Who Elected Elon?
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Hello, welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Hamlin of Axios with Emily Peck of Axios. Hello, hello. Elizabeth Spires is in Alabama somewhere. So we are back with the inimitable, wonderful and brilliant Anna Szymanski of Reuters. Hello, hello. Anna, welcome back. We...

have constructed an entire show around your wonkish predilections this week. We're going to have a whole discussion about exchange rates, which I feel like we can only have the whole discussion about exchange rates when Anna Chomansky is on the show. We are, of course, going to talk about Elon Musk blowing up the government because we have to do that. We are going to talk about the

rate cut, which happened this week, and whether it was rather more hawkish than people thought. We're going to talk about the strikes that are happening this week at Amazon and Starbucks, which are mostly not happening, but definitely there are some that are. We have a Slate Plus segment on gifting strategies. It's a good one this week. It's all coming up on Slate Money.

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slow Christmas week where nothing happens. And obviously, if you're Elon Musk and you're a volatility junkie, the last thing you want is a slow week where nothing happens. And so he decided to blow up the government and create a completely unnecessary government shutdown, Emily? That...

It's what it looks like, Felix. So we are recording on Friday afternoon. There is a chance, I suppose, that the House could vote again. And this continuing resolution that they revamped because Elon Musk said so could, I suppose, pass, but it's not looking good. And yeah, we have basically this unelected billionaire that appears to run the government from the command center of X.com. Yeah.

He tweet stormed 150 tweets about this 1500 page bill that had been painstakingly hammered out in Congress. And on the basis of.

a bunch of misinformation and disinformation about what may or may not have been in the bill. He basically blew it up by power of Twitter megaphone. And now we are not only going to have a government shutdown, but also there's very little clarity on what exactly he's demanding or what could persuade

Congress to cobble together something that works. It does seem like you're also getting some pushback from certain elements on the Republican Party as well to any attempts to raise the debt ceiling, which seems to be the only positive thing that could come out of this entire debacle is that maybe we could get rid of the debt ceiling. But it seems like there is a segment of the Republican Party that's actually pushing back on Trump on that. This is wonderful. Now that Trump is president-elect, like all presidents,

presidents and every sensible person, and we have talked about this ad nauseum on slate money, he realizes that the debt ceiling is incredibly stupid. And for about

five minutes on Thursday, I had a brief glimmer of hope that he might actually abolish the debt ceiling. When the bill came to a vote on Thursday night, it suspended the debt ceiling for two years rather than abolishing it. I'm like, well, that's no use. We've got to abolish this thing. I know that we don't have Elizabeth Spires on this week, who's the expert on all things politics, but I feel like maybe the...

The moment has passed for something sensible to happen, and now the chances of actually abolishing the debt ceiling remote again? Well, it seems like the debt ceiling is used for leverage by whichever party, you know, is out of power. And in this case, it's the Democrats who want to reserve the right to

use the debt ceiling, essentially, especially when Trump tries to extend his tax cuts next year when he actually is president. I mean, I think it is worth emphasizing that he's not actually president right now, just saying. But the Democrats, one of the reasons they kiboshed the compromise bill on Thursday night was they said, we don't want to give the Republicans this debt ceiling extension because that would give them a free pass to cut taxes and not have to worry about how much

it costs, essentially. So it seems like when push comes to shove, when they're on the other side of the coin, they're now using the debt ceiling just the way the GOP does typically, right? To get what they want. It's become a point of leverage. And I know as Felix noted earlier, it did seem like maybe there was a chance for a moment that out of some of the Trump chaos, we were actually going to get

someone who's going to be like, okay, we're done with this thing, so no one can use it. But Emily, as you said, and I think honestly, in this instance, it was both from the right and the left. There was actually pushback towards apparently keeping the debt ceiling. And then that gave Trump enough time to take a breath and be like, oh, well, maybe we'll actually just push it out until the next person is in office, which again, is essentially useless. I mean, it's really astonishing to me the role that X.com and misinformation played in

like you were saying, Felix, and what Elon Musk did here. I mean, there's definitely, you can go online and read a bunch of articles, but he was just tweeting misinformation about the CR in the first place saying, you know, it gave lawmakers like outrageous reviews

raises and pay that it spent i think he's i hope i don't get his lies wrong um spending billions on the stadium for the washington football team um just just all kinds of there was like 60 billion dollars of aid to ukraine which wasn't there was not right and it so it disturbs me i

I think even more than like, okay, this billionaire can have his way and is maybe helping the president-elect run the country. But like, he's just making stuff up to do it. And the media landscape right now is so fractured that that's possible. Like, he can just lie and it works. My question here is that Elon is spending more time with Trump than I think probably anyone else on earth. I mean, probably more than J.D. Barnes.

Almost certainly more than Melania. Melania's like, thank you. Thank you so much. And one imagines that they're kind of on the same page working in concert.

Do we think that Trump is telling Elon to do this or encouraging Elon to do this? Or is this Elon just being Elon, waking up at two in the morning, tweeting up a storm because he's crazy, suddenly deciding that he's going to endorse the AFD in Germany and all manner of other crazy stuff. And Trump really has no control over him because no one has any control over him.

I would guess it's the latter. Obviously, I have absolutely no clue in reality what the day-to-day relationship is between Trump and Musk, but it strikes me just based on Trump's personality, I would have a hard time believing that he would want to go through someone else and then have someone else get the credit for the fact that this bill got kiboshed. To me, if anything, that means that Musk might not be long for this administration if he continues to do this and he continues to outshine Trump, but that's a separate issue.

Yeah, that is one of the Democrat talking points. The standard Democratic line now is to talk about President Musk and Vice President Trump in order to get Trump angry at Musk, clearly, and in order to create the massive fight between them that is inevitable at some point. Oops.

So why are Musk and Trump so close? Is it simply that Musk is the richest man in the world and he has unlimited funds and can help Trump like wield power? You know, when Musk threatens people that anyone who votes for this bill deserves to be voted out in two years and we know he can primary and fund campaigns as many as he wants, unlimited. Is that the thing that attracts Trump? Just like the unlimited funds to sort of back up

power, like not only the social network power, but just the financial wherewithal. Like, I don't, I guess I don't actually understand why Trump is so into this guy. I think Musk has two things that Trump really values. One, as you say, is bottomless pockets. And I've been reading for many, many years about how the amount of money in US politics is

large though it is, is really very small compared to the amount that US politics can change the fortunes of individual companies. And that weirdly, you know, you might expect it to be orders of magnitude larger given how important politics is to the fates of individual companies and the economy. Musk seems to be leaning into that and saying, like, I can spend as much as everyone else combined if I want to. And

I'm willing to do that. And Trump is finding that obviously very attractive. And at the same time, Musk controls the single most powerful news outlet in America.

So that helps too. And what's more, Musk has shown himself willing and able to put his thumb on the scale of X and make it lead and right. There's no doubt that Elon's control of X was instrumental in handing Trump the decisive victory that he had in November. Is there a comp...

to Elon Musk in United States world history where someone has just like

elbowed with money his way into oligarch status. The one who springs to mind would be Silvio Berlusconi. No, definitely. I mean, I think you could also look throughout U.S. history during the period of time during like the Gilded Age where no one remembers the names of any of the presidents. And part of the reason that no one remembers the names of any of the presidents is because they didn't have nearly as much power as the people in business at that time. So I don't necessarily think this is completely unprecedented, but what is just the...

Obviously, you add in technology and the speed of communication, all of these different things that I think it amplifies both when you have someone who is that wealth as well as someone who is essentially controlling such a large swath of media at that time. I mean, I do think it is legitimately, in that sense, a little bit different than what we would have even seen in the past. And Felix, I do agree. Berlusconi is a decent comparison. One of the things we have seen in the past, like if you look at, say, there are

Russian oligarchs back when they controlled Russia, they were content to wield their power more or less behind the scenes, much as the Gilded Age oligarchs did in the 1920s in the United States. The difference with Musk and Berlusconi is that they actually want to be out there front and center taking credit for pulling the strings. And that is weird and

Pretty rare. It's just so brazen. It's like there's no shame at all. I mean, we knew this about Trump, obviously, for a long time. But I guess this is just the natural result of that shamelessness, just to be upfront about I'm buying influence. I'm buying the government. I'm buying the president. Here I am. Follow me on Twitter. Maybe if you want to be an optimist, you could say that maybe bringing things that were happening behind the scenes, but bringing them out front is

maybe makes it more likely that at some point you could actually get an attempt to, I don't know, amend the situation in some way, pass laws in some way to make it less likely that this would happen in the future. But the reality is that, I don't know, based on everything we've seen in the last,

eight years, 10 years, I have a hard time believing that anything is going to happen to fix this, but you don't know. I mean, I think the key would be what it leads to, right? If all that happens right now is that we have some chaos for a little bit of period of time, and then at some point, Musk gets bored or Trump gets annoyed with Musk, and then this breaks down, then that is what it is. But if this continues and there are potentially...

legitimate damage that is done, then who knows? Maybe down the line, this could be the thing of like, okay, you're bringing something from behind the scenes. You're bringing it in front of the public. I don't know. I'm trying to be an optimist here and saying maybe there's a way that that could lead to positive change, but I'm not much of an optimist. I mean, they could make things so bad and break them so badly that there would be some kind of

backlash and some kind of legislation but it just it doesn't it seems more likely that other billionaires will follow musk's lead and spend more openly and i mean that's already happening and more publicly support trump and more publicly kiss his ass and you know yeah i'm not sure like we're seeing you know mark zuckerberg and mark benioff and all of these like silicon valley types like donating a million dollars to trump's inauguration campaign and yada yada but that's

a very different type of us kissing from the going up on stage during a campaign, jumping up and down and giving him $250 million. You know, it's like, it's just a whole other order of magnitude, not to mention they don't control a social network like Musk does. The thing that I'm kind of looking forward to in my sort of journalistic, you know, chaos is good for journalism way is, as I say, the inevitable blow up between Trump and Musk when Trump

Musk, you know, does a Scaramucci and goes from being a massive Trump supporter to being a massive Trump opponent. Then what happens to the Republicans in Congress, right? How much influence does he have over the Republicans in Congress, given the size of his megaphone and given the size of his wallet? It's not zero, right?

How big is his megaphone really? Because we know Twitter has seen an outflow of users since Musk bought it. We know advertising revenue is down, right? Really? Is it so influential? Felix, you've now called it like the biggest media... What do you call it? The biggest media property or biggest media company? Are you sure? Yeah, I am sure because...

At least within the Republican Party. The exodus from X has been... Just liberals. Democrats, liberals, and a few independents. But in terms of the influence that it has in terms of driving opinions among Republican voters, it is unrivaled. It is an order of magnitude more powerful than Fox News at this point. That's truly terrifying because it's just lies and misinformation. It's like...

Just completely misinforming voters. And once everyone just believes your lies, you can really do anything you want. Right. I don't think there's any reason at all to be optimistic. And I actually, everyone keeps talking about this inevitable breakup between Trump and Musk. I just don't see it happening. Musk is really powerful and Trump likes power and he likes money. And like, yeah, he could break up with this, like a Scaramucci or a Michael Cohen, because who are they?

You know, they can't bankroll anyone. They have no megaphone. But Musk is powerful on his own. He actually does not need Trump, really. And Trump, he just I don't I just don't see them. I don't see them splitting. I bet on it. Oh, we have a bet coming up that you're about to win. Do you want to replace it with a new bet?

I wouldn't add a thousand. No, I talk offline. Now I'm curious. We have this Bitcoin bet, Anna. People can listen to past episodes about it. But Felix is about to lose, I think. I am about to lose the bet and I am about to be forced to spend a thousand dollars on a Bitcoin ETF. And there is nothing that I want to do less. While Bitcoin prices are at record highs.

Yeah, at some point on this show, we should have a conversation about the natural reluctance that people have to buy anything when it's at a record high because they feel like it's gone up already and there's mean reversion and therefore it's more likely to go down. Even though that kind of strategy of buy low, sell high tends to underperform.

the alternative strategy of momentum investing, which is if something is going up, just buy it and don't pay any attention to how expensive it is. Yeah.

Yeah, and it's not even just momentum. It's just the idea of not trying to time the market. Exactly. Yeah, if you're talking about something that has no underlying value, then that might be a separate question. But yes, in general, not trying to time the market is probably a plus. Bitcoin has no underlying value. So if I'm buying into Bitcoin at $100,000 per Bitcoin, then who knows? Maybe we'll go to a million.

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We should talk, though, about actual things that affected the economy this week. Foremost among them, a surprisingly hawkish rate cut from the Fed. Anna, you're our resident Fed watcher. Everyone expected the Fed to cut by a quarter point. The Fed did cut by a quarter point. Everything was in line with expectations. And then suddenly the stock market tanks and bond yields rose and

What was it about this rate cut that was surprising? So it wasn't the cut itself. It was the messaging around the cut. And it was also the projections that were released with the cut. So everyone knew 25 basis points that was priced in. God, please.

Dot plot, yes. So basically every quarter, this statement of economic projections is released, which includes, as Felix was saying, the dot plot, which is where the Fed basically says where they think rates are going to land, how many cuts that are going to happen in the next year or two years. So what happened this time around was the number of cuts that were priced in for the next year were halved. It went from four to two. And then on top of that, the projections for inflation also increased slightly.

There was also dissension on this cut. And then also some of the language that Powell used was indicative of the fact that they think that rates are not going to come down as much as people anticipated previously. Oh, other thing I forgot to mention was, of course, the neutral rate, which is seen as the interest rate that neither stimulates nor restricts economic growth.

the expectation for what the neutral rate is also went up. So all of these things suggested to the market that interest rates are going to remain higher than they had previously anticipated. And interestingly, the market is even more hawkish than the Fed in that the market is even pricing in fewer cuts next year and fewer cuts moving forward

indicative of the fact that it believes that basically we may get 50 basis points more maybe of cuts and then we're done, which is significantly different than where we were even a year ago. So let me ask you about the Trump angle to this, because if you ask Jay Powell at a press conference, you know, are you swinging to hawkish views

because you reckon that Trump is going to get all tariffy and that's going to cause inflation and you're going to have to keep rates higher as a result. He'll be like, no, I'm not pricing in anything from Trump. I'll deal with Trump as and when Trump does stuff. But it doesn't seem to be entirely coincidence that this swing to hawkishness, not only in the Fed, but also in the market, has coincided with this realization that

Trump is going to Trump and that might have to end up having a

significant influence on monetary policy. And essentially, Powell basically admitted that. Of course, he did do the standard answer of, no, of course, you know, we're not thinking of politics. But then when people pushed him on it, he was like, well, yes, some of the members of the committee did in fact consider what might happen in policy in terms. So he basically all but admitted that, yes, of course, the fact that Trump has now been elected, the fact that he has far more power in terms of what he can do moving forward. So yes,

What came out of the meeting was clearly the acknowledgement that the Fed is taking into account the fact that we now have a president in power who is putting forward policies that have the potential to be rather inflationary. Now, of course, whether they will actually be inflationary or not, whether what exactly will get passed, what the impact of that will be, how other countries will respond, no one actually knows that. And the Fed is not going to act to preempt that. However, I think it makes sense.

that the Fed is probably going to be more cautious moving forward as we go into an environment where the risk seems to be a little bit more on the overheating inflation side. Now, the weird sort of right turn that I want to make here is to ask you a question, which may not actually be as weird as it sounds, but what does all of this mean for Brazil?

It was the question really everyone was thinking of like, what does this mean for Brazil? So the reason that people are talking about Brazil is that Brazil's RIAI, their currency, is the worst performing currency this year. And that is really for two reasons. A, there's the general issue that when people expect interest rates in the US to be higher, and that means the dollar is going to be stronger, then that is obviously going to be very negative for it.

A lot of currencies, because obviously the dollar is strong in relation to other currencies and especially emerging market currencies. So there's a general trend. And then there's a specific trend to Brazil. And that's the issue that Brazil has a large budget deficit. They have a fairly high debt to GDP level. And almost more important than that, the market has very little faith in this current government of their president Lula, who recently also had brain surgery. Side note. Twice. Twice, yes. The fact that you had...

You have both a local issue of concerns about their fiscal health and you have this general issue. You bring those two things together. That's the reason why the Rai has been so weak this year and especially so weak since Trump was elected. And we are getting scarily close to an actual financial crisis in Brazil. It seems like the central bank is in there intervening in the currency markets to try and stop the Rai from...

clunging even further than it already has. And as we all know, when it comes to central bank interventions like this, they basically never work if you're trying to prevent a big move in a certain direction. If you're trying to work with the market wind behind you, then central bank intervention can work. But this kind of thing, they seem to be incinerating tens of billions of dollars for no reason.

I was going to ask, one of the pieces we read in the prep for this conversation mentioned that Brazil has very low unemployment right now and the economy is growing. So...

What's the problem? It's growing because they have completely unsustainable fiscal situation. So you can't just keep taking on more and more debt. If the productive capacity of your economy is not actually growing, you're just simply throwing more money into the economy. That's completely unsustainable, especially when you have very high borrowing costs.

So it also is the point that if you do have a better financial picture, that also should give you the leeway to be able to make more cuts. And the fact that the government is seen as being fairly unwilling to do that, or they're putting forward fiscal measures, but they're very watered down, they're putting forward spending cuts, but they're watered down.

That makes the markets very nervous. And Brazil is an economy that it requires foreign borrowing. It needs capital from outside. And the rest of the world does not trust the fiscal situation in this country. And there's the concern, even though you have had, not only have you had the central bank working directly in foreign currency markets, but you've also had significant increases in their borrowing rates, their policy rates. They raised it to 12 and a quarter percent. They've said it's going to go to 14 and a quarter percent by March.

But the concern is that if the fiscal situation doesn't get fixed, the monetary policy situation won't matter. Is what's happening in Brazil sort of an extreme version of what's happening in Europe, where it's like fiscal discipline is desired, but they can't do it? If in France you have this government who's being forced by the bond vigilantes to make cuts and the politicians don't want it, that is kind of the same dynamic as what's happening in Brazil, where...

Basically, to your point, the markets are saying, look, the economy is healthy. It is growing. Unemployment is low. Under any normal basic Keynesian principles, this is the time when your deficit should be shrinking. In fact, your deficit is growing and is now nine and a half percent of GDP. That is completely unsustainable, especially given your borrowing costs. You need to do something about this.

Lula is, you know, a leftist. He is reluctant to sign on to this kind of thing, but a little bit like Macron, he feels like he has to, so he eventually signs on to

you know, a sort of watered down version of that, which the markets just don't trust. And as Anna says, if the markets don't trust Brazil, then Brazil can collapse very quickly because without that constant inflow of money that the government is borrowing, then you have a financial crisis. If the markets don't trust France, it's less dangerous, right? You just get a kind of increase in French threads, but no one is out there saying like France,

France is imminent default or anything like that. Exactly. Right. That's why the US has more room to run a deficit, has more room to be fiscally irresponsible because we don't have to rely on other... We can just issue debt, borrow as much money as we want. Our debt is much cheaper. We can print our own money. And also, for all that our fiscal situation is not great, we are not running a deficit of 9.5% of GDP. Right.

Right. And for as much profligate Biden spending, it wasn't anything like what this Lula dude is doing or has done. Well, also, the U.S. almost has the opposite problem. We have so much capital flooding into the U.S. that we have, like, if you just look at the percentage that U.S. equity markets make out of global equity markets, how we're just pulling away so much capital is coming here as part of the reason that the dollar is so strong.

So we certainly don't have the concerns that whether you're talking about France and Europe or whether you're talking about, obviously, emerging economies. But I actually think this is something we don't have to go into this too much. But I do think as people look towards the next year and what I would argue they should be paying attention to, I would argue that you should be paying much more attention to currency markets than you do to like what's happening with the S&P or what's happening with stocks, because especially as we look to.

world with Trump, a world with tariffs, you're going to see a lot of things happening in currency markets. The dollar is very strong. Obviously, that means it's strong in relation to other currencies. And what you're going to see is you're going to see a lot of countries either letting their currency weaken somewhat because that helps them or because the dollar becomes too strong. That makes distortions in their economies, in their markets. They have to act. So I would really, really advise people to pay attention to what happens in the currency markets in the next year. One of the weird economic tautologies that

I don't ever entirely understand, but I like to sort of trot out from time to time is this idea that the current account deficit is a capital account surplus, which basically means that if you are a country like the United States that is running a massive trade deficit, the flip side of that is that there's huge amounts of money flowing into the

It's an arithmetic necessity. Yep, has to. People often think of this as...

as, you know, well, that's just the flip side of having a trade deficit. If you have a trade deficit, then that means the money is going to flow in. But in fact, the causality is not so obvious, right? And in a world like the one we're in, where you have huge amounts of money flowing into America to buy NVIDIA stock and to basically, you know, throw capital at the mega cap techs and all the rest of it, that in a weird way, kind of creates the trade deficit.

It does. It does. Now, this is actually it's something that, you know, Michael Pettis is of the world talk about quite a bit. And again, it's complicated, but you can see it as if you have we have open capital accounts. And if you have lots of capital coming in, what that means is it does prop up your currency. And if it really strengthens your currency, what that also means is that it makes your manufacturing sector, it makes it a lot less competitive.

because your currency is so strong. And so what that means is that that also means it's going to be cheaper to buy products from other countries, which also then means you're more likely to have a current account deficit. So these things, in terms of figuring out the causality, it's not as simple. And I feel like I agree with you. I truly, I got lost. I'm so sorry. I,

I thought I understood, but then I got lost because you're talking about trade deficit. You know what, Emily? I have a plan for this. I think what we should do is that next week on Slate Money, we should get a Nobel Prize winning trade economists to explain this to us. Well, yeah. I mean, I was going to interject and say Paul Krugman does a great job explaining the relationships between tariffs and currency in our episode next week.

But then you started talking about capital inflows, which is not something Paul Krugman talked about. And I became just incredibly confused. So can you just indulge me? Because I bet there are listeners who are in my position right now. I'm guessing. Okay, so trade deficit in the US, that means we're importing more than we're exporting? Yes. And if we're importing more than we're exporting, then our dollars are...

being converted to foreign currencies and leaving the country? Yes. Okay. But then at the same time, dollars are coming into the country because people want to invest in stocks and other stuff. Yes. So it kind of washes out and the trade deficit doesn't matter as much because it's balanced out by the inflow of capital? The point is that you have these different pressures on the dollar, right? We are selling...

dollars and sending them out of the country when we import stuff. On the other hand, there is a flow of dollars into the country from everyone who wants to buy Apple stock, right? And so the way that you balance out those pressures one way and the other way is through the price mechanism, which is the exchange rate. And so generally speaking, as the dollar strengthens,

That makes imports more attractive, exports less attractive, and therefore serves to widen the trade deficit. And as money comes into the country because people want to buy the S&P 500, that also serves to strengthen the dollar because people are buying the dollar and so the dollar goes up.

And so in terms of the trade deficit, in a weird way, if people are throwing money into the country to buy the S&P 500, that will strengthen the dollar. And when the dollar strengthens, that means a higher trade deficit.

Okay. Which weakens the dollar, but it's balanced out. No, the trade deficit, when the dollar strengthens, that causes the trade deficit to go up. Yeah. No, and to be fair, it is actually, we don't have to go the whole thing. The mechanics of it are a little complicated. There's like simple mathematical equations. We can be like the current account and the capital account have to equal. But in reality, it is definitely a complicated thing. But I do think the simple way to think about it is that if it's cheaper to buy goods from other places, people are going to buy goods from other countries. And

And if our currency is stronger, that means it's going to be cheaper to buy goods from other countries. So it's partly how you can see this relationship between trade and currency. And so even if tariffs go up, if the dollar keeps getting stronger, kind of, I think we talked about this with Paul Krugman. Yes. This is a really good point that exactly, because that's actually what you saw happen last time with China is that they basically allowed their currency to weaken. And so then that offset the impact of the tariffs. So.

And when Trump is talking about trade deficits, he's not thinking about the dollars flowing in to buy stock or any of that. Does Trump have a clue what a capital account surplus is? No, he doesn't. I don't think so. So he should really learn about that so that he could better understand that.

the situation with the economy. Maybe he should hire Gary Cohn to be one of his advisors and Gary can explain it to him. I mean, Scott Besson really does understand this stuff. What's interesting is we have no idea the degree to which Scott Besson is going to have any control over Trump, over policy, over what happens. If Besson does become a key trusted advisor, then at least

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So I was watching the news on Thursday. Well, I don't have a television, so I was seeing clips on some kind of social media site showing Teamsters getting arrested in Maspeth in Queens, where they were out on the streets striking against Amazon. And it looked kind of chaotic and almost violent, but

Emily, what is going on? There are Teamsters versus the police and arrests being made. And Amazon is somehow part of this? Yeah. So on Thursday morning this week, the Teamsters launched a strike against Amazon in seven warehouses across the country in Queens and Southern California and Illinois. Now, Amazon has hundreds of warehouses. So the first thing to know about this strike is you still get your packages on time.

Maybe a few people won't, but it's not going to really affect Amazon's run of business. But

Anyways, they have gone on strike in these warehouses and it's getting a lot of media attention. I can't speak to the specifics of what happened in MassPath with the police, but like a story like that is kind of like exactly what the Teamsters want. You know, when they launched this, they want attention during this peak season for Amazon. This is Amazon Super Bowl. It's the holiday season. The few days before Christmas is when Amazon is like,

at their peak, right? That's when people are desperate for presence and like they want their stuff to come exactly when Amazon says it's going to come. And it's also, it's the first strike against Amazon since the union teamed up with the Teamsters, which happened last summer. So it's sort of like baby's first big labor action. Oh,

Okay, so let me let me just ask some basic questions, because I haven't been keeping up nearly as much as you have. Number one, are Amazon's warehouses unionized? And number two, is the union that they're members of the Teamsters?

A few of Amazon's warehouses and drivers have unionized. I think we spoke when it happened when the Staten Island warehouse unionized and started all of this off and they had a real election and it was certified by the NLRB. Some of these other warehouses have unionized, but they haven't gone through the NLRB election. That's still okay in labor law. You can still

have a union and vote to unionize without, you know, the federal agency helping you out. There is a dispute. Some of these union members aren't employed by Amazon. They're employed by contractors, the drivers, especially these contractors who, you know, contract with Amazon and all they do is drive for Amazon. So,

There's sort of this big dispute about do these drivers actually work for Amazon or not? Of course, the union says they work for Amazon. Who else is there? Amazon tells them how to do their deliveries, sets the pay, sets the standards for how they work, all of this. And when you talk to Amazon about the strike, they're like, most of these people don't even work for us. What even is this? And there's litigation about that. The NLRB has said, yes,

They should be considered employees of Amazon, but the NLRB is about to be taken over probably by a bunch of Republican Trump appointees. And, you know, the union can't really expect them to have the backing of the NLRB anymore after January 20th. So what difference does that make if these drivers are not considered to be Amazon employees, but they still want to strike against Amazon? Yeah. Why does that matter?

whether or not they're employees? So the reason for the strike is because the Teamsters and the union members haven't even been able to get Amazon to sit down at the negotiating table and hammer out a first contract. And as we all know, a contract is everything when you're in a union. What's the point of being in a union if you can't sit down with your employer and say, okay, this is what raises are going to be, this is what benefits are going to be, this is my protection against getting fired, these are the safety regulations you'll follow. That is the whole thing, right?

Amazon hasn't come close to the bargaining table at all. And if it can get rulings saying that these drivers aren't actually employees and saying that Amazon doesn't have to bargain with them, that their whole deal is going to crumble. So then a lot of what the people going on strike right now really are asking for is not even the specific things related to pay or work, all that. It is explicitly to be recognized as employees of Amazon that Amazon has to speak with.

Yeah. Recognize us, recognize our union and come to the table. There aren't even like demands yet of like what pay raises should be or benefits. And you could see sort of like a counter example, a parallel example with the Starbucks union, which also said it was going out on strike as we are taping on Friday, these workers in some Starbucks stores are going out on strike. Those guys are at the table negotiating table with Starbucks and their strike is more like

we've been negotiating, but we're not getting anywhere. We want the contract to be like this and you're not giving that to us. So it's like a more traditional kind of thing. Whereas like Amazon is more like back at square one. So tell me about the Starbucks strike. Are you going to be unable to...

Order your Starbucks in the morning? Again, there's like 500 stores, 535 Starbucks stores in the country that have voted to unionize. That's like out of like 10,000 stores in the US. You'll probably be able to get your gingerbread spice latte or whatever you want from Starbucks. It's just a matter with both of these actions of like keeping these workers in the public eye, especially before the next administration comes in. And it just sort of highlights how hard it is to unionize these

Like back in the day when like auto workers would unionize, they have like one factory, right? Everyone can strike at the one factory. It's very clear how it's affecting the employer's business. But the case of Amazon and Starbucks, it's like these workers are spread out all over the country and all these like little workplaces everywhere. It's just...

so much harder to get any momentum or really like develop any leverage than it would be with a more traditional scenario. I've been wondering about this for like the past couple of years as you've been reporting on all of these unionization drives and whatnot.

Can you just explain why it is the unionization happens on such a tiny granular level at the level of the store or level of the warehouse and why a union can't just come along and say, I want to have a vote among all the workers. And if all of the workers vote to unionize, then we are recognized for everyone.

That is, I think, a flaw of labor law and a flaw of how these workers have gone about organizing. Like in Starbucks case, they've just gone from store to store rather than some kind of national, like, let's all vote at once. And there's nothing in the labor law that requires, like, there's no...

rules that say, okay, Starbucks, 500 out of 10,000 stores, you have to now bargain with everyone. It's just a piecemeal labor law with very little protection and very little incentive for a giant trillion dollar company like Amazon to even follow the laws that do exist. Let me...

put the devil's advocate case to you which is that the reason that unions aren't having big votes among all the workers is because if they did they would lose yeah that's true that's possible

I mean, we know Amazon had that. They lost the vote in, was it Alabama a couple of years ago? The company fights really hard against unionization. Public sentiment for a long time was just, I mean, I feel like Anna and I used to fight about it, but like people don't like unions. They think they're wasteful, corrupt, et cetera, take people's money out of their paychecks and whatever.

Yeah, they might lose. That's true. And I also think you could make the argument of like, look, I don't know the specific issues that a specific group of employees in an area might have. But I mean, you could make the argument that maybe the pay and benefits they're getting is...

reasonable. And so they're less likely to want to strike and put themselves at risk. So I mean, I do think that it's on the one hand, yes, I think it's reasonable to say that there are pockets of this economy where obviously workers do not have a tremendous amount of power. And it makes sense that they might want to come together to strike. But as Felix is also indicating, if

it may be that a lot of workers simply aren't interested in that, then we may also be doing them a disservice of trying to say like, well, that's because people are just telling them that unions are bad. I mean, it could be just that when they look at their own situation that they determine that this actually isn't the best thing for them to do. Yeah, and also, I mean, unions aren't good or bad yet in the Starbucks or Amazon case. They can't even get to the contract and make a case that they're good. It's so nascent. So that's another sort of like knock against them. And then there's also the sort of, I was speaking to,

someone yesterday who was talking about Walmart. And you remember for like years, I want to say like decades at least, there was a big push to unionize Walmart workers and it completely failed. And the woman I was speaking to, a professor, you know, labor professor was like, but actually the movement succeeded because Walmart did change the way it treats its workers. It increased pay. Benefits are way better than it used to be. And that was because there was this big push and there was a lot of negative publicity about how they treated their workforce. And

It seems like almost like that's probably what happens with Amazon and maybe even with Starbucks is like the unionization efforts fail, but there's like some incremental improvements for the workers. And that's maybe the best you could hope for in the US where labor law, like I said, is just so weak and there's not much.

that can be done to enforce the rules. I have a question. I'm not sure if this is something that you were reading up on or not, but I know that weren't there also Amazon workers in Germany who were looking to go on strike, which I thought was interesting because I know Germany has very different labor laws and has labor laws that tend to be more at the kind of sector industry level as opposed to kind of a local level, but it seemed like there was still, this was still involved in it. So what have you been hearing about that?

I think I'm in the same boat as you where I heard like Amazon workers in Germany are going to go on strike in solidarity. But I haven't heard much beyond that, to be honest with you. It's not because they're upset about how Amazon is treating them in Germany. It's just that they're like a standard European Union move of we're on strike, therefore we have to be on strike. Yeah, I think so.

And when you mentioned sectoral unions, that also seems to be something that's happening in the U.S. And you know, in California now they have a different minimum wage for fast food workers. I was looking the other day at a list of like all the minimum wage increases that are going to go into effect in 2025. And there's like a few like healthcare workers, I think in Minnesota, make like a higher minimum wage. And it looks like this is like a trend that's happening everywhere.

I think unions and labor groups are a little bit walking away from the idea of going from store to store or warehouse to warehouse to organize and now trying more of this policy push to raise wages sectorally. I think that's a thing to watch and that's happening too. Well, that's an interesting thing to think about too because –

I do think sometimes there's a tendency to look back at a certain period in time where unionization made sense based on how the economy was structured, based on the way people worked, especially when it was a more manufacturing-based economy. And as you shift towards a different type of economy, maybe unionization isn't the ideal way for people to actually get the changes they want. Maybe there are other ways that would be more efficient. I don't know. I

I don't know. It just seems like labor in the US, so powerless. There needs to be some mechanism. Maybe it's the sectoral industry level minimum wages, but that seems like such weak tea compared to the origins of unions where you got the five-day work week, you made big gains, you got overtime pay. Getting a slightly higher minimum wage for fast food workers just

it does not compare. And it's very worrisome. Like people like Elon Musk, who now has all this power, he has through SpaceX now a lawsuit, just like basically challenging the constitutionality of the labor board. And it's like, well, without that, then you have zero enforcement mechanism for labor laws. And it just seems like a really bleak time for workers. I'm you're depressing me. I'm sorry. People can work remotely. That's fun.

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Anna, what's your number this week? My number is $4,350, and that's dollars. And this is if you are looking for a gift for the fixed income nerd on your list, there is a...

A Liberty Bond from 1918. And importantly, this was the fourth edition, which was the one that basically actually defaulted because it had a gold clause in it. And in, I think it was like 34 or something when the bonds were called, they said that they were not going to actually pay them back in gold. And they weren't going to account for the fact that actually the US currency had devalued based on gold. So technically, this is a bond that the US defaulted on. And on eBay, you can buy it with all the

the coupons attached for $4,350. Oh, wait, what's the face value? So it was a $50 bond. I feel like that's not a bad rate of return on that bond. Yeah, that worked out.

For this one? You could do the math on that. I'm guessing this isn't the original holder, just a guess. What's the CAGR on that? It was a five and a quarter coupon. Oh, wow. I don't know. I'll take it. Yeah, no, if anyone wants to buy that for me, that would be great. Thanks in advance. I have a number that was given to me by my wife. She says, Felix, you need to do this number as part of your numbers round.

And the number is 551. And I don't really know what 551 means. All I know is that when I got my beloved teddy bear, Big Blue Ted, back from the teddy bear hospital in Japan, when I went to Japan on holiday, it came with a bunch of tags and notes and

the number attached to him was 551. So I think he might be the 551st teddy bear that the teddy bear hospital worked on. And there are all manner of other little tags, like 1, 2, 3, 4, 5, 6, 7, 8 different tags plus the receipt showing the various jobs and works that they did on him in terms of

polishing up the color and taking off any sort of mold and cleaning him. And most importantly, completely restuffing him, taking out all of the old stuffing and putting in a whole bunch of new stuffing. And at the end of this whole exercise, he came back very fat and happy. And so my great sort of present to myself for 2025 is I have a fat, happy teddy bear named big blue Ted. And if you ever need a,

super high-end reconstruction and restuffing and cleaning done on your teddy bear, especially when he's 51 years old, just go to Japan, send him off to the Japanese Teddy Bear Hospital. They will keep him for like three weeks or so and then send him back and he'll be better than you. Is it any stuffy or it has to be a teddy bear? Oh, it can be any. Okay, great. And this is one you've had your whole life? No, I've only had him since I was one. I got him for my first birthday.

Oh, only one. Only one. Sweet. For the first year of my life, I was sadly not, you know, with Big Blue Ted. Since then, I have. You were teddy-less, yeah. I was teddy-less, yeah. Do you know who gave it to you? Do you remember? My grandmother.

And you like it still. When I was younger, I had a Raggedy Ann doll that I really liked. And my grandmother was like, this thing is disgusting. And she took it and gave it a new dress and fluffed it up. And I wanted nothing to do with it after that. If it's not covered in your drool, it's not really as stuffy. I was like, I am done with her. Yeah.

Emily, what's your number? My number? See, I was a bummer before, but now I will bring hope and joy into the world. My number is three. That is three years without any confirmed sightings of murder hornets in Washington state. Woo! Woo! Because the state, after you started hearing about these murder hornets in 2020, people were very upset about them. They're like two inches, and apparently they attack people.

honeybees or something and they decapitate the bees and everyone freaked out, especially a beekeeper named Ruthie Danielson, who like mobilized the beekeepers of Washington state and the state government to eradicate the murder hornets. And they put together these kits, which apparently were just two liter plastic bottles with orange juice and cooking wine in them that worked somehow. I don't know.

But they all came together in this world, in this time of isolation and misinformation and despair. And they work together as a community. And no one's seen a murder hornet in three years. And all I can say this holiday season is, if anyone tries to serve you a drink which is made up of orange juice and cooking wine, just say no. Don't do it. If it's bad for murder hornets, it's bad for you too.

Could drive you to decapitate bees. Exactly. It's a good world to live by. Well, I think that's it for us this week. We will have a Slate Money segment devoted to the whole question of holiday presents, which I believe Emily Peck has opinions on. But other than that, thanks for hanging out with us this week. We will be back next week with Paul Krugman, who will be dropping a whole bunch of knowledge.

And many thanks to Jasmine Molly and Shana Roth and Ben Richmond for opening up the Slate offices for me and everyone else at Slate. And you guys who keep on emailing us on slatemoney at slate.com and we love you for it. So we will be back next week with more Slate Money.

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Happy holidays, everyone. Here at Slate, we take karaoke pretty seriously, especially around this time of year. So for this holiday season, we are bringing that spirit straight to you with a special karaoke-themed episode of What Next Plus.

You heard that right. I'm Mary Harris, the host of What Next? And I've teamed up with Anna Sale of Death, Sex and Money to dive into the joy, chaos and catharsis of karaoke. You're going to hear Slate staffers and friends share their ultimate go-to songs from ballads that bring the house down to anthems for this moment we are living through right now. Plus, you'll get a playlist of barn burners and bops to sing along to at home. Head over to the What Next Plus feed and listen now.