Political Ad Splurge

0:09Hello and welcome to the Blue Nami edition of Slate Money, the guide to the business and finance news of the week from the 30-year-old media organization known as Slate. I am Felix Salmon of Bloomberg. I'm here with Elizabeth Spires of the New York Times.

0:31Felix Salmon: Hello. I'm here with Emily Peck of Axios. Hello, hello. And of course, we're going to talk about the midterms. We're going to talk with Emily's lovely, amazing, intelligent, and brilliant colleague, Sarah Fisher, about advertising and the role it plays or doesn't play in election results. We're going to talk about the stock market and it's kind of interestingly weird reaction to what happened we are going to talk because we need some counter-programming here about the vessels that bottles of whiskey come in when those bottles of whiskey are very expensive we have a slate plus segment with sarah about fox and right-wing media and what's happening there we have a kind of wild numbers round.

1:13It's all coming up, so stay tuned to this week's Slate Money.

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2:03Felix Salmon: Slate Money is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab, to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's Managing Director for Legislative and Regulatory Affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors, and even the entire market.

2:44Felix Salmon: Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and follow at schwab.com slash Washington Wise or wherever you listen. So we are going to start this week with the intersection of politics and money. We have the world's greatest expert on money and politics on the show this week, the one and only Sarah Fisher of Axios. Welcome, Sarah. Thanks, Felix. Hi. Is it true that more money was spent this year on election-y things than ever in the history of humanity on any election on the planet? Not true. More money was spent in this midterm cycle than any other midterm cycle.

3:33But last presidential was higher than this midterm cycle. But it was insane amounts of money. I saw that there was like the California Democrats alone spent like almost$800 million on God knows what, because they were all going to sail through without any problem.

3:51Elizabeth Spiers: Well, no. I mean, we flipped four seats in California. And competitive primaries. You flipped four seats for$800 million. Like Elon Musk spent, what was it,$300 million in a desperate attempt, which failed to stop Texas from going blue. There just doesn't seem to be any limit to, I mean, the total amount of money spent was, what,$11 billion,$13 billion. I've seen various numbers floating around. Let's not get stuck in the specifics. I just want to, like, the big picture is bazonkers amounts of money. Bazonkers amounts. And my question is, is any of it making any difference? I'm a big believer that advertising works.

4:32And whenever you ask somebody how much does a footlong sub cost at Subway, you expect that they know the answer's$5 because they've seen the ad. If you ask somebody what movies are in theaters, people typically know that because they've seen the ad. So it's not that advertising doesn't work. But what we've come to find with elections is that advertising is not alone enough to persuade somebody's vote. And I think that is a critical thing here. You're right that Republicans spent way more than Dems, $2.1 billion versus Dems,$1.8 billion. And it largely didn't work. And I think one of the other challenges Republicans face, Felix, was that they were a little bit caught off guard about how they had to move the money.

5:12Because typically, Republicans put dollars towards toss-ups that they kind of expect, states like Georgia or North Carolina. But this race, I think they were very much thrown off by how far behind they were in Texas with Ken Paxton, with John Cornyn. And so they had to move a lot of money to states that they don't typically have to. And that was a core strategy because they got boxed out of broadcast inventory. They had to move into streaming, which is not a bad thing, but it's oftentimes not as efficient. And so the problem there in some cases was the strategy.

5:46Elizabeth Spiers: Was there any scenario where they could have spent the same amount of money and actually had it work? or was it an issue of what they were spending ad money for? You know, there were a lot of ads about trans kids, which didn't seem to move the needle for them. If the creative had been different, do you think the outcomes might've been different? Excellent question. During the primaries, I ran this analysis, both parties were messaging so heavily around Trump and not just Trump, but character politics. You saw a lot of Republican campaigns referencing, for example, like Crooked Joe. And what we came to find was that ultimately this was an election that really mattered around the economy, around taxes, and actually around healthcare.

6:25A lot of Republicans ended up shifting spend into healthcare in the final months, recognizing that was a big issue. I think you're right, though, that they spent so much time and money in the primaries talking about Trump, that they tuned a lot of Republicans out. And we know that Republicans started to tune out ahead of the general because ratings on Fox News started to slip. And that's our best proxy for understanding conservative engagement in this election cycle, pretty much.

6:49Felix Salmon: Sarah, I wanted to ask you, like zooming out even from this election, and you had some of this in your really good deep dive that you shared with us and we'll share in the show notes. But the explanation for why there is so much money behind these ads, I feel like you noted you flicked at Citizens United sort of opening the floodgates. And I think on the planning call, and I can't remember if this was in your piece, we just talked about like the arms race nature of it. If my opponent is spending hundreds of millions of dollars, I too need to spend hundreds of millions of dollars. You mentioned like consultants taking a big cut of the money, super PACs being forced to spend more than the candidates themselves.

7:27Felix Salmon: Like what are all the reasons for all the inflation and this like crazy increase year over year? There are three reasons. One, policy. So you mentioned the Supreme Court case, 2010 Citizens United, which said that outside groups have uncapped spending. And alongside that, I'd say we have very little policy restricting political ads in terms of required transparencies and disclosures, especially compared to other westernized democracies around the world. We also don't have caps in terms of when you can stop spending. You know, in other places, you can't message and buy ads within the month or two weeks leading up to an election.

8:01So policy is reason number one. Reason number two is that because Congress is so deadlocked and because so little laws are being passed, a lot of issue advocacy spend, which is part of that$11.6 billion that Felix referenced, is moving to the states. And so if you're an issue group or corporation that has a vested interest in some sort of policy proposal, instead of having to throw dollars at one federal Congress, you now need to pose more dollars potentially into many dozens of states that have certain issues on the ballot. We saw an enormous uptick in state legislature advertising this cycle.

8:40We also saw a huge bump in down-ballot races. Typically, a lot of the spend is going to go towards federal candidates. Remember how I just said the Republicans spent 2.1 and Democrats spent 1.8? The rest of it mostly is issue advocacy, but some of that is these down-ballot races in state ballot measures.

8:58Elizabeth Spiers: Is that because the money is just there when it hasn't been previously, or is it because there's a growing awareness that all of this starts with down-ballot races or both. The laws around these issues are not being passed at a federal level. They're being passed at the state level.

9:13Felix Salmon: That really tracks with what we're going to talk about in our next segment, Sarah, which is data centers and all the action on data center moratoriums and policy is happening local and state. So that totally, yeah, that totally checks out. Everyone's talking about federal government's not going to do anything. It's all going to happen at the state level. and companies are going to have to run around to all the states and do their issue-by-issue, state-by-state lobbying. So that totally tracks that then that would redound onto ad spend. Definitely. And then the last one is because you have a lot more inventory.

9:43So it used to be that you were capped by broadcast, which is a 24-hour cycle, right? And that has capped inventory. Now that you can put ads on streaming, you can put ads on digital, you have a lot more inventory to be able to message. And so that, especially with streaming, which is completely unregulated and easier to target, gives campaigns a lot more places to put the ads. So it's those three reasons combined that you see a lot more advertising. It's not necessarily that the consultants are pushing it for the cut, although that is a nice little change in their pocket that I'm sure they're very excited about.

10:17Because if I'm one of the consultants who buys local TV ad spots, you give me a million dollars to buy an ad spot in Alaska or whatever. I just take 15 % of that, right? And then the other 85 % goes to the TV station. That's a nice little earner for me every two years. You should get into it. I mean, people feel like I can't even tell you. When I used to sell ads, I would go to these offices. And typically on the Republican side, they're like in Alexandria, Virginia. And these agencies, they're beautiful on the water in Alexandria. They're run by people who have a lot of little PO boxes because they firewall for all the different candidates they could represent.

10:54And they basically make no money on the off years, except for some advocacy stuff. And then they make millions on elections. It's amazing business to see.

11:03Felix Salmon: Speaking of who is this an amazing business for, we talked about on the prep call, the local TV. That's where all this money is winding up. Is that right, Sarah? How much is the entire local TV business reliant on election spending these days? Political, which includes issue advocacy, advertised and spent this cycle, so roughly$5.5 billion, went to local broadcast. So it's a pretty big windfall for them. And if they did not have that, they would be in even more serious terminal decline than they already are. They basically are staying in business because of elections.

11:36Elizabeth Spiers: Do they view connected TV as a competitor or is it just a totally different media buyer and ad category? They do. And that's a big part of, I'm not going to get into it here if you ever want to have an antitrust discussion around Nextar Tegna. But basically one of the reasons that they are arguing to the regulators that are looked at that deal that they need to merge is because they compete with connected TV and streaming and all these other platforms, not just with other local broadcasters. But ultimately, these broadcasters, it's funny you say that on competition, one of the things that's kind of annoying for them is there's a law that says that they have to provide the lowest rate to candidates.

12:12Streamers don't have to do that. So streamers can charge whatever they want to these campaigns, whereas local broadcasters have to charge the lowest rate. And the reason they have to do that is to ensure that no one party gets charged more than the other. So let me ask you, all of us who have lived in America for more than five minutes get fundraising texts from various candidates saying like, I am losing and I need money. And the idea behind that is like, I am a politically engaged person and I want one side or the other to win. And I want it so much that I'm willing to donate money to that side that I support for political reasons.

12:49how much of the 13 billion dollars or whatever it is that gets spent on these elections is ideologically intense people donating money because they really want one side to win and how much of it is much more sort of corporate interests saying like hey if we put 100 million dollars into this campaign that is going to make like a certain percentage more likely outcome and And if we get that outcome, then that is going to be worth$3 billion to our business. And it's just like a business investment type thing. It varies by the party. The Democrats have always been so heavily reliant on small dollar fundraising through ActBlue.

13:29So reliant. Whereas Republicans have tended to be more reliant on large corporate donors. And that did not change the cycle. That dynamic stayed the same. Is it like those corporate? I mean, obviously, we talked two years ago a lot about how Elon Musk made some massive return on investment on his political campaigning. You know, he put a couple hundred million dollars in and then suddenly his companies were worth hundreds of billions of dollars more because he was in there with Trump. is the big corporate investment in political advertising, even at the insane amounts of money that are going in right now, is it still generally a positive ROI business to be in?

14:09It depends. I think about all the money that was spent during on health care during the Obamacare years. Ultimately, a lot of health care companies spent billions and billions of dollars pharma, and they didn't get the return that they would have liked. But by the same token, they also managed to avoid the worst case scenario that they were trying to fight against. Correct. There's no way to tell. It's unlike consumer marketing, where you can have a clear return on your investment through a product sale. Moving votes can be a little bit ambiguous. And then, by the way, that's why these consultants make so much money, right?

14:41Because it's hard to measure the efficacy. But what we do know is that corporations cannot afford to completely sit Washington out. because if you are caught flat-footed, your business could be really radically upended. The best example we always referenced was Bill Gates and Microsoft were really caught flat-footed by the Justice Department during the Google case in the late 90s. And it was that case that woke up corporate America to why you really need to start investing in Washington. Gates famously didn't come in the first few the positions in a suit, right? He didn't understand the culture.

15:15He didn't understand what he was up against. And then obviously now big tech is more invested in Washington than anyone else, in part because of what happened there. So everyone knows that you've got to invest. Everyone's strategies are just very different. Some companies, Meta and Google, hire hundreds of lobbyists and are very much on the ground. Other companies like to have very little presence and instead join coalitions where they don't have to be leading the charge. It just kind of depends on how visible and how loud you want to be.

15:41Felix Salmon: How, I mean, aren't consumers voters? Isn't there backlash to this? I mean, we were seeing in our house, I mean, like 25 dozens of ads a day, like, and not just watching TV. It's every time you want to look at a video, you have to watch, you know, an ad for Mike Lawler. Every time I pick up my mail, there's six flyers going both ways for those two candidates. It's like insane. Everyone I know is like, I hate that guy, Mike Lawler. Why is he talking to me still? Why am I still seeing his face in these ads? You know what I mean? It just seems like it's going to backfire at some point. It's like, it's just too much.

16:14Felix Salmon: It's like a flood.

16:15Elizabeth Spiers: I think part of that is the way that consultants look at it is, is this effective? And they don't really care if it annoys you, if it actually gets you out to vote or gets the candidate name ID. One of the most famous ad tactics is from the 1980s, where campaigns went sent out to voters, usually via direct mail, email that basically tracked your voting history and said, hi, Emily, I see you didn't vote in the last cycle, but your neighbors did. And so we get that. And that is one of the most effective get out the vote ads. But it also annoys people so much because they think their privacy is being violated.

16:49Elizabeth Spiers: But people still run variations of that because it's still effective in randomized controlled tests. Yeah, I think that you just nailed it, right? A lot of this is also name recognition. And the more you just hammer on someone's name and align them with a particular policy, the more likely someone is to come get out the vote. I think where Republicans struggled, and we talked about this earlier, was the messaging. I think there was an over-indexing on sociocultural issues and on character issues, as opposed to just talking about the economy. And I think one of the reasons they didn't is because it's very hard to talk about the economy with gas prices being attributed directly to the president's war.

17:26So they were caught flat-footed on the messaging problem. And Emily, to your point about this being a huge burden on consumers, my response to that is we are nowhere near Congress passing any laws, let alone federal election laws. and in other places around the world, this is why spending is capped. It's why spending is curbed ahead of the election. It's almost consumer protection as well as protecting the integrity of the elections. We're just never going to, not in my lifetime, I can't see that getting passed.

17:51Felix Salmon: That's really frustrating. Sarah, it's been amazing having you on. Thank you so much. I'm assuming from everything you're saying that like all of these lines will just continue going up, right? There is no world in which election spending ever starts going down rather than up. You know, it's funny. when I was in political ad sales, the thing we loved was when the presidency and Congress were divided because then there's a tension that is going to require messaging. Or when the House and the Senate are divided, you love that because then there's, again, tension that requires messaging. What you hate is when it's the same House, Senate, Supreme Court, presidency, which is what we've kind of had because then there's no point in messaging it, right?

18:34Like that party's going to do what that party's going to do. So to answer your question, Felix, I don't see this political ad spend for the foreseeable future for the next few cycles slowing. However, if you're ever in a position where there's just so much uniformity in terms of the party, we definitely see spend slow because there's no point in messaging. It's, you know, uphill battle. So basically what you're saying is that 2026, which was a midterm election where the White House, the Supreme Court and both houses of Congress were all controlled by the same party and everyone knew who they wanted to vote for.

19:07And there was no real way that a TV ad was going to change anyone's mind. That's like the lowest amount of potential that anyone has ever had from advertising. And even then, it was like the second biggest election ever and the biggest midterm ever, which means that like come 2028, God help us all. Yeah, well, you know what it meant? It was honestly, it was just that 2025 was really rough because 2026 is high because you're trying to get people into office. You know, in a non-midterm year in 2025, Congress is deadlocked. We all ignore the odd years. But in advocacy, you can't because there's still a lot of cause and appeal messaging.

19:44And that$11.6 billion number, Felix, also includes, actually, most of it is, like, the cause and appeal stuff.

19:50Felix Salmon: Sometimes the ads do work, right? Every year or every campaign cycle, there does seem to be a few kind of interesting ads. Like, I was looking today at the Mississippi Democratic senator candidate for Senate, Scott Colom, who's got this ad that, what is it, pick your own protein. He's basically, he's making— I don't want a new protein. I want a new senator. Yeah. Yeah. Yes. Because Cindy Hyde Pierce, the Mississippi Republican senator said something like, well, you know, beef prices are high. And she said, well, you could just pick a different protein. And then it was just this like fun ad where the guy, there's a guy at the grill and he says, she, I'll just pick another senator.

20:30Felix Salmon: And then it's just so fun. And like, I don't know, there's always a few ads where you're like, okay, well, why can't they all just be like this? Or like one ad that everyone remembers, like Lyndon Johnson's like Daisy ad or something. Like, why can't the ads be better at least, Sarah? They're so expensive.

20:45Elizabeth Spiers: That's the insurgent agencies that are working with the younger candidates, first time candidates. They are producing the most interesting stuff because they're not the old school giant sclerotic places.

20:57Felix Salmon: I would like more of that if we're going to have to live with$100 billion worth of ads or whatever it is. Yeah, I mean, those can be so effective. So those are an outlier category. Others that I would put in that category would be Joni Ernst, who got into office in Iowa by saying, I grew up castrating hogs. So when I get to Congress, I will cut pork. I mean, there is a lot of good examples of this. But I will say overwhelmingly, you hit on something when you talked about Daisy ad. In political advertising, there's only two emotions that tend to be affected and triggering. One is fear, which is like the Lyndon Johnson Daisy ad in 64.

21:32And the other is enthusiasm, which is like the 1980 Ronald Reagan morning in America again. Anything in between doesn't typically work. Anxious advertising doesn't work, but getting people anxious doesn't work. You have to get people scared. So if you try to do comedy, it can be much more hit or miss. If you lean into those two things, enthusiasm or fear, you have a higher likelihood of a higher return on investment. Don't ask why. That's just literally what we know to be true. Sarah Fisher of Axios, thank you so much for coming on. Thank you, Felix. It's my favorite topic ever. Appreciate you guys.

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26:44Okay, so we need to talk about the markets. Market reaction to the election was super interesting. It's one of the most interesting reactions I've seen like ever. When the results were coming in, there was a broad sell off, especially in tech stocks, and we can talk about why. Then on the day after the election, they all kind of went up, or a lot of them went up, led by the big spenders, Apple, Microsoft, Google. And then on Thursday, two days after the election, those big spenders broadly stayed up. But then the more sort of core AI stocks like CoreWeave, more sort of data center-y stocks kind of fell off a cliff.

27:24And all of this is related to two big things. One is that a lot of the people coming into office, especially the incoming governor of Texas, but lots of other people have basically called for a moratorium on data centers. And given that so much of the AI trade was about like, we are going to be building data centers faster and faster until the death of the universe, that kind of put the kibosh on that trade. And then the second part of it was something that looks very similar to what we saw with situational awareness a few months ago, which was basically just that there was an incredibly crowded hedge fund trade where they were all in the same stocks and they were all betting on them going up and they all deleveraged and tried to get out at the same time and there was this rush for the exits and the stocks went down.

28:10But if you put it all together, Emily, what's your sort of verdict? Do you think that this could be the bubble bursting?

28:19Felix Salmon: I don't, I don't, I'm not going to prognosticate, Felix. I don't know. I think some of this was already happening going into the election. Like you saw a lot of the chip stocks were falling off their highs in September. The hedge fund unwinds were already happening ahead of the election. So I feel like the election just sort of a like a catalyst for that sell off that took a day to to happen. And we're talking on Friday morning. So I don't know what's going to happen now. The market's just open and it looks like they're up a little bit. So it was just my general opinion here is that Thursday was noise and Wednesday was real?

28:55Felix Salmon: Maybe. I think what we learned Wednesday and what we were originally going to talk about today was that the big tech, the so-called hyperscalers, meta Microsoft, Alphabet, were going to be okay. Like even if there was a data center pullback, these companies are in, they're fine. They're in relatively good shape. It's all those other weird companies like the crypto companies that are now making data centers, that company Iron, stuff like that. Like the chip makers that went up 100 % or more over the past year, they're kind of like, okay, this is getting a little crazy. I guess the, just the question is just like, do those, the troubles for all those little players that became really big, do those sort of like spill over and pop the bubble or is it like a more subtle situation?

29:40Elizabeth Spiers: I don't think there's a bubble popping. I think maybe this was some necessary letting a little air out of the bubble because the rate at which the hyperscalers and some of the smaller AI companies were planning on doing data center buildouts already had some problems, one of which was that in a lot of places, the grids couldn't sustain it. There's bipartisan data center opposition. And especially when you consider that most of the places where these data centers, the biggest ones were slated to be developed, were in rural areas that skewed incredibly red, especially in Texas. So you had a kind of opposition to tech oligarchy coming from the left and opposition from the communities that were being affected directly by data centers coming from the right.

30:20Elizabeth Spiers: And I think everybody kind of saw that coming, but the sort of democratic route means that there are a bunch of other things that are kind of, I think, secondary in the discourse, but equally important. And there are considerations around regulation, permitting, things like, things that basically all of these companies have not really had to deal with up to this point because they have been allowed to go in and build these data centers with no resistance, no regulation. And they have been able to shoulder the cost of negative externalities onto other people. And now the Democratic Congress is going to come in and kind of say, all right, you guys have to be responsible for some of this stuff.

30:59Elizabeth Spiers: And we need community participation if you're going to put a data center in our districts. Yeah, like if you have a Democratic, I mean, I don't think that the House of Representatives, even with a 250 seat majority or whatever it is, is going to be able to do anything really in the face of presidential vetoes. I do think the White House is going to probably stay relatively strong on this one, even though there is bipartisan calls for more regulation and a slowdown and pacing the frontier and all these things. I do think that at the state level and at the local level, especially in Texas, but also in Virginia and also in Ohio and also in Georgia, the ability of governors and the state level legislatures to put the kibosh on these data center build outs is massive and they can and they will.

31:47And my opinion is broadly in line with Wednesday's market, which is this is probably a good thing that we were spending too much money on data centers, that it was a lot of the money that was being spent on this stuff was being spent just because everyone else was spending money a little bit like we were talking in with Sarah about how like one party needs to spend money just because the other party is spending money. Like, you know, if you're meta, you need to spend hundreds of billions of dollars on compute because Apple is spending hundreds of millions on compute. And so it's Microsoft, you know.

32:17And so if this arms race of spending money, a lot of which, and we're seeing this with chip prices and stuff, a lot of which is just price insensitive. If that arms race slows down a bit, that's good for the economics of AI. And I think we saw that with the way that some of those big companies have risen in price. And I think we're also seeing it too, like it's very hard in this world of OpenAI and Anthropic being private companies to see really what the AI trade is doing. Because the AI trade is so concentrated in those two companies. But we do have this wonderful thing called Hyperliquid, which is a crypto-y kind of website where you can trade the stock of those companies.

32:59And it's the best thing we have. It's not perfect, but it's not bad. And if you look at the stock price of Anthropic and OpenAI on Hyperliquid, it's basically flat. They're down a bit since the election, but nothing too bad. And people are talking about maybe Anthropic will delay its IPO a little bit. But I take that as a bullish sign that they're like, no, we want to wait until we can get more money rather than being like, oh, shit, no one wants to buy our stock. I think at a$1.4 trillion valuation or something, Anthropic would have no trouble getting an IPO out the door.

33:33Felix Salmon: I mean, we're seeing now some pushback on the valuation given everything that happened this week. I think that's the big question mark because Anthropic and OpenAI are such a key part of the AI trade, but we still don't really know how successful. Obviously, we don't know how successful the IPO is going to be. And Anthropic has something like$800 billion of spending commitments. I think we talked about last week. Like there's such a like a pivotal kind of pillar in the AI trade, right? And so a lot is kind of hanging on how well that IPO does. And if they do say like, we're not going to do it this year, we're not going to do before Thanksgiving, like we said, I think that would lead to more stock gyrations would be my guess.

34:14Elizabeth Spiers: Companies are under different pressures if they're private versus public. And I think public shareholders are looking at the hyperscalers and they don't consider if they slow down a little bit on AI development, they're not as concerned about it because they have other revenue lines, they're big enough to sort of handle the impact. And I don't think it's really gonna hurt Anthropik or OpenAI, but it would not surprise me if the valuations were lower because they would have to readjust projections of what they're supposed to be building out because that's sort of what they promised the early stage and later stage VCs.

34:45Elizabeth Spiers: So there would be some justification for the valuation being lower given all of that. Yeah, so much of those valuations are a function of growth rates. And, you know, if things are slowing down, then growth rates are slowing down. And it kind of stands to reason that valuations might come down. I don't really think that it's the end of the world if Antropic is worth$1 trillion rather than$2 trillion. It's still a trillion dollar company. You know, it's still like, why does that even matter?

35:10Felix Salmon: One thing I have been thinking about a lot with regards just to go back to data centers and backlash and slowdowns and all of this is how, if you look at it one way, data center developments, kind of like residential housing development in that this big important industry, macroeconomic force, the AI trade that's driving the economy and productivity all comes down to like permit requirements from some obscure board in Texas. It's hard to build stuff in the United States. There was a whole book about it, I guess. I haven't read it, but I've seen the discourse about abundance or whatever. And for a while, it looked like data center construction was like special.

35:50Felix Salmon: It takes houses and apartment buildings a really long time to get built because there's all this NIMBYism and whatever. But not in Texas. Like, Texas is always the exception. Not in Texas. Right. And then you saw all the data center development. I was just reading an analysis last week. And Elizabeth just said all the data center development got, like, it went to rural red areas with low regulation on purpose because they were like, I will not encounter the NIMBYs here. we will not have the same problems as housing has, of course, because we figured it all out. And there was almost like a fiscal stimulus to the construction, right?

36:26Felix Salmon: Policymakers in these places were like, we love this. Have a tax break. Don't worry about it. You're good. Build all you want. We don't care. And like immediately are hit with the same backlash that affects the housing market all the time. Like these forces in America are like deep and real and bipartisan, actually. Can I share my mildly facetious explanation for why Texas went blue and Florida stayed red? Texas has been doing an astonishingly good job of building houses for people and expanding its cities. And cities are blue. And Florida has been doing a terrible job of building. Therefore, all of that kind of urban expansion that happened in Texas has not happened in Florida.

37:13Felix Salmon: I like that. I thought it was more like California exported all its quote-unquote woke tech people. They weren't that woke because they left California, but they're still more liberal perhaps than garden variety.

37:26Elizabeth Spiers: I wouldn't consider that a primary explanation for the difference. No, no. The other thing is just that the incoming governor is pretty moderate. She's not really progressive. and she said something this morning on CNN where she said something like, you know, with the AI stuff and the data center issues, 99 % of us are in the same boat. And you can sort of build this bipartisan consensus around the idea that we're all, this is a Texas issue. And on the other side of it are 15 tech guys who have way too much power in government. So can we talk about the one guy who is on the other side of that?

38:01And his name is Elon Musk. You might have heard of him. He famously moved not only his company to Texas and built an entire city in Texas called, what's it called? Star or something?

38:13Elizabeth Spiers: Starbase. Starbase. He even moved his company, Tesla, from Delaware to Texas. He is all in on Texas. And then, as we discussed, put$300 million into trying to keep Texas red and failed. And if there's on the face of it one big loser out of this election, it would be Elon, right? Because all of his bets on like I can trust Texas to be pro-Elon seem to have gone south at exactly the same time. Emily, you're smiling as though you're feeling a little bit of schadenfreude here.

38:46Felix Salmon: I was just thinking about the weekend. It was unrelated to what you were saying. Yes, Elon Musk does seem like kind of a loser because he spent all this money in Texas and it didn't go his way. and he put all these resources into Texas and it didn't go his way. And also there's a lot of discourse, post-election discourse about X.com was a bubble and no one saw the blue wave coming because they were all talking to each other and it was bad for the tech industry because they were all talking to each other, not thinking about the backlash, spinning up their theories about AI apocalypse, not realizing or thinking about how people might receive said theories, whatever.

39:23Felix Salmon: I don't know. Blue Sky is celebrating, you know, the usual splintering of the social media. But what I'm saying is, in addition to being sort of like a lose for Elon Musk's Texas strategy, it also kind of low-key looks like a lose for Elon Musk's social media strategy. And the kicker is, I guess, that he's not going to make the Cybertruck anymore. And I don't know how that relates to ARB, but I just wanted to say it. R.I.P. Cybertruck. I'm just happy never to see that thing again. It's a truly ugly vehicle. But Elizabeth. I feel like it'll go up in value now if they stop making it. No. No? Like the existing one?

40:01It's not like a DeLorean, Emily.

40:04Felix Salmon: That's what I was going to say. Is it like a DeLorean? Elizabeth, I need to ask you, where does this leave Elon Musk's influence and power within the Republican Party? Is it gone? Is it still there?

40:18Elizabeth Spiers: I think it depends on, I think it's still there if he still chooses to spend money. But, you know, he's sort of fickle in the same way that Thiel and some of the other big funders have been. He'll dip in and out. You know, he was pretty happy to exit Doge in a very abrupt fashion and then jump back in with money when he saw that maybe that would help. So I think what will drive his decision to be in politics will be the extent to which Democrats start to hold him accountable for things and how that plays into the public discourse. But also, I think he might get some backlash locally. The district that Starbase is in voted overwhelmingly for Democrats, and it's not a blue district.

40:57Elizabeth Spiers: So I think if he feels like his actual ability to stay on the treadmill that he's on with SpaceX and a potential merger with Tesla, if he thinks that's threatened in any way, he'll have to participate with money and he'll have to be in the process. He can't just check out of it. So I don't think he's going anywhere. I think it's going to be harder for him.

41:19Felix Salmon: Yeah, he's going to be okay. I'm worried about him. Elon is not going anywhere. My one last hot take was that the wealth tax didn't pass in California, but the AI data center backlash was sort of a version of that. That's my, do I have to explain more? No, I think that's right. And the wealth tax in California thing we have not talked about. And it's, I believe the technical term is messy as fuck. The proposition 40 failed, proposition 42 passed. that's going to make it more difficult to do a wealth tax in the way it should be done. I think we can probably all agree that the way the wealth tax was put on the ballot was not the way an ideal wealth tax should be done.

41:55But in any case, as Anna Shemansky wants of this parish has never stopped talking in my head, like this thing is never going to happen. Like it's just there's no wealth tax that will ever pass the Supreme Court so long as the Supreme Court has any kind of a Republican majority. And even if the Democrats take the Supreme Court, even then, it seems pretty clearly unconstitutional.

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43:22Verizon knows that holiday math can be complicated.

43:25Elizabeth Spiers: Okay, let's see. We got the four kids. Four gifts each. Six teacher gifts? Wait, oh, what did we get in? Sandy and the dogs. Oh, can't forget the dogs. know what doesn't need math simplicity plan from verizon one plan one price just 30 a line per month for you or the whole family the holidays are complicated shopping our best deals and switching to verizon is simple for new customers 30 per line includes auto pay and switch discount additional taxes fees and terms apply but we should move on to really important things like the boxes that bottles of whiskey come in. After all of this talk of elections and money and trillions of dollars, we need to talk about something utterly frivolous.

44:11Elizabeth Spiers: Well, everybody needs a drink anyway. So whenever you're listening to this podcast, pour yourself a glass of whiskey. Pour yourself a glass of whiskey. Emily, are you a whiskey drinker at all?

44:21Felix Salmon: I like whiskey. I like brown over white when it comes to liquor, yes. And then when it comes to whiskey, this is one of the things I learned when I was reporting this story, which we're going to link in the show notes. When it comes to whiskey, it turns out that Americans really fall into one of two camps. There's the majority of Americans who drink whiskey with an E. And then there's the minority of Americans who drink whiskey without an E, like scotch. The ones who drink scotch don't drink bourbon, and the ones who drink bourbon don't drink scotch. Are you one of the people who just drink both?

44:52Felix Salmon: Yeah, I'm a bourbon. You're a bourbon person. Yeah. I'm a both person. I'm a bourbon person. I really like bourbon. Wait, so bourbon is, I like these things, but I am ignorant. You like these things, you just can't spell them. I can't spell them. I don't understand really. Bourbon is whiskey, but not all whiskey is bourbon. Some whiskey is scotch. Correct. And the whiskey that is scotch comes with an E or no E? Scotch whiskey has no E.

45:17Elizabeth Spiers: Bourbon is made in Kentucky. Scotch is made in Scotland. Scotch. Yeah, and made in Scotland. In Ireland. Right. Well, no, no, no, no. Scotch is not made in Ireland.

45:26Felix Salmon: In Scotland. It's made in Scotland. Irish whiskey is made in Ireland. And does Irish whiskey have an E? Is it bourbon? Bourbon is made in America. Yeah. Well, I'm American. I like bourbon. That is the end of what I will say. I like your Jim Beam. I like your Maker's Mark. I like that Bullet brand. Bullet is good. Really good. Yep. I'm not going to spend$36 ,000 on scotch. I don't know. Felix, did you even try the$36 ,000? You did. You tried it, right? I have a little taster at home, and I'm trying to save it for when I'm actually going to write about what it tastes like because this story really wasn't really about what it tastes like.

46:02Felix Salmon: But we should say the story is another one. Felix, you're becoming like, this is your little niche is like crazy expensive things. Felix tries them and explains. Felix explains crazy expensive things. We talked about the bread and now it's a scotch that is$36 ,000 that you're writing about. Which by the standards of crazy expensive scotch is not that crazy expensive. So the news hook for my article is this$36 ,000 50-year-old Glenmorangie, which is a Scotch. There are lots of Scotch whiskeys that are 50, 60, 70 years old. And some of them sell for much, much more of that. There are bottles of Scotch that have sold for like a million dollars.

46:43There are bottles on the secondary market. There are bottles that have sold new. There's this auction that happens in Scotland every two years called the Distillers One of One Auction, where regularly bottles sell for more than half a million dollars.

46:56Felix Salmon: But what do you do with that? Do people then drink them or they just sit in someone's house? This is a really good question. And the answer is that it's a big deal when they are opened, but they do get opened. And these things tend to be extremely limited edition. Sometimes it's just one, sometimes it's 20. The Glenmorangie was 149 and that seemed quite large in the sort of edition size. And the people, if you talk to like Johnny Fowle at Sotheby's, who's the guy who knows all about this market more than anyone else, he like kind of knows when someone's opened one of these. And he's like, that one's off the market.

47:34That has reduced the number outstanding. They do get opened. They generally live in the kind of places that you would expect them to live on large mega yachts and big mega mansions and that kind of thing. And the thing that is super interesting about them is that there are very expensive bottles of bourbon as well. But the very expensive bottles of bourbon look like bottles of bourbon. The very expensive bottles of scotch look bizarre and weird and unique. And they're full of incredibly elaborate packaging. And so my question was, why? Why would these companies, I can understand why they would put a lot of effort into making a 50-year-old whiskey taste good.

48:13But like, why would you then spend thousands of dollars just on the packaging for the bottle of whiskey?

48:18Felix Salmon: Are you going to tell us the answer? Do we have to go to the listeners have to go read the story? Elizabeth, I want to ask you, like, when you saw the packaging for these bottles and the kind of what they looked like, was it intuitive to you that? Well, of course, they're going to do this. Or were you like, that doesn't make any sense?

48:34Elizabeth Spiers: No, I felt like I got it because it looked like everything's designed for display. And I did actually kind of like the, who was the ceramicist in your story? Peter Pincus. It looked cool. He's up in Rochester. Lovely guy. Peter and Laurie Pincus, I should say. It's the pair of them who make ceramics. And he made this sort of grid of 149 vessels, which you could put the bottles of whiskey into. And if you ever put those 149 vessels into the grid, it made this beautiful sort of artwork called Together in Spirit. But he never did because for insurance reasons, basically, they just couldn't. Glenn Moringy couldn't afford to have them all in the same place at the same time because it took him three years to make these 149 vessels.

49:20It was really like a three-year project just to make the box that this whiskey came in.

49:25Felix Salmon: Is it just like if you're buying a very expensive whiskey, you want to, like Elizabeth is saying, you want to display it. You want to show off how expensive it is. So you have some elaborate design sort of around it and packaging so you can really talk about it when people come over or stay on your yacht. That's kind of what you might say the first pass explanation. And the reason I started off here by talking about bourbon is that the fact that doesn't happen in bourbon kind of shows that it doesn't have a huge amount of explanatory power. If this made perfect sense in Scotch and people wanted to show off what they had, wouldn't they be doing the same thing in bourbon?

50:02And they're not. I think it is true. I don't think it's false. And I think one of the reasons why it doesn't happen in bourbon is because bourbon is much more about consistency, whereas Scotch is much more about uniqueness. So a very expensive bottle of bourbon, a little bit like a very expensive bottle of cognac, is made sort of, they make the very, very expensive one every year, and it's pretty much designed to be the same year in and year out. And so you are going to be producing a lot of those bottles. And the more you can produce of them, the better. Whereas with Scotch, it's all about, well, there's this one particular barrel which has been sitting in the back of this distillery for 75 years and we're finally bringing it out and we're putting it into bottles and there are only 20 of them.

50:45And then once we have bottled those 20 bottles, that's it. And if we had a different barrel sitting in a different corner of the distillery, it would taste different and it would come in a different packaging and it would cost a different amount of money. What that does is it allows you to make packaging that is much more expensive because you don't need so many packages. If you are making thousands of vessels for bottles of bourbon, that will cost you a lot of money if they cost thousands of dollars each. Whereas if you're only making a couple of dozen, then you can actually afford to make expensive ones.

51:16Elizabeth Spiers: So Felix, what is the most expensive booze you've ever tasted for journalism? I'm almost certain it was a red wine of some description in Davos. Davos has a bunch of wine parties and I've been to one or two over the years that I've been there and every so often like you kind of get invited from the front room to the back room and then if you're in the back room people will start pouring you crazy expensive burgundies and bordeaux and that kind of thing many of which are not really my jam, to be honest. But yeah, it would almost certainly be one of those. But I can't even tell you what it was, to be honest.

51:56Felix Salmon: And have you had the expensive scotches? No. And one of the weird things is I lived in Scotland for four years and I kind of got into scotch for a while there. And I would do these things called vertical tastings. You take like a Bowmore or something, you taste it. And this was back when scotch was vaguely affordable. Like scotch has gone up in price a lot since I was living there. But you would get like the five year and the eight year and the 10 year and the 15 year and the 30 year. And you would like put them all next to each other and taste them and be able to see how the taste change changes as it gets older.

52:29And obviously, the older it is, the more that has evaporated over time, the rarer it is, the more expensive it is. Like there's a very strong correlation between age statement and price. But just my own like idiosyncratic taste, I didn't generally like the older ones the most. It was often like the 10 or 12-year-olds that I liked the most rather than the very old ones for whatever reason. And so I was quite lucky in that regard. You know, I'm also quite lucky in not particularly loving very expensive red wines. The stuff I like is not super expensive. And so that makes me happy because I can afford to drink the stuff I like.

53:04Felix Salmon: Is it like with vodka? I feel like every few years there's an article about how cheap vodka tastes the exact same as expensive vodka. That's true. But is that – That's not the case in whiskey. That's not the case. No, I mean, expensive whiskey, there is like genuine connoisseurship around it, and it is very expensive to make, and it does take decades. There's no such thing as a vodka that takes decades to make. There's all vodka you can make in a week. Wait, why is scotch harder to make and take longer to make? Because the main ingredient in scotch is time. You put it in the barrels, and then you just wait for a lot of time.

53:38And eventually the wood in the barrels imparts the flavor to the liquor, right? The liquor is clear when it goes in the...

53:47Felix Salmon: That smoky flavor. When you say you prefer brown liquor to white liquor, what you mean is you like it when people put the white liquor in a wooden barrel, leave it for a few years, and the color and the taste from the wood leaches into the liquor. I like a smoky flavor. And often in America, with bourbon, what they do is they char the inside of the barrel. They take a blowtorch to it. And that's where you get your smoky flavor. That is very interesting. Thank you for that lesson. I hope the listeners enjoyed it as well. What I discovered is that there's two main producers of whiskey packaging out there.

54:26And then Glenmorangie, for whatever reason, decided to go with neither of them. And they picked this random guy in Rochester instead. But there is this tiny little micro industry of designing super swanky packaging for whiskey bottles or for scotch bottles in particular. And the purpose is to do exactly what I was saying, like is to distinguish the one barrel that was in one corner of the distillery from the other barrel that was in the other corner of the distillery and make it obvious that they're both very special and both very different and both very valuable. And yes, to give someone a pretty thing that they can display behind the bar on their yacht.

55:01Big question, what happens when the yacht runs into heavy weather? I don't know what the answer is.

55:08Felix Salmon: What do you mean? You drink. Like, you don't want the bottle to fall over and smash. That's the special occasion when you open up the bottle. That's the special occasion when you open the bottle. You're like, oh, there's a storm coming. We better open that 86-year-old Glenfiddich. I'm still kind of like chewing on you saying that the ingredient is time. Like, that's just, I need to sit with that for a minute. That's also the main difference between bourbon and rye. The bourbon needs to have been aged for at least seven years and rye does not. I didn't know that either. This is great. I feel like the ingredient is time is something you could say about a lot of other in writing as you learn as you're a daily, like I'm trying to write something every day.

55:47Felix Salmon: But if you have three days to write something, like you have time to sort of the ingredient is time that the piece is better, you know, like with someone with a monthly column. I couldn't agree more. Yeah, it's a really important ingredient across so many levels. Writing bourbon, apparently, or scotch, rather. I don't know, probably other things. Bread, sourdough. I think a month is the right amount of time to spend writing something. I think when you spend years writing something, I feel like things that appear in sort of monthlies are often better written and more conceptually rigorous than, say, books.

56:23Elizabeth Spiers: I won't tell Robert Caro you said that. Yes. But yeah, so in any case, if you guys want to go out there and buy yourself an expensive bottle of scotch to celebrate whatever it is you're celebrating, let me give you the arbitrage. The Glenn Morangie 50-year-old is$36 ,000. But if you go to Europe, it's only 30 ,000 euros. So my advice is hop on a plane, buy it in Europe, and you can get it for basically the equivalent of about$34 ,000, which is a bargain.

56:54Felix Salmon: But how much does it cost to go to Europe? You're probably going anyway, right? Yeah. Right. Of course. Of course.

57:16Should we have a numbers round? I will start. Why not? My number is 31, which is the number of years that Salon.com published before it died this week. Salon and Slate both started publishing around the same time. They were both the original internet mags. I remember opening up my browser pretty much the first week I arrived in New York in 1997 and going, I need to read the internet. And one of the places I would read would be Slate.com. and one of the other ones would be salon.com and it was a glorious era and then eventually of course salon wound up getting caught up in the dot-com bubble it went public in 1999 we all know how that ended and it somehow kept limping on for decades after the end of the dot-com bubble it didn't die but now it has died and it was the birthplace of so much great journalism and online It was well before the era of blogs, but it had a little bit of that sort of proto-bloggy sensibility.

58:22Elizabeth Spiers: I wrote my first freelance piece for us, Len. What was it about? I interviewed Lauren Weisberger right before the Devil Weisberger product came out. About the book or about something else? About the book, yeah. Did they pay well? No. The company that owns them now is like a crypto operation or something a few months ago. So sad. I just hope the archives stay up somehow.

58:45Felix Salmon: Well, Slate's still going. Slate's on its 30th year now. They just celebrated. With the OGs. Never went public. Yeah, Slate never went public. That was the thing. Slate was owned by Microsoft during the dot-com boom. So maybe some tiny little part of Microsoft's bubblicious valuation back in 1999. And they own Slate. Emily, what is your number? My number is 60. $60 an hour. That is how much a woman named appropriately Kim House charges upper middle class and rich people in Atlanta to be their house manager. According to the Wall Street Journal, this is the new a new job. It's like kind of a house cleaner, kind of a house manager, planner slash organizer.

59:31Felix Salmon: And apparently it's all the rage right now among like the rich people with who have jobs and giant homes who can't take care of their homes anymore. it's like more expensive than a cleaner. They'll like run errands for you. I guess like a housekeeper. I'm not sure, but they're called house manager. Will they like pay the electricity bill? I think they would do that. Yes. But I think so. Will they take out the trash? They will take out the trash, but they will not clean toilets. Oh. Per the story. Like they have boundaries in that regard. But will they hire the person to clean the toilet? I think they'll hire and oversee the people cleaning the toilets who I'm sure do not make$60 an hour.

1:00:09Felix Salmon: And according to the journal, some of these house managers are making like annual six figures a year. And I mean, it's how many houses do they have each? Multiple houses. I don't remember if there was a clear number, but it's multiple. You're juggling. I feel like they should reinvent themselves as a fractional butler. Yeah, it could be a fractional butler. But it's more like someone said, it's like a house having a housewife for couples where both are working. Or a fractional housewife. And the journal framed it as like how to make it look like no one lives in your house. The one you're not there, you know.

1:00:39Felix Salmon: Because you know how rich people, you go in their houses and everything's like all put away. The counters are clean. And you're like, how does some, what? Why can't, how? Oh, because they have staff. They have staff, exactly. But now, like if you're not uber, uber rich and you can't have staff, you can hire this one person for like$100 ,000 a year. And they will make it look like you don't live in your house. You do need the square footage. They'll come in after everyone leaves in the morning and like put everything away. The other secret to making it look like everything is put away is to have places where everything can go if it's put away.

1:01:11Felix Salmon: Yeah, well, this is in Atlanta where I think there are a lot of really big houses, is my understanding. I have been told this, yes. Elizabeth, what's your number?

1:01:20Elizabeth Spiers: My number is 40, and that's dollars. And that's how much Sylvester Stallone sold his dog Butkus for when he was broke, right before he sold the Rocky screenplay, and I learned this last night. He sold his dog? Yes, and then after he sold the screenplay, he tracked down the owner and bought the dog back, and the owner charged him$15 ,000 for it. What? And insisted that he be in the movie. Wait, he sold his dog for$40 because he was that broke. And then he was like, I miss my dog, I want it back. And then the owner was like, that'll be$15 ,000, please. Makes total sense. Yes. It's capitalism. It was so broke that he couldn't afford to feed the dog, and so he was like, I got to do something.

1:01:58Elizabeth Spiers: I learned this because I went to a screening of Rocky last night at King's Theater in Brooklyn, where Sylvester Stallone was on a panel. And this is maybe an apocryphal story, but he repeats it all the time. And I highly recommend seeing Rocky in a theater with a live orchestra playing the score, which makes all the difference. So good. And I guess they're doing this on a national tour, and I imagine when they do it in Philly, it will be insane. As someone who has recently seen Rocky the movie, I need to ask you this question, because it was a question that someone asked me a couple weeks ago and I was like, that's a good question.

1:02:35When Rocky is training for his big fight, why does he need to get up at four o 'clock in the morning? He doesn't have a day job. Why can't he just train during the day like a normal person?

1:02:45Elizabeth Spiers: I don't know. I guess maybe he wants to be at peak energy and I guess you probably have that when you wake up. I don't know.

1:02:54Felix Salmon: That's a really good question. I think you just want to get it out of the... You work out in the morning to knock it out, to get it off your plate so you can do other stuff. But his other stuff was just more training. So I don't know.

1:03:04Elizabeth Spiers: Also, if you're going to punch big steaks in a meat locker, maybe that's the time when the meat locker is not busy.

1:03:12Felix Salmon: Running up the stairs and everything, you want to make sure not a lot of people on the stairs with you. Exactly. You couldn't get that iconic shot if you had to like dodge a bunch of strollers or whatever. Yeah. I can highly recommend reading or watching the interview that Sylvester Stallone did with Lulu for the New York Times. He has a really great story. And so either read that or watch the movie or neither. Wait, why is Rocky so in the discourse right now? Is it like an anniversary? But he has his autobiography out.

1:03:41Elizabeth Spiers: And there's a movie coming out called I Play Rocky where it's like a biopic kind of. It's about him selling the Rocky screenplay and then insisting that he star in it. Exactly. They kept on saying this is a good, they bought the screenplay and they're like, this is a great screenplay. We're going to get someone who can act to be Rocky. and he's like, no, I've got to be Rocky. And eventually he managed to persuade them that he would play Rocky, even though they were very skeptical because they were like, you can't act. And he's like, well, that's not going to stop me.

1:04:09Felix Salmon: It's a very Rocky story. Okay, I think that's it for us this week. Thank you to all of you guys for listening. Thank you to Jessamyn Molly for producing. Thank you especially to Sarah Fisher for calling in from an undisclosed location somewhere in lower Manhattan. Do keep the emails coming on slatemoneyatslate.com and we will be back next week with more Slate Money.

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