Audio Length: 00:50:07

Transcript:

S1: Welcome to the porn and propaganda episode of Slate Molli your guide to the business and finance news of the Week. I’m Felix Salmon of Axios. I’m here with Emily Peck of Fundrise. Hello. And very special guest, Jo Bernstein of I’m not entirely sure what your affiliation is. Jo, introduce yourself.

S2: Hi, I’m Jo Bernstein. My byline is Joseph. But please call me Joe. I as of Tuesday, I’m a reporter, senior reporter at Buzzfeed News. I spent the last year as a Nieman Fellow at Harvard University.

S1: Welcome, Joe. You are back at Buzzfeed now. But during your sabbatical or whatever it was, you did manage to write a massive cover article for Harper’s about anti disinformation, which is a fascinating subject we are going to talk about. We are also going to talk about porn, because obviously it’s been in the news for the past couple weeks. There was this big sort of flip flop from OnlyFans. We’re going to talk about what that was all about. We are also going to talk about a rise in shoplifting thanks to the Internet and Jeff Bezos (AMZN). We have a Slate plus segment on Renaissance Technologies and that tax settlement. We have a numbers round that is probably the most depressing numbers around we’ve ever had.

S3: No bowling balls, but it’s

S1: all a good show, actually. And you get to hear Joe dropped some serious knowledge about the Internet and whether it changes how we think. It’s all coming up on slate money. So, Joe, you disappeared off to Harvard and disappeared into a pile of books and came out with a magnum opus on the cover of Harper’s magazine about this is my favorite word that you used in the piece, anti disinformation and the anti disinformation industry, which now I feel the slate money has been part of the anti disinformation industry, selv. We are part of the problem. But tell us what this industry is.

S2: I would like to start by saying we’ve all in way, various ways, shapes and forms, been a part of the anti disinformation industry over the past 10 years. We’ve sort of been inundated with new and exciting and sometimes disturbing, infuriating, anti-democratic forms of content. And we’re all sort of negotiating how to live with them. That’s just a broad lesson across lots of Internet, basically every Internet platform, specifically since twenty sixteen, there’s been a kind of a cluster of people in the media and academia and think tanks and sort of civil society groups, cash rich non-profits that have really devoted themselves to combating a concept that they call disinformation. And what this. Group of people of essentially knowledge workers assumes is that there is a stable category of thing called this information that can be fought against. And that that is like a like a neutral sort of like empirical good. And what I want it to do with this story is think about the assumptions behind that. Think about how this work takes place in the broader technological context, the broader sociological context, the broader media context. And take a step back and think about how that has worked over the past sort of four to five years.

S1: So the first thing to think is that what was that Netflix documentary that got everyone up in arms? That was terrible.

S3: The social dilemma,

S1: the social dilemma, that was it, that there was the social dilemma. And then there was also just anyone you’ve ever heard at a cocktail party or whatever, just like complaining about Cambridge Analytica and how evil they were. And I think, as you say in your piece, it all really comes back to this idea that there was something illegitimate about the way in which Trump won the 2016 election. The Russia in particular was injecting disinformation or misinformation or whatever you want to call it into Facebook. The people there for or thereby wound up believing things that weren’t true. Thanks to this brand new sophisticated way of getting people to believe things that aren’t true. And the consequence of that was the election of Donald Trump. And people got terrified, the power of social networks and have now seen this now terrified of this power and a bunch of different context.

S2: Right. And like right away, there’s like good academic research that studies the effects of fake news. That is not at all causal. That is not at all sort of, you know, directional like this stuff makes people vote for Donald Trump, but it sort of doesn’t get it just doesn’t get a lot of media space. And I think there was just an enormous appetite to explain why Trump was elected, why Britain left the EU. And blaming this sort of nebulous concept of bad information is in many ways easier than thinking through the various complicated reasons behind both of those things.

S1: And there’s this peculiar irony here, which I really love on one level, which is that the natural people to fight back against this narrative are the tech companies and specifically Facebook. And Facebook is uniquely incapable of fighting back against this narrative because it makes all of its money by selling the narrative that it can influence people. And if you buy ads on Facebook, then that is going to influence their behavior.

S2: Right. So one of the things that I sort of started thinking while I was working on this piece was about the framing of disinformation as a pollution issue. And so then I started thinking about sort of other big sort of classical like literal polluting industries, big tobacco, you know, the energy industry and how long and hard these industries fought to claim that their products weren’t doing the things that advocates claim that they were doing. And then how comparatively fast, big tech essentially took on board the disinformation critique. And then I started thinking like, well, why is it not in their interest to fight the basic claim of the disinformation critique, which is that information on social platforms causes people to behave in these specific ways, which there’s research that supports that. And I sort of think, well, actually, as you say, their entire business model is based on the idea that they are all persuasive, that they can standardize people to be persuaded. And once I realized that, it kind of unlocked a lot of things about this story for me.

S3: So the disinformation narrative then helps everyone on all sides of it, because it gives powerful elites, as we call them, sort of like a bogeyman excuse. And they don’t have to examine their own behavior or policies. They can just say, well, it’s Facebook’s fault. Facebook can say, we’re sorry, but at the same time, they can say it to Charman. We’re going to help you sell a lot more toilet paper. Look how influential and powerful we are. And then real problems underlying everything don’t really get addressed. That was very appealing about your piece. It was just like, oh, no.

S1: I mean, I guess one of the messages I took away from this piece is that maybe the problems that people are getting so exercised about are not so real after all.

S2: I don’t want to go that far and I don’t want to say that information on social platforms can’t have profound negative effects. I just think we need to be humble about massive claims, a massive sort of overarching claims about the nature of media facts, which is like an unsettled science.

S1: Do you think the Russia won the election for Donald Trump by meddling in Facebook?

S2: I don’t know. What do you think? I mean, no, I don’t. I don’t. There’s a twenty seventeen Stanford and NYU study, which. Concluded that if one fake news article or about as persuasive as one TV campaign ad, the fake news and our in our database, which is the database of Facebook users, that the study was examining what have changed vote shares by an amount on the order of hundredths of a percentage point. That is much more than Trump’s margin of victory in the pivotal states on which the outcome depended. So for them to have sort of for Russia to have elected Trump, you have to believe that this Internet advertising is like massively more powerful and persuasive than TV advertising, which we don’t even know is all that persuasive to begin with.

S1: Right. I mean, I think that’s one of the things we’ve learned in in the past few elections is that. Money doesn’t win elections, even though what it does do is buy lots of TV ads, and if TV ads aren’t particularly impressive and don’t really change people’s minds anymore, it’s hard to see how, you know, the Internet is suddenly way more powerful being able to have that kind of effect.

S3: So that was one of the things that I was kind of wrestling with after reading your piece. It’s like on the one hand, you’re saying Facebook isn’t as powerful as everyone is arguing it is. Social media isn’t as powerful as everyone argues it is. TV ads aren’t as powerful. Marketing isn’t as powerful. But like it is, though, marketing, TV ads, all that stuff does shape a narrative and does lead people to believe certain things are see the world in certain ways. So how do you square that?

S1: Emily, what makes you believe that?

S3: I mean, I just listen to a great podcast episode on Slate about how bottled water is basically a creation of marketing. Like no one needed bottled water. Marketers figured out how to bottle water literally and convince people that they needed to hydrate. And now it’s a multibillion dollar industry. And now I am actually working in marketing. And I can see like you can see measurable results, you know, like a CEO appears on TV and then, you know, traffic surges to a website, sales go up. It all does matter.

S1: Tim Hwang is a friend of mine. He’s also quoted in Joe’s piece. He has a great quote in Joe’s piece, basically saying The reason why digital marketing in particular has so much strength of belief behind it is because it lends itself so naturally to impressive PowerPoint presentations, basically, which show you exactly the kind of causality that you’re talking about. And you can say, well, look, we spent a bunch of money in this channel and then we made a bunch of money over there. Or I have this business where for every hundred dollars I spend on Facebook advertising, I make one hundred and thirty dollars in profits. And so it’s just it’s great business and it all ends on Facebook. And I think you’re right that that does it works at some level of the funnel. Right. It works in terms of if you have someone who wants to buy, you know, who has a general idea that they want to buy something and you put it in front of them, a button saying, here, you can buy it right now, you could get 20 percent off, then that’s going to be the thing that incentivizes them to actually buy it. Whether it works like higher up the funnel in terms of, you know, making people decide who to vote for or change their mind in terms of what they think about Ford cars is much less well defined. And I think it does work to some degree, but I don’t think it works much better than marketing. And an advertising has always worked. I don’t think digital is some kind of amazing marketing technology that has transformed the industry and its effectiveness.

S3: Yes. Marketing does work, but digital marketing might not be any different or better.

S2: But also it’s related to this kind of mid century idea that some combination of advertising and behavioral science has cracked the code to the human mind. And I don’t think that’s true. And I think attempts to sort of quantify that and just see exactly how it works, I just don’t think they’re accurate. And just to take your example, Emily, did people start buying bottled water because they saw ads for it or because they saw it in the store? I mean, those two things seemed to me to be separate questions. Right.

S3: But seeing bottled water in the store is marketing. There are decisions that go into where the bottles of water get placed. Right. And how they’re sold, et cetera, et cetera, like it’s all part of it’s all part of marketing and ad sales, like there is brutal competition over where the products are placed.

S2: Yes, it’s marketing, but it’s not messaging. And what I’m talking about is messaging.

S3: OK, well, I guess I think it’s all part of the messaging. I think all that stuff is very meticulously planned and crafted and sold to people. And that I guess I think people are pretty vulnerable to those messages, maybe not uniquely so on social media.

S2: That, to me is more like debating whether or not Trump or Biden goes first on the ballot unless about right when you’re talking about like placement in the store or whatever. What I’m talking about are the messages people are exposed to before they make a choice. And I think there’s a lot of evidence basically showing that those effects are not as strong as you think in a lot of Fortune 500 companies don’t even run 12 because it’s not clear that they work.

S1: So let me ask you two questions. The first one is just broadly, as the tech clash been over a bit, is there much less here than meets the eye? Yeah. Let’s start with that one. Have we all got too invested in this sort of tech clash narrative?

S2: I think that the tech clash is a completely understandable and in some ways necessary reaction to the way the industry was covered for years and years and years. I think a mature coverage of the tech industry is going to combine like some acknowledgment that these companies are not uniquely evil. They’re just self-interested, like all companies, and with a kind of skepticism that any reporter, any sort of knowledge producing person needs to bring to bear on the things that they know that they cover and report on.

S1: And then my second question is about Covid. Truth is, an anti vaccine is an anti maskers. And what’s your opinion of the degree to which social media may or may not be particularly to blame for the spread of those kind of beliefs?

S2: I think it absolutely plays a role, and I think there has to be reporting on this stuff. My piece is not an argument that we need to you know, it’s not a libertarian argument. It’s an argument that just sort of, you know, a speech, you braless or anything like that. It’s just that there are other factors at play in vaccine skepticism. Vaccine skepticism existed before social platforms. It exists in lots of different communities in the states and in other countries. And to sort of delude ourselves into thinking if we have better content, moderation, well, that’s going to eliminate vaccine skepticism. This is, I think, just sort of cruising for bruising.

S1: I totally agree with that one. I’m recording this from Berlin, where I spent a bunch of time talking to Germans as well in Germany, talking to a bunch of Germans with various degrees of different types of attitudes about vaccines and masks. And the one thing you can say about Germany in general is the kind of people I’ve been hanging out with is they spend very little time on what we would consider social media. They might use messaging apps like WhatsApp, but it’s not sort of a fake news kind of place necessarily. But yeah, I think what we see now is people who we never used to see before. There were always Antibalas as they were always Graves’s. There were always conspiracy theories. And they just didn’t used to be nearly as visible as they are now. And now we see them all. And one like this is terrifying what is going on. And maybe that’s good that we can see it. I just don’t think that. I think you’re right. It’s a bit of a stretch to actually blame Facebook or YouTube for that.

S2: I think it’s an interaction. You have people who say who make the argument you basically just made, which is that social media technology is a mirror. It just shows us what already exists. And there’s people who say technology is completely determinative of human behavior. I think the truth is somewhere in the middle that these things interact, that we’re still figuring out how they interact, that we need to be paying close attention. But that also to give too much power to the tech companies in a negative way is in many ways to their benefit. And that’s I think what I was trying to say is

S3: but certainly social media has this amplification effect. Like it’s not just a mirror. If it is a mirror, it’s being held up to the sun and reflecting in all our faces and making my eyes go all squinty. I mean, it’s more than just, oh, people have always been kind of nuts. But now everyone gets to say how nuts they are in public. And it’s like contagious or something. Right. There is something going on that’s worth worrying about.

S2: That was one of the criticisms, my peers, that I didn’t talk enough about the sort of amplification effect. And I think that’s valid. I think that’s one of the interactions that I’m talking about between sort of a pre-existing social context, between a pre-existing belief system and the ability to share that and find like minded people. I think that’s a consequence of connecting. Everyone, I think because Facebook and YouTube and Twitter, to a lesser extent, have become so huge and powerful and wealthy, it is incumbent on them to monitor this stuff and it’s incumbent on reporters to monitor this stuff. And again, I’m not making the argument that it’s not. I just think to say that everything starts sort of with those platforms and is a consequence of them, which is how I see this discussion moving or how I saw it moving is just the mistake.

S3: Yeah, that makes sense. Well, my one other question is sort of the lead of your piece. Is it possible that it’s always been this way, that people have always had these NAZO opinions and they’ve been able to express them in different mediums, but during this kind of like golden age of media, when it was like the three television networks and the nice man behind the desks telling us what to think was kind of an anomalous period of cohesion in the world and in the United States. And we think that’s normal. But really, that was not normal. And what we’re seeing now is kind of the way it usually is.

S2: Yeah, I think that’s highly plausible. I also think there was the world of media during that time period that people who watched ABC, CBS and NBC were kind of free to ignore. There was a huge network in some ways prefiguring sort of modern conservative talk radio. There’s this network of like rabidly anti-communist radio preachers who had an audience of millions in their 50s and 60s. And the people who listened to them were sort of the people we would now think of as Trump voters. And, you know, if you lived in New York or Washington, D.C. or Chicago or whatever, you sort of or didn’t listen to these radio channels, you just wouldn’t be exposed to them. You might see an article about a certain point the Kennedy administration tries to sort of shut them down using the FCC or the FCC, but you just wouldn’t be exposed to these viewpoints. And of course, that’s an argument for a conversation about. You also wouldn’t be exposed to the viewpoints of millions of minority Americans who were treated as second class citizens. And so it’s you know, then we sort of get into a broader conversation about the sort of disinformation industry. What it wants to do in terms of which voices it wants to let into the conversation. And when you talk about, yes, there’s all this bad stuff on the Internet now that we didn’t see before. Well, there’s a lot of good stuff, too. There’s a lot of voices being represented that weren’t represented before. And those conversations, I think, need to be had in parallel,

S1: which is a perfect segue way to the conversation I wanted to have with you about porn. There was there was this very vibrant community on the Internet, on a wonderful website known as Tumblr, where every, you know, amazing sexual predilection you can possibly think of, managed to find a safe home to celebrate themselves. And it was a very sort of sex positive and explicit kind of place, if you wanted it to be. And then one day it got sold and all of that porn just got eradicated more or less overnight. We have big mainstream payments, companies like Stripe and American Express, who just want nothing to do with anything porn whatsoever, even though it’s legal, is let the American government isn’t asking them to do this. We just had a crazy flip flop from OnlyFans, which is a porn company, basically, which came out and said, guys, you have to stop doing porn on our platform. And then everyone was up in arms and then they sold the banks for and then they somehow managed to find a solution and they said, oh, well, never mind. Go back to your point, after all. But the fact is the. Exactly what you’re talking about in terms of content, moderation and gatekeepers and all of that kind of stuff really does exist to a very stifling degree in the porn industry to the point at which there were basically no American porn companies. And it’s extremely difficult for American sex workers to have bank accounts for American porn companies to get off the ground. What’s your view of all of that?

S2: It’s interesting. I mean, that OnlyFans situation in particular is fascinating because it’s almost like a negotiation between various, you know, sort of stakeholders and who’s going to set the rules of 20th for 21st century American life. Like on the one hand, you have banks, you know, who sort of can exercise their own sort of like moral imperatives. You have the platforms who sort of gain scale in certain ways and then often sort of try and distance themselves from the ways that they’ve gained scale. And you have the users themselves who in many ways were kind of liberated by OnlyFans, and you see this sort of push and pull between these three different want to call them interest groups, but these three different interests and the fact that OnlyFans has kind of gone back on it is fascinating because it really shows the power of this like loud group of people and a passionate group of people on the Internet to kind of say, well, we’re going to take our business and we’re going to go we’re going to take our Baucau home.

S1: Well, I mean, that was what OnlyFans kind of wanted them to do. Right. I mean, what was happening with OnlyFans is incredibly opaque because they’re not really explaining what was happening. No one really understands what was happening. A lot of what they said didn’t make a lot of sense, you know. Was it the case that they wanted like a bunch of easy money and that VCs just weren’t interested in funding of one company? That could be it. Was it the case that, like their banks were forcing them to take this move and then the banks changed their mind? That’s kind of what they’re saying, but it seems less plausible. But Emily, you have you’re shaking your head here.

S3: I mean, I think it is mysterious exactly what happened. And if we can say anything, we can say it seems to be have been really badly handled by OnlyFans. What was the strategy here? It just seems like a total fail on their part of leadership and branding. But I was just thinking I’ve been thinking that what happened with OnlyFans sort of points to something that’s happening maybe all over social media, which is that the people who were used to posting stuff for free or were being taken advantage of in their content was being used to the advantage of big companies like Twitter, Facebook, etc. are gaining more power. The the reason that a lot of sex workers liked OnlyFans was that the company let you keep 80 percent of your of the money that you made on the site, which is apparently like a really lot of a big percentage for sex workers who on other sites are getting much smaller cut. And like we know, Twitter is now about to launch some kind of program where people can get paid for their tweets. People are making money as creators everywhere. Like it’s just there’s something new happening with with social media, which I don’t know how it plays back into Joe’s Harper’s piece, but it’s something to pay attention to.

S1: So this is the big question, right, is Twitter is, you know, well, I don’t know what they’re calling it, but like the subscription tweet thing that they’ve now launched, is that is that a competitor to OnlyFans? Are they going to be OK with that being porny? Because Twitter is basically the only major social network that allows porn these days. You know, I got booted off Tumblr. It’s never been allowed on Instagram. It’s never been allowed on Facebook. And Instagram doesn’t even allow like basic nudity, let alone anything, you know, sexually explicit. Whereas Twitter has always been it hasn’t really monetized the porn, but it’s allowed the porn. Joe, do you have any, like, insight there into what’s the difference between Twitter and Instagram that like one of them, like refuses to show so much as a Nevel and then the other one is, yeah, go ahead, be explicit.

S2: Well, first of all, Instagram is like a purely visual platform. So it kind of makes sense that they’ve thought more explicitly, pardon the pun, about what they’re going to allow. I mean, visually on the platform. Twitter is a media platform that starts as a microbus blogging platform of however many characters that originally was.

S1: So you think this is like path dependency, basically?

S2: Yeah, could be. I mean, like visual media certainly puts a huge role on Twitter, but I don’t know that their strategy for it has always been great. I don’t think like the user experience of like video and photo on Twitter is all that good. Have you ever tried to search for videoclip on Twitter? It’s almost impossible. I think Twitter historically is sort of like the worst designed, unlikeliest user friendly of all of the big social networks. And so some of this may just be like classic Twitter, kind of like stumbling over its own feet, not really having thought about a problem it’s created. But it’s true that there’s an enormous amount of porn on Twitter, that there’s just like a huge amount of it. And most people don’t know because they don’t hide it. Exactly. Feel like said they don’t really monitise

S1: kind of do hide it. They kind of shadow Bannen. If you look for it, it’s there. But if you’re not looking for it, you’ll probably never. Yeah.

S3: Yeah. I didn’t know until I read. In Felix’s newsletter, which is a strange place to discover pornography, I guess,

S1: unless you’re my colleague Dan Primack, who wrote about OnlyFans early on, and then suddenly his entire tweet deck was full of like sex workers damning him and trying to talk about OnlyFans, like

S2: Twitter and porn. Reminds me of that episode of The Simpsons where Marge goes away and like Bart and Homer trying to clean up before she comes home and they sweep all the trash under the rug. And like when Marge comes home, there’s so much trash under the rug that it’s actually like swaying back and forth. But again, I mean, it goes to this idea that we don’t actually have a lot of visibility about what’s on the platforms, that there is all this happy content on the platforms that, you know, it may be affecting people in ways we don’t understand. And as always, you know, the platforms control the data. And so it’s sort of hard to say, you know, ultimately, what’s

S3: the other Branum thought I had about OnlyFans, actually, it was reading. Feliks wrote about this for his newsletter. And you link to a piece from I think it was a software engineer, had written a blog posts about pornography and how it’s so hard to write code for porn sites, because the payments that the way the payments are structured are so convoluted and weird because the mainstream companies won’t let them, you know, just do regular stuff. You can’t just pay with your MasterCard. It’s like a whole nightmare. I’m digressing. But the point I was thinking about was just that like porn has built the Internet. People say that a lot, but it’s really true. And now I think, you know, like Web video and such. The progress that was made there was in part driven by demand for better pornography. And now if we’re moving to a more like creator, individual creator, dependent, kind of like content system on the Internet, I feel like OnlyFans has showed that once again, it was like demand for pornography that has driven this new sector and segment of the Internet. And that’s sort of

S1: OnlyFans is you get no credit for being like Patreon, you know. Yeah. Someone. Yeah.

S2: Well, it’s interesting. Shouldn’t this hypothetically and you guys can speak, I’m sure, much more intelligently about this than me. I mean, this should benefit cryptocurrency.

S3: Yeah, it should. Shouldn’t it feel like you talk about that?

S1: Maybe. I mean, you know, like perhaps in theory, yes, I can. I can see in principle like this idea that like OnlyFans could move just to a Bitcoin based system. But yeah, it hasn’t. You know, this is one of the weird things about crypto, is that the obvious use cases tend not to be the actual use cases. And so, yeah, and in principle, I can see the idea that if the payments companies are all being very bad about allowing porn payments, then this is a great place for crypto to step in. And yet somehow it hasn’t happened. One of the mechanisms that I do want to mention is that a lot of what we see here is driven by very aggressive antiproton campaign campaigners, explicitly Christian lawyers who like to believe that all porn is illegal. They have this whole sort of theory of jurisprudence saying that it’s all covered under obscenity laws and it’s all illegal. But since that has failed in courts over and over again, they’ve sort of fallen onto this fallback position where the where they’re saying that it’s illegal not for obscenity reasons, but because a bunch of the sex that you’re seeing is either nonconsensual or has underage performers or has people who’ve been sex trafficked or something like this. And this is like this weird paradox, because if the porn industry was allowed to operate in a clean, well lighted place with well moderated companies who were making sure that everyone was consenting to everything like that wouldn’t be an issue. But because every time a porn site like become successful, you know, Exodus Cry or someone gets like Nick Kristof to write a column, and then the next thing you know, you know, like the whole industry is so shadowy and genuinely does have a bunch of shady players who do illegal things in it. You know, no one can can like OnlyFans is the closest thing that we have to like a perfectly clean, well, like consensual place where people can have sex, you know, legally on camera. And even that is controlled by some very shadowy Ukrainian webcam billionaire. And, you know, no one really knows where it’s based or who owns it or who’s on the board or anything like that. You know, like it’s just I feel that so much of the problem here could be solved if you got one of these big platforms actually embracing it and saying, like, we will do this right. But they’re all far too shy to do it.

S3: But the payments companies are a big a big hold up to, like even if OnlyFans totally, you know, went out and said, we’re going to do this right and everything, MasterCard, Amex, all those guys, Stripp, they don’t want anything to do with us. I don’t know if this is the. Real reason, but the blog post I was talking about, the guy was saying like a big problem is that someone will pay for pornography and then their spouse will get that. See the

S2: dispute, the charge

S3: and dispute the charge, and then the credit company will will be like, fine, OK. And that happens a lot. And that’s a real problem. I don’t know if that’s true.

S1: The chargeback thing, I think I mean, I spent a bunch of time disappearing down this chargebacks rabbit hole. The chunge bank thing is real, but it’s a much it’s much less of a big deal than I think a lot of the payments companies would have you believe. Yeah. Right. Well, people think this like the fact is that the amount of chargebacks, you know, the amount of times that, you know, someone will dispute the charge and get the money back is a known ratio. Right. And I think all of the porn sites are perfectly happy to just accept that as the cost of doing business. It’s not in and of itself a reason for the payments processes to just not want to deal with them on a steady state kind of thing. Like it should be fine. But, you know, chargebacks is certainly always going to be bigger with porn than they are with, I don’t know, like grocery stores.

S2: I have a funny story about chargebacks. If we have time for a digression, digress.

S1: Always digress.

S2: All right. So I don’t know. Five years ago, I reported a story to you remember one of those kind of dual engine little things that people would glide around on where big like viral product category

S1: very vividly.

S2: OK, right. So everyone made their own hoverboard brand. And Soulja Boy, the rapper, had his own hoverboard like make, which was, you know, just sort of imported en mass from Shenzhen somewhere. And I got a tip from someone working, I think, at Shopify that some wild percentage of Soulja Boy branded hover boards were being chargebacks and that he was actually making no money because of it. And I got a leak, basically an email to him saying like, people are not actually paying for these hover boards. And so I reached out to them. I said, Soulja Boy. No one’s actually buying your hover boards that you’re not making any money on your hoverboard. He didn’t respond. I sent him a text message and he just said something like, who the fuck is this? You’re on the story. You can find it on Buzzfeed. It’s like Soulja Boy is hoverboard company beset by fraudulent purchases. It gets better. So this is the night before my 30th birthday. And the story publishes. I do what you would imagine on a night of your 30th birthday. I wake up at 10 a.m. the next morning with the worst hangover of my life. I can barely function. I turn on my phone, which basically gets so hot I can’t touch it. I can Twitter on my laptop and I have so many notifier. Like most notifications I’ve seen, my Charlet Soulja Boy has tweeted out my phone number and said, this is soldier, call me.

S1: Whoa.

S2: Gawker writes it up. Soldier boy has basically ruined my life for a week. Oh, no. I sometimes still get WhatsApp messages from people who’ve made their own basement hip hop in Brazil or Malaysia and want Soulja Boy to check it out. And this is all because of chargebacks and payment processor. So that’s the digression. But it’s a good story.

S1: So it’s a good story.

S3: But what was wrong with the hover boards?

S1: They just fell apart. He bought the wrong brand from Shenzen. Oh, man. Amazingly, that is also a perfect segue way to the question of like, can we trust things that we buy on the Internet and believe it or not, we buy on Amazon. Because it turns out that a bunch of store on Amazon are just selling stuff that was stolen from CVS.

S3: I told my family about this and they were like, who cares? Like stuff is stolen. It’s the same allergy medicine. It’s not like the products because Amazon has had trouble before people selling products that were defective. This is a case where people are just fencing enormous amounts of legitimate product on Amazon. And the only one harmed is like CVS. And to be fair, I do love CVS. I go there often and enjoy buying random things there that I don’t need. But yeah, what’s the harm? I’m curious why Felix wanted to talk about this phenomenon.

S1: I think it’s just fascinating. The new economics of fencing, stolen goods. Right. I wrote about this when we had the looting surrounding the sort of second wave of Black Lives Matter marches. There was a bunch of city centers where there was a bunch of looting. And it used to be that people would loot stores and then either just keep what they had stolen or sell it for pennies on the dollar. But what you saw this time around in twenty twenty was a bunch of people looting like high end clothing stores, you know, Gucci or Balenciaga or something like that, because that shit is now worth like 90 cents, sometimes upwards of 100 cents. So sometimes you can sell it on the Internet for more than retail. And I wound up talking to a bunch of sites like, you know, the real real investee collective and all of these places where you can sell genuine goods. And I’m like, are you doing anything to make sure that these goods on stolen? And they kept on coming back to me and saying, we are very, very careful to make sure they’re not fake.

S3: They don’t care

S1: if you buy from those sites. You’re not getting something fake, but like they really have no way of telling whether or not it was stolen. And so suddenly the returns to stealing things like Covid, double fashion items or even items that kvs a way higher than they used to be once upon a time. What you would do with something if you stole from CVS is, you know, use it as deodorant or whatever. Now you can turn around and sell it for almost as much as retail. And in fact, the higher the price you’re selling it for, the more legitimate it looks.

S3: Yeah. And these are sophisticated operations that the Journal reported on. This wasn’t just like me with a bunch of claridon in my closet. It’s like people with like warehouse space in their homes in a separate elevator to carry the goods up and down, flight to flight. So it’s a whole new market, I guess.

S1: So is the Internet increasing shoplifting? This is the question.

S2: Oh, I don’t know. I mean, something really interesting occurred to me about the story, which is that it was recently reported that Amazon is going to open more big box stores, essentially. And so you may actually have a situation in which people are stealing from Jeff Bezos and then making Jeff Bezos money by selling the stolen goods on his third party market.

S3: Well, but you won’t be able to steal from those Amazon stores because they have that whole thing where you can just take the stuff and walk out and they’ll charge you.

S2: Oh, good point. Bezos thought of an evil genius.

S1: Why is worth so much money, man? He’s two steps ahead of us.

S3: The Internet has enabled all this crime, and the pandemic has really changed the face of crime. Right. I mean, we’ve talked about the unemployment benefit scam.

S1: The unemployment benefit scam was huge. There was this weird uptick in violent crime during the pandemic, which now seems to have come straight back down again. And I don’t really understand what explains that at all. But, yeah, I feel like we can sort of tease apart these two things. This is not a pandemic thing. This is just, you know, ease of selling on the Internet thing. And I do think that if Amazon only, you know, did a bit more work in terms of validating its third party sellers, there’s really no other place they can go on the Internet to sell. Right. If you have a bunch of Clarington, it’s relatively easy to sell it on Amazon. But if they if Amazon says, wait, who the fuck are you and no, go away. What’s plan B? You know, who are you going to sell to that isn’t Amazon yet? No one else has that reach.

S2: I mean, interestingly, to bring it back to the to my story, selfishly, you know, a lot of disinformation. These are stories about scams. I mean, and the Internet has enabled like this whole range of scams. This is not necessarily a new thing. A lot of disinformation or what, like people will call this information are just click scams. I mean, there are ways of getting people to to click on content to generate money. And like, for example, my former colleague Craig Silverman has done a ton of really good work on this. The original sort of Macedonian teenagers making fake news story. You know, the Internet has created all these news, sort of like weird, shady, quasi hidden economies. And this also goes to Felix, your whole thing about like a clean, well lighted place for porn. I mean, lots of people make their living in various legal and semi legal ways on the Internet. And that’s what cuts across all of these, I think all these stories.

S3: That’s a really good point.

S1: You see, we have thematic coherence to this show, people

S3: meticulously planned and scripted, obviously.

S1: Although now I’m going to mess it all up by opening up to a numbers round. And these numbers are going to have nothing to do with anything. Emily, do you have a number?

S3: Yes, I have a number. It is six weeks. That is the Texas law that went into effect this past week. It bans abortion after six weeks, a point at which most women don’t even know if they’re pregnant or not yet. It’s very early. So that’s one part of the law that seems bad, effectively banning a procedure that’s legal under Roe v. Wade. And then the other crazy part of this law is that it deputizes everyone in Texas to sue anyone who helps someone get an abortion. So you can’t sue the woman who gets the abortion, but you can sue like her Uber driver, her doctor, the nurse, the guy who drove her. And if they win the suit, they get ten thousand dollars, which is crazy. That was like the runner up for my number, 10000. And I’m mentioning this on slate money, because it’s an it’s obviously it’s a political issue, but it’s also an economic issue. Women who don’t have access to abortions have worse economic outcomes. There’s some good research from one specific study called the turn away study, which compared women who were turned away for abortions and women who were able to get them. And they looked at financial data for the women and the ones who weren’t able to get the abortions were more likely to go bankrupt and struggle financially. So it’s a big it’s a big deal and a lot of ways.

S1: The thing that. Really strikes me about this story is the astonishing silence from a big corporation. Oh, yeah, that’s it. He’s in Texas about this. Yeah. North Carolina imposes a bathroom ban. Everyone’s like, we’re going to boycott the entire state. Texas does something which is just way more draconian. And, you know, all of these big Texas companies, you know, American Airlines or Dell Computer or whatever, or the big bucks down there in Austin, they’re like me. And they’re saying nothing like there’s a handful of companies run by women, mostly like Match.com, dating Covid, who have been like, we’re going to care about this. But that doesn’t seem to be a corporate backlash against this. And that surprises me. I would have imagined that this was like given the predilections of CEOs to take stances on this kind of thing, this would have been a very easy way for them to take the moral high ground. It doesn’t seem to have happened. Maybe it’s just going to take a little bit of time. But my colleague Dan Primack reckons this is just a gender thing, that most companies are run by men. And although most men are pro-choice, they’re not nearly as viscerally pro-choice as most women.

S3: Yeah. And I mean, the big tech companies have big outposts in Austin right now. Facebook, Apple, Tesla’s coming to Austin. And, yeah, they need to say something. There’s a piece in Fortune this morning where Fortune reached out to a lot of companies and none of them commented except for Bumble and Match.

S1: My number is 230, 5000. They have to do this one. This is the number of jobs that were created in August. The number that came out on Friday morning, it is a massive decrease. We basically had a million jobs created in June, a million jobs created in July. There was a bunch of momentum in terms of getting all of those jobs back that we lost during the crisis. And that just fell off a cliff, basically, and still positive. But it’s way, way lower, not only than it was, but even than people expected. And as I can explain this with one word, which is Delta Leisure and hospitality added zero jobs. And you just can’t expand an economy at a torrid pace when there’s a massive third wave pandemic going on. It’s awful. Joe, do you have a number?

S2: Yeah, my number is 50, which is about the number of people they found so far to have died as a result of flooding due to Hurricane Ida in the northeast,

S1: which is more than the number of people who died in Louisiana.

S2: Yeah. Including people trapped in their basements in Queens. I mean, it’s just shocking. And it just shows how much this, you know, our global climate is changing and how much, you know, people who sort of thought that they were insulated from some of its effects are going to have to deal with it, you know, immediately.

S3: And once again, it’s the most vulnerable people. The New York Times had the stories of the people in Queens who died in their basement apartments, probably illegal basement apartments. You know, that people, immigrants live and for very cheap that are not officially apartments and aren’t really safe. And those are the people in the most trouble.

S2: Yeah, that’s right. And actually a guy I follow on Twitter made the point that there was a program basically to standardize and make some of these dwellings safe, to regulate them essentially, and fund funding for that went away during them. And it’s just I mean, it’s a tragedy and it was a preventable tragedy. And, you know, we all bear some responsibility for it on which.

S1: So, no, I think that’s it for us this week. We are going to have a Slate plus segment about Renaissance Technologies, the hedge fund and the seven billion dollars that its offices have agreed to pay in back taxes that they had managed to avoid paying. If you are not asleep, this isn’t it. Then thank you for making it this far. Thank you for listening to Slate. Plus, thank you not only to Jessamine Molli for producing this show, but also to the great Dan Stern of Radio Payscale here in Berlin, who was incredibly sweet and lent me his microphone so that I could record this show, because I stayed on for a week in Germany without a microphone and I needed to record. So thank you. Then you’re a superstar and you guys should all listen to Radio Spag Kalfin, specifically their podcast series, How to Fuck Up in the Airport, which is pretty much the best podcast series I’ve ever listened to. It’s about the big Brandenburg Airport in Berlin, which I am going to be flying out of quite shortly. Pretty much as you’re listening to this show and how incredibly on German it’s building and opening was. It’s hilarious. It’s awesome. Check that out. And Radio SpinCo. But mainly, let me thank Jo Bernstein for coming on. Joe, thank you for being on the show and thank you for writing your piece in the office. And it’s been a pleasure to have you

S2: such a great time. Thanks a lot, guys.

S1: All right. We’ll be back next week with more slate money. All right, let’s have a Slate plus segment about Renaissance Technologies or Rentech, as it’s known, the most successful hedge fund in terms of returns and pretty much the history of hedge funds. Seven billion dollar is basically they don’t run outside money anymore. They only run their own money. And they found a clever way of paying long term capital gains tax and sort of short term capital gains tax. And then the IRS decided to fight this and they’ve settled for seven billion dollars, which has to be a record for the biggest tax settlement of all time.

S3: It is a record, I can tell you that confidently. I cannot confidently explain to you Baskett options and the difference between long term capital gains tax and short term capital gains tax may be one of you can do such a thing. I can actually

S1: is not quite as difficult as it sounds. Basically, if you hold something for more than two years and you make a gain on it and sell it at a profit, then you pay Long-Term Capital gains, which is a lower tax rate than if you hold something for ten minutes and sell it, which is the short term capital gain. What Rentech does it hold holding for ten minutes? Right. It’s a very it trades a lot. It trades in and out a lot. Virtually all of the money it makes is short term capital gains. But what it did was it basically created a box, a box full of money, and it gave the box to a bank and it said, hey, the bank will just trade all of the money in this box and we’ll trade in and out and we’ll have a bunch of short term capital gains in this box. But if your box. You just look after the box for us. And then after two years, that box has grown in size. We will take that box back and we will sell the contents of that box. And because it’s a box, I am just going to claim Long-Term Capital gains on the increase of value in the box rather than short term capital gains on all the trading that went on inside the box. This is obviously and always, you know, tax avoidance attempt and. The Rentech people had extremely expensive lawyers saying it was entirely legal and the IRS said, look at it, come on, people. And eventually they seem to have come to this settlement.

S2: I mean, what’s amazing about this and I’ll tell you what it reminds me of my wife is Swiss and I just constantly learn interesting facts about Switzerland from her. One of the facts is that if you’re really rich and you move to Switzerland, which you can do if you’re really rich, the government, you go to the government and you say here as much how much tax I want to pay. And the government basically says, OK, or pay a little bit more. And you just you go to the government and they say, here’s how much tax you pay, OK? As a way of attracting wealthy people to come in the country. Because what Rentech does, the part of Rentech that’s at issue is the medallion fund, which as Felix or Emily said, it just makes money for the people who started the fund. Right. There’s no social benefit to it. Just it’s their friends and

S3: family

S2: and friends and family. So basically what they’ve done is they’ve done a Swiss. They’ve gone to the US government. And the US government has said you have to pay seven billion dollars in taxes, and that’s your special arrangement for your bank account. And now you’re going to go on your way. And I just think that’s like very it’s kind of like special that they have that or they reach that arrangement with the government. Once you put all the lawyers in the IRS decide that’s what happens.

S3: I mean, it took them six years to. It wasn’t like there was a phone call and they figured it out really quick. This took a long time to get to this number. And aren’t there other funds doing this basket of options? Long term, short term trick also that are still getting away with it? Yeah, I think that’s for the the IRS enforcing the tax laws that everyone wants.

S1: So this is yeah, this is the big picture here is if you give the IRS a lot of time and a lot of resources, they can actually. Bring in massive settlements and, you know, if we just increase the IRS budget by a tiny bit, that’s going to massively increase the number of hedge fund managers that they can investigate and do multi-year investigations and multi-year negotiations and billion dollar settlements with. And that’s going to pay for itself at least 10, if not 100 times over.

S3: But that hasn’t happened so far. I think we talked about Biden’s proposal or whatever to spend more money on IRS enforcement, but so far, no.

S1: We can but hope.

S3: Why did they go after Renaissance anyway?

S2: I think Rentech essentially invented this form of quantitative trading. Right, Felix? Yeah.

S1: They invented the form of trading. But I think you’re right that they also invented the tax dodge options basket.

S2: Right. Yeah. I mean, there was some speculation that Trump because Robert Mercer, who one of the founders of Rentech, was a Trump zorch type High-Profile Trump donor, that somehow Trump was going to make this was going to make this lawsuit go away and that, you know, that never came to pass.

S3: Does seven billion dollars matter much to Renaissance Technologies?

S1: Yeah, I mean, it’s a lot of money. It’s like Joseph, half the size of the fund.

S3: Oh, OK. All right. So that’s a big deal. That’s going to hurt. Yeah. OK. Yeah.

S1: They can afford it, but it’s going to hurt. Great.

S3: So that’s some good news.

S1: Yeah, good news on Slate plus.

S3: Well, thanks for listening.