The Global Economy is STRUGGLING & Duolingo Ditches Contractors for AI

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0:26Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the World Bank warns of a wasted decade for the global economy. Then more and more politicians have been the subject of swatting. We'll tell you what exactly that is in just a bit. It's Wednesday, January 10th. Let's ride.

0:50Yesterday afternoon, in a long-anticipated move, the Security and Exchange Commission tweeted that it had approved a spot Bitcoin ETF, a watershed moment for Wall Street's embrace of cryptocurrencies. Crypto prices spiked. Euphoria reigned on the internet. And even SBF let out a fist pump from his jail cell. There was just one problem. The SEC hadn't approved the ETF. Its X account was hacked. And 20 minutes after the first tweet, it posted a follow-up saying it had not green-lighted the fund. So what initially was a celebratory moment turned into a major cybersecurity incident involving the country's top financial services regulator.

1:30But what a fun 20 minutes it was. As the memes were flying, everyone was very, very excited. You can look at this in two ways, though. Like maybe, whoa, X slash Twitter has this huge cybersecurity problem. This is not the first major hack we've seen on this platform. Or the SEC itself has bad security on its X account. And according to reports, it did not even have two-factor authentication on. Come on, SEC. Two-factor authentication. That's base level stuff. People were also pointing to a past tweet from the SEC saying, Careful what you read on the internet. The best source of information about the SEC is the SEC.

2:06There's always a tweet, Neil. There's always a tweet. Before we jump into the show today, we have a quick word from our sponsor, Veeam. So on this show, we've covered plenty of debilitating ransomware attacks this year. Everything from hospitals to casinos, you name it. Veeam helps you avoid getting in the headlines, though. They confront, contain, and conquer ransomware before it can disrupt your business. Or you might just get an unwanted appearance on the Morning Brew Daily Show. Don't become a ransomware headline. Head to veeam.com today to discover more. That's V-E-E-A-M dot com today. Does it ever feel like you're a marketing professional just speaking into the void?

2:46But with LinkedIn ads, you can know you're reaching the right decision makers, a network of 130 million of them, in fact. You can even target buyers by job title, industry, company, seniority, skills, and did I say job title? See how you can avoid the void and reach the right buyers with LinkedIn ads. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started at linkedin.com slash campaign. Terms and conditions apply. So the World Bank issued its projection for the global economy, and it's fair to say they do not expect these 20s to be roaring. The global economy is at risk of a wasted decade and the weakest stretch of growth in 30 years, the World Bank warned in its semi-annual report.

3:27From recovering from a global pandemic to inflation to wars raging around the globe, things have been pretty bleak lately and they're expected to take a big toll on the economy. Growth in world output will continue to slow in 2024 for the third straight year, declining to 2.4 percent, the report predicted. Compare that to the 2010s when growth averaged 3.1 percent. It hurts even more because this was intended to be a transformative decade for development. People were predicting that the 2020s could look a lot like the 1920s with explosive growth and incomes, innovation, productivity, and more.

4:03Now, with all the risks looming worldwide, the global economy is set to rack up a sorry record by the end of 2024, the World Bank said. Less like the Jazz Age, more like the Blues Age. I saw this news and was like, wait a second, I thought economic activity was turning around. I mean, prospects appear much brighter than a year ago, at least, when inflation was kind of rippling through the global economy, and we were thinking maybe we were going to tip into a recession. But then you look under the hood, and globally, growth is slowing. The main threats that the World Bank cited, as well as other reports we've read, is geopolitics.

4:37There's just so much instability right now between so many different countries. You look to the Middle East right now, that could send energy prices skyrocketing at any moment. So under the hood, even though it does feel like we've kind of put this inflation bug a little behind us, knock on wood, there is some stuff that is still making this not the roaring 20s. Yeah, one thing I want to point out is global trade. So global trade growth is now at its slowest point in the past 50 years. You're seeing this in the major trade routes just being disrupted. The Suez Canal is home to 30 % of global container shipping.

5:10The Iran-backed Houthi rebels are now just firing at any ship that crosses there. So now you have these big shipping companies like Maersk having to go around the corn of Africa, which adds 13 to 15 days of transit time, and that could lead to higher costs. I mean, you're already seeing higher costs for shipping rates skyrocket since these attacks have started. Meanwhile, in the other sort of trade nexus in the Panama Canal, there's been plenty of delays, too, because drought is slowing the flow of goods through that channel. So those are two kind of flashpoints, bottlenecks that I think people are pointing to and saying, This is how geopolitics, this is how climate change and bigger factors are affecting global trade.

5:57Right. And it's mostly poorer countries that the World Bank thinks is going to struggle. One, because sky high borrowing costs because of this high rate environment. But then, yes, global trade constrains their economic progress more so than than high income countries. And the World Bank predicts that by the end of 2024, one in four people in low income countries will still be poorer than they were pre pandemic. And again, you want humanity to progress. You want the global economy to lift people up. And seeing that stat, that one in four people will still be poorer than they were pre-pandemic, is not what you want to see at all.

6:30No. And then the final point I want to make is China. China is the second largest economy. When its economy does well, it's not just good for China. It's good for everyone in its trade orbit, the Far East region, even the United States, because we trade so much with China. But China's growth is expected to slow to 4.5 % this year from 5.2 % in 2023. We've talked about the young people in China feeling a little disillusioned and not spending as much. The property sector there is just a complete debacle. So I think slowing growth in China will also play a big factor in hindering global growth. But we've got to say, the U.S.

7:08is kind of putting the team on its back. Yeah, if the U.S. can do better than expected, then it could lead to another boon time, could lift up the global economy. But that's an if, according to the World Bank. As we are well aware, 2024 is also an election year and already a disturbing trend has emerged targeting politicians. More and more elected officials are getting SWATed. No, that doesn't mean getting lightly slapped. SWATed is a prank born from the internet that involves calling the police to report a fake threat is going down at a target's home in the hopes of triggering an aggressive response from usually a SWAT team, hence getting SWATed.

7:46On Christmas last year, both special counsel Jack Smith and representative Marjorie Taylor Green were the target of SWAT attacks. Thankfully, both those were sniffed out by the police before a big response. But a third Christmas SWATing in New York was successful, and police actually did show up to the House of Representative Brandon Williams. This used to be a prank that targeted famous Twitch streamers usually, where bad actors tried to get them SWATed on camera in clips that would often go viral. But to see it leak into the realm of politics is concerning, to say the least, especially in a year where there's an element of fragility to our democratic processes right now.

8:22Right. We've talked about 2024 being the biggest election year in history and new technologies like AI could disrupt democracy all around the world. And we're seeing this play out in a big way in the United States here for various elected officials. It does seem to have been targeted. A lot of people associated with Trump and Trump prosecution, but also election officials at various places around the country. It must be extremely traumatic and it can be life endangering. You come home to your house and you see this massive police presence. Luckily, you might not be home, but if you are home, it has led to deaths in the past to some of these Twitch streamers around call of duty disputes.

9:00Yeah, it is a bad corner of the internet that is unfortunately kind of growing into a much bigger thing. This is a way to exert pressure on judges, on politicians in a very obviously undemocratic way. One of the scariest instances of swatting was actually targeting a judge. A caller pretended to have broken into the home of Maine Secretary of State Sheena Bellows a day after she disqualified Trump from being on the state's primary ballot. So that's where you see kind of a direct correlation between a cause and effect of something a judge did and how it ends up kind of reverberating in a very unsafe and unsound way.

9:40Right. Let's go back to the beginning of swatting. So this goes back to 2008, at least. That's the first documentation of when the FBI first posted about it. It called it a new phenomenon and swatting targeted celebrities like Tom Cruise, Justin Bieber, Ashton Kutcher and Miley Cyrus. And it still has stayed, I think, a lot in that celebrity realm. But then it morphed to become this big thing on YouTube and targeting YouTube and Twitch streamers. And you said that's because they want to see that everyone's live streaming them playing games and stuff. And these these people who are conducting these phony calls want to get the police interaction with this streamer on camera.

10:18And that seems to be a very potent force. And then it did seem to spike back in 2022. the FBI issued a renewed call saying that four Twitch streamers in the span of a week had been subject to SWAT. Right. And I could certainly see this spilling over into the business world eventually. I mean, business leaders have just as much influence and are just as much public figures as politicians are. They're also getting pulled increasingly into these ideological battles with really strong opinions on either side. So, I mean, like Bill Ackman, Mark Cuban, these people may be next in line. I could certainly see it entering the business realm as well.

10:50The FBI did say that increasingly it has seen swatters targeting public places such as airports, schools and businesses. So kind of an ominous start for this big election year. That's for sure. OK, a food fight is escalating between Pepsi and the French supermarket giant Carrefour. It started last week when Carrefour took the drastic step of saying it would no longer sell Pepsi products because the prices were too high for consumers. And by Pepsi products, I don't just mean the soda, but everything it sells. Lay's potato chips, Quaker cereals, Doritos, Cheetos, and more. Carrefour isn't doing this quietly.

11:25Instead, taking a page from the Game of Thrones shame playbook and putting up signs where Pepsi products are that read, we are no longer selling this brand due to an unacceptable price increase. But on Monday, Pepsi told the Wall Street Journal that Carrefour didn't dump them. They dumped the supermarket because the two sides couldn't reach an agreement on a new contract. So we've gotten to the point that consumers at thousands of Carrefour stores in France, Belgium, Italy, and Spain won't be able to buy Pepsi products when inventory runs out. And the backdrop here is that food inflation has remained stubbornly high in France, even as broader inflation has come down.

12:01And the government is extremely sensitive to price hikes at the grocery store. It's taken several measures over the past years to force manufacturers and retailers to bring down prices. and those tensions have spilled over into a high stakes blame game between two huge corporations. Yeah, the blame game is, you mentioned the word petty and it is petty. Leaving notes on the shelves is the definition of pettiness. And there was this line in a Wall Street Journal piece about it, and it's equally petty even though PepsiCo didn't write it. CareForce stores in those four countries represent around 0.25 % of PepsiCo's global revenue.

12:35So it was funny to see them back to back as CareForce leaving notes and saying this, while Pepsi, it's not affecting the bottom line. If you zoom out, though, this tension is something that could eventually affect Pepsi because they kind of got away with these massive, massive price hikes all throughout the last two years, really. Consumers just kind of accepted them because there's not much else you can do. But as soon as these governments started putting pressure on suppliers to come to agreements with retailers to lower prices, then we're seeing someone finally pushing back against these near constant price increases.

13:09And so the way France sets grocery store prices might be kind of mind-blowing to people here in the United States. It's very different than what we think happens here, which is that Pepsi hikes their prices. And then the grocery store, Big Y, shout out Western Mass, or Stop and Shop or wherever, Wegmans, they hike their prices almost immediately, right? It's this like oil gas price dance where prices are going up and down based on whatever prices the manufacturing sets. But in France, there are these year long contracts where manufacturers produce suppliers and the grocery stores kind of come together to work out an agreement.

13:49And they set a price for the entire product line for the entire year. It's like you're locking them into a contract. There's like such heavy handed regulation in French supermarkets, which is kind of an interesting tidbit. And that's why I think this price war has kind of come to the fore, whereas in the United States, something like this could maybe never happen because prices fluctuate much more frequently. Analysts do think eventually they will reach an agreement because you can't just not sell PepsiCo products. I mean, again, you mentioned some of the products that are under that label. It's not just Diet Pepsi that you see in the checkout line.

14:23It is a whole range of products. So eventually, just from consumers need to have these products on the shelves for them and these supermarkets do eventually want them back as well. So I think they'll figure it out. But if not, then a precedent has certainly been set. And this is not the first time that Carefor has done the shame game against producers. We've talked about shrinkflation, where the producer will basically put a smaller amount of product in the packaging and charge the same price. And when this was happening over the past few years, Carefor also put these bright orange stickers on all the products that it considered were doing shrinkflation and said, this is shrinkflation.

15:05Just so you know, we are working with these suppliers to bring down prices. But we want you to know that this is shrinkflation. This is not our problem. Name and shame. Because most of all, consumers do blame the supermarket rather than the actual supplier for price increases. They want to protect their good name. All right, before we jump into the next part of our show, we're going to take a quick break.

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17:00Duolingo, home to the internet's favorite unhinged bird mascot and language training platform, is the latest company to cite AI as a reason for scaling back their workforce. It's letting go of 10 % of its contractors opting to use AI to do their work instead, and people are more than a little worried. It's one of the clearest examples of AI literally replacing a human's job one for one, which has always been in the back of people's minds as generative AI has proliferated. Plus, the fear in this specific context is that AI won't understand the cultural nuances or idiomatic expressions a native-speaking human expert might.

17:38Duolingo has been using AI in machine learning for years now. It's AI model, BirdBrain, was introduced all the way back in 2020 and helped set the difficulty of exercises based on users' performances. But up until 2023, anything AI generated was reviewed, edited, and translated by a human being. Is this the first cracks of AI taking our jobs like many have feared, or is this all a little overblown? Well, the Duolingo execs want you to think that it is overblown, and they completely, I think they do read the room. and they understand how sensitive this issue is. Execs came out with interviews right after this news broke saying it wasn't a straight one-to-one replacement.

18:18This is a complete corporate word style. This is pretty impressive. The head of communication said, there is some merit to the idea that AI is contributing to the reduction of our contract workforce, but it would be an oversimplification to say this is the sole reason. So good for that head of comms there. They were definitely on a comms war because, yeah, they tried to frame it more as like they were just not bringing, they were not re-signing their contractors. Duolingo also does have a very large contractor workforce, larger than probably an$8 billion company or$9 billion company would expect.

18:51So they really tried to get out in front of the PR train. But Reddit posts were going viral saying that the only thing the remaining contractors were doing were just reviewing whatever, and this is a quote, garbage AI spits out. So there's definitely some tension on they think that there's a worse product now being put out from Duolingo because AI, for all its positives, still is prone to hallucinations. And it's definitely not as artful in the translation as a human being is. Yeah, I think we're also seeing what kinds of companies are going to be embracing AI quicker than others. Duolingo needs to create a ton of content across a variety for its millions of customers.

19:30And it also wants to have these customers to have these personalized translation journeys. And the CEO has been on record saying, look, we want to create as low cost education as possible. With generative AI, we can literally press a button and create millions and millions of words and all of these personalized training plans. So I think you're saying a lot of disruption in education. I mean, Chegg, the online homework company, was one of the first companies to also said it was laying off a small portion of its workforce in place of AI. So I think you're seeing AI coming to tutoring, content creation, customized tutoring plans before you're seeing it come to even other industries.

20:13Let's shift gears a little bit here. South Korean lawmakers unanimously outlawed the breeding, slaughter, and sale of dogs for human consumption yesterday, putting an end to decades-long tradition that had fallen out of style in modern times. The practice of eating dog meat in Korea traces its origins back to the Korean War when meat was scarce. It's most popular to use in a dish that translates to, quote, soup good for your body. But younger generations aren't so enamored with the concept of eating dog. The New York Times writes that about 93 % of South Korean adults say they have no intention of consuming dog meat in the future, and 82 % say they supported a ban, according to a survey conducted by an animal welfare organization.

20:55Despite the unpopularity, though, there is still a robust industry in Korea that will now need to pivot. In 2022, over half a million dogs were being raised for human consumption at 1 ,150 farms, sold at 1 ,600 restaurants. To help ease the transition, there's a three-year grace period before the law takes effect. So it will be interesting to see how local governments align financial incentives with people who rely on this industry for their livelihoods. This does seem like a complete generational divide where you have older people saying this is a part of our way of life. Like this is part of our cuisine.

21:28I eat this all the time. And then you have younger people who say this is a different South Korea. We are an economic and cultural powerhouse. I think one factor here is we have a lot of pets now and we view dogs as part of our family. I mean, in 2022, there were one in four Korean households owned a pet dog and that was just 16 % in 2010. So I think that's been a sea change. There's also been a push by the first family, the prime minister and his wife. They own six pets. And the first lady has been a huge advocate of this law. And so she's put her force, her political force behind it. And that's, I think, also been a big reason why this law has been gotten passed, because they've tried for years and the industry has pushed back on it successfully.

22:14Yeah, successfully. And in Korea, farmers are still angry about this. Leader of the Farmers Association in the country said, quote, this is just a clear state violence as they're infringing upon freedom of occupational option. We can't just sit idly by. So they are treating it as infringing on freedoms to kind of make your livelihood in a way that the government shouldn't determine what you can do in order to make money. Although in this case, that's literally exactly what they're doing. They're passing a law. So in November, they threatened to release all their dogs on their farms if this was going to pass.

22:50So there's been a lot of tension between kind of special interest within the industry and the actual laws themselves that are getting passed. Quick correction on the fly. said prime minister i meant president there we go correction on the fly correction on the fly okay let's go to our final story 25 years ago today sunday nights were changed forever when everyone's favorite new jersey mob family first appeared on hbo with a pilot episode of the sopranos you hear it a lot but it is undeniable that this show changed the medium of television there was an era before the sopranos and then there was an era after the sopranos before tony christopher Carmella and the North Caldwell crew came into existence.

23:31TV was mostly filled with characters who were lovable, but one dimensional. You didn't need to know what happened in the previous episode to understand what was going on in the one you were currently watching. Then David Chase created The Sopranos in 1999 and brought cinema sensibilities to the small screen. Narratives extended in multi-episode arcs. Characters were emotionally tortured and morally flawed. There was plenty of violence and nudity. Perhaps most importantly, The Sopranos popularized the concept of the anti-hero, a protagonist you hate to love. Tony Soprano paved the way for Don Draper, Omar Little, and Walter White, but also for complicated characters in female-focused shows like Orange is the New Black, Girls, and Insecure.

24:11I think David Chase described his innovation best. On network, everybody says exactly what they were thinking. I wanted my characters to be telling lies. So we were talking before the show on whether to include this segment talking about The Sopranos. You thought it was interesting because it feels like the end of an era when it comes to prestige TV. I thought it was interesting because they actually chopped up every Sopranos episode and put it onto TikTok in 25 second increments to honor the 25 years of Sopranos. I think your angle is more interesting here because I tried watching the episodes last night and it was all, I mean, to steal a phrase, gabagool.