Audio Length: 00:52:24

Slate Money talks that CNN milk story, the big Glasgow climate summit, and the proposed Penguin Random House merger.

Transcript:

Hello

S2: and

S1: welcome to the 12 gallons of milk episode of Sleep Money, your guide to the business and finance news of the week. I’m Felix Salmon of Axios. I’m here with Stacy-Marie Ishmael of Bloomberg. Hello. Hello. I’m here with Emily Peck of fundraise.

S2: Hello. Hi.

S1: And we’re going to talk about milk. We’re going to talk about the price of milk. We’re going to have lots of things about inflation. We’re going to talk about job growth. Forget about monetary policy. We’re going to talk about the economy. We’re going to do one of those things because we did just have a taper, a tapering announcement from the Fed and the very strong jobs report this week. So we’re going to cover all that. We’re also going to talk about the big news out of Glasgow and the Big Climate Summit that went on there. We are going to talk about Penguin Random House and monopsony. We are going in Slate Plus to talk about tungsten cubes, which I can tell you is a surprisingly fun conversation to have. It’s a pretty fun one this week. All coming up on slate money. Emily are going to lead with milk.

S3: Yeah, I think we should I mean, everyone knows what milk is. It’s not a complicated economic term. We know about milk.

S1: What we know about by a lot of it, 12 gallons a week, right?

S3: Yeah. OK. So we’re talking about milk because CNN had a segment ostensibly about inflation in which they featured a family in Texas with nine children that goes through 12 gallons of milk a week, I guess, and the CNN dude went shopping with them at the supermarket, which is what family go shopping all together. It was like seven people going to the supermarket

S1: to take my nine children to go shopping at the supermarket, buy 12 gallons of milk and then complain. The milk has gone up by 40 percent in the past few months, which it hasn’t. The reason the real reason we’re talking about this is because this is our occasional foray into the important yet dry world with monetary policy and milk makes everything wetter. So if you thought monetary policy was dry, it’s a bit like breakfast cereal. You pour milk on it and it becomes much more palatable.

S3: We’re dunking the monetary policy, the cookie of the monetary policy in the milk of human stories or something like that.

S1: Stacey is impressed by this.

S2: We have tortured this metaphor within an inch of its life if it ever had one. But Karen,

S1: so so the big story. The big news of the week is that we had a monster jobs report on Friday morning. We had over half a million jobs created in October alone. It turns out that almost half a million jobs were created in August, way more than initially reported. September was really strong. Unemployment down to 4.6 percent. Wage growth more basically keeping up with inflation looking pretty strong there as well. Just an incredibly positive jobs report all around the economy seems to be doing great. The labor market seems to be doing great. And this coincided also this week because it’s a big week for, you know, big economic news with the news that the Federal Reserve is tapering, which we can talk about what tapering is. But all of this means kind of like, on the one hand, things are back to normal. But as per the milk story, if there’s a public, let’s say this quiet about this good news. It comes in the form of worries about inflation and the whole idea of going grocery shopping with a family of 14 in Texas was that the family of 14 claimed that not only milk, but their entire grocery bill had gone up enormously over the past few months, a claim which no one entirely believed except for the CNN report.

S3: Yeah, I mean, it’s just the things this mother said should have been a little bit better. Fact checked. I mean, she said, things like my dollar is now only worth 70 cents, which would what would that inflation rate be? Something really wild,

S1: you know, like 50 percent annualized inflation or something that Jenny would definitely count as hyper inflation. But I mean, but this is also, you know, who thinks we have hyper inflation right now? Jack Dorsey with his eight gazillion Twitter followers, is like tweeting out, We, you know, hyperinflation is here. So people, and certainly if you watch Fox News, I have a wonderful chart showing the, you know, minutes spent talking about inflation on Fox News. It is enormous and and there is this feeling that once and I’ve seen this in Germany as well, which has this national obsession with inflation, the once you’re obsessed with inflation, you do wind up seeing everywhere. It’s like the bottom line half of it. I would say

S2: the other thing about that family, which is if you are in a very tight budget increase, which many people are increases will feel like 30 percent, right? And I am not the member of my household who is the, you know, Costco has the Costco responsibility, but I am certainly getting feedback that like, wow, the salmon that we would normally buy has significantly increased in price, that there are certain things that, you know, just aren’t available anymore. So I don’t think it is. I don’t think there’s no consumer price inflation. And I think that the the tighter your budget is, the more your sensitivity to things that might in fact be small. But that to you are very consequential.

S3: I feel like there’s no doubt that food prices have gone up both anecdotally and you see it in the data to maybe not. I mean, this woman’s estimate of how much she used to pay for milk as compared to now was just blatantly incorrect. Yeah. People added estimating. But it’s people don’t know true.

S1: That’s who they voted for last Tuesday, the let alone how much they paid for milk, you know, six months ago. It’s just not something which we have any particular. The need to store in our long term memory.

S3: Right, and there is something to like econ nerds being like actually a core, inflation hasn’t really gone up all that much and it’s already trending downwards versus normal people who are like, I go to the store. And personally, I’ve mentioned the mayonnaise costing $8 before. But my God, mayonnaise for eight dollars was a lot. It was a shocking thing to see. And gas prices are definitely higher than they were. But take into account that they bottomed out in March and April and May 2020. Like so your baseline was kind of reset at that point also, which makes things hard to

S1: this baseline effects in like annual inflation figures. But there’s also baseline effects in psychology and we’re seeing that. And as ever and always, the one permanent truth about public impressions of inflation is the one number matters more than anything else, and that’s gas. It’s the most salient price in the economy. It’s the one price that you see in three foot high letters multiple times a day and when gas prices are higher. And then you have and then if you had a number two for the second most salient place in the economy, it would probably be milk,

S3: which is crazy because if you look at historical milk prices, they really don’t fluctuate that much. It’s like 10, 20 cents, 30 cents. It’s not. I mean, if you look at your rents, if you want to talk about things that are now more expensive, rents have gotten crazy. Home prices. Increased quite a bit, college tuition like there are things that cost lots, lots more, but milk is a pretty steady Eddie. Right.

S1: You know, a share of Apple stock, you know, and the thing like the thing, the thing that enormously

S2: thinking about buying milk is also considering as I would like to buy one Apple share for sure. That’s in their basket of goods.

S1: It’s a lot cheaper than the Tesla chair. It’s such an

S3: interesting political thing also, because I think Felix, you sent around this really good Substack post from Christopher Ingraham, and he points out that this family in Texas would most certainly be qualifying for the child tax credits that have been going out every month. They’re probably getting like close to $2500 a month

S1: or more between $90 credits, sometimes 300. Yeah, you can do the math.

S3: I think there’s a there’s a cap, but yeah, so that certainly would offset if they’re spending 400 more a month in food prices,

S1: which there are no thousand dollars. Yeah.

S3: So like, it’s just sort of interesting that they didn’t mention that in the piece and like that didn’t come up. And politically, it’s sort of interesting to me because it’s like the the Biden administration is harmed by this perception of inflation. Yet they seem to be doing something about it by like literally sending cash to most parents around the country right now. And is that not it’s not paying off. It doesn’t seem to me for them politically.

S1: And and meanwhile, while the Biden administration is still very much pushing like these twin stimulus bills, the Fed, I think has now pretty clearly said, All right, we are no longer in an economic emergency. We have unemployment down to 4.6 percent. We have significant job growth. You know, we’re still four million jobs short of where we were pre-COVID. And obviously the trend line then was upward. So we’re probably I know six, seven, eight million jobs short of where we would have been without COVID. So there’s still a lot of work for the Fed to do. But what they don’t need to be doing is these emergency things like quantitative easing, which Stacey, you can explain what QE is saying.

S2: Yeah, I haven’t had to explain what QE is since I was like writing about it on Alphaville. But I mean, I think the the idea that you can infinitely rely on central banks, the Fed etc to take the responsibility for take all of the responsibility for. Inflating the economy, I guess, or at least providing stability to banks is something that we’re starting to see is not true. I mean, there was a period when I think Lorcan Ross Kelly was like the foremost commentator on one QE and who’s now a colleague of mine and Bloomberg, every single peer in the direction of, yes, we’re going to buy more long dated securities or we’re not going to buy as many long dated securities was was headline worthy. But I think the lesson or the the signal now from the folks involved is like, get over it. We’re returning to normal operations

S1: and the Bank of England has even come out and started, you know, saying it going to hike rates, which is way ahead of where the Fed is. You know, people are expecting the Fed to hike interest rates in like mid-2022 at the earliest right now. And so the world is going back to a little bit of normal in a relatively healthy economic environment with a massive asterisk around COVID supply constraints. Prices being a bit, you know, volatile. And what we don’t have is is what you might call dynamic equilibrium in the economy. We don’t really know what the sort of steady, predictable growth rate or inflation rate or anything like that is because we’re still in crazy, supply constrained world, but we’re not in an economic emergency anymore. And that’s awesome.

S3: Yeah. And I think that’s what’s so interesting about this period right now. I mean, there are all these signs out there that were in like a boom. Basically, unemployment is falling. Jobs are being created. Companies can’t find enough workers. Stock markets doing really well. People are spending money on tungsten cubes, which maybe we can talk about later. Like, everything is is like coming up roses here. Yet people like this family in Texas don’t feel like it is because things are still so weird, you know? So like, I keep thinking like, we’re in a boom. I’m kind of like bracing myself for some kind of like bubble bursting because that’s in my nature, I guess. But I recognize we’re doing well that that that the economy is doing well. Yet it doesn’t feel like anyone. Like a lot of other people are seeing it that way, especially politically like their elections didn’t go well for the the Biden administration this week.

S1: And I spent a lot of time talking to a pollster on Friday, just after the jobs numbers came out about this exact question like why aren’t people feeling the economy? Why don’t people think that the economy is doing well even when the economy is objectively doing well? And it’s an interesting question, which I’m going to write about more on Tuesday of next year, but I think the TLDR is basically still COVID. You know that COVID just whacked people. And it’s. And while a lot of Republicans seem to have forgotten about COVID entirely at this point, Democrats and independents have not. Most of their kids are still unvaccinated and going back to school, and they’re worried about that. And the job situation is still weird with COVID. They’re still masks and a lot of places, so that makes people feel nervous. You know, almost everyone knows someone who’s died of COVID. And and it’s and it’s been a big shock to the psyche, and economic confidence is fundamentally much more about a cycle is much more a psychological thing than it is sort of how big is my bank balance thing? Oh, one other thing as well. People really like the idea that they have the ability to fend for themselves and the amount of money they need to look after themselves. That makes them feel a lot better than my bank account has a bunch of money in it because the government put it there.

S2: What do you do if you have all this money in your bank account? At least relatives your baseline, but you can’t buy the stuff you want? I mean, I also wonder what you

S1: you buy Shiba coins?

S2: Please don’t. Yeah. You know, I was I was talking to some friends about. I was like, Hey, what do my nieces and nephews want for, you know, Christmases and birthdays that are coming up in the next several months? And they’re like, at this point, we were like, Oh, well, it’s October. I was like, Yeah, have you have you read any of the stories that I’ve been sending you about supply chain?

S1: The big the big Christmas gift this year is going to be like Roblox coupon.

S2: Here is a gift card. Try to buy something for yourself later in the year and things

S1: spend it, spend it wisely, but only within Minecraft.

S2: But there is a weird disconnect between people having the ability to buy things and not necessarily being able to buy the things they want. They’re like, I’d like a new car, can’t get a new car. I’d like a second hand car, not a second hand car. You know, it’s just it’s it’s a very strange time.

S1: So after talking about big picture macroeconomic, broad subject, like, you know, the entire U.S. economy, I feel the only thing we can do here is broaden out even more and talk about the entire planet, which, you know, in case you didn’t know is burning up and spending burning carbon far too fast. And the big summit this week in Scotland has been. Devoted to this and trying to save the planet. It was on its face a little bit disappointing because we still hadn’t passed any kind of green infrastructure bill in the United States and most importantly, Cheyna was not making any new promises and in fact, the Chinese delegation was more or less non-existent in in Glasgow and China being the biggest carbon emitter in the world. Kind of. It’s important that China gets involved in these things that all that said, I am pretty impressed that there was actual substantial progress made in Glasgow this year. And this is an annual thing. And I feel like for a one year progress, I think we did OK.

S2: What are the things that impressed you?

S1: Three main things impressed me. One of them is actually comes from the private sector. We haven’t really seen this before, but we now have this coalition of investors, both sovereign wealth funds and sort of like public investors, but also a lot of investors, pension funds and private investors saying we are going to really put our investment portfolios to use in creating a net zero economy. Now there’s a little bit of confusion about exactly what that means, but this is something that has not happened before. You haven’t had like these coalitions coming together to say they’re going to work on this before. When they started putting this coalition together in April, they had five trillion dollars of assets under management, which is a lot of money and does move the needle, but is not enough to really do everything that needs to be done in terms of private sector investment in greening the planet where we’re at now. Just in the past six months, basically that five trillion has become 130 trillion, which really isn’t like that is a fact of money. And so I’m kind of impressed that we have got now. You know, the proof of the pudding is in the eating like this. It’s just pledges. Nothing has happened yet, but we have the promises and that’s not nothing. You can’t do anything without the promises. That’s. Necessary, even if it isn’t sufficient. The next thing we did this year was a really important global coalition pledging to cut methane emissions and methane emissions, a really big deal that it’s a much more potent greenhouse gas than coupling carbon dioxide. And it looks like we’re really attacking methane in much the same way that we previously attacked things like ozone and carbon chlorofluorocarbons and that kind of thing. We know how to do that and we’re doing it. And so I’m kind of impressed by that. And then finally, the third big one that I was impressed by was the reforestation pledge, which even Bolsonaro in in Brazil was like, Yeah, I’m going to sign on to this. We’re going to basically end deforestation and stop building the forests back again. Promises not reality, but that’s all you can do at a big summit like this is make promises. And it turns out if you look at most of the promises the most leaders have made over the past decades, like they’ve actually kept them surprisingly frequently. So that’s my that’s my cue for optimism

S3: and talk about the the pledge. Shame connection. Everything I read or listen to about the summit, everyone was like, Look, these aren’t enforceable promises, they’re just promises and pledges. But you can really shame these global leaders into action. It’s worked before, and that’s all we have. So it’s good and fine and shame, is it?

S1: Kerry is really big on this humiliation concept, maybe because he has John, John Kerry, our climate, you know, and famous loser of presidential election, knows what it’s like to suffer humiliation. And he’s like humiliation works as a incentive for leaders to meet their promises. I think he’s maybe overstating this a little, but not by that much, right? I think I think that this idea that there is no global court that can enforce these things, right? All we have is the power of promises. And if we are going to save the planet, it is going to be via this mechanism of promises. We don’t have any choice. So we may as well just try and make these promises as binding as possible, not in terms of a legal fight.

S2: We have no choice. Like whatever you know, with these gatherings of people are like, Well, we’re in charge of entire economy. What? This country’s got billions of dollars in corporate wealth, but there’s literally nothing that we can do.

S1: OK, so Stacey, let me let me just put it, but ask you that like, let’s say you wanted something more, right? You wanted more than what you wanted something enforceable. You wanted something with teeth. Like what would those teeth look like? What kind of global world government dictator organization would be empowered to punish a company, a country that failed to live? I mean, I tried for reform with those punishment

S2: graduate thesis about international accountability, and it was like too hard. So, so instead, I read about FIFA as a supranational institution instead. But I do think that I don’t think there is a global enforcement mechanism beyond some amount of not so much shaming. I’m more from the perspective of leading by example and introducing opportunity costs for other people who don’t write and there. And that’s kind of the tension is you need people who are willing to step up in ways that potentially affect short term growth or that affect profitability from a corporate perspective and kind of reduce the barrier to entry for others. It’s sort of like an honor amongst thieves not saying that these are all thieving folks, but they are stealing from the environment. And I don’t know if I have seen sufficient kind of willingness of that, you know, or willingness to lead of that kind. Outside of the corporate sector, I do. I have been impressed by a handful of companies whose names I will not say because they will immediately disappoint me. It’s something that they do tomorrow. Whereas, you know, political leaders, Bolsonaro was like, Yeah, we will reinforce the Amazon like, well, why has it been deforested at the rate that it’s been in the past five years?

S1: I don’t trust Bolsonaro any further than I can throw the guy. But I think the one thing which is like sort of undergirds my private sector data point. And in the Glasgow 150 trillion dollar Glasgow alliance, which really does make me excited about this is I think we have now I can see us really turning the corner right now. And I’ve definitely seen this talking to European investors, not to a certain extent American investors, but like this seems to be the consensus now among like really, really big sort of trillion dollar European investors is that there is no trade off anymore, that the world that we are on this sort of sustainable path. And in the same way, the high carbon investments have been underperforming for the past 10 15 years and green investments have been outperforming, that is going to continue. And that it is in everyone’s financial interest to do this, not only like in terms of like a healthy, sustainable planet is better for the economy than one that’s burning up, which is obviously true. But just in terms of like, that’s where the economic growth lies and that’s where the returns lie, that’s that’s the whole idea behind, you know, a Green New Deal. We don’t have a Green New Deal, but we have like a free new deal lite in the form of the infrastructure bill is the this isn’t a kind of like we will make sacrifices for the sake of the planet conversation anymore. So much as it’s we will reap the benefits of transitioning to a zero carbon economy.

S2: I did realize that there is one enforcement mechanism. It’s the youth.

S1: Gretta will save it, not just not just grass.

S2: I mean, I feel like I have been really struck by the. Fed openness as it were of, you know, younger people, teenagers kind of across the political spectrum in terms of the households they’re coming from and how they’re feeling about the environment, about climate. And I do think the reality of having lived through two years of what feels like either everything is literally on fire or covered in snow or covered in snow, then deluged then on fire has just been strange, you know, and I think that, you know, going back to what we saw at the top, I think the overarching feeling that like something isn’t working. This can’t be normal. There has to be a better way. I’m very excited to see how, like we collectively are held responsible by an upcoming electorate, by folks who are trying to vote with their dollars and by folks who are just generally very media savvy. Riley there are a lot of entirely legitimate criticisms of various movements, and Sunrise is not exempt from that. But they have shown both a willingness and an ability to use their collective smarts and expertise to push things in a different direction.

S1: Yeah, they’re still not voting in enormous numbers compared to the old thing.

S3: Yeah, I want to be optimistic, like like you folks

S2: are oh, I didn’t say I was optimistic because it was like less.

S1: You have to understand the Stacy-Marie Ishmael baseline

S2: is like to be clear.

S3: First, I think even the pledges that were made a cop 26 wouldn’t we wouldn’t meet our target or the target of staying two degrees Celsius or under in warming like we are on a path to like three or four degrees right now. And I feel like the economic change and growth that you’re talking about, Felix is good, but it’s not going to be enough like you need governments to step up and like create some policy to really push this along. You know, like we got smoking rates down fast in the United States because of shame, because of health and science, but also because of policy like it at all needs to work together. Otherwise, it’s not going to work. And we do have a substantial percentage of people in the United States that are like still thinking that this isn’t a real thing. You know, like there’s a big chunk of people like that. At the same time, there is a perception right now that we just talked about in the last segment that gas prices are already too high and there’s an energy crisis and shortages and things like the

S1: energy crisis, I feel, is, you know, COVID related. And you know, as I say, there will be cop 27, there’ll be Cop 28, there will be a there will be opportunities, you know, next year in the year after we’ll be under water, but we’ll carry on. And and and the other thing I’ll say is the America is an outlier in terms of people not really believing in global warming. There’s a lot of Americans who think that global climate change is just a nothing burger in America, and that’s just not the case in pretty much any other country, except for possibly Brazil. But even there, like I think they can see what’s going on is pretty visible. So I think it, you know, if you want again to be less pessimistic legacy than say, you know, everyone else is kind of on the right page here with the Chinese, you know, pledges to stop building coal fired power plants and stuff they’ve already happened. Like part of the reason why China didn’t make any new pledges this year was that they already made a bunch of really big pledges back in December. And then, like the big surprise this year, was India coming out and saying they were going to be net zero by 2017. No one expected that. Like if you get China and India, the European Union’s already pretty much on track like you’re doing pretty well in terms of global governments. U.S. is the biggest problem because you can’t do anything without Congress, and Congress has structural reasons why it doesn’t want to do things. But globally speaking, I think there’s room for optimism.

S3: Can I just say one more thing about shame? Sorry. Yeah, that I feel I need to point out. It’s funny to me that John Kerry is big into this shame as motivating factor kind of argument. When we just came off four years of a president who completely revamped what it means to be motivated by shame, by which I mean to say he was not motivated by shame at all and like, change the way politics works in that regard and this in this country. And so to have someone now arguing that that’s like a powerful motivating factor is hard to believe just because we know it can change pretty quick.

S1: Yeah. Maybe. I mean. Yes, I do think Trump is an outlier, but then again, you know, you also have Boris Johnson and so like, you know, it’s not like he’s unique. We should talk about books.

S2: Yeah, let’s talk. I’m always down to talk about books.

S1: So Stacey’s big thing on books is independent bookstores and the monopoly that is Amazon, and we’re not going to talk about any of that. Instead, we’re going to talk about the monopsony that may or may not be Simon and Schuster Random Penguin House, the biggest publisher in the world and suddenly the biggest trade publisher in the world, which means books that normal people like us buy is Penguin Random House, which is a subsidiary of Bertelsmann, which is this massive German company. And a few months ago, ViacomCBS, which is another one of those like unwieldy corporations, decided it was putting up its publishing arm for sale. Simon and Schuster and the general consensus was there was no way that Bertelsmann was going to be able to buy it because that would just never pass antitrust scrutiny. And then what happens? But Bertelsmann announces that it’s buying Simon Winchester for a big premium. And everyone was like, Yikes, is the DOJ going to be OK with this? And it turns out, no, no, the DOJ was not OK with this, and they are taking antitrust. They filed an antitrust suit saying like, it can’t be allowed to happen. The really, really interesting thing about this trust antitrust suit for me is that they are not claiming that the merged company would be a monopoly. They are claiming that the merged company would be a monopsony,

S2: which one I can never spell correctly for. But it is. It is so, so interesting. Sort of like the idea of like a monopoly buyer of authors. Work is incredible and true.

S3: So Felix explain more What monopsony means for those of us who know what it means, but also still can’t explain it like me,

S1: a monopoly is where there is a single seller and because you’re the only seller in town, you can set your price. If you if you’re the only grocery store in town, you can charge eight dollars per gallon of milk, and no one will have any choice but to pay $8 for a gallon of milk. And you can make massive profits on that. A monopsony is where there’s a single buyer. So let’s say that your, you know, an industry town and you you run the local, you know, car manufacturing plant, and that’s basically the only job in town. Then you can set the wages and because there’s no one else hiring people, you can set the wages unrealistically low and people are like, Well, I guess I’m just going to have to take those wages because I don’t have any choice. And what the DOJ is saying about the book publishing business is that author advances are a weird form of wages. Basically, they’re a way that publishers pay authors that the main way the authors get paid and the if you have one merged company which would, according to the DOJ, account for as much as two thirds of all or through advances, then basically that company can start lowballing authors and authors will make less money, and that will be bad for authors. But it would also be bad for the broader ebook ecosystem because you have your authors make for better books. The consumer harm is really fascinating. The consumer harm is consumers will end up reading worse books because the authors won’t really be paid enough to write.

S2: Books like authors already don’t make tons of money.

S3: Yeah, I think it’s so interesting. Like so, typically, the the Department of Justice focuses on harm to consumers only, but this suit focuses on harms to authors and has all these delicious examples of bidding wars between Simon and Schuster and Penguin Random House, where they compete to get the book from, like the famous politician or whoever

S1: the Grammy Award winning artist.

S3: Yes. Who is that?

S1: And lots of blind items we want to know who was this? Who was the Grammy Award winning artist who got $8 million for the memoir after a bidding war between Penguin Random House and Simon and Schuster? Few, you

S2: know, even if it’s going still currently benefiting the one percent. But yes,

S3: so that’s all really interesting. And like Stacy was saying, there is a trickle down effect. If you’re harming authors and consolidating the book publishing business, then we do get worse books. We already kind of have a lot of bad burn. The books, those bestsellers they’re they’re bidding over aren’t aren’t typically good books. They’re like things politicians have someone else write for them that come out too fast and are not something anyone actually wants to read.

S1: And I have to agree with Stacey, like, there is a large part of me as a journalist who receives large quantities of books in the mail. There is a large part of me which says we have way too many books already and like, why do we worry about this problem? We have way too many Newbery. We are publishing way too many new books. But the fact is that the reason that I think that there are too many new books is because the quality of those new books is too low. And if those new books are a better quality, then I would be much happier about the number of new books. And the best way to make high quality new books is to allow authors the time and resources to write good books rather than rushed books. In the way to do that is to give those authors healthier advance,

S2: especially when one of the reasons so many of those books are just like filled with mistakes is because most authors have to if they’re going to do fact-checking. If you’re doing nonfiction like that, you have to pay that out of your advance, right? Like, if that’s not sort of covered for you, if you have legal fees, the I think one of the hard things for a lot of people, even people who love books and read books is the economics are so often invisible, and it was just really interesting to kind of see the dog kind of like cast a little bit more of a light on stuff that’s usually just very behind the scenes.

S1: I love the dynamics of book auctions more than life itself. Book auctions are just really, really fascinating. I’ve done a little bit of a deep dive into how they work. They’re not the there’s the highly complex auction designs like and then that you even get like meta auctions where you try it, where like the book agent and the is kind of just a little bit on what kind of auction it’s going to be. We seem to be moving from English style rounds of bidding to single round sealed bid auctions anyway. There’s a lot of interesting stuff going on in the

S2: book, just those two types of auctions that you’ve described

S1: totally and

S2: book people and

S1: we maybe we should get a book auction person to talk about big auctions one of these days. But for the time being, it looks like the DOJ is coming out hard against Bertelsmann buying Simon and Schuster. I am sure that. Well, I mean, if you look at the press release that Bertelsmann put out, they’re going to fight this very hard. They say that some of the facts in the complaint are wrong. And while the anti-monopoly statute is 100 percent right there in the statute and it is 100 percent something that can be upheld by a judge, it really hasn’t been used much in the past 40 years in antitrust cases. So I guess on one level, like Bertelsmann has that on its side, right? That will a judge really say, I’m going to block this gazillion dollar merger on the basis of this monopsony thing that no one can even spell?

S3: I think so, because people actually understand the stakes in a in a case in this case about book publishing, everyone gets it like this.

S1: Take the author advances. People don’t really care that much or

S2: even understand other advances.

S3: Yeah, but OK. But even if you back up from the stakes are author advances. Like the biggest book publisher buying the third biggest book publisher is just like, Oh yeah, that seems. That seems bad. You know, like even if you can’t argue that it would cause prices to go up for consumers because we live in the Amazon age and all this like, it’s still kind of at the heart, very traditional kind of thing that is easy to understand and therefore people, I would think would get behind.

S1: The one thing I was surprised to see in the complaint was the absence of the word fiction, because the real monopoly here in this merger is infection. They would like they would have like more than three quarters of the fiction list and the new the new novels coming out. But yeah, DOJ kind of. I guess they looked at that and said, No, we can. We’re just going to talk about trade publishing more generally because this is always the way that you fight back against antitrust complaint is by saying like, No, no, you’ve got the market wrong, you’re defining the market wrong. And so the DOJ just said no, what will define the market with all trade books? Of course, Bertelsmann came back and said, we’ll trade. Books are just a subset of the bigger book market and the big e-book market. We’re not so big. And besides even the trade books, they’re still for big publishers and five to four majors. People are normally cool with that, so I think they have a chance, depending on on which judge they get.

S2: So here’s the thing, but at least now more people will know the word monopsony.

S1: It’s a great word. We should all use it more often. I think we should have a numbers round Emily.

S3: You have no, I have a number. I was going to do milk prices, but that feels played out now. You guys are going to do for my numbers for that is four weeks. That is the number of weeks of paid leave that are now included in the build back better struggling bill that probably maybe we don’t know if it’ll ever come to fruition, but it’s been interesting as someone who thinks about paid parental leave a lot to sort of watch what’s happened over the past. I don’t God feels like ten years, but maybe it’s been a few months because it was originally there was 12 weeks of leave in this proposal. Then there were zero, then there were zero weeks, and now it’s sort of it’s back to four, and it’s this very popular notion that people should have paid time off, you know, when they have babies or someone get sick. And we just went through a pandemic where everyone needed a little bit of paid leave, most people. Yet it’s still been this incredible uphill battle just to get it included in this gigantic, enormous bill, which also is now going to include this massive tax break for rich people in the Northeast. But that’s for another show. But feel free to ask me about it

S2: in another show.

S1: My number is two hundred and forty eight thousand, which is the amount by which the August payrolls report was born. When when the August payrolls report came out at the beginning of September, they announced that two hundred and thirty five thousand jobs have been created and this was way lower than people had expected. People who are expecting something like 400000, it came in two hundred thirty five thousand. It was a big disappointment, and it started this entire multi-month news narrative about how the Delta virus was really holding back hiring and holding back the economy. Now we have gone back to, you know, the lovely government statisticians have gone back and looked at what the number really was. They’ve revised the number twice and the number is now four hundred eighty three thousand, which is actually if that had come out initially, that wouldn’t have been a disappointment at all. That would have been a big win. And this is, you know, how statistics work. There are big everybody’s on the jobs report and you do get big errors and two hundred and fifty thousand is that definitely a big error. But it just reminds us how much uncertainty there is in these statistics and how much we don’t know even about the economy of the recent past, let alone the economy of the future.

S3: Yeah, it’s kind of wild because the the discourse last month was so like, this is awful end of the world disappointing. Everything’s falling apart. And now it’s just like, Oh, whoops, we were wrong. It was actually right. What everyone said it was.

S2: The mere fact of conceding that we were wrong is not necessarily something that that particular element of Twitter is known for. So I Felix

S1: put it in a pretty good job on Friday morning as saying, Yeah, we were completely wrong about the job situation that it turns out the job situation is quite good. That’s one of the things I like about political ramifications.

S3: There was just like a big election. And I mean, I don’t know if the jobs numbers have a role in that, but they definitely lead to a vibe of a feeling the vibe. And it was bad.

S1: Yeah, with with with Democrats still control, this is not the kind of state House Democrats have been for the bad by the August jobs report.

S2: Somebody like light a candle or something. And so these fires out

S3: just wave some sage

S2: around

S1: something. It doesn’t matter if you have jobs, it matters if you know that you have jobs. Stacey, what’s your number? A billion dollars,

S2: which is so I fell into a very, very deep hole of NAFTA is what they owe

S1: NAFTA.

S2: No flash flash loans. And one of the first things that I saw is that the person who sold that crypto one to themself has now listed it for a billion dollars. So if anyone wants to buy

S1: a billion dollar

S2: crypto FTA crypto, they feel free. But the other thing is, I could not get a specific number for how much

S1: data you had one job I

S2: know I did write sorry about three numbers instead. So what? What number is a billion? One number is zero. It is very likely that the person was able to get, you know, more than $500 million in instant loans and pay a tiny, tiny, tiny fraction of a cent in fees because of how these flash loans are constructed, which is like the idea that we talked about in the previous episode that because in theory, there is no rest

S1: a tiny fraction of a cent as in dollars and cents a sense as in like percent on the same time

S2: in dollars and cents, it’s something like, you know, point zero zero zero zero one of a cent would have been the cost in a unit of Ethereum known as way WTI, because depending on where they borrowed the money from, there isn’t necessarily even a real interest rate of any kind. There’s a transaction fee and those transaction fees are very low. At the other end of the spectrum, there’s the possibility that they paid as much as $500000 because some flash lenders will require a zero point nine percent transaction fee for that

S1: zero point zero nine

S2: zero point zero nine percent, exactly not 1990. So I think one of the things I find so fascinating clash frustrating about these markets is when I called around and I was like, OK, help me understand. Why everybody thinks this is such a low risk that they don’t need any money to compensate, they’re like, oh, because it’s low risk. That is a circular answer to the question, right? The idea that the inherent feature of this market is safety, therefore it’s safety, and you don’t need to be compensated in any way for potential risk is baffling, particularly when flash loans are not immune to manipulation. Right. There have been several recent examples of folks who were able to effectively like run away with the money in breach of what that smart contract that is a flashlight otherwise specified.

S1: So I’m hardened on a certain level that you took this upon yourself and you didn’t take this late money question and move the entire team of Bloomberg reporters under the question of like how much of the last cost? But I I’m with you on this one. The. Opacity of the flash loan market really does stand out in the crypto world that prides itself on transparency. More on this to come, but we’re going to have more crypto flavored conversation in Slate Plus when Stacey is going to tell us what it’s like to hold a tungsten cube. Stay tuned for that. Slate Plus listeners otherwise. Thank you for listening to this here show. We loved talking and we love it. When you send us emails, we read them. The email address is late money at Slate.com. Many thanks to Sheila Roth for producing, and we will be back on Monday with the next episode of Succession. I think we have Mike Mechanic talking about rich people after that as ever. Next Saturday, there will be more money. OK, Stacy-Marie. Yes. What is it like to hold a tungsten cube? Surprisingly heavy to tell the good listeners of sleepless. What were you doing holding a tungsten cube?

S2: I was very fortunate to hold a tungsten cube because I work on in the same office and on the same floor, as noted, tungsten cube influenza at the stall or on Twitter too. And he bought one and brought us to the other. How much did it cost? I think it was $399 for the size that he bought. And I was like, Whatever, it can’t be that heavy. And then I held it actually was, you know, I was like very slightly to build to realize that the people who were like, no man tungsten, the super dense, weren’t kidding.

S1: Like, it’s about the same as gold, right?

S2: I haven’t held a gold bar, man. I don’t know what kind of life you live, but your gold

S1: around holding hold, have you? I have fun. I’ve held a gold bar and that she is heavy.

S3: But how much is is the cube weigh was like five pounds, two pounds, one pound.

S2: I actually did. I didn’t look at the exact weight of the one that he had, but the thing that my brain had a hard time wrapping around because it’s like, you know, it’s a relatively small cubits, maybe half the size, it’s maybe a quarter of half of it, iPhones like one eighth of an iPhone corner. And yet I had to hold it with two hands. And Joe was like, very helpful and gave specific instructions. He’s like, No, no, seriously, two hands. And I held it with two hands and I was like, Whoa, you know, this cubes heavier than like a small child. And just like quite impressive,

S1: gold is nineteen point three grams per cubic centimeter. Tungsten is nineteen point two five grams per cubic centimeter, which explains, which explains why there is a constant low level for business of people creating tungsten bars and covering them in gold and trying to sell them as gold bugs.

S3: Interesting. I’m just going to convert from metric for the most of our listeners who I suspect are like me and don’t understand what

S2: you mean by gram metric people on the gold. So sorry.

S3: So, so like a two inch cube would weigh around five pounds, which is that’s heavy. Yes, five pounds. Two inches. I feel like you

S1: can hold five pounds in one hand,

S2: not if you’re not expecting it. You know, you’re like, Oh yeah, this is like super low. And I was not trying to like, drop the cube and break a two stones.

S1: It is, yeah, but it’s harder than gold, right? So if you did drop it it, it would still be cube like it wouldn’t have a big dent.

S2: Would it hurt my foot, though? Like, you know me? But the

S3: so the

S2: supplier of this tungsten cube is kind of the the angle that to me is just like fascinating. They’re called Midwest tungsten. They go semi viral every couple of years. This is not the first round of, you know, cubism on on the internets, and they, because this is 2021, issued an NFT that is a cube that had, yeah, yeah, no, I’m real

S1: talk, like most NFT is a two dimensional. This is this is a literal.

S2: They made a full on massive three dimensional cube that has only, let’s say it was, and it’s two thousand pounds, nine hundred seven kilograms raw that’s having

S1: that come hold that can

S2: hold on one hand, the then sold to a group of crypto folks for two hundred and fifty thousand dollars. But what they were buying was the right to visit that cube one time a year and touch it and touch it.

S1: But the whole point about touching it is that you can’t tell how heavy it is, just by touching it.

S2: Hey, what can you do? Money can only buy you so much.

S3: So people have too much money, is that my take away for

S2: those in our society? I think it’s

S3: yeah, it’s just people have too much money now that some people have too much money. Not everybody. Some people need to spend it on milk. Some people are spending it on whatever the hell

S1: and the right to touch a tungsten cube. Stacey, have you been following the secondary market activity in the right to touch it? Tungsten Cube I have been going up or down,

S2: but it was it was because it was purchased by a collective. There’s this really interesting specification that it’s not that one person per year can touch. The Cuban that other people can purchase, like the cube can only be touched once per year. So if like

S1: so buy, only one member of the collective can touch it in

S2: a given year. Exactly. So if you were to be like the secondary market buyer for this thing and like that person had already used their touching rights, you’d have to wait.

S1: Is they’re going to be like, is there going to be people lining up on New Year’s Eve to try and be the first person in line to cube discourse?

S2: Here we are.

S3: Did you guys read the The Wall Street Journal story, though, and will not read it, but see it because it has this great photos of these tungsten cube crypto guys with their little tiny cubes just staring.

S2: You know that there’s a lot of places like Iraq money and reminds me of the stakes of what I’m trading. I was like, Good. Yeah, it’s good to be reminded of stakes. That’s helpful. I mean, it kind of

S3: reminds me like my kids and all the kids around here where I live are really into like fidgets now. Like everyone like, I have this vision. It’s like a bubble poppy thing.

S2: I hear it. Yeah.

S3: And I’m obsessed with it. And like, everyone has these like fidgets now, but they’re only a few dollars. So for the crypto guys, they want fidgets too. But they have to be like expensive

S2: because what’s the point of buying a cheap fidgets? I just don’t understand.

S1: I’m just going to finish this little slate plus segment. I recommend because we’re books themed podcast. We’re not recommending a great book by Oliver Sacks called Uncle Tungsten. No, his memoir? It’s a great book. I’m not making this up. It’s a really good book. Felix. Oliver Sacks Real. Is it, you know, obviously famous for his, you know, psychology. But he grew up fascinated by chemistry, and he had an uncle who he called Uncle Tungsten, who had a tungsten cube, or at least a piece of tungsten. I don’t know if it was a cube. And he would go over to his uncle’s place and pick it up and be astonished by how heavy it was. And that was one of the ways that he got really excited in chemistry. And it’s just a wonderful, very touching, very well-written book.

S2: And I’m going to go to my favorite local independent bookstore this weekend. Kind of that book.

S3: Who publishes it?

S1: I believe it’s Penguin Random,

S3: not Penguin House

S2: should have been.

S1: Yeah, we always wanted it to be called random Peck right in

S2: front of them,

S1: right there. But they refused. They refused to do it. I’m looking at up. It’s vintage who owns vintage. I don’t know.

S2: It’s probably still.

S3: Is it weird that I want to buy a tungsten? See, this is

S2: what happens to you and

S1: you’ve been cupid.

S2: You get you feel like. I found myself browsing the website the other day and I was like, I don’t even know how I got here, but look what’s going on.

S1: So, yeah, let let us know. Slate Plus, folks, if any of you guys have bought it, please send your photos.

S2: Are you holding it while staring off longingly into the middle distance?