Americans Push Back on Mass Surveillance & Dallas Is the New Wall Street?

0:01Marketers, tell us if this sounds familiar. You invest in something that seems incredible, like millions of views, but then don't see any revenue. Instead, invest in what looks good to your CFO. LinkedIn Ads generates the highest ROAS of all major ad networks. Spend$250 on your first campaign on LinkedIn Ads and get a$250 credit. Just go to linkedin.com slash mbd. That's linkedin.com slash mbd terms and conditions apply good morning for daily show i'm neil freiman and i'm toby howell

0:32Toby:today what's fueling the backlash to flock cameras then why wall street is twos in texas it's tuesday august 11th let's ride

0:48Toby:we've all been on some nightmare flights but nothing quite like the one experienced by porter airlines passengers on Thursday. As a flight from British Columbia to Toronto was preparing to take off, a child refused to sit down and buckle their seatbelt despite desperate attempts by parents and the crew. This kid was stubborn and simply wouldn't do it. So the flight had to be canceled and all the passengers had to leave the plane. To make things worse, it was super late past 1230 a.m. So everyone had to go home and come back to fly out the next day. Toby, they might have to put this family in witness protection.

1:24This is the final boss of babies on planes. We've all sat next to one that wouldn't stop crying, but a screaming one that won't sit down and makes you miss your flight. That's some children of the corn type stuff right there. I feel bad for the parents. I mean, a toddler meltdown is an unstoppable force. You can't control when or where it happens. My mom, true story, once locked me out of the car before I settled down. It was very effective. But obviously Reddit has complained about this in the past. One poster replied to a similar incident saying, I would seriously pay extra to go on adult-only flights.

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2:50Toby:This just in, Americans don't like being mass surveilled. This summer, opposition to flock cameras sprouting up across the country has reached a fever pitch, maybe even surpassing the outrage directed against data centers. In July, more than 20 local jurisdictions canceled their deals with flock or made plans to, the highest amount for a single month on record. In response to public backlash, Los Angeles hit pause on 138 pole-mounted security cameras operated by Flock. In other communities, Flock cameras have been vandalized, and officials have put bags over them instead of renewing their contracts.

3:24Toby:So what is Flock, and why is it so controversial? It's a company worth$8.4 billion that leases cameras to homeowners associations, businesses, and most importantly, law enforcement in order to prevent crime and track down perpetrators. These cameras run an automatic license plate recognition system that IDs cars passing by and stores the information in a database powered by artificial intelligence. Flock has been super popular with local towns and cities because it's seen as an effective tool to help catch criminals. Currently, 40 percent of all law enforcement departments in the U.S., 7000 of them deploy Flock cameras.

3:59Toby:But for many regular Americans, the cons outweigh the benefits. They warn that Flock is essentially creating a dragnet that could be abused by the government to track and target political opponents or be abused by rogue law enforcement members. Toby, I just did this yesterday. If you want to spark a debate in the group chat, you got to bring up Flock. Let's dive into both sides and see what the group chat is talking about. The case for Flock lies in public safety. Flock argues that it's a very effective crime fighting tool. uh there's a 2023 study from flock that says it was involved in preventing roughly 700 000 crimes per year that's approximately 10 of all reported u.s crimes a more recent study uh bumped that number up to 1 million cases last year they said that they solved 10 000 missing purchasing missing person searches but again the strongest evidence is coming from flock itself so take that with a grain of salt but cities have shown that it is helping boulder colorado is a good example.

4:59They claimed a 34.5 % drop in motor vehicle theft after they installed 31 cameras. So that is kind of the case for Flock is that if you have a lot of surveillance technology that can track license plates and, you know, create this net of where a vehicle has been or is going, that makes it a lot easier to apprehend these criminals. That is going to be what you're going to hear from people who defend Flock.

5:24Toby:And that is exactly why there's been such opposition to flock as well, because the fact that these cameras are so ubiquitous, there are 120 ,000 of them across the country creates what people call a dragnet or a mosaic of surveillance where they're creating the infrastructure for a government to track you. And they say that, well, maybe the intentions are good to prevent crime. The abuses could be so much greater to civil liberties. They point to perhaps ice working with flock. Flock is denied. It works with ice, but critics say it could easily get around that. And then there's just abuses by police officers or law enforcements who have access to this technology, can track whoever they want.

6:05Toby:The Institute for Justice, a libertarian public interest law firm, said they counted 30 cases where officers have used flat cameras to guess what? Stock romantic interest. So they say that there's too many pitfalls. There's too many possibilities of these cameras maybe possibly also violating the Fourth amendment and just being illegal. So they're mounting a grassroots and a legal opposition that's been actually fascinating to watch. It is also fascinating how bipartisan this is, because it's liberals, it's conservative, it's libertarians that are all kind of blending together. Republican commissioner Josh Young described a coalition against flock cameras as we had work boots and Subarus in our parking lot, and they were united in their position against flock cameras.

6:50One of the biggest and most outspoken voices against flock is Tucker Carlson. Actually, he's really taken the mantle there and pushed it into conservative politics. He calls it the largest mass surveillance operation in history, part of becoming, and he's horrified about it. So it is a wide swath of Americans who feel uncomfortable with this, which is why you're seeing, you know, groups called D flock pop up and are literally either vandalizing cameras or, you know, going through the proper channels to get them taken down.

7:19Toby:Yeah, D-Flock is very interesting. So it's this app that is a crowdsourced map of Flock cameras. It's been downloaded more than 350 ,000 times. It is super popular. The CEO of Flock has called this a terroristic organization, which he later walked back and said, I didn't actually mean that, but it is certainly a grassroots opposition that's showing up at your local town and community. It's putting pressure on local law enforcement towns and cities who have been using Flock. And we saw a lot of them cancel their contracts in July. Flock's response is that actually this is a vocal minority for every one contract that's canceled.

7:55Toby:We get another seven that sign up for Flock because it is such a useful crime fighting tool. This probably ends up in the courts, to be honest. The ACLU has sued. There's a bunch of lawsuits ongoing about whether this does violate the Fourth Amendment. Right now, courts have mostly sided with Flock saying not yet because they're not creating this mosaic yet. But once you do create that mosaic, that's where there's the potential for courts to step in and say, OK, maybe we need to regulate this or crack down because right now Flock is everywhere, but it is not winning the PR war. Up next, last week, you heard how rivers in Europe are drying up.

8:31Toby:Now it's our turn to have a water crisis. Lake Mead, the largest reservoir in the United States, has recorded its lowest water levels since it was first created in the 30s with the construction of the Hoover Dam. As of Sunday, the water was 1 ,040 feet above sea level, lower than the previous record set in 2022. It's a culmination of a slow-moving emergency that threatens water access to 40 million people across seven states in the southwest who rely on the reservoir not only for drinking water, but to power households, irrigate farms, and keep factory lights on. Lake Mead, located on the Arizona-Nevada border, is fed by the Colorado River, but years of overuse, drought, and extremely hot temperatures have depleted its reserves.

9:11Toby:And the same goes for its sister reservoir, Lake Powell, which is also losing its water. Last month, researchers at the University of Colorado found that combined, Lake Mead and Powell contain less water than at any point in their history. So how does this end? We don't know, but it's getting testy. The seven states picking up the Colorado River Basin have been locked in intense negotiations on splitting up the remaining water, but they haven't come to an agreement. And in the absence of a deal, the federal government is planning to step in and announce drastic cuts in drawing water from Lake Mead.

9:40Toby:Toby, you can draw a direct line from the water levels in Lake Mead to the ability for people to live in the Southwest. And it's looking increasingly grim. Yeah, Lake Mead supplies water to 20 to 25 million people. And that's just the actual drinking water. There's a lot more things that water is used for, like agriculture, like actually powering the dam itself, the Hoover Dam. If Lake Mead falls another five feet, some Hoover Dam turbines would have to shut down. The critical number here is 1 ,035 feet. If it falls below that, then you do have a hydropower threshold that cannot be overcome. The Hoover Dam powers electricity to serve roughly 1.3 million people.

10:25So again, it's not just about if you can water your lawn or if you can take a shower. It's about if your home will literally have a power. And that's why the shrinking, you know, containment of Lake Mead is just such a scary thing right now.

10:38Toby:So if you went to Colorado to ski this winter, you noticed that there wasn't a lot of snow. And really, snowpack is one of the main reasons why we're seeing such low water levels at Lake Mead. Last winter, as many people know, The Colorado River Basin had the worst snowpack on record. And that's just not the lifeblood of the economy in Colorado. In the winter, it also has huge impacts downstream, literally, in summer. Because if you don't have snowpack in the winter, then that stuff is not melting and it's not filtering through the Colorado River into Lake Mead. So the big problem is snow. And actually, I was in Colorado last weekend on the literal Colorado River rafting.

11:20Toby:And we had to look at the water levels because they've been low. There's just been a huge drought all over the course of the past few weeks. And we had to make sure that the water levels were enough because there's just no snow melting from the tops of these mountains. I mentioned that the scary number was 1 ,035 feet. The real scary number is actually 900 feet. That is, you know, a catastrophic scenario beyond imagination. But that's when it becomes, like me, becomes known as a dead pool. The water level is so low that the reservoir or that the water can no longer flow downstream, stream, which really does threaten everything from farmland all the way to the water supplies of Los Angeles, Las Vegas, Phoenix.

11:58This supply is basically all of the Southwest. So keep an eye on that number because each inch and each foot it drops represents billions of gallons of water that are slowly getting drawn down. I thought a good way to think about Mead and Powell, this came from a professor at Arizona State. She's at the Center for Water Policy. She described the two reservoirs as the region's savings account. And they have been drawing down that savings account for years. It's the same thing that happens with your bank account. If you don't replenish the water from working, if you don't replenish the water from the snowpack, then you do not have it to withdraw from in the future.

12:37It doesn't just magically replenish itself. Moving on, Mark Zuckerberg is under a lot of pressure right now. Not only is his old frenemy, Eduardo Saverin, lining up a move to own part of Liverpool, but Meta's foray into AI has been shakier than the rest of big tech. So yesterday, the Meta CEO sat down and wrote a long manifesto laying out his vision for how Meta will approach AI, while also pushing back against some of the increasingly glooming predictions coming from the industry. The main takeaway is that Zuck is beating the open source drum again. He was an early proponent of releasing the models his company created to the world for everyone to tinker with, but after falling behind Anthropic and OpenAI, Zuck went back to a closed approach to get his own house in order.

13:20Now that the model's meta is pumping out are more competitive, Zuck is back to his original views that AI should be widely distributed and not controlled by a handful of companies. He also took a different tone from the doom and gloom approach often adopted by Anthropic CEO Dario Amadei. Zuck thinks that everyone will have an exceptionally capable personal agent that understands you, your goals, and everything you care about. To reach that goal, though, Zuck acknowledges that we're going to need a lot of pretty unpopular data centers and use the letter to announce a$1 billion fund to invest in communities near those data centers.

13:55The bigger play here is positioning. As the AI backlash grows, Zuck is betting Meta can become the industry's optimist in hopes to convince everyone along the way that abundance is actually the safer path. Neil, this thing also had an abundance of words, 6 ,500 of them. What did you take away other than Zuck yearns to be an English major?

14:16Toby:My thoughts immediately turned to not what was in the essay, but why he wrote it in the first place. Because Mark Zuckerberg, busy guy, not sure he's going to spend some time writing 6 ,500 words unless he thinks he'll make a big impact or there was a calculated strategy behind it. Obviously, I don't think he wrote it all himself. But I think Zuck thinks there's an opening here for an AI optimistic message because you have Dario Amadei of Anthropic out here saying, look, we think AI is going to wipe out 50 percent of all white collar jobs. And Sam Altman is also of OpenAI has also promoted a more doomer, at least in the past, a more doomer view of what AI will happen.

14:56Toby:And Zuck thinks there's an opening here for Meta to step in and say, actually, we want to empower you with super intelligence tools to make your life easier. And the subcontext of this is that Meta is not winning the AI race. It is behind. It doesn't have the most powerful models. So he thinks there's an opening here to promote a more optimistic version. And he said in his essay, I don't understand why anyone who believes that AI will eliminate most jobs and much of humanity's relevance would rush to build that future. And that is a complete subtweet of Anthropic and OpenAI, which Meta is currently behind.

15:31Toby:But I think with this new vision, it could perhaps leap ahead. Yeah, he's pushing back against the fears. His argument is that humanity has always feared these transformational technologies. They always fear that it would destroy jobs or society, but he believes that ultimately humans always overcome that. But he does talk a lot about who controls AI and who should be responsible for it. He actually wants government oversight still. That's been a big sticking point in the AI industry is that these companies train these models. They go to release them to the public and the government goes, wait, actually, we want to review it for 30 days.

16:05And he says that is absolutely unacceptable when you have China pumping out open source models every single day. You know, AI progress is measured in days now, not months or years. And so he's advocating for the government to be involved earlier within the training itself. And then they can check in at intermittently rather than delaying a model after its release. So that's one big thing. He also doesn't want Mark Zuckerberg making the final call when it comes to the AI models that Meta is putting out. He wants the board to have more authority over AI. He says, I do not think it is in my meta or the world's best interest for me or anyone else to be the sole decision maker on how super intelligence is deployed.

16:45Again, probably a subtweet of Dario Amadei and Sam Altman who are running a more closed operation. But yeah, you can read between the lines and everything he says and also see how it benefits meta on the other side. All right, we're going to take a quick break and come back with Toby's Trends right after this. every day shareholders meet to discuss important matters about the companies you invest in now you can easily make your voice heard too vanguard investor choice makes it easy to set your proxy voting preference for your eligible vanguard index funds in just a few clicks you can have a say on important shareholder topics like executive pay and director elections visit vanguard.com investor choice to learn more it's your shares it's your voice it's easy vanguard investors own shares of their index funds, and those funds own shares of the companies they invest in.

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18:57Toby:That's zbiotics.com slash MBD. There's two rules to becoming a new financial center in America. One, you need to create a welcoming climate to financial firms and their employees. And two, you need a funny moniker that sounds like Wall Street. Texas has nailed both, growing a new financial district with the nickname Y 'all Street, a trend I want to talk about on today's edition of Toby's Trends. You're just as likely to encounter a Patagonia vest as a cowhide one in Dallas these days, but it's not just the smell of barbecue that is pulling the suits down south. Lower taxes, laxer regulations, and aggressive courting from state political leaders has led to a finance bro explosion.

19:37Finance jobs in Dallas have grown 23 % since 2020, outpacing New York at just 6 % growth. As of June, finance, insurance, and real estate employed 317 ,000 people in Dallas, which accounted for 10 % of the total employment in the city. Residents need only look out the window to see the roots of finance spreading. Goldman Sachs is building a 800 ,000 square foot Dallas campus scheduled to open in 2028. Bank of America is setting up shop in a 30-story office tower right next door. But no one has embraced the Lone Star State quite like J.P. Morgan, which now employs more people in Texas than in any other state, including New York.

20:16Heck, Texas even has its own stock exchange these days. the Texas Stock Exchange, which began trading this summer in an attempt to create an alternative to the traditional New York establishment. Neil, everything from the politics to the policy have been set up to attract this industry. Ella Langley isn't the only one who's choosing Texas.

20:35Toby:If you've read Liar's Poker, which is the 1989 book from Michael Lewis about Salomon Brothers and Wall Street, then you know the phrase equities and Dallas. And it wasn't a term of Deerman. It was a pejorative phrase where if you work for Salmon Brothers and then they told you to go work in Dallas, then that was seen as they're putting you in the penalty box in timeout because you would just have a back office role. So back then, just a few decades ago, working in equities in Dallas, working in the stock market on quote unquote Wall Street or Y 'all Street in Dallas was seen as a demotion. But now it's seen as, you know what, that maybe it's a pretty good way of life.

21:15Toby:You have a huge mansion in the northern Dallas suburbs and you got to work your maybe your work life balance is a little bit better. You have all these these tax advantages that Dallas and Texas brings to you. So not only are finance firms expanding there, there is a growing sense that you can actually work in finance and be the top dog also in Texas. Why is Texas so dang attractive to finance outside of, you know, the taxes and everything? Well, one, it's growing. It has a growing population. That means that there's a larger hiring pool there. And you have also a larger potential client base.

21:50That's one thing. And then two, there's a migration, corporate migration. That is Texas now has more fortune 500 companies than any other state, including more than California, more than New York. Tesla is kind of the big one. And I guess SpaceX at this point set down their roots. Elon Musk is a fan of just the lighter touch regulation that Texas affords you. And if all the major companies and all the major executives are moving to Texas, then the financial institutions that serve them have, you know, an incentive to put important bankers right nearby them as well. So it's kind of a self-fulfilling cycle right there.

22:27The more that companies are interested in Texas, the more that financial firms are going to follow them.