0:01

Hello! Welcome

0:13

to Slate Money, your guide

0:15

to the business and finance news of the

0:17

week. I'm Felix Hammond of Axios with the

0:19

suppliers of New York Times. Hello. With

0:22

Emily Peck of Axios. Hi, Felix. We

0:25

are going to talk about McDonald's.

0:28

They have a $5 meal. Burger

0:30

King has matched. What does this

0:32

all mean? We are going to

0:34

talk about this concept that the Harris Poll

0:36

has come up with called quiet vacationing and

0:38

whether it's a thing and whether we should

0:41

be worried about it. We are going to

0:43

talk about the Bond Vigilantes and whether

0:45

they're back in places like

0:47

France and the UK. We

0:50

have a Slate Plus segment on Yankee

0:52

Stadium and whether or not it truly

0:55

is accepting cash for payments. It's all

0:57

coming up on Slate

0:59

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available in all states and situations. So

1:48

Emily, as the suburbanite

1:51

among us, you are more attuned

1:53

to chain restaurant prices

1:55

than Elizabeth and I. I can tell

1:57

you that non-chain restaurant prices seem to

2:00

be very high, but the

2:03

vibe seems to be that eating out

2:05

is expensive and even cheap eating

2:07

out is expensive and it doesn't get much cheaper

2:09

than McDonald's and Burger King

2:11

and now they're in a price

2:13

war and they've announced these

2:15

$5 meals where they're going

2:18

to lose money on every meal and make

2:20

it up in volume, something like that. Exactly.

2:23

Yeah, there is a price war in fast food.

2:26

Good for people, probably not good for

2:28

these businesses, but bad for cows. Oh,

2:31

poor one out for the cows, but

2:33

McDonald's starting this coming Thursday, I believe

2:36

is going to be doing a $5

2:38

meal. It's gotten

2:40

a lot of press. I think it's

2:42

like a sandwich, a burger, some

2:44

nuggets, fries, and drink $5, which is a good price.

2:48

But you get burger and nuggets or burger or nuggets? Burger

2:51

and nuggets, according to my research. Yeah, it's only

2:53

four nuggets, so I wouldn't get that excited about

2:55

it. But I did think about how did this

2:57

become a thing, the burger and the nuggets and

2:59

fries? I think that was Cactus

3:02

Jack. I think Cactus Jack made the burger and

3:04

nuggets combo popular. I am making this up. What

3:06

is Cactus Jack? Oh, Emily, did

3:08

you try to keep it? Anywho,

3:13

but this is

3:15

apparently, and so McDonald's is doing a $5 meal,

3:18

Wendy's, Burger King, even Starbucks is

3:20

doing, I mean, they're doing a

3:22

$6 thing where it's like a food

3:24

and a drink. Don't

3:28

ask me for more details. But

3:30

this is basically a return to

3:32

normal, is my understanding, because during

3:34

the pandemic years, these

3:36

fast food outlets were just raising prices,

3:38

like having a great old time.

3:41

Even in the McDonald's CEO

3:43

wrote a little rejoinder to

3:45

the haters recently, saying, Big

3:49

Mac's cost $18 now, and that's

3:51

not true. It's

3:54

not that bad. And even buried

3:56

in his rejoinder to the haters was

3:58

the information that prices at McDonald's Donald's

4:00

average for all menu items are up 40%

4:02

since 2019, which

4:05

is a lot of money. And like you

4:07

could maybe understand why people would be saying, I

4:09

don't want to eat at McDonald's. It's too expensive.

4:11

I might as well go eat at a like

4:13

restaurant or something. Um, so

4:15

now we're seeing return to the idea

4:17

that you have to compete on

4:19

price. If you're a proprietor of a restaurant

4:22

that is known for selling cheap food. So

4:25

I think that's what's happening here. There's

4:27

also people were upset because there was a

4:29

kind of meme-ified receipt where somebody had a

4:31

franchise in Connecticut and paid like $18 for

4:33

a burger meal. Yes. $18

4:35

for a burger meal. And

4:38

so wait, was, was that a real receipt

4:40

or was that, was that just like a

4:42

viral misinformation? I think, no, I

4:44

think it was real because some said there are

4:46

the franchisees are allowed some flexibility in how they

4:49

package things. So I don't

4:51

know what part of Connecticut, this was, but, but

4:53

they do have to sign up for this $5 meal

4:55

deal, right? And then I guess McDonald's

4:58

corporate will reimburse them for their

5:01

losses. I don't know that they're reimbursed

5:03

for their losses. They're, they've been complaining about

5:05

it and I haven't seen anything about reimbursement.

5:07

I know that the Coke is, is kicking

5:09

in some money to help to make this

5:11

deal happen. That was in one of the

5:13

reports we read in the prep. Yeah. You

5:15

got to get a soft drink with your

5:17

meals. It's one of the items in the

5:19

meal, which is why, which is why a

5:21

$5 meal is still something that is even cheaper in

5:26

a weird way than like a dollar burger. Because

5:29

by the time you add in the Coke

5:31

and the fries and whatever else, the four

5:33

nuggets, it's all, it all adds up anyway.

5:36

The point being that there is a price

5:38

war and this is a good old fashioned

5:40

loss leader

5:43

with the idea of getting people

5:45

back into McDonald's restaurants and back

5:48

into the habit of buying meals

5:50

at McDonald's. And once this special

5:53

offer expires in six weeks or

5:55

whenever it expires, people will

5:57

be so habituated to going to McDonald's. that they

5:59

will just happily go in and buy the same

6:01

thing and pay twice as much. Do

6:03

we believe that's going to happen? I don't know. I'll

6:06

tell you this. I just read six articles about

6:08

McDonald's $5 meal and I'm kind of like, maybe

6:11

we should go to McDonald's.

6:16

The media is just so interested and I

6:18

mean, this is our lead podcast item for

6:21

the week, is so interested in McDonald's. It's

6:23

like they get all this earned media just

6:25

for doing this deal. It's got to trigger

6:27

something in the psyche. I mean, there was

6:30

some stat. I think the CEO of McDonald's

6:32

mentioned it like 80% of Americans eat, have

6:34

eaten at McDonald's in the past year or

6:36

something crazy like that. I should double check.

6:40

Just being reminded of it, you already know

6:42

what the experience is and unless you're like

6:44

Felix or something, you think like, well, it's

6:46

kind of tasty. Oh, it's not good

6:48

for me, but like those fries are good. I feel

6:50

like it could work. Also if

6:52

you have children, you have a

6:54

nine-year-old who's favorite thing is a

6:56

happy meal and you know, like

6:58

every time we go in, there's

7:00

a different item on the menu

7:02

that seems directly marketed

7:04

toward children and right now his thing is

7:08

like a frozen raspberry slushy

7:10

something, something. It's

7:12

one of those things where you're going to get dragged into

7:14

McDonald's if you have a child, no matter

7:16

what. Is this just the

7:18

sort of competitive moat of

7:20

McDonald's versus Burger King because Burger King is also

7:22

doing a $5 meal. They're

7:25

entering this price war with gusto.

7:28

There is much less kind of meaming of

7:30

Burger King prices. People don't complain, oh, it

7:32

costs so much to go to Burger King.

7:34

They complain it costs so much to go

7:36

to McDonald's. Burger King, I've

7:38

never heard anyone talk about the Burger King

7:40

happy meal. I'm sure they have some kids,

7:42

something, but it doesn't seem to have the

7:45

same sort of cultural

7:47

valence and I feel like

7:49

they're always going to just be in

7:52

also random McDonald's and I don't quite

7:54

understand why. Yeah. Well,

7:56

there's so much. There are so many

7:58

more McDonald's. I mean, the franchises are

8:00

just more ubiquitous. What is for McDonald's?

8:02

It's the largest restaurant chain in the

8:04

United States. So it just, yeah, so

8:06

it just eclipses everyone else. And McDonald's

8:08

targets, it's weird to say targets children

8:10

because it makes it sound really nefarious,

8:12

but they do, they target children. They

8:15

literally have playgrounds in the restaurants and Burger King

8:17

doesn't do that, right? And I mean, for a

8:19

time they had a clown as

8:22

a brand ambassador slash mascot, which I

8:24

guess is meant to appeal to

8:26

children, though many find clowns terrifying. So

8:29

the next question is, does this kind

8:33

of tactic of

8:35

if you reduce your prices, that's gonna

8:37

get people in the door. Does

8:40

that work for much

8:42

smaller chains? Like would that work for

8:45

serafina or sweet

8:48

green or like someone

8:51

like that? Or how big do you need

8:53

to be in order for this kind of

8:55

strategy to have a chance of working? I

8:59

think it's about whether they have items on

9:01

the menu that are considered quote unquote value

9:03

meals. You know, like if you're going to

9:05

sweet green, it's probably, you know, budget

9:07

is probably less of a consideration certainly

9:09

at serafina, but a lot of

9:11

people will go to fast food places, especially

9:14

if they live in food deserts, because you

9:16

can get some satiating protein of

9:19

some sort pretty cheaply. Yeah,

9:21

I'll take the other side of that. I think,

9:23

well, I used to work next to a sweet

9:25

green back before Axios closed its New York office

9:27

and sweet green would send me sale

9:30

deals. They're like, today get $5 off a kale salad. I'm

9:34

like, okay, in that case I'll buy the kale

9:36

salad. It totally worked. Yeah, I think, I mean,

9:38

a $5 meal is really cheap in

9:43

these times, right? I mean, where else could you get a $5?

9:45

It's definitely cheaper than the kale salad at sweet green.

9:48

Knowing something is really cheap at a place you like

9:50

to go makes you want to go

9:52

there. Like I have this weird addiction now to

9:54

Starbucks chai lattes. And if they sent me a

9:57

message and they were like, the chai lattes are $3, like I'm...

10:00

likely to like hop in the car and get

10:02

over there because it's a good deal. That's

10:04

right. Dollar menus are really popular at pretty

10:06

much all fast food places because people just

10:08

are like, oh, you can get a whole

10:11

piece of food for a dollar. A piece of

10:13

food. Which seems cheap no matter what it is,

10:16

you know? Yeah. I guess there are some, like

10:18

for some restaurants, the idea of a discount item

10:20

or a sale item would be like

10:22

a lot of restaurants are judged on their

10:24

prices as a marker of quality. Yeah,

10:27

I think not. I mean, like one of

10:29

the things I've noticed in the past year

10:31

or two is a lot of people talking

10:34

about especially sushi

10:36

omakase in terms of value. Like

10:38

it ranges so much in value

10:40

can find a $50 omakase or a $500 omakase. And they

10:43

actually, you know, there's

10:47

a lot of discussion now about is it

10:49

worth it because there's really no limit to

10:51

how much you can spend and there's no

10:53

obvious correlation between price and quality. And so

10:55

people are really sort of seeking out the

10:57

good value omakase. And I think that's happening

10:59

more broadly. One of the things

11:01

I've seen taking off in New York recently, and

11:05

I think it's in other places too, but not quite

11:07

as ubiquitous, is

11:09

this super interesting app called InKind, which

11:12

provides working capital to restaurants and

11:14

they basically pay, repay

11:17

that loan in kind

11:19

in meals. So what you do

11:22

as a diner is you kind of, you

11:24

throw some money at the app and

11:27

then they give you dining credits with that money. But if

11:29

you put, if you give them like $500 of money, you

11:31

get like $700 of dining credits and

11:35

it's an effective discount. And then what you do,

11:37

you can use those dining credits at any of

11:39

the restaurants that have received these loans and

11:42

you wind up having an incentive to go

11:44

to those restaurants because when you go to

11:46

those restaurants, you're effectively eating at a discount

11:48

and everyone kind of wins. I like it.

11:50

And it's a way of

11:53

sort of getting people in the door

11:55

and doing discounting and also getting working

11:58

capital and stuff without necessarily having

12:00

a big visible sale of you know we

12:02

have reduced our prices or something like that.

12:05

That's interesting that reminds me of in high

12:07

school my friends her parents had this like.

12:10

Coupon book of for restaurants in the area and we'd

12:12

be like let's go out to dinner let's see what

12:14

coupons are in the book and it would be like

12:16

you know. Get fifteen dollars for

12:19

one of your entrees or something like that and

12:21

we'd like tear out the coupon and go to

12:23

the restaurant. You think that's for

12:25

to get back to emily's point for a

12:27

really high end places like if erwin started

12:29

selling five dollars smoothies do people be responsive

12:31

to that or they feel like that sucks the

12:33

fun out of not paying paying up for. The

12:36

hayley beaver whatever expensive los angeles

12:38

store whole foods on steroids kind

12:40

of place where people will pay

12:42

you know twenty twenty five bucks for. Brandon

12:45

smoothies by celebrities i think

12:47

it's if an expensive place has one cheap

12:49

item that it's promoting that people would be

12:52

into that to answer your question yeah i'm

12:54

always into my like oyster happy hours

12:56

but i think this is a good sign i don't think this

12:58

is a sign of. Disinflation i feel

13:00

like i read some takes that were like prices

13:02

are actually coming down in fast food it's

13:05

more just a sign of. The

13:07

crazy times are over and there was

13:09

a long stretch where these a lot

13:12

of places not just fast food. But

13:14

other retailers could just raise prices and

13:17

no one seemed aware

13:19

of it like people were aware

13:21

of inflation but they were

13:23

accepting of higher prices for a while

13:26

and those days are over i think.

13:29

For me i think it's yet

13:31

another symptom of. Non

13:34

sticky prices which is something that

13:36

really came into its own it

13:38

started pre pandemic but it really

13:40

came into its own post pandemic.

13:43

Which is the ability of

13:45

every single company selling stuff

13:48

to humans to really. Optimize

13:51

their prices when

13:53

we talk about this you know in previous shows

13:56

like according to the time of the day and

13:58

what kind of browser using and what's. you're

14:00

in and like, like the idea that

14:02

there is a price for a Big

14:04

Mac, you know, the economist has its

14:06

famous Big Mac index and they're like, how much

14:08

does a Big Mac cost in Austria versus how

14:10

much does it cost in Thailand?

14:12

And then they work out some kind

14:15

of purchasing power parity from that. Like

14:17

that concept of like homogenous item having

14:19

a single price, you know, nationwide has

14:22

basically gone out the window that not

14:24

only does it vary according to geography

14:26

within a country, but it also just

14:28

varies according to what day of the

14:30

week you happen to walk into the

14:32

restaurant. And with these

14:34

$5 meals, like, you know, you like

14:36

the Big Mac doesn't change in price, but if

14:39

you combine it with a fry and a drink,

14:41

then it does change in price, but only

14:43

for six weeks and then it goes back up again. And that

14:46

kind of, I don't know how much it

14:48

costs. There is no one singular price anymore.

14:50

We are just always going to be trying

14:52

to chase what happens to be cheap today

14:55

and try and find out and the people

14:57

setting the prices have much more information than

14:59

we are. And we're always at a disadvantage

15:01

and we wind up, you know, paying

15:04

so much more for a plane ticket than the guy

15:06

sitting next to us because it's just

15:08

random at this point. And that feeling of

15:11

like, not being in control of how much

15:13

you're paying for something and not being able

15:15

to have a rational expectation of how much

15:17

something is going to cost before you buy

15:19

it is, I think, just part

15:21

of life now. Maybe

15:23

that's why this story is resonating and

15:26

being so widely covered because now you

15:28

know, if you go to McDonald's Burger

15:30

King Wednesdays, you can get a meal

15:32

for $5. It's a real number. Like

15:35

I couldn't tell you how much it would cost to get a

15:37

meal at those places otherwise, you

15:39

know what I mean? Like, to

15:41

your point, like I don't know if prices are

15:43

always changing and they're weird, but it's comforting to

15:45

see like $5. Easy. Get

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Terms and more at applecard.com. Emily

16:34

we have a Sleep Plus segment

16:36

this week about paying cash versus

16:38

paying with a card. And

16:40

I want to ask you, if

16:42

you're paying cash, does that change

16:45

your willingness to pay for something? Does

16:48

it make the price more salient and feel bigger? Make it

16:50

less likely that you're going to pay for it? Yes,

16:53

I would be really reluctant

16:55

to spend more than like

16:58

$50 in cash. It

17:01

just feels wrong. I just immediately want to use

17:03

a card for that. I don't want to use

17:05

cash for really big ticket items. Art, yeah.

17:08

Because the card feels like it's not real money. It's

17:11

not real money, but it's also a more

17:13

responsible way of buying a big ticket item,

17:15

partly because as we spoke about at the

17:17

end of the Plus, because you get the

17:19

cash back. So once you get

17:21

into like, I spent $100, I can actually

17:23

do that math on the 2% cash back

17:25

and I know, aha, I'm getting $2 back.

17:28

So it's a steal. And then why

17:31

would I pay cash? Exactly. I

17:33

mean, once you get $2 back, anything is

17:35

worth it. Oh yeah. What could

17:38

you do with the $2 if possibilities are

17:40

endless? Emily.

17:45

Shh, quiet vacation. Don't tell anyone you're

17:47

on vacation. Shh, I'm on vacation. I'm

17:50

not though, but I wish I was. But

17:52

if I was, I would tell people, Felix,

17:54

I wouldn't do it this new way that

17:57

we've coined a new term for quiet vacationing.

17:59

So, that's the- concept

18:01

which harris pole is trying to make

18:03

happen called quiet vacationing

18:06

and i'm not sure that

18:08

it deserves to be. You

18:10

know promoted into the pantheon

18:12

of quiet quitting and vibe session

18:15

and all of these other things

18:17

that we're talking about this new world the idea

18:19

is. That you

18:22

take time off work without

18:25

telling your boss. And

18:27

what they did was they went along to

18:29

a thousand people and you know some subset

18:32

of who millennials and they. Ask

18:36

have you done this have you taken time

18:38

off without communicating it to your manager slash

18:40

employer and it turns out that in this

18:42

poll the number of millennials who say yes

18:45

to that is much higher than the number

18:47

of changes or. Can access to say yes

18:49

to that which you know we can talk

18:51

about why that might be or whether that's

18:54

just a weird statistical artifact but they also.

18:57

Talk you know conversely about like when you're

18:59

on vacation do you reply to emails from

19:01

your boss do you wind up. Doing

19:05

for working things on vacation and.

19:10

The big picture here really is

19:12

that for a lot

19:14

of time off not necessarily like

19:17

the big vacation to Zambia that i just did

19:19

but like for a lot of time off where

19:21

you're just you know. Taking a

19:24

long weekend to go to the countryside

19:26

or something yeah you can do a little bit

19:28

of like you can answer a quick email you

19:30

can check into slack you can put in an

19:32

emoji or something and. That's

19:34

actually work but it's no big

19:37

deal and it actually makes life your life easier in

19:39

terms of reentry once you come back because you don't

19:41

have all of that random stuff you need to catch

19:43

up on. End so the

19:45

flip side of that is if

19:47

you are officially working

19:49

one day and you wind up doing

19:52

a yoga class in the middle

19:54

of the day is that taking time off

19:56

do you need to tell your manager or

19:58

employer that you are. taking them

20:01

yoga class probably not but

20:03

I don't feel that that is quiet

20:06

vacationing I don't think that is like I

20:08

have actually taken a vacation and my employer

20:10

didn't know so this is

20:12

why I'm hesitant to embrace this

20:14

quiet vacation concept. Yeah

20:16

I mean I guess it depends on how the

20:19

survey respondents would define taking off like do they

20:21

mean going you know disappearing for an

20:23

hour to or being out the whole day. What

20:27

exactly and that's why we were very careful

20:29

to look at the actual question because it

20:31

doesn't take an entire day off just take

20:34

time off. But let's say let's say it

20:36

doesn't mean taking entire day off the generational

20:38

split kind of seems intuitive to me gens

20:40

ears are less likely to do it and

20:43

i think it's because they have higher standards for

20:45

what they do and don't know their employers

20:47

they think that. Are there more

20:49

likely to be open about the fact that they

20:51

want work life balance and don't feel like they

20:53

should have to work around the clock. Today

20:56

loud vacation work yeah

20:58

I think. Pulling back

21:01

from like the way the question

21:03

was worded even or even the

21:05

generational differences I mean I think.

21:07

One thing that that's kind of clear is

21:10

that work. And

21:12

vacation or work in the rest

21:14

of your life have become so

21:16

melded like another question in the

21:18

cross tabs asks like do you

21:20

respond to work messages outside of

21:22

regular hours and it's like 67%

21:26

of people do that check you know messages while you're

21:28

out to lunch 65% do that. Do

21:32

you respond to work request outside of

21:34

regular hours again it's like low sixties

21:36

do that take meetings during

21:38

time off majority of people do that

21:40

so it's like yeah okay you

21:42

don't tell bosses you're on vacation because

21:44

like you never are. You're

21:48

always working. Why

21:50

would you tell them like I'm not working because

21:52

that's not even true anymore. There's

21:54

been a long history and

21:57

Emily pack is the one

21:59

of the. experts on this long history

22:01

of a bunch of experts coming out and saying,

22:03

it is good to have boundaries and it's

22:05

good to have time when you are working and

22:08

time when you are not working and it is

22:10

good to be very much not working and not

22:12

responding to emails and not checking into Slack

22:14

and et cetera, et cetera, when you are not

22:16

working. And to

22:18

the point at which this kind of

22:21

stuff was enshrined in French law famously,

22:23

and it's illegal for people to reply

22:25

to emails when they're not in

22:27

their nine to five window of work

22:29

or whatever. As a journalist

22:32

responding to news, this is also completely alien

22:34

to me. I'm like, well, obviously I'm just

22:36

going to do stuff when it

22:38

happens. But there's a big

22:41

struggle and this dates back to

22:44

pre-pandemic, but then once we

22:46

all started working from home, it became much

22:49

more entrenched. It's like the work is a

22:51

little bit like traffic. You know the lore

22:53

about how traffic expands to fill the amount

22:55

of road space available. Work

22:57

expands to fill the amount of like phone

23:01

notifications and like

23:03

internet bandwidth and stuff that you

23:05

have going on. And

23:08

if you just turn all of that shit off and

23:10

literally just disappear to the beach and you don't even

23:12

take your phone with you, then yeah, you're on vacation.

23:14

And if you have your phone with you and someone

23:16

pings you, then you're a little bit not on vacation

23:19

and the boundaries are not as clear

23:21

as they used to be. And

23:24

I feel like it's quixotic

23:26

to try and create

23:31

rigid boundaries in this

23:33

world. You know, for all that there is an

23:35

infinite number of academic experts who are saying it

23:37

is very good to take time off and it

23:40

is good to set boundaries and you should not

23:42

be working outside the boundaries that you have set

23:44

and all of this kind of stuff. I've heard

23:46

it a million times and I'm sure they're right.

23:48

I just don't think that in the grand scheme

23:51

of things, it's actually particularly realistic. Yeah.

23:53

I mean, and you said it when you

23:55

started off the conversation, like it makes sense

23:57

to check these things because

23:59

it makes you and I think

24:01

a lot of people think like that, you

24:03

know, they're not going to completely check out

24:06

of email or slack or whatever on vacation

24:08

because then they're just making more work for

24:10

themselves when they get back and there's truth

24:12

to that because I think a lot of

24:14

organizations maybe are understaffed or they rely on

24:17

people overworking and that's like part of the

24:19

plan, you know, part of the budget. And

24:21

there's rewards for overworking. I don't

24:24

even think it's that they rely

24:26

on people overworking. They just rely

24:28

on people having

24:30

awareness of what is going on, you know, and if

24:32

you spend two weeks with no awareness of what is

24:34

going on, then you are going to have to do

24:37

a huge amount of work to try and catch up

24:39

on working out what the hell happened in the past

24:41

two weeks. Fine.

24:43

What about what

24:46

about people who aren't comfortable telling their boss like they're going

24:48

to a yoga class in the middle of the day? You

24:50

should be able to tell your boss you're going

24:52

to yoga class in the middle of the day,

24:54

especially if you're like working on weekends and checking

24:57

and being available all the time. Like, you

24:59

know, there should be a comfort there and I

25:02

think that's a problematic. Yeah. And I do think

25:04

that as well is

25:06

a post pandemic

25:09

thing where millions

25:11

of people have literally never met their boss

25:13

in person. The

25:15

relationship with the boss is a very

25:17

kind of weird attenuated thing and

25:21

everything becomes sort of formalized

25:24

and there are KPIs and

25:27

you know, there's a question in this poll

25:29

about like mouse jigglers and stuff. There is

25:32

this feeling of like, am

25:34

I being paid to do the job or am

25:36

I being paid to try and tick a bunch

25:38

of boxes off my performance review? And

25:41

at that point you're like, I could ask

25:45

permission to take this yoga class,

25:48

but then they might say no. And

25:50

so why not just take it and then if they

25:52

don't know what they don't know, won't hurt them. I

25:54

think there's also just it's a work culture thing where

25:57

most employers believe that, you know, even if you

25:59

don't know, don't work a regular nine to five,

26:01

that during regular office hours, you are supposed to

26:03

be available and that time really belongs to them.

26:06

And some of it too is just, we've

26:09

gotten so accustomed to that, that even

26:12

doing normal things in the middle of the day

26:14

feels a little off. Like I

26:16

read an essay by a woman a

26:18

couple of weeks ago, who was newly

26:20

retired and she talked about how strange

26:22

she felt reading a book in the

26:24

middle of the day, just to like read. And

26:28

it's sort of crazy. I sometimes feel that way when I'm

26:30

reading stuff that we have to read for the pod, because

26:33

I'm so used to having to do like the busy work

26:35

and stuff in the middle of the day. Like

26:38

so everyone just expects that they're

26:40

available to their work during business

26:42

hours, and that's why you

26:44

would cover it up. Yeah, and it is

26:47

the dumb availability. Back

26:50

when I had a weekly newsletter, that new

26:52

weekly newsletter would always get written between like

26:54

midnight and two in the morning on a

26:56

Thursday night, because that was the only time

26:58

that I wasn't, doing a

27:00

bunch of random bullshit during the middle of the day. And

27:04

I think it was important to note, I

27:06

think it was the Emily Stewart piece in

27:08

the business insider that noted, like this concept

27:10

quiet vacationing, taking time off but not telling

27:13

your boss is like not a new phenomenon.

27:16

And she wrote about this paper

27:18

that I still remember from 2015, where

27:21

Erin Reed I think was the author.

27:23

And she looked at one consulting company

27:26

and the gender differences between, the

27:28

differences between men and women in terms

27:31

of like the perception of goofing

27:33

off. So like both, if

27:36

men were out of the office early, like

27:38

at five o'clock or in the middle of

27:40

the day, the assumption was they

27:42

were out with clients. But if the

27:44

women were doing the same thing, the

27:46

assumption was they were dealing with like

27:48

childcare issues. And then it turned out

27:50

that a lot of the men were

27:52

like skiing in

27:55

the middle of the day and no

27:57

one was any the wiser and they

27:59

weren't penalized. or anything like they just

28:01

were able to just go

28:03

skiing and like so I think

28:06

yeah like maybe under explored in this Harris

28:08

pole or is just perceptions of the quiet

28:10

vacationers who gets to do it and get

28:12

away with it and who who doesn't you

28:14

know. We should all

28:16

be like Patagonia and just like set

28:19

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31:29

So let's move on to something which I've

31:31

been thinking about quite a lot and I

31:34

wanted to talk to you guys about, which

31:36

is the effect of politics on economics and

31:38

specifically the way in which the

31:42

markets seem to be very

31:44

worried about a potential far-right

31:46

victory in the French parliamentary

31:48

elections, even though the president

31:51

is not up for reelection and they're still gonna

31:54

have this centrist president no matter

31:56

what. Bond spreads are

31:58

gapping out. France is

32:00

considered to be riskier than Portugal

32:03

now. The stock market has sold

32:05

off and there's this

32:07

general fear of

32:10

fiscal irresponsibility and the Front

32:13

National or whatever they're calling themselves these days will

32:16

just wind up spending a

32:18

whole bunch of money they don't have

32:20

and that will be bad for markets.

32:22

And there's something similar going on in

32:24

the UK election, which is an absolute

32:27

certainty everyone knows what the result is

32:29

going to be in so markets aren't

32:31

really moving on it because it's been

32:33

priced in forever. But the

32:36

policies of the Labour Party, which

32:38

is going to win, are

32:40

clearly being put together in

32:42

the shadow of the bond

32:44

vigilantes. They're not making grand

32:46

fiscal promises in the kind

32:48

of way that they did

32:51

the last time around under Jeremy Corbyn, precisely

32:53

because they like we want the markets

32:55

to not have a freak out like they

32:57

did under this trust and

33:00

the bond vigilantes are kind of back and

33:02

they're not back in the US but I

33:04

feel like it's only a matter of time

33:06

until they come back in the US we

33:08

just got a report from

33:10

the CBO talking about a 50 trillion

33:13

dollar national debt

33:15

in 2034 and you

33:17

know interest costs rising to absolute

33:20

record levels of percentage of GDP

33:22

like 7% of GDP something like

33:24

that. And people are

33:26

really worried about the way

33:28

that politicians are affecting

33:30

a really important part of the economy and you know

33:32

the government is roughly half the economy in all of

33:35

these countries. So that's what I wanted to

33:37

ask is like to what

33:39

degree does the difference between this

33:41

politician and that politician you know

33:43

whether it's Rishi Sunak versus Kia

33:46

Stama whether it's Emmanuel Macron versus

33:48

Marine Le Pen whether it's Donald

33:50

Trump versus Joe Biden like to

33:53

what extent does that make a

33:55

big enough difference that markets will

33:58

really care which one wins. But

34:00

first, before we get to the answer for your

34:03

question, I think you need to remind listeners what

34:06

you mean when you say bond vigilantes

34:08

and also remind people what happened with

34:10

Liz Trust. So back in the Clinton

34:12

years, James

34:14

Carville reportedly said that he wanted to

34:16

be reincarnated as the bond market because

34:18

it's the most powerful thing in the

34:20

world. And the bond

34:23

vigilantes are basically whenever Bill

34:25

Clinton would put forward a

34:29

policy that the bond market

34:31

considered to be recklessly profligate

34:34

in some way, fiscally irresponsible,

34:37

the yield on the 10-year Treasury

34:39

bond would go up and suddenly

34:41

the cost of borrowing for the

34:43

US government would go up. And

34:45

this was basically the markets punishing

34:47

the government and the executive for

34:49

doing things that were irresponsible. And

34:52

that mechanism became known as

34:54

the bond vigilantes. Something very,

34:56

very similar happened when Quasi-Quoting

34:58

and Liz Trust, you remember this trust, he

35:00

was the person who was UK Prime Minister

35:03

for 15 days or something. I mostly remember

35:05

the lettuce. I remember the head of lettuce.

35:07

She lasted less, yeah, the daily stuff, a

35:09

live cam of a head of lettuce on

35:11

the internet. And they're like, will Liz Trust

35:13

last longer than this head of lettuce? And

35:16

the answer was no, she did not. But

35:18

the reason she did not is she came

35:20

out with this massive tax cutting mini budget,

35:22

it was called, and the

35:24

bond market freaked out. And it

35:26

turns out that there were non-mini budget related reasons

35:28

why the bond market freaked out in the way

35:30

it did, why it sold off so much, to

35:33

do with pension fund asset

35:35

liability management, which we do not need to get

35:37

into. But the fact is there was a freak

35:39

out and it cost both Quasi-Quoting,

35:41

the Chancellor, and Liz Trust their

35:44

jobs. And bond

35:46

yields are still relatively high in the UK.

35:48

And it is very clear that no one

35:50

at Treasury or the Bank of England wants

35:53

them to be any higher than they are.

35:56

And so this worry about

35:58

what will the bond markets

36:00

do, will we, you know, the

36:02

government is being constrained by the bond

36:04

market seems to be coming back in

36:07

a way that basically I don't remember

36:09

happening at any time since the mid

36:11

2000s. And

36:14

I feel like that's new. So

36:17

that's new, but you're asking something

36:19

about, does it matter who is

36:22

in charge? Does that affect the bond market?

36:24

And I feel like you just answered your

36:26

own question with the Liz Trust example. And

36:28

the answer is, yeah, it matters sometimes. Right?

36:30

I mean, if a new person surprises

36:32

people with something that no one was

36:34

expecting in terms of fiscal

36:37

policy, then it matters to

36:39

bond markets. And the UK,

36:41

of course, has a parliamentary system where

36:43

the executive and the legislature are basically

36:45

the same things. If you have a

36:47

majority in parliament, you can just basically

36:49

do whatever you like. They

36:52

don't have the system that France and the US have

36:54

where the legislature can do what it likes, but it

36:56

needs to get signed into law by the president and

36:58

the president can't really do anything on their own. But

37:01

this is why, like Mark Zandy, if Moody's

37:03

just came out with a forecast for, you

37:06

know, various different economic

37:08

forecasts under various different results

37:10

of this coming election, and

37:13

he's like, broadly speaking, Trump would be worse

37:15

than Biden, but especially Trump would be worse

37:18

than Biden if he has a majority in

37:20

both houses, because then he will be able

37:22

to do all of the tax

37:24

cutting that we can't afford in the way that he

37:26

wouldn't be able to if the Democrats

37:28

retain at least one of those houses. Yeah,

37:31

it's also an unusual situation because we have

37:33

a matchup where both people have been

37:35

president before. So you know,

37:37

they're both known quantities. We do have

37:39

a record of what they do historically.

37:42

So I think the risks are a little bit already priced

37:44

in here. Expand on that, Elizabeth. When

37:47

you say the risks are priced in, obviously we don't

37:49

know who's going to win. Are

37:52

you saying that like, economically

37:54

speaking, there's not a big difference between the

37:56

two? Well, I'm saying that

37:58

people are not. worried about

38:01

being completely surprised by something either

38:03

candidate does. There's less uncertainty. Yes.

38:07

So basically what you're saying is that

38:09

we've seen one Trump presidency.

38:11

It turned out not to be terrible

38:14

from an economic perspective. And so everyone's

38:17

just assuming that a second Trump presidency

38:19

would play out in a similar

38:21

fashion. Yeah, it wasn't, I mean,

38:23

it wasn't terrible for markets. It was terrible

38:26

in a lot of other ways, but the

38:28

markets will react based on a kind of

38:30

overall perception of stability. And

38:32

right now, I think you're looking at

38:34

two candidates who we do have a

38:37

historical record for. So people are not

38:39

as I think freaked

38:41

out about either possibility from a

38:43

market's perspective. So be

38:45

very specific here. Are you talking about the bond

38:47

market sort of stock markets? Because I feel like

38:49

the important one is the bond market. The important

38:52

one is the treasury market. And

38:54

I do think that the treasury

38:56

market is worried about both

38:59

candidates. And the general consensus

39:01

of everyone I'm reading on

39:03

Wall Street is neither

39:06

side has a real plan

39:08

to get their fiscal ducks

39:11

in a row. And this is a big

39:13

long-term problem. And you can say, well, yeah,

39:15

the big long-term problem is priced in because

39:18

there's no difference between them. And we're just

39:20

pricing in a big long-term problem. But

39:23

given that there's a big long-term problem,

39:25

I feel like it's sort

39:27

of intuitive that there might be a

39:30

difference between the two. Yeah,

39:33

I think there is. I think bond markets are

39:35

always more sophisticated about these things. But would

39:38

you say that right now the concern in

39:40

the bond market is really bond vigilantism the

39:43

way that it is in Europe? Well,

39:45

I'm not even sure there's bond vigilantism in

39:47

Europe. You know, like the French bond yields

39:49

have gone up, but they haven't spiked

39:52

to unprecedented levels. They're not

39:55

basically forcing Marine Le

39:57

Pen to backpedal

39:59

on very- I do

40:01

think though that bond

40:03

yields are reacting to fiscal policy in

40:05

a way that they just haven't for

40:08

most of the past 15 years. It's

40:11

like it's a new driver of bond

40:14

yields that didn't used to exist. Like it

40:16

used to be really what they cared about

40:18

was the future direction of interest rates, you

40:20

know, and they're like, what's going to happen

40:22

to rates? And if you tell me what's going

40:24

to happen to rates, I'll tell you what yield I should be. And

40:27

now they're increasingly looking at fiscal as

40:29

well. Maybe this is

40:31

really about the end of

40:34

neoliberalism because

40:36

we've had expansionary fiscal policies in the

40:39

US at least, maybe

40:41

not as much in Europe, where the

40:43

government has spent a real lot of

40:45

money without caring about deficits for

40:47

the first time and since the

40:49

last time there were bond vigilantes. So it

40:52

sort of makes sense that they would come back

40:54

at a time when like politicians don't

40:56

seem to care about debt or deficits anymore. And

40:58

for a while they did so that there didn't

41:01

need to be a bond vigilante because politicians are

41:03

doing that work themselves. But now there's less concern

41:05

with all of that. So

41:08

it sort of would make sense that you need

41:10

something to balance out that lack of concern. Yeah,

41:13

I think that's right. It's hard to think

41:15

of a major national politician on either side

41:18

of the aisle who seems to care at

41:20

all about deficits or

41:22

fiscal policy. Yeah, like Donald Trump,

41:25

I think I read this somewhere. He wants to

41:27

get rid of the income tax or something and

41:29

wants to replace it with just tariffs. Yeah, good

41:32

overall tariff. Like that's bananas and tariffs would not,

41:35

bad idea and like that would be very deficit

41:37

producing. But I don't

41:40

know, like he, I don't think

41:42

his supporters would care about that. They'd

41:44

be like, cool. Yeah, but also like

41:46

he can say these things precisely because

41:48

there is zero chance that that

41:50

would ever get through the Senate. You

41:52

know, even with a Republican majority, there's no way

41:54

that the Senate is going to abolish the income

41:56

tax. It's just like not going to happen. Yeah.

42:00

I was thinking like, well, there are a lot

42:02

of really crazy candidates. You never know. But yeah,

42:04

I'm pretty sure you're right. We'll

42:07

have the income taxes here to stay, though it might

42:09

get lower for the rich people. Yeah,

42:12

which is a bad idea. I'll

42:14

just say. So yeah, so now I feel like for

42:16

the first time, I can remember

42:18

there were lots of sort of non

42:20

politicians coming out, the Tax Foundation, the

42:23

Manhattan Institute, people like that, basically

42:25

saying, his ways of trying

42:27

to deal with this fiscal problem we have, like

42:29

the immediate fiscal problem is not that far away,

42:31

is 2033 when the Social Security Trust

42:34

Fund runs

42:36

out. Congress needs to

42:38

do something. Like it has no

42:41

choice, right? It can either give Social Security

42:43

borrowing power to be able to borrow the

42:46

money it needs to be able to pay out, or

42:48

it needs to change Social Security, or

42:51

it needs to just fund Social Security

42:53

itself somehow, you know, with some new

42:55

taxes or something. But like, something needs

42:57

to happen, because I can pretty much

42:59

guarantee you this is like, a little

43:01

bit like the debt ceiling. If

43:04

you come up to the 11th hour,

43:06

and like tomorrow morning, absent any action,

43:08

Social Security benefits are going

43:10

to be cut by 20% across the

43:12

board, like Congress will do

43:15

something to prevent that. We just

43:17

have no idea what it is.

43:20

And that kind of like panicked last

43:22

minute response of, oh shit, we need

43:24

to do something right now, otherwise stuff

43:27

is going to be really bad tomorrow. That

43:29

panic debt ceiling kind of knee

43:31

jerk response is clearly the

43:33

worst way to do fiscal policy. You

43:35

know, having like a thought out plan,

43:37

which you can implement in advance, and

43:40

you know, allow people

43:42

to read before it's voted on, would

43:44

be vastly superior. Yeah,

43:47

that's not how we do it in the United States anymore,

43:49

though, right? I mean, it's just not. We

43:51

also have a Republican party that believes

43:53

that they benefit from obstruction. So

43:56

the last minute shenanigans, they think

43:58

a crew benefits to them.