Too Big To Disappear

S1: Wait for 10 NFTs. There are six thousand per NFT.

S2: Right? So they ended up paying $63000 for 10 NFTs that were originally valued in total of $3000.

S1: Holy crap. OK. All right. The world now makes no sense. And just in case you were wondering, it is possible to get a time subscription for much less.

S2: They found sixty three thousand dollars. Yeah.

S3: Read all the articles in incognito mode.

S2: Wow. On that note, we do not yet have a slate money NFT, but who knows?

S1: We do have a Slate Plus segment. That’s the way that Slate tries to make money from subscriptions. So, yeah, do subscribe to Slate Plus, where you will hear me being rude about Larry Summers because I’m probably you’ve never heard me being rude about Larry Summers on the show, ever. But you get to hear me being rude about Larry Summers because we’re going to talk about the Treasury Department and the revolving door and how people when they leave Treasury make lots of money, including Larry Summers. That’s coming up on Slate Plus. But other than that, thank you for listening to Slate Money. It’s been a pleasure and thank you. Thank you. Thank you. Massive, enormous thanks to Jessamine Molli, a seaplane amada in Brooklyn. We love you Jessamine for producing this here show. Keep the emails coming on Sleep Money at and we’ll be back next week with even more sleep. Money safe? Can you whisper sleep? But you’re going to like it?

S2: No.

S1: So, Stacey, you read this piece in the New York Times, right, about how these accountants come into Treasury, they work there a couple of years and then they interpret laws in various sort of big, business friendly ways, and then they go straight back to the accountant, the companies that they came from. But they, like, doubled their salaries and become partners and make loads of money. And it’s just

S2: like, make at least $400000.

S1: Yeah, exactly. And they basically get rewarded for doing business friendly things while they were Treasury seems deeply corrupt.

S2: I don’t know, man. Here’s how I woke up in a very cynical side of the bed this morning.

S1: It’s Stacy-Marie like, is this cynical, Stacey?

S2: The the notion of regulatory capture by any other name seems like well established in financial markets, right? You run into this problem where the argument is, well, the only people who are who have the appropriate experience to figure out how we should make the rules are people who were previously on the other side of rules. That’s like a good and healthy thing. They their smarts, they you know, they’ve done this for a long time. They understand what we’re talking about. Let’s hire them. Then, of course, the people who are on the other side of rules tended to specialize in getting around the rules. And so when you put them in the situation where now they’re like, OK, we’ve spent our entire careers being useful to large corporations by knowing how to avoid stipulation x y z. We’re going to go into a situation where we then design stipulation ABC and then we’re going to get immediately hired again after where we tell those corporations. And by the way, this is how you avoid stipulation. ABC and I know because I wrote it. And that just seems I don’t know if it’s necessarily corrupt, but it feels very broken.

S3: It definitely feels corrupt. I mean, you. What’s interesting about this pieces? I feel like I hear people complaining about the revolving door all the time. But what’s good about this piece by Jesse Drucker and Danny Hakim is this the specificity with which they explain how it works? It’s like you work at TWC or Ernst and Young for a number of years trying to, you know, lobby the government to relax various tax rules, et cetera. Then you go into Treasury and work on those rules and talk to your old friends at the firm about how to relax them. And then it’s understood that you’re going back to P C, R E Y after you do your little stint. It’s like study abroad, but for accounting. And then when you go back, you know you’re a partner and congrats everyone. It’s so it’s I guess I had thought a little bit like the revolving door was more like you work in the private sector and then you go into government as like a service. I feel like I hear

S1: the Goldman Sachs thing right when everyone leaves behind like like Hank Paulson or Bob Rubin or, you know, Neel Kashkari or someone would leave Goldman Sachs and become a public servant and you’re like, Yes, OK, but they don’t get straight back to Goldman Sachs. Those people went back to Goldman afterwards, although no, this is the go to Citigroup, I suppose. I mean, he’s

S2: partly the

S3: understanding of the accounting firms. It’s like you do your little stint and you help the firm out and then we’ll reward you. I mean, it’s truly seems corrupt, you know, it’s different than public service.

S2: The were the eves there a service, right? And I think part of the reason the ideas of service is so interesting is because these government salaries do not allow you to kind of maintain your other house in the Hamptons and your multiple private schools. And I hear that a lot from, you know, friends I have who go into government who come from the private sector, they’re like, Yeah, I’ll do this for two years because the money that I was making a large tech company. Well, and you know, I can survive on my options and my equity stuff for a while, and then I’ll go back and continue making money again, and I’ll like feel good about my contribution to the world, etc., etc.. That is not. I don’t know if that’s solvable, right? As long as government salaries are what they are, the idea of it appeals to your inner good. One has the effect of leaving people out who can’t actually afford to survive on a government salary and to definitely rewards the people who can and then can go back and get an even cushy job after.

S1: Well, I mean, let’s be clear about this. Anyone can afford to live on a government salary. It’s just you can’t afford to have the

S2: lifestyle that they want.

S1: Yeah, exactly. You’re your former lifestyle or like, exactly. You can’t have a $400000 a year lifestyle on a $100000 a year salary. Like, that’s obvious. But yeah, if it fits well, I feel like the really interesting test case here is going to be Angela Merkel, right? She’s never operated in the private sector. She’s always had a very modest lifestyle.

S2: She does her own laundry

S1: room, laundry in supermarket shopping. And if she was a UK or US politician, you know, given the amount of power she’s had. For so long, she was basically like, you know, the leader of the world for so many years, there’s no it’s almost obvious that she would start signing multi-million dollar contracts of some description. You know, there’s going to be a lot of people coming up to her throat, you know, offering absolutely enormous amounts of money to do various different things and. American politicians have no compunction taking those deals, and especially Treasury. Former Treasury secretaries have no compunction taking those deals. So, you know, Larry Summers goes off and makes $5 million a year, working one day a week at the seashore. Or Tim Geithner goes off and works like Carlyle Group or Bob Rubin goes off and takes a $10 million a year job at Citigroup or the most recent example, Steve Mnuchin. Goes off and raises two and a half billion dollars from his friends in Saudi Arabia for a new fund, which, you know, for those who say, I’ll save you the mathematics, just the management fee on that is going to be $50 million a year. So it’s standard. We saw during the Greensill implosion, the David Cameron was being paid $10 million. David Cameron is the most useless world leader that the world has ever seen. He is a complete disaster. He has no skills at all. And he got 10 million dollars from Greensill just for being a former world leader. So just imagine how much Merkel could get. I feel like the norms are different in Germany, and there’s a good chance you might not actually accept any of those deals. You’ll be just like, Oh no, I’ve retired now. I’m going to keep on living in my house and doing my laundry, and I don’t need that lifestyle.

S3: Yeah, she’s like the exception that kind of proves the rule. But I think there is something to what Stacey was saying about the quality of the government jobs I read like Michael Lewis’s fifth risk book, I think last year sometime and what it means to be a bureaucrat in America these days. It’s not. It could be better. The pay could be better. The fights in Congress kind of trickled down to these workers. Like we were saying in the main segment, they might not get paid, you know, if we default on debt, like that’s a go to place. When there’s a government shutdown, there’s furloughs. They get no respect. I feel like those jobs could be a little bit better. That’s not going to affect like the Larry Summers and Steve Minchin’s kind of thing. But like, maybe it could affect the revolving door for these like accountants, you know, at P C and E Y, et cetera, right? Like these jobs could be better.

S2: The great crisis of bureaucratic management,

S3: they get no respect over there. I don’t know.

S1: Well, one of the things that the World Bank has been doing for a long time right has been like asking for governments to raise public sector salaries so that the perceived need to be corrupt. The financial need to be corrupt goes away, which it’s not obvious that works, but it’s certainly not obvious it doesn’t work like that at the margin. There are places where it seems that if you start paying back, then there’s less corruption. And when we had onion on talking about China, she was definitely saying, like, if you look at the official public sector salaries in China, it forces you to be corrupt because there’s no other way that you can live is $40 a month or something.

S3: And then maybe on the flip side, these finance jobs just pay too much. Maybe the government jobs pay too little and the finance jobs pay too much. The inequality is too wide, and that leads also to the corruption.

S1: Yeah. Like why should I? In what sane world, as Steve mentioned, actually earn $50 million a year by throwing Saudi money at various investments?

S3: No, I only need thousand to be wealthy. First of all.

S1: So, yeah, but he has a very high making ex-wife.

S2: This is like the very strong opinions episode. Like, I just feel like it. Just tell us how you really feel about genuinely everything we do.

S1: He’s like I would never. I would never have an opinion about Bloomberg.

S2: I am. I have never had an opinion in my life.

S3: Did they make you sign away your opinion, Stacy? Silence.

S1: OK, you see, this is why you subscribe to Slate, plus you get to find out Stacy’s true opinions

S2: well on nothing. I do have very strong opinions about independent bookstores, so I’m willing to share those at any time.

S3: What’s going on with that is this is the strand still around. I haven’t been there in two years. I worry about.

S2: Yeah, they talk of the world’s largest PBB, and it was quite interesting. No, it’s just previous guest and friend of the show. Cardiff Garcia is a very enthusiastic corporate bookstores in the form of Barnes & Noble. And I am very enthusiastic in the forms of not Barnes and Noble.

S3: So I kind of feel sad for Barnes and Noble a little bit. I recently watched You’ve Got Mail was kind of just thinking about how it used to be the big bad and now is just sort of like a shell of its former self.

S2: Well, since you seem to be very aligned with Cardiff, Garcia’s perspective on this, folks should tune in to that episode in which we argued about the merits of Barnes and Noble versus independent bookstores.

Mentioned In the show:

Understanding Evergrande, the Chinese Real Estate Conglomerate That’s Nearing Collapse,” by Joe Weisenthal and Tracy Alloway for Bloomberg’s Oddlots

Axios Capital Newsletter, by Felix Salmon

Axios Closer Newsletter, by Courtenay Brown

How Accounting Giants Craft Favorable Tax Rules From Inside Government,” by Jesse Drucker and Danny Hakim for the New York Times

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