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Hello! Welcome back to Slate Money.
I am Felix Salmon of Axios.
I'm here with Emily Peck of Axios.
Hi.
I'm here with Elizabeth Spires,
who has written a great piece of the New York Times this week.
Hello.
We are going to talk about Elizabeth's column in the New York Times,
all about strivers and Tom Wamskans.
That is going to be in the Slate Plus, though,
because we have a packed show this week.
We are going to talk about Target, Budweiser,
and all of the other gay-friendly companies
who have been targeted by anti-woke mobs.
We are going to talk about Nvidia,
which is soaring through the stock market
on the strength of the AI boom.
We are going to talk about Germany,
which is now officially in a recession.
We have a jam-packed show, it was all I can say.
So, it's all coming up on Slate Money.
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OK, Emily, I really want to ask you
about anti-woke activism, which I feel is new this year.
I haven't really seen it in the corporate context before.
And it's hitting target right now.
And it hit Budweiser a few weeks ago.
Can you just bring me up to speed on this?
Because I feel like I'm in a world that I don't understand.
Yeah, so companies have long faced backlash
for doing things around LGBTQ rights.
But definitely something changed earlier this year
when Budlight sent some promotional Budlight to a transgender
woman who then posted about it on TikTok, right, Elizabeth TikTok?
Yeah, her name is Dylan Mulvaney.
Dylan Mulvaney.
And that just set off this immense, I guess,
you called it anti-woke backlash.
I guess we can say that.
But it created immense backlash and really a drop in sales
of Budlight in some places in the country
and launched 1,000 think pieces and just a lot of anger
that was atypical.
And now this week, Target has big pride displays
in all of its stores.
And conservatives are going in the stores
and getting really angry about these pride displays,
like rainbow colored merchandise.
What did I see?
A yellow hoodie that says not a phase and some baby clothing
like with rainbows on it and conservatives just freaking out
about this and Target then this week said they would put
some of these displays in the back of their stores
instead of in the front and pull some merchandise as well,
seeming like the company is kind of caving to the backlash,
which is, I think, unusual.
So that's sort of what's going on.
I'm in California this week and apparently there
was a big thing with the LA Dodgers and the Sisters
of Perpetual Indulgence.
Like Los Angeles is sophisticated and very sort of cosmopolitan
city where everyone knows lots of gay people.
And if it's happening in LA, and I think in the general sort
of way that these things work out,
if you look what happened with Budweiser and with Target
and with the Dodgers, is that the corporations
want to stand by their stated principles,
but also they don't want to alienate a significant customer
base and so they try and navigate the kind of middle way.
And then of course the left is like you're caving
and then they have to sort of like tack back
towards the sort of gay friendly side of things.
And then eventually, you know, they muddle through somehow.
But now it really does seem you can't just slap rainbows
all over everything on in June and be like, yay gay pride
and everyone's going to be happy for you
because you risk this backlash.
And I'm super interested in what you're saying about how
like there has always been some kind of opposition to this.
And because you've almost certainly been following this
more closely than I have, can you tell me a little bit more
about what form that opposition used to take
and is it better targeted, more weaponized,
more effective right now, somehow?
You know, part of what's happening is that there's been
a little bit of an overton window shift where it's,
I wouldn't say it's socially acceptable,
but I think open homophobia in the discourse right now
is acceptable in a way that it wasn't three or four years ago.
So there've always been, you know, people in the Christian
right who oppose any kind of display that has anything
to do with the LGBTQ community because, you know,
there's a whole swath of America who believes
that being gay by itself is sinful.
But they haven't historically used boycotts as a mechanism,
I think partly because direct action was always viewed
as something the left does, but I think part of what's
happening too, this is not totally unrelated
to you, DeSantis and Disney.
I think conservative saw an opportunity,
and there's a well-known right winger named Matt Walsh,
who sort of stated this explicitly a few months ago,
he said, the goal is to make pride toxic for brands.
And so that's exactly sort of what they're trying to do.
They want no visibility for pride whatsoever.
So one of the tactics that they're using is to sort
mislead people about what these products are by suggesting
that they're all being marketed to children.
So in the case of Target, a lot of the products
were really designed for adults, they're in the adult section.
Yeah, exactly.
Like, this seems to be one of the themes of the,
you know, I'm gonna keep on calling it anti-woke,
even though I probably shouldn't, like,
this sort of new trend in American society
is to sort of particularly double down on
whenever children are, you know, exposed to LGBTQ content,
but specifically the T as well.
I think that what we've seen over the past two or three years
is a significant increase in transgender visibility
and transgender pride, an anti-trans in particular,
sort of backlash, and you see this in bathroom bills
and bills against, you know, gender affirmation surgery
and all of this kind of stuff.
So it's definitely part of the political discourse.
And, you know, if we just go back, say, four years,
pride was gay pride.
And now it's become much more trans focused.
People have found that kind of way into object to it.
Yeah, I think that's exactly right.
I think the backlash comes from transgender people
being more visible now, and the backlash has been really fierce.
And the conservatives who Elizabeth are talking about
have really leveraged mainstream America's
maybe more discomfort with transgender people
into really like hatred and bigotry
towards all LGBTQ people there.
I mean, there are hundreds of bills at this point
in the United States, you know,
trying to restrict LGBTQ people in various.
And, you know, companies aren't social activists.
So it makes perfect sense to me that a company
like Target would pull back or Bud Light
would, you know, fire the executive responsible
for sending beer to a trans woman.
Yeah, companies reflect what's going on in the culture.
They don't really set the trends.
So I would expect to see more of this happening
more retrenchment from corporate America,
despite what some companies are saying,
like, no, no, we're still committed to gay pride.
Like, I would think there would be more.
Yeah.
I'm not sure about that.
I think, you know, part of what's happening too
is that the LGBTQ community is responding and saying,
look, for years, you know, we've been critical of
what they call rainbow capitalism
where you're creating products around pride
and stuff like that.
But, you know, we would rather have pride being, you know,
kind of more visible in the culture.
But if you're going to commercialize this stuff,
then you owe it to the community to also be supportive
when there is backlash, because there's always
going to be backlash against marginalized communities,
particularly from the Christian right.
Let me pick up on this idea of rainbow capitalism.
I think this is super, this is at the heart of it, right?
Is, you know, why is it that every June, every single
consumer facing brand in America splashes rainbows
on top of everything?
Where is it an internal thing, mainly just to show
their employees how, you know, gay friendly they are?
Is it an external thing to try and attract gay dollars
from gay customers?
Is it really not a capitalist thing at all?
And it's actually just because they, you know,
believe in the cause.
Like, what is the reason for it?
It's a capitalist thing.
I mean, partly because, you know, more people are
identifying as being gay or trans or, you know,
something in the LGBTQ plus continuum.
And so, you know, the numbers are pretty clear.
And 2021 are around 7% of the population identified
as LGBTQ plus.
And that's up from 3.5% in 2012.
So they view this as a growing market and it's used younger.
And so it's not, it's not really
and surprising that a big consumer brand would want to target
a younger growing audience.
I don't think it's, you know, altruism on any level.
No, no, I just want to be clear about this.
Like, the idea is, if I'm a brand who slaps rainbows
on everything every June, that will make it more likely
that that younger growing audience will buy my product.
That's the way that it is.
Yeah, you're signaling to that community
that you're making things for them.
You know, and they feel more represented.
So they have, you know, better fuzzier feelings
toward the brand.
It's nice to feel welcome at a store or retailer.
I mean, it is for capitalistic reasons.
And, you know, this isn't altruism for companies
to be doing this, though they try and spin it that way,
I think.
But on the other hand, it is really important part
of the culture that companies do this at the same time.
You know what I mean?
Even though it's for business reasons,
like, it's really nice to have LGBTQ plus people feel welcomed
at the nation's biggest corporations.
I can walk into a Target store with my kid
and be like, oh, look at this, you know?
Pride.
There's also, because this is fairly new
as a tactic on the right, there's a kind of
A-historicity to it, you know, Bud Light has been
gay-friendly for decades and they've done pride promotions
for decades, you know?
Bud Light was sort of one of the preferred beers
after the Stonewall riots because they were supportive
of the community.
So this isn't a new thing, you know?
And Target's been doing it for over a decade.
It's just that now that it's acceptable,
there's the right things that's acceptable
to be very openly homophobic about things
by suggesting that these things are damaging to children.
You know, this seems like a more effective tactic for them
or it's a tactic that they're embracing.
So I think you know, you may be correct,
Emily, that we'll see more of it,
but I do think that corporations are gonna adapt
to this kind of thing and, you know,
learned how to respond to it better
without just shoving all their pride,
merit and closet.
I don't know, I mean, I've done a little bit of reporting
on, you know, there's a lot of backlash also to ESG
or environmental, social and governance efforts or whatever.
And there are some companies now in response to that backlash,
which is kind of similar to the anti-transgender backlash
who are just staying more quiet about what they're doing.
There's a term called green hushing.
That's like, companies are still doing their environmental stuff,
but they don't put as many press releases.
And it's weird, because I was always one of the people,
like back when I was at HuffPost,
who would call out companies for hypocrisy,
for issuing kind of press releases about,
here's what we're doing for the environment,
here's what we're doing for the gays, you know,
here's what we're doing for women.
And I'd be like, yeah, okay, but they did this press release,
but here's what they're really doing, you know.
But to see all of that go away is also a worrying sign.
Yeah, it was a little hypocritical all along.
It turns out you need a little hypocrisy to keep things.
Well, it all just normalizes, you know,
caring about the environment or seeing gay
and trans people in the community.
Normalizes it, yeah.
And I do think there's a move away
along all these socially progressive lines.
And I think part of it was sort of the conservative response,
not only to more transgender visibility,
but a response to where companies landed.
And it's been three years since George Floyd was murdered,
because there was such strong corporate support
for Black Lives Matter.
I sense that it kind of freaked out
some people who don't think Black Lives Matter, you know,
and who are worried about companies being socially progressive.
Okay, let's take a quick break
and then talk about Nvidia,
because oh my God, the amount of money they're making
is kind of crazy.
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Okay, so in video,
$11 billion of revenue or something,
this is the ultimate picks and shovels stock.
Everyone is piling into AI, there's all of this AI hype.
And if you're investing billions of dollars in AI,
the number one thing you're investing those billions of dollars in
beyond computer scientists is Nvidia chips.
Nvidia chips turn out to be the ones that are best suited
for training up these large language models and whatnot.
And it is causing Nvidia to become the fifth largest company
in America, it's worth more than Facebook,
it's worth more than Tesla.
Emily, is this a harbinger of the AI driven economy to come?
Or is this just an idiosyncratic story about a single stock?
Yes, both of those things.
I don't want to commit and say,
because I don't know what's coming, right?
I'm no, I don't know, I don't have a crystal ball,
but it does seem like this could be the first rung on the ladder
of some kind of new transformation in tech
to an AI driven tech economy.
So that's possible that it's not just a one off.
Someone shared this cool chart,
I thought it was a cool chart on Twitter,
I think it was a Morgan Stanley chart.
It basically showed how the mobile internet boom kind of worked
across different companies and it also it started in chips
in Qualcomm with chips and the Qualcomm stock goes up
and then it moves to the hardware and Samsung and Apple stock go up.
And then in the final stage, it moves to the software
and the services, you know, the Google and the Facebook go up.
So maybe something similar will happen with AI
where it starts with the very basic building block of a chip
and then it moves into like, here's the hardware you need
and here's the software you need
or maybe the next two rungs or something different,
but it does seem like this NVIDIA stock isn't a blip,
it could be just the first piece of a boom.
It's also important to understand what NVIDIA chips do specifically.
NVIDIA typically makes chips for the gaming sector in particular
and they're used for image processing.
So the sort of sector of generative AI
that really deals with creating images from scratch,
companies like mid-journey, that sort of thing.
NVIDIA seems like an obvious place that you would go for that infrastructure
because that's who VR companies are buying chips from for immersive VR.
You know, if you're looking for the highest-end processor
that really works with images,
they are the number one company for that.
It's much more than just images though,
like it's large language models more generally.
The point about image processing is that what you're doing
is you're processing a large amount of information
that's coming at you at once, right?
If you're looking at anything out of your eyes,
you're having photons coming at you from all directions
and what your brain has to do is process all of those photons
simultaneously to turn it into like, oh, that's a cat, right?
Which is a very different kind of thinking,
if we're talking about artificial intelligence here,
from, you know, if you give me a long division arithmetic problem
and you say, what is 8,427 divided by 36,
then what I have to do is I go step by step,
I do this and then I do this and I do this and I do this and I do this
and then that's a much more sort of like linear processing thing
rather than the parallel processing thing.
And historically, the Intel chips and the, you know,
the kind of chips that you find in processes and computers
have been optimized for linear processing rather than parallel
and it's been the Nvidia chips, the graphics have been the one area
that you really need to worry about parallel processing
and the thing that you need to do when you're training up a large language model
is not to do this, then do this, then do this.
It's just like ingest absolutely enormous amounts of information
and doesn't need to be images, it can be words,
it can be anything you want and build it
into a broader conception of what is this world that I'm looking at
and how does it work and that is, you know, more fundamentally
why Nvidia is ahead of the game on this one.
So what do you think?
Do you think this is the start of a new AI boom
and video is the first stock to blow up and there'll be more?
You know what?
Honestly, I'm skeptical still.
I'm probably at the skeptical end of the AI, you know, hype spectrum.
It is very easy to explain the Nvidia boom
just very simply on the basis of cash flows, you know,
they came out with these astonishing numbers of how much money they expect to make
because there are all of these companies out there,
whether it's OpenAI or Antropic or DeepMind or whatever this company
that Elon looks like he's going to start up or whatever,
who are all rushing to throw money at AI.
And if all of these very rich companies are rushing to throw money at AI,
that money goes to Nvidia.
The question is, do those companies who are throwing money at AI,
do they actually create any value from it?
And are they going to turn those in those investments going to be profitable?
And so far, there's not a huge amount of evidence for that.
And I don't believe that large language models are AI.
I think that they're fun to play with for the time being
and you can do some interesting things with them.
I don't see them really transforming the economy.
I do think there are other forms of AI which could in theory,
but we haven't developed them yet and we don't know when they're going to come along.
And I'm just very cognizant of the web three slash metaverse boom,
you know, which also had billions of dollars of investment.
And so far has basically nothing to show for it.
And it's very easy to get swept up in height.
And especially when you have investors who are willing to assign massive valuations
to companies that throw AI in their name somewhere,
then like everyone is going to try and pay lip service to the idea that they're an AI company.
And so I can definitely see a case for this is good for Nvidia
for the time being while the hype cycle is at its peak.
But then if nothing really happens,
then that will have been a great profit engine for Nvidia for some amount of time.
And then we'll go back to where we were.
Like that is definitely a possible outcome.
I think there's a difference between companies like OpenAI that are explicitly AI companies.
And a lot of companies are buying these chips because they already have LMs
built into their tech and they aren't nominally AI companies,
but they're using the tech.
And so I think that's really what's driving the growth.
It's not the standalone AI companies.
And I just have trouble imagining that that's going to get rolled back.
No, I'm not saying it's going to get.
But like, OK, so let's think about a good example of something that Axios just did, right?
We have five years worth of, or more than five years,
maybe six or seven years worth of Axios Pro-Rata newsletters, right?
Which is this amazing newsletter that comes out every day written by Dan Primak.
And each newsletter has this long list of private equity deals and VC deals.
And he just writes them in words.
And for years, a whole bunch of people have been asking,
can you turn this into a searchable database?
And for years, we've been like, that will be so much work.
We would love to, but it would be horrendously expensive.
And then a few months ago, we just said, oh, we can pull this AI thing down off the shelf.
I don't know which one we used.
One of those models that you can just download or outsource.
And we set it to work on the archive of Pro-Rata newsletters.
And hey, presto, now we have a searchable database of Pro-Rata deal information.
And that's amazing.
And we could never have done it with our AI.
And on some level, there's probably three levels down.
There's some company that we used to run the computers in the cloud.
And those computers in the cloud were running on Nvidia chips.
And Nvidia made some money from us doing that.
And maybe with any luck, we'll make money from productizing this.
And so it is a way to make money.
I do see that.
And so your point is well taken.
I just don't know how much that's going to be a sort of big profit engine for the broader economy.
It seems like AI could represent a sea change for how everyone uses technology.
And if that's true, that's money.
You know what I mean?
Scott Rosenberg and also an Axios, not to keep plugging Axios, but got to make a living.
He also had a good piece out today about how AI is sort of a new interface for people
and that every sort of big advancement in tech involved changing the way people interface with computers.
So Windows was a big breakthrough because before Windows existed, no one knew what to do with the computers.
It was hard to really use them.
And then Windows kind of changed the game.
And it took a while to figure out exactly how it would change the game, etc.
But it did.
And then mobile web was like a new way of interfacing touch screens.
This is a new way of interfacing.
And at every stage, apps, even people are talking to computers in a different way.
And every time the way we talk to computers changes, money pours in because software has to be updated, hardware has to be updated.
There are new inventions.
We don't really know right now all the ways the NVIDIA chips will wind up making its way into various AI products that consumers will use.
It'll take a long time, but I do feel like it's going to happen.
It's a real thing.
Whereas with Web 3, I still really don't know what that means.
And I didn't at the time either.
Now I'm more like things could happen.
This seems real.
I don't fully conceptualize all the ways AI could be used, but I can see pretty easily how it would transform Google searches or make Google searches obsolete or whatever.
You can kind of get a sense that this is big, right?
Yeah.
And especially with the chat interface, the chat interface is a new interface.
You just ask a question in language and you get useful information back or pictures back.
And that's a big deal.
It feels like magic.
It feels amazing.
One of the interesting wrinkles to it, of course, is that the cost of a computer using AI to respond to a chat request is like three or four orders of magnitude greater than the cost of using a computer to respond to a search request.
And fulfilling search request is so cheap that you can pay for it just by selling search results, you know, ads on a page.
And that's how Google makes all of its money.
And it's incredibly profitable because it makes so much more money, in fact, from advertising than the cost of running those computers to do the search.
Like search is a little bit like software, right?
Like Microsoft Word or Microsoft Office or anything like all those other previous big profit engines, which is that the marginal cost is very much more than the cost of the product.
Very close to zero.
Once Microsoft has developed Microsoft Office, the cost of selling one new copy of it is basically zero.
And the cost of doing one search for Google is basically zero.
The cost of doing one AI response is not zero.
And it really transforms the economics of the IT industry to make it much more similar to the economics of any kind of old fashioned manufacturing industry, which is that you have unit costs.
And you need to sort of recoup those unit costs somehow.
And we have been so accustomed and acculturated in tech to this idea that you can do things for free.
I do wonder where the revenues are going to come from.
Only time will tell.
Emily, you're fired.
I do just want to say that I put this in my news that I did this week.
Nvidia has a PE ratio of over 200, which is absolutely crazy for a company that went public in 1999 and is worth hundreds of billions of dollars.
It's like, that doesn't happen.
It's a mature company and it's trading it over 200 times earnings.
That is wild.
And that's because people believe in this in this AI future and it's once again, it's like a startup.
Not it's like a startup.
It is like a number.
Seriously, like there are a lot of startups up there.
I'm sure Elizabeth has worked for some of them who would kill for a 200X earnings valuation.
You know?
Okay, let's take another break and talk about Germany.
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OK, so really bad news coming out of Germany.
We have some very interesting economic data this week.
The United States is looking very hot.
We had what's known as PCE, Personal Consumption and Expenditures data out on Friday,
showing inflation is entrenched, showing spending really strong, showing corporate profits going up.
And basically, the US economy being so hot that the Fed is going to continue on its rate hiking cycle.
It looks like they're actually going to hike rates at the next meeting now, which we didn't think they would like a week ago or even just a couple days ago.
So that's great news in the sense that America means we're doing great, albeit with entrenched inflation.
If you go across to Europe, you see inflation that's even higher, and you see the economy just super sluggish.
Germany is now officially in recession.
They've had two consecutive quarters of negative growth, which is their definition of recession.
The UK is looking utterly miserable with just insane degrees of inflation.
We have food inflation in the UK running at 19%.
We have just these inflation numbers that the Bank of England seems to be incapable of bringing down.
And then across Europe, more generally, there seems to be this problem of they have the same or worse inflation that we are struggling with in the United States.
But what they don't have is the upside, which is the tight labor market and economic growth and the strong consumer spending and all of the things that make people happy.
So, yeah, what do we make of that, Elizabeth?
Well, I wonder how much of it has to do with a sort of German cultural reaction to situations like this with austerity because the consumer spending is way down in Germany.
And some of this is, it's also driven by lower demand for, or lower export numbers, lower auto sales, in particular around electric vehicles because now Chinese people who are normally by German cars are buying Chinese electric vehicles.
And so I think there are a lot of different factors, but what do you think is driving the consumer spending being as low as it is?
It's a really good question because in principle, the large decline in energy prices that is global and hit Germany the hardest when energy prices went up after Russia invaded Ukraine.
In principle, that decline in energy prices that they've seen over the past few months should feed into higher disposable income and higher spending, right?
And it isn't doing that.
And I go back to the broad thesis of my book about the YOLO economy and how people are like, now I've been reminded of how you only live once and we should enjoy our life all we can rather than sit around being miserable.
And I'm asking myself whether that is more idiosyncratically American than it is global and it just doesn't really seem to manifest itself in Germany.
And I have to admit, it doesn't seem to be manifesting itself in the UK either.
I had one question about Germany and UK that I don't actually know the answer to, but maybe you do.
When the pandemic hit, people got lost their jobs and the US plan was just unemployment insurance, but in UK and I think in Germany, the plan was more keep people attached to their jobs.
And I wonder if that kind of plays into this too because the detaching a lot of people from their jobs, at first I thought was a bad idea, but now I feel was a good idea.
Because it enables a lot of people to switch jobs and get better jobs and higher pay in the US, which I would think would increase people's willingness to kind of spend and do that very American thing of just continuing to spend money, even the prices are higher.
But maybe in UK and Germany, that's part of the story.
Maybe that sort of reduced that kind of dynamism or something.
That's just my wack of theory.
No, it's not a wack of theory at all. And it's something which has been very much fleshed out by economists is this question of when you have this big pandemic shock, do you try to preserve the economy you have?
Or do you burn down the economy you have and build something new?
And the European impulse was, let's preserve what we have and try and keep as much as we can.
And people were kept at full pay on payroll for companies they couldn't work for because they weren't allowed to go into work.
And basically the government paid their salaries for as long as they were in lockdown.
And that did preserve the status quo ante. Meanwhile, the United States, we saw unemployment spike to all time highs in this terrible, traumatic experience of the pandemic was worse on an employment level.
But as you say, we precipitated the great resignation and people didn't just get fired from their jobs, but they started quitting their jobs voluntarily in record numbers and went off and rebuilt something that they were much happier about.
I think a lot of this honestly just comes down to happiness that people spend more when they're happier, maybe.
And that we now have people, as you say, who've increased their earnings because of the great resignation and who have much more bargaining power.
And they can go out and sort of take advantage of the Phoenix economy that is growing up out of the ashes of the pandemic in a way that if you didn't have any ashes of the pandemic,
if you just kind of stopped time for a few months and then said, well, let's go back to how we were.
That entire dynamic doesn't happen.
Yeah. So, here, this is the Germans were more miserable than we are more or less.
That's the weird thing Felix, because if you look at a lot of the consumer sentiment data in the US, I mean, Americans don't seem that happy.
Yeah, and we're all convinced as a recession, right?
We've all been convinced that there's a recession for the past two years when that clearly hasn't been.
So, yeah, it is messy. There's no simple narrative here that completely makes sense.
No. I mean, one simple narrative that makes sense for Germany is just like they did have an energy shock that was tremendous far more than we did.
And some of their manufacturing companies had to like slow production and things like that.
And that we didn't have to do that in the US, that we didn't have the same.
I mean, yes, gas prices were high.
Yes, for sure.
My oil bill was insane, but like, it's not the same as companies stopping making stuff.
I do think that Elizabeth's point about China is an important one.
The German economy has historically been driven by super high-end manufacturing.
And people by German manufactured goods because they are the best in the world.
And then everything stopped and we started anew globally and we kind of looked around and we said,
what should we buy? What goods should we buy?
And German manufacturing goods are still the best in the world.
But Chinese manufactured goods are extraordinarily good.
And we, I think, came to a sort of global collective conclusion that maybe we don't need the best in the world.
Maybe we can have like extremely good, but not the very best, which means Chinese rather than German.
And they don't need to get better than Germany to beat Germany.
They just need to get good enough to be like, I am perfectly happy with a Chinese car.
And I was in New Zealand a few months ago and there are a lot of Chinese cars on the road there.
And it makes sense for there to be a lot of Chinese cars on the road in New Zealand because they're closer to China.
You can get better support than trying to get someone from Mercedes to fly over to Wellington.
So, yeah, I think being the best is no longer necessarily as profitable as it once was.
And then the UK, the reason they're not doing well, is obviously because of Brexit, right?
I mean, it's always Brexit.
If you want a simple explanation that like explains everything, like it's hard to do it anywhere except for in the UK where Brexit really does explain it.
Like 19% food inflation. Yeah, there's obviously a reason for that.
Whoops. Because they don't trade freely with their neighbor countries anymore.
So there's more friction to get food from other places so that even higher food prices than in the UK.
Yeah, exactly.
Like if you are a food exporter in Holland, the UK used to be, if not your largest market, definitely in the top two.
And now you're like, there's just way too much paperwork.
It's way too much trouble.
I can't even, you know, it just doesn't make any sense anymore.
And I'm just going to concentrate on the rest of my export markets and leave the UK to its own devices.
Incredible.
You know, when Brexit first happened and we talked about it entirely too much on Slate Money probably, and everyone was saying, it's going to be a catastrophe.
It's going to be a catastrophe sort of expected that as soon as it would happen, there would be like a mudslide or, you know, an earthquake and it would be a catastrophe.
But like, that's not how catastrophes kind of work economically.
It really takes time to shake out and it feels like now we're kind of like slowly coming to see what that means and it's kind of sad.
And, you know, going back to this, the era of the Phoenix economy, the interesting thing about Brexit is that the actual Brexit date was January 31, 2020, right, which was right as COVID was making.
Oh my gosh.
And so, you know, everything burns down in the UK, just as everywhere else.
You have the same lockdowns in the UK as you do everywhere else.
But then the ability of the economy to reinvent itself and to do fresh new exciting things is massively hindered in the UK compared to everywhere else, because it doesn't have those global trade relationships that it needs to be able to do that.
And so, you know, those poor little vinxes just kind of die in the ashes and wither away.
Oh my God.
Poor little vinxes.
I have to lose this metaphor, man.
But it's so much fun.
It's good.
I have a book, everyone.
Let's have a number round.
Elizabeth, do you have a number?
My number is 17,850, and that's a dollars.
And that is the starting price for the Marcellus masterpiece mahogany casket, which is supposedly what Logan Roy is buried in succession.
But also what Ronald Reagan was buried in.
Oh, do you remember that there's a scene where Kendall Roy says something like they're talking about what happens when Logan dies and he says, you know, we'll off the rack, the funeral Reagan with tweaks.
So it's supposedly the same casket.
You use the Reagan casket, for sure.
And with improvements, this casket can go as high as $37,000 if you get the super.
Blinged out version, like with Bluetooth and stuff.
With a panic button on the inside, so if you wake up.
Extra comfy pillows.
Yeah.
I was impressed at the way that the Paul Barrows don't actually carry the thing.
They just like wheel it along on wheels.
And it's just like, who's going to be the front right wheel?
Wheelman.
Wheelman.
Wheelman.
Emily, I'm going to steal your number because.
There's no way you have the same number as me.
I know that.
Okay.
I'm going to steal the number that you dropped in the Axio Slack this morning, which is $35 million, which is the amount of money that an unnamed first republic employee was paid in 2022, which is kind of interesting in terms of getting a better visibility into the first republic business model.
The average pay at first republic compensation expense per employee was $310,000, which is more than Morgan Stanley. Morgan Stanley is $280,000.
So it was the people who worked for first republic were unbelievably well paid.
And well, first republic painted itself and in many ways was a very consumer focused, very friendly, genteel.
It will help you through your life at every step of the way, kind of bang.
It was also internally a very red-blooded what you kill kind of place and it had these incredibly aggressive compensation structures that encouraged its employees to maximize revenues in any way that you could.
So that would be by selling mortgages, by increasing deposits, by bringing in wealth management clients and all the rest of it.
And if you managed to provide excellent customer service to a couple of billionaires and they started giving you money to manage and that kind of thing, you could get up to $35 million a year in pay.
And this is not senior executive pay. These are just client-facing people on some level. And that is fascinating.
And that's more than Jamie Dimon, the CEO of JPMorgan Chase makes $35 million, right?
To be clear, even at JPMorgan, there are always in any given year, there are always employees who make more than Jamie Dimon.
There's always some hotshot trader on an energy trading desk or something who makes more than the CEO in any given year.
That happens in every investment bank.
But what's interesting is it doesn't just happen in investment banks.
It also happened at first republic, which is not an investment bank.
Well, now they're doing layoffs. I think they're laying off a lot of these guys, right?
Right.
The first republic bankers. Yeah. So hope they're okay.
It hasn't really been announced yet, but yeah, there will be layoffs and some people will stay at JPMorgan for a while and then leave, some will be laid off, some will stay.
But yeah, it's going to be a very different vibe going forwards.
It was making me think your number. These people are well compensated for selling products, whatever mortgages, la la la.
I was thinking about Wells Fargo where no one was well compensated and they had to sign people up for these products where people weren't even realizing it.
But their incentive only was like, so they don't get fired.
But also it was just such a badly structured incentive because the incentives were all done on the kind of like sign people up for a product.
And then somehow the underpants gnomes will wind up making money, right?
Whereas at least in first republic, you get paid when we actually make money.
And if we're making money, then you get like a cut of it. If we're not making money, you don't.
Like that makes more sense.
Yes, yes, it does make more sense.
So my number is not related to death or anything really important at all.
My number is 200.
That's the number of potential condiments that can be dispensed by Heinz's new machine called the remix, which I don't know if Felix is going to be familiar with this.
It's like the Coca-Cola has this machine called the freestyle. You've never seen this.
It's in like movie theaters, fast food restaurants where you can like you can get Coke, Diet Coke, whatever, ginger ale, but like all different combinations of it.
And you press all these buttons and you can have like a lime, Diet Coke, caffeine free, or you can have like a raspberry Diet Coke with root beer mixed in.
And like you can just go crazy mixing things.
So now Heinz is doing this with ketchup and I think it's hilarious.
You basically, you have like four base kinds of sauces. You have your ketchup, ranch, 57 sauce and barbecue.
And then you could like add jalapeno flavor or mango flavor and then you could like adjust the spice, right?
And that gets you to like 200 combinations.
Whoa, yes.
You get to dial in your personalized ketchup.
Yeah, you can create your own personalized ketchup. It's not available yet.
So you'll have to wait. And I know Felix, you will be waiting like very excited.
And this is going to be in like movie theaters and I put it on my hot dog.
Yeah, because that's what you're doing. You're buying hot dogs and movie theaters.
There's no way that's happening.
Elizabeth, do you think Felix buys hot dogs and movie theaters?
No, you could put it on your audition chips, I guess.
Yeah. Or your fries or your hamburgers or whatever. Go crazy.
But where are these machines going to be? I mean, I love this idea of a machine,
but this isn't like an at home machine, right?
I mean, it has to exist in some kind of food chain situation.
I mean, it would be incredible if it was at home, but yeah, I think it would be like at your Wendy's
or at your McDonald's or something like that.
Anywhere where fries are sold.
But I read there are technical difficulties getting it like in the drive-through and whatnot
because it would slow down the drive-through because there's so many possible combinations, right?
Oh, for sure.
The freestyle machines are always in the restaurant.
You don't want to have people like pressing all of those buttons out their car window.
That would be a disaster. But I'm into this. I'm like, I'm going to be dialing up the horse radish for sure.
Great.
Okay. I think that's it for us this week.
Unless you are one of our favorite people, i.e. a slate plus member, in which case we are going to talk about
strivers because Elizabeth had a great column about Tom Wamskans and strivers in the New York Times.
We're going to talk about that in Slate Plus.
Otherwise, thanks for listening.
We are going to be back on Monday with Slate Money Succession, the grand finale,
quite possibly the very last ever episode of Slate Money Succession in the history of the world.
Unless we do another one.
It will be a little bit later than normal because we don't get screeners for the final episode.
But it will come out on Monday afternoon sometime.
And that will be produced just like this by Jess Minn-Molly of C-Plane Almoder.
Come back for that and then come back next week.
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