly was at the beginning of this and that Trump at least has some level of realization that the fate of the administration’s success actually depends on these individual bureaucracies working well and not necessarily whatever Elon Musk is doing.
0:55:54 So he’s continually demoted, you know, they say Amy Gleason is actually the administrator, and now he is an advisory person, et cetera.
0:55:58 And you look at Tesla basically cratering, right?
0:56:00 The international sales are some of the most astounding.
0:56:02 What is it, down in Germany, like 75 percent?
0:56:07 So he, you know, might want to tend to his home.
0:56:24 That could be his children or his companies that he had before he did this and pay attention to that versus the day-to-day grind where it seems like these folks who got confirmation for these jobs have a different kind of plan on how to execute.
0:56:35 Yeah, if this in fact is true, that he’s now got to defer and the ultimate decision is made or not made by the cabinet heads, it’s effectively, I think, the end operationally of Doge.
0:56:53 And the notion that we decided that an individual, the world’s wealthiest man, who is severely addicted to ketamine, reported by the Wall Street Journal, is concurrently being sued by two women for sole custody of their children because he doesn’t, he’s not involved in their lives.
0:57:02 Maybe that’s not the individual who gets to bypass any sort of congressional vetting or approval to decide if veterans or children get their medical care and food.
0:57:18 And in addition, if you look at what so far has happened from Doge, the audit, the only thing it has demonstrated, in my view, is that the U.S. government has a lot less fraud and waste than initially feared.
0:57:32 If this were a physical, I would argue that the U.S. government has gotten a clean bill of health, that this wall of receipts meant to just highlight all the outrageous waste and fraud, there’s no there there.
0:57:36 The first thing they reported on the wall of receipts was an $8 billion savings.
0:57:38 It ended up it was $8 million and it was money that had already been spent.
0:57:42 And then items two, three, and four, it ended up, weren’t even true.
0:57:47 They are having trouble finding all of this waste and fraud that was supposedly out there.
0:57:49 And this isn’t an operation.
0:57:51 This isn’t about operational efficiency.
0:57:53 It’s about political ideology.
0:58:01 I got an email from a fraternity brother who I hadn’t talked to in 30 years, a kid named Greg Townsend, kid.
0:58:02 He’s now, you know, 57.
0:58:05 And after graduating, you have trouble.
0:58:09 All you see when you hear from these kids is a guy you used to do beer bongs with.
0:58:13 And that’s, you assume they’re still doing beer bongs and listening to Led Zeppelin.
0:58:25 And this, this, this guy, this man, Greg, had gone on to law school and has been working for a division of the UN pursuing war criminals around the world out of, out of Switzerland.
0:58:28 I mean, I was just so blown away by his work.
0:58:40 And he said that their funding had just been shut down, but they’re continuing to work because they all, all are so committed to creating an incentive system globally where people think twice before committing war crimes.
0:58:43 And essentially the funding was cut off.
0:58:49 So if you look at where they quote unquote have what Doge has really done, it’s not an operational or an efficiency mechanism.
0:58:53 It’s a political ideology because they just decided, I know, let’s just shut down all U.S. foreign aid.
0:58:58 That’s a political decision that has nothing to do with efficiency or fraud.
0:59:05 And what Trump has been really good at is using people as human shields and kind of soaking them up, having them do his dirty work and then firing them.
0:59:12 92% of his advisors were fired in the first administration, which was more than the previous three administrations combined.
0:59:18 And I think he’s essentially, I mean, the thing about Trump that’s just so obvious that people don’t want to talk about nobody.
0:59:21 He is literally Chernobyl after the meltdown.
0:59:25 You get near him, you’re going to die a hideous death, at least your reputation.
0:59:27 And it’s happening to Musk.
0:59:29 I see it here at South by Southwest.
0:59:31 People are throwing shit at Teslas.
0:59:36 You know, my, when I talked about Tesla, I’m like, you know, zero to 1939 in three seconds.
0:59:44 It’s really hard to understand the political calculus or the political calculus here, the economic calculus.
0:59:46 He really fucked up.
0:59:55 And that is the opportunity to remove inspectors from the 32 different investigations across 11 agencies against his companies.
0:59:55 Okay.
0:59:59 That’s an economic incentive to get involved and be cozy up to the president.
1:00:03 But the cost that’s being levied on him and his brands right now is enormous.
1:00:05 People are canceling Starlink contracts.
1:00:10 Entire countries are saying, Poland’s saying, we can’t count on you or your technology.
1:00:13 Provinces of Canada are canceling Starlink.
1:00:16 And I thought that’s the one that is really going to scare the shit out of them.
1:00:22 What’s unusual about this, and I use Nike as a counterexample, Nike took a political stand.
1:00:24 And sometimes it works.
1:00:29 When they decided to embrace Colin Kaepernick when he bent a knee, that was a real political risk.
1:00:30 But they did the math.
1:00:34 And that is two-thirds of Nike sales are outside of the U.S.
1:00:39 No international individual is that concerned or thinks the U.S. has race relations correct.
1:00:51 And about two-thirds of their revenue came from people under the age of 30 or non-whites, meaning the people that were outraged and did videos of burning their Nikes, that was probably their first pair on Nikes.
1:00:58 They did the math and said, this is going to cement and tickle the censors of the majority of our profits and revenue base.
1:01:01 And Musk has done the exact opposite.
1:01:07 75% of Republicans who he’s sort of lighting up or illuminating or activating say they would never buy an EV.
1:01:17 So he’s done the exact wrong math here, and that is the group that he is most going to piss off and alienate is sort of his core customer base.
1:01:25 And all this bullshit in Europe, it does seem like there’s a very healthy gag reflex in Europe around him trying to meddle in their election.
1:01:30 But I have never – it feels to me, and I’ve said this before and I’ve been wrong, this feels like a tipping point.
1:01:36 It feels like the worm has turned, and I was thinking the Bill Burr rant against him was sort of evidence of that.
1:01:44 But Tesla has shed a third of its value in February, and I mean the polling on this guy is absolutely – it’s just brutal.
1:01:56 Anyways, I don’t – I think – and I’m calling it, and I’ve been wrong before, but I think the Musk brand has absolutely peaked and is crashing in the fall right now feels unsustainable.
1:01:58 I mean, I mean, you would know better than me.
1:02:07 I feel like it is very early in the Trump administration to be writing the obituaries for anyone, let alone the person who got Trump elected.
1:02:18 And we also need to keep in mind that the normal things that should, quote-unquote, take a person down do not apply, certainly to Trump, right?
1:02:28 And a lot of people in his orbit, and I get this criticism all the time from lefty friends, you know, don’t normalize him, you know, this is normalizing, et cetera.
1:02:40 There is nothing more normalized than the fact that Donald Trump got reelected and that everyone knew exactly who he was and that they knew as well that Elon Musk was coming in for the ride and all of this.
1:02:44 He was by his side, almost glued to him for the last two months of campaigning.
1:02:55 So I’m not sure that I agree completely with you in terms of this being the end of it, but it certainly feels like a trouble-in-paradise moment.
1:03:01 And that, again, the American people are smarter than Trump and co. think that they are.
1:03:11 And they’re trying to convince all of us that public servants are just leeches instead of people who dedicate their lives to helping other people.
1:03:13 And does that mean there aren’t some bad public servants?
1:03:15 Of course there are.
1:03:28 But by and large, a workforce that’s 30% veterans, people that we all agree with, should have the most opportunities when they come home from serving this country, possibly, you know, risking their lives for us.
1:03:34 And they should have these possibilities to go and work for us and continue to make America better.
1:03:39 That Musk is really off-key in terms of how he’s talking about those folks.
1:03:51 Yeah, to your point, Kara was saying that Trump is scared of Musk, that he’s the world’s wealthiest man, which is his metric for credibility, and that the last thing he wants to do is piss him off.
1:03:52 I think he’s just going to fade away.
1:03:54 I think it’s going to be, if in fact—
1:03:55 He’s going to disappear him?
1:03:58 Well, no, I think Musk will decide to fade away.
1:04:01 I think Musk at some point is going to do the math and go, this is just not worth it for me.
1:04:14 And also, if in fact it’s now the cabinet members who get to decide or either do this or not do this, Secretary Rubio is not going to lay off some people in the State Department to save some money at this point.
1:04:16 He doesn’t give a shit about a small increase in the deficit.
1:04:18 He’s got a difficult job.
1:04:22 He’s not going to start laying off what he thinks might be bureaucratic.
1:04:26 He wants all the firepower he can get.
1:04:34 The notion that these guys are going to say, okay, I’m really going to take a chainsaw to my—the incentives are I need to get shit done.
1:04:35 I need to reflect confidence.
1:04:37 I need to have decent morale.
1:04:39 I need resources to get things done.
1:04:45 I’m getting shoved back and forth by these decisions.
1:04:45 They need people.
1:05:03 The notion that they are going to decide to start cutting costs, I think effectively or operationally, it might be if in fact he’s now there on top, so to speak, might be, if you will, the end of Doge.
1:05:04 It’s got to be the Pentagon anyway.
1:05:05 Got to be the Pentagon.
1:05:07 I mean, that’s where all the money is.
1:05:12 So they have to go after the Pentagon if they’re going to be actually making any savings.
1:05:17 And we’ve got to go, but I’m just saying it’s all smoke and mirrors, saying we’re going to go, we’re going to cut here or there.
1:05:18 We know where the money is.
1:05:20 It’s in the entitlement programs and in the Pentagon.
1:05:22 And so far, they’re not doing that.
1:05:23 It’s interesting.
1:05:26 That was one, I think, strategic error on the part of the Republicans.
1:05:28 I think they would have had a lot more credibility.
1:05:35 They would have obviated or kind of defenestrated any criticism if they had gone after the Pentagon first.
1:05:41 And that is, I would think it would have been much harder for Democrats to be critical of the process.
1:05:44 I thought that was a strategic error on their part of what started with the Pentagon.
1:05:45 Any thoughts?
1:05:45 Yeah.
1:05:47 I mean, you go where the money is, right?
1:05:51 And that was something that Secretary Hegseth said that he was open to.
1:05:53 He said, you know, we’ve never passed a clean audit.
1:05:55 And we absolutely should.
1:05:57 So, yeah, start with the audit of the Pentagon.
1:05:59 All right, Jess, that’s it for this episode.
1:06:01 Thank you for listening to Raging Moderates.
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