Gambling on the Globes & Geopolitics

0:07Hello!

0:08Emily Peck: Welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg with Elizabeth Spiers from the New York Times and Emily Peck of Axios.

0:20Felix Salmon: Hello, hello.

0:20Emily Peck: We three are going to talk about Jay Powell being sued by the Department of Justice. We are going to talk about the way that China is winning the research university wars. But mostly, I think what we're going to just talk about is betting and prediction markets and polymarket and stuff. Because there's so much awesome stuff going on around there. Golden Globes, you name it. It's all coming up on Slate Money.

0:50Emily Peck: So, Emily, Elizabeth, did either of you guys watch the Golden Globes Award? live on the telly?

0:58Elizabeth Spiers: I did not, but I watched a clips later. I watched the first 10 minutes.

1:03Emily Peck: Okay. And so you need to tell me, because I've read about this, but I have not personally experienced it in a visceral manner. When you were watching the first 10 minutes, Emily, was there all manner of like weird chirony things from Polymarket saying, bet on the outcome?

1:18Felix Salmon: No, I only saw it in clips that they put up the Polymarket odds ahead of things.

1:23Emily Peck: Elizabeth, you saw the people who were carefully clipping the Polymarket clips and getting outraged by this, right? Yes.

1:30Elizabeth Spiers: Yes, I did.

1:31Emily Peck: So we don't really know how much Polymarket bought, and we also don't know how much Polymarket paid. And what we do know, which has been true for years now, is that whenever there's an award coming up, it is possible to bet on who is going to win those awards on prediction markets, and specifically on polymarket that is an offshore thing where Americans, you know, wink, wink, nod, nod, aren't allowed to use it. And so it's not really subject to US laws. And they've been offering these markets for a long time. And they're not super deep and liquid. But if you want to flutter, as we say in England, it is something you can do.

2:08Emily Peck: What is new now is that number one, polymarket is in the process of becoming a fully legitimate player in the United States. And number two, as part of that process, it is investing quite heavily in marketing stunts, like actually partnering with the Golden Globes while they are on and having things on the screen saying, oy, you can bet on this if you think you know who's going to win, you know, have a flutter, make some money. And this is one step beyond what I grew up with in England, where people would bet on everything all the time and it was perfectly legal, but you wouldn't see live Oz, you wouldn't see partnerships on the television.

2:49Emily Peck: It wouldn't be like incorporated into the programming in the way that it has been in the Golden Globes and it has been in a bunch of sports programming as well. So it doesn't seem super harmful to me, but I'm sure, Elizabeth, you're going to tell me that this is a terrible thing. That's mean. Well, it depends on what we mean by harmful.

3:09Elizabeth Spiers: I think in the context of the Globes, what sort of weirds everybody out is that the Globes are supposed to be about rewarding artistic achievement. And that's not something that I think people are accustomed to betting on. People don't think of it as a game, whereas in sports betting, you are literally betting on a game. And so particularly whenever you have awards categories like best documentary and you're talking about a documentary about what's happening in Gaza and there's some gravitas to it, it feels is a little bit strange to then see like a screen that's like, and bet money on whether or not this is going to win.

3:45Elizabeth Spiers: It just seems crass, you know?

3:46Emily Peck: That doesn't weird me out in the slightest. It's interesting that it's like the thing that you're betting on, if it's a liberty gibbet game like the Super Bowl, who cares? You go ahead, bet on it, because that doesn't matter. But if it's the best documentary at the Golden Globes, that's serious. We shouldn't be doing frivolous things like betting.

4:04Elizabeth Spiers: It's a continuum, you know? Like, I think the sort of worst case that people are imagining now is if people are betting on whether or not a political leader will be assassinated. It's, you know, what are the proper contexts and categories for these kinds of prop bets? And I agree with you that it's not the worst thing in the world, the betting on the Golden Globes, but I do understand why it kind of grosses people out, you know, in a sort of ick way.

4:29Felix Salmon: We should point out that of all the Hollywood awards in the awards season, the Golden Globes is probably the one best suited to have this like trashy betting aspect put onto it.

4:42Emily Peck: Because it's kind of trashy anyway.

4:43Felix Salmon: The Golden Globes is recently bought by Penske, the publishing company, overtaken from the previous owners who were basically forced out over a corruption scandal.

4:53Emily Peck: Was that the Hollywood Foreign Press Association?

4:55Felix Salmon: The Hollywood Foreign Press Association. I think the LA Times had a bunch of reporting on corruption and there was racism. so the Globes has always been known as like the award show where celebrities go and they get really drunk and it's not like the serious award show it's not the Oscars or anything so it completely like lines up with Globes lore that this is the arena in which I mean just seems really corrupt for the owners to kind of sell the sponsorships to Polymarket and like you assume the voting was on the up and up but like who really knows 20 polymarket got 26 out of 28

5:31Emily Peck: globes categories right they called it okay wait hang on a second let me jump in here very quickly because that's not necessarily a sign of an efficient and good prediction market right because these awards generally had five nominees per award okay so when someone says like polymarket got it right. What that means is that each of the five nominees will have had a price on Polymarket. And one of those prices would have been the highest. So one would have been trading at like 40%. One would have been 20%. One would be at 10%. One would be at 5%. It will add up to very close to 100. But in an efficient market, that highest one, which was trading at like 40%, will only win 40 % of the time.

6:20Emily Peck: If the highest one wins like 90 % of the time, that means it's mispriced. And so what you really need to do to work out whether polymarket got it right is take into account where were these things trading. And if it turns out that they should have been trading at like 90 percent, in fact, they were trading at 40 percent, that means the polymarket did a bad job of predicting the winners.

6:41Felix Salmon: I did hear Matt Bellany talking about this on The Town, and I feel like the 90 percent was the way a lot of them were going. Like he was basically saying you don't have to be like a genius. You don't have to be on prediction markets to surface like the movie with the leading odds to win. Everyone knew coming in that the best actress from Hamnet, Jesse Buckley, I want to say, was the one who was going to win. Like it's not hard, in other words.

7:06Elizabeth Spiers: Yeah. Where there is a potential conflict of interest is that Penske owns three of the biggest Hollywood traits. And so if you were just sort of evaluating who was going to win based on coverage in those three publications, you might be spot on, even if, I guess, even if there is no coordination between. Okay, so this goes back to what you were talking

7:25Emily Peck: about, like assassination contracts, right? The idea being that there are two different ways of sort of insider trading prediction markets. One is where you know the outcome, and you bet on it, knowing that it's going to happen. And the classic example of this one was there was something, I think it was on Polymarket, I think it was like the invasion of Venezuela and the contract like surged, like some guy made$300 ,000 by betting on like, there will be something happening in Venezuela. And it did. And obviously, there's this person who knew that it was about to happen. A bunch of people knew that it was about to happen, including the New York Times, who, you know, sat on it because it was national security.

8:08Emily Peck: So one of those people who knew that it was going to happen, made some money by betting on it. It is very unclear whether that is legal or not.

8:15Felix Salmon: But seems yucky. But whatever, like it is actually, if you look at the literature on

8:21Emily Peck: prediction markets, that is a feature rather than the bug of prediction markets. The whole point of prediction markets in many ways is to try and surface a bunch of information that isn't necessarily public. And so if that price moves ahead of the invasion quite sharply, that's a sign that this is actually likely to happen, even if, you know, it hasn't been made public yet. We can talk about like whether it's a good idea to do that or not, whether it's legal or not, whether it should be legal or not. But let me just finish my thought here, which is that the other form of insider trading, which is absolutely yucky and really something that we want to avoid is where you have control over the outcome yourself.

9:05So I bet on the assassination of

9:07Emily Peck: politician X, I then go out and assassinate politician X and make money and like effectively pay myself. Or I am, uh, you know, a pitcher in a baseball game. And I bet that I will throw exactly 17 sliders and I throw exactly 17 sliders and I make money. Or I am Carolyn Livet, the press secretary and there's a huge bet that my press conference will last less than 75 minutes and I end up like calling it off abruptly after 74 and a half minutes which I think is something which actually happened and so there's a whole bunch of things where people have control over the outcomes and can make money by betting on themselves doing that thing and that is really weird.

9:54Elizabeth Spiers: One of the best things that I learned in the prep was that why you can't now trade onions futures in certain ways because there was a guy in the 1950s named Vincent Kasuga who bought up 98 % of the available onion supply in Chicago via futures contracts. And then he went around to all of the other onion producers and told them that they had to raise prices or he would flood the market. So then they start raising prices and he buys up a bunch of short contracts and floods the market anyway. And as a result, there is regulation around onion futures specifically, not other types of food, just onion futures.

10:32Emily Peck: Well, it's onions and Hollywood, weirdly. Yes. In 2010, they added Hollywood. And I remember, like, I am an old, and I'm old enough to remember back in the 1990s, there was a website called Hollywood Stock Exchange, which was basically this exact thing, but 30 years ahead of its time, which was people betting on, you know, box office grosses and who was going to win awards and this kind of thing. That was all like play money. And then the whole idea was that it was going to pivot into real money. And eventually, it was going to be real enough money that you could, if you're a filmmaker, sort of hedge your investment.

11:10Emily Peck: So, you know, you announce a big film starring Jennifer Lopez, and then you hedge your bet by selling a bunch of Jennifer Lopez futures on the site so that if it does well, your effectively co-investors manage to make money. And if it does badly, you've, you know, not lost as much because you've got money from these investors. You know, again, this is all potentially a very legitimate form of financing, which is why futures markets exist and why there's futures markets in almost everything except for onions. But also, this is, we have to mention this very explicitly. If we're looking at Polymarket and Kalshi, which are the new kids on the block and are doing prediction markets, they're overwhelmingly sports we can talk about polymarket we can talk about politics we can talk about all of these weird prop bets that get all of the headlines in slate money but really what these are used for is betting on sports and sports betting has historically been very regulated and for really dumb regulatory reasons calci and polymarket have managed to place themselves under the purview of the CFTC, which is run by a Trump appointee who's basically got an opinion that they should regulate fuck bug rule, and not under the purview of sports betting regulators in each individual state.

12:34Emily Peck: And the sports betting regulators in the individual states are furious about this, but there's seemingly nothing they can do. The sports books in places like Las Vegas are furious about this because it's actually much more efficient to bet on calcium polymarket than it is to bet in a casino. And certainly places like FanDuel and DraftKings, which I think is the same company now, they're furious about this because they too are seeing all of their business go to Calci and Polymarket. But I feel like on some level, it is just a more efficient way of betting. And so I'm not particularly upset if it's going to be legal, at least allow people to bet directly against each other, because that, you know, does stop a couple of big middlemen from making all money.

13:14Elizabeth Spiers: We've talked about before the fact that when you legalize sports betting in a state, poverty rates go up. Does this kind of exacerbate that? Do we think that people are going to start betting on all sorts of things and you'll have the same effect?

13:27Emily Peck: Well, so the first thing is, no, they're not going to start betting on all sorts of things. They're just going to start betting on sports. I think more than 90 % of the sports betting on calcium poly market is just going to be sports betting sort of migrating over from both legal and illegal betting sports betting elsewhere and onto these platforms rather than new people betting but certainly there are states where sports betting is illegal in those states some people bet illegally a lot of people bet illegally but then some people just don't bet and now that they are able to bet legally they will start being able to bet legally and they will do so on calcium poly market so at the margin yes i I think this is a little bit like when a state introduces the mega millions lottery.

14:13Emily Peck: You know, it is a form of it is a kind of a tax on poverty.

14:17Elizabeth Spiers: Last night I was watching The Night Manager, which is a great show. But I kept getting ads for MGM Sportsbook. And I don't remember ever having, you know, before the last few months seeing sportsbook ads.

14:29Emily Peck: That's because you're researching this show, Elizabeth, and they know you're interested in betting.

14:34Elizabeth Spiers: I was not. This is my husband's account.

14:37Felix Salmon: I think you just said this a few minutes ago, Felix, but an efficient prediction market basically needs insider trading to be a good prediction market. And that seems sort of wrong, but maybe it's right. Like you need people who know what the outcome is going to be to make the right market and to create the right odds.

14:55Emily Peck: So like if Matt Bologna, like is he an insider? Yeah, I mean, that's his whole shtick, right? He's like, I'm an insider. I know what Hollywood knows. But it's not like he has actual inside information of what the results are. And there was at least one major upset where Hamnet beats Sinners. So when he's like, it's really easy to make money because everyone knows that Jesse Buckley is going to win. Who is the everyone and how do they know it? And is that inside information? It's a very fuzzy area.

15:26Felix Salmon: Right. That's different from like, we know that the U.S. is going to go into Venezuela and snatch out its leader. tonight.

15:33Emily Peck: There are very few people in the prediction market world who want to try to prevent insider trading, partly because this is how they make money. And it's partly because they believe in a sort of libertarian way that insider trading is good. It's price discovery. And I have seen this argument about the stock market. It is not a popular argument. It is not of the common argument, but I've definitely seen it. And I am to some degree sympathetic with it, which is like insider trading is a good thing, which we should have more of because it makes the markets more efficient and because it's kind of a victimless crime.

16:11Elizabeth Spiers: Not if you're talking about certain prop bets. I mean, the problem with the Venezuela bet isn't so much that it's insider trading per se, it's that whoever bet on it is, you know, taking what's presumably classified national security information and in a way making it public.

16:28Felix Salmon: Right. Endangering the troops is the argument.

16:32Emily Peck: Exactly. And so the illegal thing, the most obviously illegal thing here is making confidential information public. It is not, you know, betting on inside information. There's a slight sort of distinction there, which is worth maybe teasing out. But also the big problem here is that none of this is regulated at all, right? The weird regulatory arbitrage that's happened in sports betting and the reason why polymarket is becoming legitimate and the reason why Kaushu became able to offer sports and all the rest of it is basically just because the CFTC is sitting on its ass and doing nothing. Like, back in the Biden administration, none of this would have been possible because the CFTC was a genuine regulator.

17:18Emily Peck: And indeed, under even Trump won. The CFTC was the genuine regulator. Now the CFTC seems to be, you know, one of those places. It's like USAID. It's just kind of what the hell is it doing? It seems to be doing nothing. And I do think that on some level, the default of we are just going to regulate nothing is clearly the wrong default. You know, there should be something that is regulated here.

17:43Elizabeth Spiers: My question would be, if you're, like, let's say you're an executive at a public company and you bet on something that's sort of tangentially related to insider information that you have, is that a potential Reg FD violation? In which case, you know, the CEO...

17:58Emily Peck: No, because there's no securities involved. Reg FD only applies to securities. This is part of the problem. Like, this is a really, really good question.

18:05Elizabeth Spiers: Well, but I mean, what if the stock moved because somebody noticed that the CFO made a bet on poly market? Yeah. You're really putting your finger on something important here, which is that none of these markets exist in a vacuum.

18:19Emily Peck: You know, they are all related to each other. And it is clearly illegal for me as a corporate insider to trade my own stock on the basis of information that I have. It is not clearly illegal for me to trade a polymarket contract on the basis of inside information that I have. You know, it is not a security. It is like there's a whole bunch of legal gray zone there. And then if people see the polymarket contract moving, then stock traders can see that and move the stock. And those stock traders don't have any inside information. They just have public information about what's happening to contract prices on polymarket.

18:58Emily Peck: But you're moving the stock anyway by making a polymarket bet. There is a whole bunch of stuff that hasn't been thought through. that none of this is internally consistent at all. It's a mess. It needs to be addressed by some non-zero degree of regulation. And the SEC and the CFTC need to get into a room and work this shit out, and no one is doing that.

19:21Felix Salmon: Well, the president's son happens to advise both Calci and Polymarket. Do I have that right?

19:26Emily Peck: Yeah, I mean, if you were Calci or Polymarket, he's the first person that you hire for your board, right? Obviously.

19:32Felix Salmon: Obviously.

19:46Emily Peck: so now what we've done is we've proved that there was enough information in that polymarket factoid to stand up an entire segment but we do need to talk about the actual news of the week which is department of justice sued jay powell and the fed criminal investigation which not only resulted in immediate pushback from jay powell and the way that this guy who has taken so much flack from the president you know but both in the first term and in his second term and it's just been very like never responding just letting it wash over him being very professional this was the point at which he's like okay fuck you i'm gonna come out i'm gonna record a video i'm gonna be like this is obviously a pretext this is bullshit what the actual fuck didn't quite say that but um close and and then everyone came out in support of him like not only all of the ceos not only all of reddit not only every single other central bank governor on planet earth but also a huge chunk of pretty mega republicans and it turns out that this was basically janine pirro freelancing and not telling anyone but the whole thing is a bit of a shit show and my hot take here is that this is the best thing weirdly that could have happened to the vet it has strengthened the fed it has shown that the fed has massive support and it does mean that the fed independence is actually it turns out stronger than we thought.

21:19Emily Peck: Like they tried to kick out Lisa Cook. They failed. They tried this attack on Powell. It's obviously going to fail. And this is one of those things where if you come at the king, you best not miss and they just missed.

21:33Felix Salmon: I just think you're totally wrong.

21:35Emily Peck: Okay.

21:35Felix Salmon: First of all, Claudia Somme, inventor of the Somme rule and who has a substack like everyone does now, including the FT, wrote a great substack about this that I was reading this morning before we taped. And basically what she was saying is Jerome Powell is a unicorn. He has been around for a long time and is one of the last sort of bipartisan Fed governors and chairs. He was made a Fed governor by, I believe, I think it was Obama. No, it was Trump.

22:04Emily Peck: Oh, Obama made him a governor and then Trump made him a chair. Yeah.

22:07Felix Salmon: One of the last like bipartisan nominations for even a Fed governor. And then, of course, he was put into the role of Fed chair by Trump and then re-nominated by Biden and has spent the past decades building support among Republican and Democratic lawmakers. So to the point where he's getting attacked by the administration, they all, as you said, Felix, rallied around him, including the Republicans. There aren't any other. He's a unicorn. Coming up behind him is no one else like him. So, yes, he got the support of central bankers around the world and crucially the support of Republican lawmakers.

22:44Felix Salmon: But that's just a one off. This is going to happen again. His term ends in four months. Whoever Trump nominates now is just in an impossible position where he's going to get the same amount of pressure. And there's.

22:58Emily Peck: Well, he's not going to get the same amount of pressure, because it's going to be a criminal investigation into the new Fed chair. Yeah, but I wouldn't put it past.

23:05Elizabeth Spiers: Who knows?

23:06Felix Salmon: I mean, this is not our first criminal investigation into, as you pointed out. And Lisa Cook, as you said, that hasn't worked, but that case is going to the Supreme Court later this month. It's certainly not over in any way. And then the final thing I should add, Jerome Powell is a millionaire, a multimillionaire. He has vast resources to fight and to, yes, when you come at a multimillionaire Fed chair, you best not miss. But like how many bipartisan supported multimillionaire Fed chairs do we have coming up behind him?

23:36Elizabeth Spiers: You know, Powell was a Republican, but he was sort of a moderate kind of, you know, safe, especially for Obama, who was kind of centrist. He felt like a safe bet. And he was a known quantity before he ever went to the Fed. So it makes total sense to me that Tom Tillis would get behind him, a Republican congressman from North Carolina who's saying he's not going to approve any new nominations to the Fed until this goes away. And I do think it might have been Pirro jumping the gun. That's what Trump is claiming he didn't know anything about it. But I also think that there are a lot of things happening in this administration where Trump doesn't have to give the direct order.

24:17Elizabeth Spiers: if Piro thinks that she's doing his bidding by doing this. And, you know, so do many other cabinet members. You know, a lot of them are sort of freelancing on behalf because they think they're advancing his interests. There's no guarantee that we have another Fed chair come in, even if it's somebody Trump approves of, that this just isn't going to happen again.

24:39Felix Salmon: Yeah, because one thing to note, and we talked about this with Austin Goolsbee when he came on, like Trump nominates a Fed chair and he gets someone in there who is willing to do his bidding and lower rates to 1%. But he still needs to convince the other Fed governors that, and I'm saying he, because I think we're pretty clear it's going to be a dude named...

25:00Emily Peck: Kevin.

25:01Felix Salmon: Kevin. So he comes in and he's like, let's get it to one. Let's go. And everyone's like, yeah, no. And then eventually President Trump becomes frustrated with this pattern, kicks that guy out. And then you just have this revolving door of Fed chairs. I mean, this is one of the worst case scenarios. There's other worst case scenarios that happen if he succeeds in lowering rates to 1 % and then we have hyperinflation become a banana republic or whatever.

25:26Emily Peck: I mean, I understand how this is definitely not how the Fed should work. But on the other hand, if you have a revolving door of Fed shares, each one getting nominated by Trump and then turns out to be incapable of persuading the FOMC to reduce interest rates as much as Trump wants. That is not the worst case scenario. That is a scenario where the Fed retains independence and keeps interest rates where they should be. And ultimately, the job of the Fed is not to have the same person in charge for a long period of time. The job of the Fed is to keep interest rates where they should be. And, you know, that is what happens.

26:02Felix Salmon: That's a good point.

26:03Emily Peck: The worst case scenario is when the Fed loses independence and Trump has de facto control over interest rates. And I guess the reason why I'm relatively sanguine right now and even more sanguine now than I was a week ago is that while all of us can come up with some dystopian future where Trump does end up being able to set interest rates you know I would say like the poly market odds on that are very low you know on the order of 10 percent

26:32Elizabeth Spiers: one fun thing is that uh now that Trump has attacked Jay Powell he is less likely I think to step down the way that he was sort of hinting that he would. I think this has hardened his resolve to stay there as long as it takes.

26:46Felix Salmon: Bro looks tired, though.

26:47Emily Peck: And to be clear, this is the question of when his term comes to an end as chairman, does he then leave the Board of Governors entirely? Or does he stay on the Board of Governors just as, you know, in parliamentary terms, does the prime minister stay on the sabacc bencher? Or, you know, does he leave parliament? Everyone kind of expects that if you've been the chair, you don't want to just be a regular voter. But there's no reason why Powell can't stay on as a regular voter. And he seems kind of pissed off. And if this is going to piss off Trump, then maybe he is going to stay on as a regular voter and that will deny Trump another nomination.

27:24Emily Peck: But yeah, as you say, right now, even the Fed chair nomination seems to be really, really fraught because Pirro is not dropping her criminal investigation. That could go on for years. who knows when that's going to end. And so long as she doesn't drop it, it looks like it's going to be really hard for anyone to be able to get through.

27:42Elizabeth Spiers: Well, I do think this Republican blockade on approving nominees will help because if you have four Republican senators saying we're not going to approve anybody Trump puts up until this is taken care of, then, you know, there's an incentive to get it done one way or the other.

27:57Felix Salmon: I'd be skeptical they hold out there, you know, these guys are not.

28:00Elizabeth Spiers: I think they would for self-interested reasons. I think they will hold out longer than yeah like one of them is going to have to blink first right either it's

28:09Emily Peck: going to be like tell us and kennedy and those guys or it's going to be pirro and frankly i i would bet again if i was a polymarket better i would bet on pirro blinking first but the doj has processes and stuff and it's not even clear to me you know what is she would need to eat a lot of humble pie at this point. Like, there's no obvious pretext she could use to drop this investigation.

28:35Elizabeth Spiers: Well, she's a bit of a chaos monkey, though. Like, I think predicting what Piro will do is, and I think the, you know, Republicans have, and instead of, they generally like Jay Powell, and they like the sort of stability that the Fed brings to the situation, and they like it as a hedge against Trump being a chaos monkey. So I think that, you know, they don't have to believe that the investigation is wrong or that they need to defend Jay Powell for any kind of moral or principled reason, they largely want him to stay in the position for very pragmatic, market-driven reasons.

29:08Felix Salmon: Can I just add one thing? There was reporting, and I'm not sure it's confirmed, but that once again, Bill Pulte showed Donald Trump a poster at Mar-a-Lago.

29:21Elizabeth Spiers: And it was a wanted poster of Jay Powell. Yes, that's the reporting.

29:26Emily Peck: Bill Pulte runs the FHFA, and he is definitely off on the wackadoodle side of MAGA, along with Janine Pirro.

29:34Felix Salmon: But the poster policymaking, I mean, it's just, that's how we go about it. You get a poster board, you put something on it, and the next thing you know, you're moving markets. You're getting senators to say things. Like, that's all it takes. You don't need a white paper. You need a big white poster.

29:50Emily Peck: White poster.

30:05Emily Peck: So let's move on and talk about the country where all of the most interesting scientific research on the planet is happening, which is China. Once upon a time, there was a time when the greatest research universities in the world were all American. And you could rattle off the list of the Harvards and Yales and Stanfords and Berkeleys and Caltechs and all the rest of it. And they would have all of the Nobel Prize winners and all of the top research and everyone wanted to work there because that's where all the most interesting leading edge research was happening. Now, nearly all the top institutions, with the possible exception of Harvard, are Chinese.

30:47Emily Peck: According to one ranking. Well, according to multiple rankings, actually. Any ranking of universities that is based on research output rather than like how good of a university is this to go as an undergrad is going to be overwhelmingly dominated by Chinese institutions. And this is across many, many different rankings. And this is something I've been thinking about a lot in the context of the sort of Trump administration's war on higher education, is that the war on higher education is really aimed at and focused on US universities as teachers of undergrads. And they're like, you are indoctrinating our children in woke yada yada.

31:28Emily Peck: And you can agree or disagree with that. But these universities also have a really important other function, which is to be scientific research centers. And that is being thrown out with the bathwater and all of the science, the cutting edge, bleeding edge science. Well, the science isn't necessarily moving to China because it's still happening in America. But the rate of growth of research in America is anemic, while the rate of growth of research in China is stratospheric, which means that China is now doing way, way more research than any other country. And that, I think, is a really profound and important development.

32:08Elizabeth Spiers: Yeah, it pains me to defend Harvard, but Trump's particular attacks on them have, they've come at Harvard from several different angles, but maybe the, one of the worst ones is that he so heavily defunded the National Science Foundation, and Doge was a big part of this. They were just vetoing grants without even evaluating them. But 12 % of the research grants provided by the National Science Foundation went to Harvard, and those are just gone. There was a 56 % cut to the NSF budget and a 73 % reduction in staffs and fellowships. That's an insanely high amount of research funding that just disappeared overnight.

32:44Emily Peck: And then add to that the Centers for Disease Control and all of the other massive... The US government used to invest tens, if not hundreds of billions of dollars into fundamental research every year. And that number is going down rather than up. That money was the reason why US institutions massively did way more scientific research and were way more bleeding edge than their European counterparts. The Europeans just weren't investing as much as the Americans were on a government level. And now the Chinese have taken over and the Chinese are investing billions and billions of dollars across a huge range of universities in China.

33:24Emily Peck: And it turns out that just throwing money at it is something that works.

33:28Felix Salmon: The rankings that we looked at for the research for this story and the one that sort of inspired us to talk about this is the Leiden rankings where Harvard was bounced from its number one position. Those rankings look at academic output and that predates anything the Trump administration was doing. In other words, this was already set in motion years before now. We don't even know yet what the effects of the current administration's funding cuts are or, you know, to be optimistic, maybe they could be reversed. I mean, it's not too late.

33:56Emily Peck: And Emily, this is a really important point, which is worth underscoring. Research takes time. And what these rankings do is they look at the number of papers that are published and especially the number of highly cited papers that are published. And, you know, between getting the money to do the research and then writing the paper takes years. And then between publishing the paper and it getting cited all over the place takes more years. So, as you say, all of this is a longstanding issue that has been in place for well over a decade. But it is obvious what is causing it, which is this disparity in funding, which has been in place for well over a decade.

34:35Emily Peck: And as that disparity in funding gets even greater, which is what's happening now under Trump, too, the result in terms of these rankings is only going to become even more stuck.

34:45Elizabeth Spiers: Well, these rankings also look at patent applications, which are much more short term. But, you know, another thing that I sort of want to point out, which is that there's a sort of conservative line of thinking about higher ed, that it's inherently elitist. And I think that sort of line of thinking becoming more prevalent has been escalating since the 1970s. And now, you know, if you look at political incentives for particularly MAGA people, they just cannot connect the idea that the U.S. as a superpower is really connected to scientific and technology advances. They just don't make that connection.

35:19Elizabeth Spiers: So they're happy to kind of be very hawkish toward China and talk about American dominance. but they really don't understand the fact that if you attack higher ed the way that the Republican Party is doing right now, and you're attacking immigrants who are, you know, the U.S.'s dominance in technology is a function of the smartest people in the world wanting to come to school here and then staying here in a lot of cases. So without a lot of political will to kind of reinstate these programs, I don't see us going forward. I don't see a lot of it being reversed.

35:48Emily Peck: It's definitely not going to be reversed. Like, I think this is absolutely a structural thing. the Chinese have, as you say, like they aren't answerable to an electorate. They can just say, like, we want to have the technology superiority and we can invest a relatively small proportion of GDP in getting there. Everyone else does not have that freedom. They're answerable to an electorate and the electorate is like, why are you spending billions and billions of dollars on eggheads? And the answer is something, something, soft power. They also just culturally

36:14Elizabeth Spiers: value education in a way that Americans don't.

36:18Emily Peck: Right. And the other aspect here is that, in fact, the sort of MAGA slash populist turn in American politics does result in people saying, in a quite explicit point of view from the Trump administration, for instance, that drilling for oil is just obviously a better idea than manufacturing solar panels. And drilling for oil is a low-tech kind of thing, and manufacturing solar panels is a high-tech kind of thing. The Chinese can manufacture solar panels at an astonishingly low cost because they have the technology and because they have these incredible... And it is important to really underscore this.

36:51Emily Peck: All of this investment that China is doing in its universities has resulted in incredibly cheap solar panels, most cheaper than anyone thought they would be. It is one of the many real world consequences of this investment. And meanwhile, the Americans are like, well, we don't want your stinking solar panels. We're just going to drill baby drill. And that is not a way, as you say, for a superpower. That is not a rational sort of geostrategic response. It's just so depressing, like I can't.

37:17Elizabeth Spiers: I can't even deal with it.

37:19Felix Salmon: It's so sad. I mean, I guess it's good for China. Look, it's good for the Chinese. It is good for China. It could be good for the world. Who knows?

37:24Elizabeth Spiers: They're opening their economy, and we're making it hard for anybody to do business with us at all.

37:29Felix Salmon: We really are self-owning our way into something not great, back to the Stone Age or something. Right before we were taping, there was an announcement that Canada was getting rid of its 100 % tariffs on Chinese EVs. Everyone's moving on. There's nothing written in stone that the U.S. has to lead in education.

37:50Emily Peck: EVs are another really good example of this. We've talked about this on the show. The U.S. government has stopped supporting EVs. Ford took that$19 billion charge and said, fuck it, we're not going to do EVs anymore. Basically gave the entire future of the automotive industry to China on a plate. China, meanwhile, is investing heavily in EVs. And again, why is it that Chinese EVs are so much better and so much cheaper than anyone else's EVs? Do we think it's completely unrelated to all of the investment in primary research in Chinese universities? Of course it's not. These things are connected.

38:27Elizabeth Spiers: A sort of line of rhetoric that you hear from Silicon Valley people is that all of our great technology comes from the private sector. And this is usually people like Elon Musk kind of alighting the fact that their companies are built heavily on government research and government contracts. And that most of our largest technological developments come either out of academia where you can do research for its own sake and it doesn't have to be immediately profitable. Or from research units at defense contractors that work with academic institutions. and I think that's another policy thing that...

38:59Emily Peck: Yeah, it depends who you're talking to in Silicon Valley. Like most, you know, a huge chunk of Silicon Valley is connected by one degree of separation or is actually a part of Stanford University and knows full well how important it is for institutions like Stanford and Berkeley and Caltech to get that funding. Yes, you're right, there is a sort of libertarian bent in Silicon Valley, especially when we had this period of people making a lot of money from social media where there was very little sort of bleeding edge tech involved in like, I'm going to build Facebook. But now we're back in the realm of Silicon Valley's future is based on scientific advances and not just on hacking social media algorithms.

39:42Emily Peck: And at that point, yeah, it's going to be a big fight with China, which we'll probably lose.

39:57Emily Peck: On which note, we should have a numbers round. Emily, do you have a number?

40:01Felix Salmon: I do. It's$3. $3? Elizabeth knows what this is.

40:06Emily Peck: Is this a gas price thing?

40:07Felix Salmon: No,$3 is the cost, according to USDA Secretary Brooke Rollins. $3 is the cost they came up with after running 1 ,000 simulations. Don't know what that means. $3 is what it costs to have a meal consisting of a piece of chicken,

40:23Emily Peck: piece of broccoli a piece piece of broccoli like one floret a corn tortilla and something else

40:29Felix Salmon: that is what she said on tv this week she said that they run over a thousand simulations and a simulated chicken breast you can have a three dollar meal made up of the piece of chicken piece of broccoli corn tortilla and something else something else apparently she meant was a dairy

40:45Emily Peck: you can put some mayo on your tortillas you can have the world blandest taco go.

40:50Felix Salmon: She was talking about this because, you know, Robert Kennedy Jr. updated the food guidelines, and now they're very protein and dairy heavy. And like the administration's out there pushing whole milk really hard. A very disturbing amount of whole milk pushing is taking place. And the question was like, seems expensive to push so much protein because, you know, if you, we've talked about ad nauseum on the podcast, how much beef costs these days, but chicken, to be fair, hasn't gone up as much. And the Wall Street Journal even went out and they had some reporters try and find a$3 piece of chicken, piece of broccoli, corn tortilla and something else meal.

41:25Felix Salmon: And they were able to do it. But the problem is you have to go to the supermarket. You can't just buy a single piece of chicken or broccoli. We know this. Even us, even elitist slate money knows that we can't just buy a piece of. So anyway, they had to spend.

41:37Emily Peck: That's like$12 for a family at four.

41:39Felix Salmon: Yeah, you have to spend like$12 or more. I think it was like$26 to like eke out the piece of chicken, piece of broccoli and something else meal. So, you know, it's not a great... But guys, this is January.

41:52Emily Peck: We've all like made our New Year's resolutions to lose weight this year. And the best way to lose weight is to eat nothing but like chicken breast and tortillas.

41:59Felix Salmon: Chicken breast, piece of broccoli. Can't go wrong.

42:01Elizabeth Spiers: Eat nothing, really.

42:02Felix Salmon: That's free. If you're mainlining the Ozempic, that's enough, right? That's enough. Yeah.

42:06Emily Peck: But then again, the Ozempic is more than$3.

42:08Felix Salmon: But I think the administration is moving to make it cheaper. So it kind of makes sense holistically, I think.

42:14Emily Peck: My number is related. My number is 22, which is also a price. It's$22. And because, you know, I am basic, I have also decided to do the dry January thing this year. And I went to a restaurant in New York, perfectly nice restaurant called The Dutch down on Prince Street. and$22 is how much they charged me for a fake Negroni.

42:40Felix Salmon: What?

42:41Emily Peck: Yeah. The mocktails are now$22, people. And while I have had many very good mocktails in my time, I have to say this was not one of them.

42:52Felix Salmon: So it's juice. You spent$22 for juice.

42:56Elizabeth Spiers: There is a really good company that I think is Brooklyn-based that makes a phony Negroni.

43:02Emily Peck: Yeah, I'm not a massive fan of the phony Negroni, but it's better than this thing I had at the Ducks. And also the great advantage of the phony Negroni is it's like, what is it, like six, seven bucks? It's definitely not 22. That is true.

43:14Felix Salmon: That's three meals.

43:16Emily Peck: You could feed a family of eight for that.

43:19Felix Salmon: That's like so many pieces of broccoli.

43:20Elizabeth Spiers: Feed them one taco for one meal.

43:23Emily Peck: Elizabeth, what's your number?

43:24Elizabeth Spiers: My number is seven, and that's the number of fire code violations that Pure Gem has experienced in New York City. Oh, this is the gates, the 24-hour gates. is a company that bought the chain Blink Fitness, which is very low cost. It's like$10 a month for membership. And then they don't have some things, like they don't have towels. You have a sort of Clorox wipes that you can wipe down the equipment, but you got to bring your own towel. But they were bought by this company, Pure Gem, that has installed these doors that look like the Star Trek tubes that people beam themselves up and down. And they said they did this because it ensures that people who aren't members can't get in.

44:02Elizabeth Spiers: But it also has a kind of creepy vibe. And initially, people thought that they were body scanners. And they were like, I don't know if I want my gym scanning my body.

44:11Emily Peck: If I want my gym scanning my body, I'm going to pay$3 ,000 for that. God damn it.

44:15Elizabeth Spiers: But there are two, you know, one person tubes. So it's also like if there are people in line, you got to wait and stuff. And there was one woman who...

44:22Felix Salmon: You entered through a tube?

44:23Elizabeth Spiers: Yeah. And you use your phone to activate it. So there was one woman who got in the tube and then her phone died. And you had to wait for somebody to get her out. so yeah people are still adjusting to this and and you know i i think the person who invented the revolving door was a sadist so this feels worse to me but revolving doors are very important

44:42Emily Peck: and very green and i will defend the revolving door i know i know you had a revolving door take but of course i do i know the revolving doors are not the best like human ux but yeah if you have a revolving door at the bottom of a skyscraper then like it helps in a million

45:01Elizabeth Spiers: different have you ever tried to get a small child through a revolving door though oh my god

45:05Felix Salmon: i've definitely had some like close calls no this is this is a feature not about it it keeps the small children out of the skyscrapers it's awesome i'm a huge fan of towels at the gym i belong to a fancier gym and that's my favorite part unlimited towels sometimes i'll take a shower and i'll use like five towels i don't care i know i know i'm destroying the environment but they're just And like it's so much serious You would never do that at home Just keep taking clean towels It's like wee It's my favorite thing

45:29Emily Peck: You are why my gym costs so much money Because you are using all the towels

45:35Felix Salmon: I love the towels

45:37Emily Peck: Alright I think that is it For us this week Please email Emily On slatemoneyatslate.com And castigate her For her towel usage At the gym You're destroying the environment How dare you How dare you or tell her that she is absolutely within her rights and go ahead and you go, girl. One or the other.

45:59Felix Salmon: Those are the only options. Yes or no. Put it on Polly Market.

46:03Emily Peck: Yeah. Thank you for listening. And thank you also to Jessamyn Molly and Shannon Roth and Micah Phillips for producing the show. And thanks for being a Slate Plus member. If you're a Slate Plus member, we all talk about something isolated in the Slate Plus. Otherwise, either way, we will be back next week with more Slate Plus. Amen.