Episode 29 Celebrating Episode 29, A leap year baby Saturn orbits around the sun every 29 years. Why is Saturn so awesome? Its the rings that bring texture and personality. What is your texture and personality?

Mine is that I like to wear dresses because I have more legs in a bucket of chicken. Let's KFC this bitch and ask the world to love us.

Don't judge us. Go, go, go. Welcome to the twenty ninth episode of the Prophet Jesus show and today's episode, we speak with Zephyr Teachout, an American attorney, author and associate professor of law at Fordham University, where a president, when he doesn't talk a lot about Fordham, went to Fordham for two years and then transferred to Wharton.

And boy, are they excited that he's an alumnus. Anyway, as we discuss the state of play around monopoly power and antitrust as relates to her latest book, Break Them Up, Recovering Our Freedom from Big, Big Tech and Big Money. OK, what is going on? The New York Times dropped one of the deepest investigations into Trump's finances this week and found that he's paid just seven hundred and fifty dollars in federal income taxes and 16 and 17. You also pay no income tax and 11 of the 18 years at the Times looked at his tax returns.

How did this happen? The Times says by using the proceeds of his celebrity to purchase and prop up risky businesses, then wielding their losses to avoid taxes. The investigation revealed that most of Trump's businesses reported losing millions, if not tens of millions of dollars a year after year. Who would have thunk it? The Gulf wouldn't be a great business. Within the next four years, Trump will need to pay more than three hundred million dollars in loans or I should say, pay back.

I've heard the numbers as high as half a billion. What's the learning here?

Simple. Trump is one of the worst business people in history and there's a difference. There's tax avoidance. Anybody who makes over 100 grand a year and any corporation engages in tax avoidance. That's your attempt to be as aggressive as possible and take advantage of a tax on the poor. And that is complexity. And that is the more complex our tax code becomes. Then it's essentially a regressive tax because wealthy people and corporations, including G.E., which has 400 people that do nothing but engage in massive tax avoidance, can figure out these Byzantine rules.

They can navigate them like Magellan, which results in a lower tax rate.

Some examples of this. The real estate industry is one of those massively tax subsidized asset classes in history. Think about this. First off, you can depreciate real estate. Now, if that seems weird, it's actually weirder than it sounds, because if you own a hundred dollars of the Apple stock, it might go up 10 percent a year. Actually has gone more up like 60 percent a year in the last five years. But you every year, as long as you own it, you can take three percent of that in depreciated or expense it.

That makes no sense. No other asset class lets you recognize an appreciation while depreciating it. Also, you get to roll it into other asset, essentially exchanges, which is like me selling Apple stock. But as long as I buy another stock, I don't incur a tax liability. And this all may seem like chump change, but over time, when interest compounds on interest, which compounds, you end up with a superior asset class. And what do you know what you know, the two wealthiest cohorts in America are entrepreneurs and real estate owners.

Let's talk about entrepreneurs.

And I'm an entrepreneur and I have absolutely engaged in this type of tax avoidance. If you start a company and you have shares in a company with less than 50 million in assets, as most startups do, and you hold onto those shares for longer than five years, you can sell shares in the proceeds of those shares are tax free, up to 10 million or ten times the original investment. So if you're starting a company and you put three million bucks of your own money in and over five years, that company does well.

You can write off or get the first 30 million in proceeds tax free, or if you put no money into the business, you can, in fact take that first 10 million out tax free. So think about that. Everyone working in the company, the majority of whom don't have the money to exercise their options, the majority of whom get the majority of their compensation from current income or salary, pay anywhere between, call it a minimum of twenty five percent.

If you live in New York, it doesn't take a lot of income before you get to almost 50 percent. But the founder, the founder who will do the best at the sale of the company, gets to pay the lowest tax rate. Market dynamics trump individual performance and we have given massive tax subsidies to the real estate and the startup community, in addition. In addition, we have a dramatic need to deal complex our tax system. You could probably get the same amount of tax revenue if you went zero percent on the first fifty thousand, 20 percent on 50 to 250 and then when 40 percent after.

And it would be just a hell of a lot easier.

Also, get rid of all the tax breaks, capital gains. Why on earth is capital gains treated as more honorable than the money that your sweat makes? Why on earth would we give capital gains a favored tax treatment? Oh, why? Because we need investment capital. No, we don't. We're awash in investment capital. I made the same point before. What else can we learn from Trump's tax returns? If you're applying to be a spy at the CIA, what are they going to ask you?

They're going to ask you, who do you owe money to? Who are you sleeping with? And. Who else has leverage on you, who could turn you into an unwitting asset and it appears that Donald Trump, we can't even figure out who he owes money to, he we know he owes 400 million dollars to Deutsche Bank, who's the largest shareholder in Deutsche Bank. The Chinese.

We know he keeps getting payments from these banana republics and these strongmen, oligarchs, including the Miss Universe pageant in Russia, which, by the way, he made two and a half million dollars on. But every other oligarch in Russia that paid for Miss Universe lost money. And this is how Putin works.

He says, OK, get into that guy via his pocketbook. And by the way, if you're an oligarch, you do what Putin tells you and then he's going to oos. He's going to feel obligated to carry our water. This is just so frightening. If we don't have what is a useful idiot, if we don't have what is an asset, we have someone we have someone right now who, if they don't get reelected, runs the risk of being bankrupt or going to prison.

So what would you say tonight? We're recording this on a Tuesday. What would you do to hold on to office?

Would you absolutely spit in the face of every norm of our democracy in our elections? Yeah, you would do that. And that is what the president is doing by trying to create a ton of uncertainty around what has been probably the most well executed part of our government, and that is our elections. What is he doing? Trying to create constant insecurity and doubt such that maybe maybe this ends up in such a state of disarray? This is just this is just barreling towards something really, really ugly.

We have a corrupt individual in the White House. We have a system that just doesn't seem to be working. We have a tax policy that is so complex that it favors the rich, that it favors certain sectors over another. We need massive tax reform and we need to return to this notion that nobody is above the law. Tonight is going to be very, very interesting.

In other news and other news, volunteer filed for an IPO that's supposed to come public tomorrow on a direct listing. When I say tomorrow, Wednesday, the Wall Street Journal reported that the company is expected to be valued at nearly twenty two billion. Let's back up. Palantir is a firm attempting to position itself as the non tech tech firm. And by the way, I think that makes sense. There are certain things I really like about Palantir. They have embraced the government as a client.

I agree. The U.S. government is the most noble client in the world. Even if you have a bad king every once in a while, what entity would you rather have as a client? First off, it has the deepest pockets in the world and be the reason that we have podcast's, the reason why we have Chappellet, the reason why we have in and out burger, the reason why we have Disneyland is because the US government has created an ecosystem that has created the great experiment, the rule of law, incredible business, ecosystem ecosystems.

Yeah. One hundred percent Palantir go girl work for the government. But that's where kind of the good stuff ends. The CEO claims to be a socialist as he wants to distance himself from Trump despite the fact that Palantir is hemorrhaging cash and the senior executives have taken tens of millions of dollars out of the company. So it's sort of a Norwegian kind of socialism if Norwegian management continue to overpay themselves while the firm hemorrhage cash, one of the founders, Peter Thiel, is the static philosophy, the only individual who's really kind of stayed on the board of Facebook.

If you were to try and find an impressive group of people that you wanted to raise your kids, run your business, you'd be you'd be hard pressed to find a better group of people than conventional. Reed Hastings, Susan Desmond Hellmann, Erskine Bowles. These are the former chief of staff for Clinton, the CEOs of American Express and Netflix, the head of the Bill Gates Foundation. And what do they all have in common? They went on the board of Facebook, saw how this company was behaving, saw its approach and concern for the Commonwealth, and said, fuck this, I am out of here.

And they left early. But who stayed? Who is right there? My brother, who is providing cloud cover, is probably the number two person in terms of dictating the approach and the complexion of Facebook. Peter Taylor. Oh, and who is the co-founder and has decided to issue himself series or Class F shares, meaning that he has control of Palantir, whose mission whose stated mission, by the way, is to be the operating system for government data.

So do you think, OK, Facebook, whatever is going on there, I'd like those guys to run the surveillance apparatus for our government said no one ever said no one ever. And here's the thing. All the shit I'm talking about, they want me to be talking about they want me to say, what on earth is a libertarian doing starting a company whose biggest client is the government such that they can surveil on people? That makes no sense.

This is the Rudy Giuliani of technology, that is. You listen to this company for about a minute and it starts contradicting itself and making absolutely no fucking sense and trying to muddy the water lie to distract you from one core premise.

This is a shitty business. It took Facebook five years, Google three years, Netflix six years and Amazon eight years to get to profitability. But at 17 years of age and having raised over three billion dollars and spent it, the open, quote, startup Palantir has never made money. In 2019, volunteer lost five hundred eighty dollars million and approximately 750 million revenues. They claim in their prospectus that their growth strategy is basically the government is so fucking idiotic that they will have absolutely continued unquenchable need for the smart people at Palantir, the untapped tech firm.

Why are they untack? Because they moved to Denver. Wow. In twenty nineteen, Palantir lost seventy eight cents on the dollar. Last year was probably the worst year for government in that we spent thirty three cents more than we had on the dollar. So technically we lost 30 cents in the dollar, spent four and half trillion dollars on three and a half trillion in tax revenue. Meanwhile, Pelletier's lost 60 cents on the dollar in twenty nineteen. Doesn't that mean doesn't that mean that the government should be consulting to Palant here?

But wait, it's nineteen ninety nine or what feels like nineteen ninety nine. I remember ninety nine. Everyone was waking up to the notion that this chicken shit wasn't chicken salad, it was chicken shit and these companies were massively overvalued. So first off they abandoned B to companies and companies like Cyber Shop that was buying Furbies for forty bucks and selling them for thirty wasn't worth a billion dollars and it crashed. But they said wait, wait, I know we'll go to B2B.

And they went to companies like ICG and these platforms in these exchanges. And it feels that way now where any company attempts to position itself as a SaaS company or feels data like or has some of that big techie kind of data software feel goes out at a crazy town valuation snowflake trading at 70 times revenues, a great company, a great company that is wildly overvalued.

Palantir is one of those things. Look out below one hundred and thirty clients, three of whom make up almost a third of their revenues, terrible renewal rates. Supposedly the product doesn't work for many industries. But wait, but wait. You should buy their stock. This is another example of existing shareholders and management flinging unicorn feces at tourists to the unicorn zoo.

Watch out. This is not a canary in the coal mine. This is an ostrich in the coal mine Palantir prediction. We record the show on a Tuesday. Palantir is supposed to begin trading tomorrow on a direct listing. And twelve months this company's valuation gets cut in half. This thing is shavings of shit on a shit. So it it is. All of the calories of Facebook scaled sociopathy with none of the good taste of profits.

Stay with us.

We'll be right back after this break for our conversation with Zephyr Teachout.

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Welcome back, here's our conversation with Zephyr Teachout, an attorney and political activist and antitrust and corruption expert. So, Professor, where does this podcast find you? I am in my apartment in East Harlem apartment in East Harlem. I like it. That's that's a New Yorker. And you said you have a toddler. I do.

He's almost two. So daycare has been amazing. A invention.

Two year old boys or that is not easy. So speaking speaking of two year old boys, let's talk about the president. Let's talk about monopoly power. Your basic premise that one of the things and we're sort of siblings from another mother, if you will, you are give us your your kind of viewpoint on how monopoly power has been or is bad or a threat to our economy and our society.

Yeah, I come at this. I like the siblings from another mother. I come at this from the opposite position you do. I come at this as a democracy activist who's written a lot about corruption. I was cited in dissent in Citizens United and probably the bigger badge of honor is that Scalia fought with me in his concurrence in Citizens United. So I've been writing about corruption, money in politics, democracy. And about six or seven years ago, I'd been interested in Antimonopoly for a while.

But I realized no matter how good our campaign finance laws are, if we're going to keep allowing these companies to merge and gain power and gain this choke point control, this is another form of government that's burrowing inside our democracy and we've got to do something about it.

Yeah, I mean, this is just a pile on. There's more Amazon full time Amazon lobbyists and sitting U.S. senators. The PR department of Facebook is now bigger than the newsroom at The Washington Post. I mean, have we ever seen anything like this kind of scale of Washington being overrun? And where does it take us?

I mean, it's I think you started with Trump. I've been sort of thinking of this is Scylla and Charybdis, like we have these two just gross threats to democracy. And one is Trump and the other is these big corporate monopolies. And of course, big tech is leading the way in that arena. And, you know, it's a form of tyranny. And and for most of American history, up until nineteen eighty people got that. They understood that antitrust was part of the democracy job, that, yes, there's really important economic protections in antitrust, especially in terms of making sure prices don't get too high and protecting suppliers.

But it is also a form of private government. I mean, these companies are taxing like that's essentially one way to see what Amazon's doing with its sellers or Apple they're regulating. When we basically accepted that Zuckerberg is our our privacy regulator and we keep begging him to be a better privacy regulator. But that's crazy. They're spying on us. They're controlling the communications infrastructure. And these are all forms of government. And we're weirdly formal about government. It's like if you're not the mayor, you're not government.

But these are governmental forms here.

And it seems as if everybody, to your point is waiting or hoping that the better angels will show up from tech companies. And it's not I would argue that it's not even tech companies that need to be reformed. It's government. How have we lost the script here? When did the DOJ and the FTC just become so flaccid, if you will?

Yeah, well, there was, first of all, just a direct attack. You know, if you go back and read what's happening in the 70s with the late 70s and with Reagan and his California Wrecking Crew, they didn't secretly bring in an attack on antitrust. They made attacking antitrust really the center of their agenda, whether you're talking about Mr. Baxter. And so Reagan came in and he did a few big things. One is he appointed a lot of judges who took the hard out of antitrust laws, including Justice Scalia, who famously during his nomination hearings laughed about antitrust.

Somebody asked him what it was and he said, I never understood it in law school. And later I turned it turned out I was right because it doesn't make any sense anyway. And and then went on to be a sort of major opponent of the old understandings of antitrust laws. He also pointed enforcers who didn't believe in enforcing and you see this radical drop in enforcement under Reagan's appointees. And third, they brought in a different vision of what antitrust law was about.

And it's consumer prices, consumer prices, consumer prices. Yeah.

And actually, since then, we've you know, in recent years, economists like John Quokka have shown that this actually hasn't been that great for consumer prices either, that actually the 40 year merger wave has actually hurt consumer prices. But the main thing is we shouldn't just be talking about consumer prices. We should be talking about. The oxygenation of the economy, as you like to say, which is I love that way of describing it, we should be talking about suppliers and what this does to small businesses, which are, you know, it's hard to do a startup in the US than in Europe.

And and then but the flaccid ness is a really also important second stage, because you first come in with this, you know, going at the jugular and then you have what you might think, well, Democrats will bring it back or Clinton or maybe Bush or maybe Obama.

And then you see this sort of deep passivity, flaccidity, fear of losing cases, which I don't know if you've read Jesse Eisenberg, great.

The Chickenshit Club, but so it's really been 40 years. And now we look around and it's like, wait, we've somehow allowed our infrastructure to be governed by this guy, Bezos, who both controls the platform and the warehouses and the cloud, like, how did we get here? Yeah, and I I think the idea of of appealing to better natures is I mean, first of all, you have to be a monarchist, which I'm not like you might get 10 years of a of a good a good CEO.

But second, it just ignores human nature like what we know about power. And this is a core democratic idea.

And you raise another point you've made more articulately than I have, is this notion that the consumer we're waiting on a consumer led revolution that won't get will we as consumers will vote with our dollars and decide this company is too powerful and I don't want a drone roaming around my house. So I'm going to use more products from Wal-Mart than from Amazon and they'll get the message. And generally, what economic history shows us is that consumers want that little black dress from nine ninety nine.

And while they claim to care about the supply chain and some do that, they will.

At the end of the day, kind of ethical behavior is a tie breaker, but not much else that unless the government weighs in, the corporations that start behaving ethically, it almost ends up being a tax that that makes them less competitive. And if you were advising the Biden campaign, as far as I know you are, what are sort of twenty four month plan to restore some sense of balance, some sense of equivalence around government being a countervailing force instead of a coconspirator?

Yeah, I mean, I think Biden is going to have to address this because we are not looking at a thriving economy right now. And although it's not the the Great Depression, I would say, hey, let's look at what FDR tried first and what he tried second. And FDR first really tried a top down approach and then came to realize if you need to revive an economy, you need I'm going to use your term again, oxygenation. You need a decentralized economy.

And Biden has a lot of power here.

And I mean right now, just to talk about the tragedy before we talk about the the beautiful future, I mean, we are talking about just wholesale destruction of communities, the mass collapse of small businesses.

Some people are talking about 40 to 50 percent of black owned businesses falling apart, 90 percent of restaurants not being able to afford rent.

I mean, this is just devastating stuff. So what I would do is say, OK, we're going to need some big national programs, but in those big national programs, make sure you do them in a decentralized way, like like FDR did electricity, you know, these localized co-ops and bring in a strong Federal Trade Commission, a strong head of the DOJ that is no longer going to sit around with this revolving door and let these companies run roughshod over us.

I mean, you saw the hearing, which was an amazing hearing. It was embarrassing for the agencies that Congress was uncovering what the FTC should have uncovered nine years ago with Facebook and Instagram. These agencies have not been fighting. They've not been digging. Key thing they can do is issue new rule making authority, especially around mergers and particular kinds of anti-competitive behaviour. And that would be a really, really big deal. I also think we have to have have Congress involved.

I don't think we can just rely on the agencies. But Biden plays a really big role here. I mean, the executive branch really matters. And, you know, I've done polling with data for progress. And what you see is politicians aren't talking about this, but people are talking about this.

People really want a president who's coming in willing to take on big tech, big cable, big ag, big pharma, they get it that powerlessness actually hurts them in their daily lives.

Yeah, it's just it's strange that it hasn't been I was disappointed. It wasn't a bigger issue during the campaign for president on the Democratic side, because we like to think our CNBC would have you believe that we live in an innovation economy. The reality is there were twice as many new businesses being formed in the Carter administration than there are now. Yeah, and the fastest growing parts of our economy are controlled by monopolies and duopolies. Talk about the notion I'm a big fan of breaking up these guys.

I think Amazon, Apple, Facebook and Google should be 11 companies. The shareholders would do well, the tax base would do well. The startup community would do all. The only the only stakeholder that loses is the CEO who sits on dual class shareholder stock who would no longer be on the iron thumb of Westinghouse, just one of the nine realms. Unfortunately, that's the individual gets to make the decision.

But isn't my go to is breaking up. Can you speak to whether or not you think that's a good idea and how you know who does it, how we would proceed?

Yes, I think it's a necessary idea. I mean, we're talking about this sort of glut of the worst kind of bureaucratic power that is leading to inequality and depressing innovation as as you say. So, you know, I think that the basically, if you have a strong FTC, these companies would end up breaking themselves up. And a lot of ways, which is what you've seen in the past when you have strong enforcement, you know that the DOJ and FTC chasing IBM around really helped lead to more innovation or the Microsoft case didn't go as far as it should have and we should have stronger laws.

But the fact of strong enforcers actually created the moment for much more innovation, more breakthroughs.

So they birthed Google literally. Absolutely. So the federal government is really key here. Now, I also would like to see Warren's structural separation legislation. So not just using rulemaking, because I guess one of the things I think that's happened, Scott, is that we've gotten used to the idea that this isn't a public matter. This is like those economists over there will solve that. And I think it's really important to re politicize antitrust. I don't mean politicize the cases like all that mess we're dealing with with with Trump.

I mean, make it so it's something you don't go to your to Chuck Schumer and say, hey, I want to talk about the minimum wage. Only you say, hey, Chuck, what are you doing about Amazon? And basically hold our lawmakers accountable, because when it's just agency action, I think people feel really intimidated, honestly, you know, like I don't know what the market share is, so I like Amazon.

Don't break them up. Yeah, yeah. But with Amazon and one of our jobs and I mean our collective jobs is to let people know, you know what, you can still have same day delivery and it might even come quicker once we break these companies up.

Who are the warriors here? I think so. I'll start. Senator Warren is kind of the only one I can identify. I think Representative Cicilline, who ran the best subcommittee hearing, wasn't the guy. I thought it was great go substance. It was real substantive. I remember I go into these things with my arms crossed and rolling my eyes and then I thought, wow, they have done their homework. And I thought it was I thought it was a great idea.

You know, I would almost use I mean, that Basso's confession on fulfillment by Amazon was a big deal. I thought, you know, that's part of our algorithm. This is what sellers will tell you is I got to use the ancillary service. Otherwise I do I do poorly. But he basically admitted it. It was amazing.

Do you think is there if you look at Amazon, you know, I focus on Amazon, Apple, Facebook and Google, and you were right to bring up that concentration of power to an unhealthy standpoint that is bad for the Commonwealth, bad for the economy. It's obviously across big food, big pharma.

But when we just talk about big tech, do you see anyone being much more dangerous than the other? Or are they kind of all sort of, you know, equivalent threats? If you if they said all I professor. Right. Go after one or two of them, but not the other two, would you pick one or two over the others?

I mean, if you look at Facebook as front of mind right now, because of that, because of the way it's running roughshod over our democracy with the elections, Amazon is where my focus has tended to be. But I often think, like, I got to go back to Google again because Google is this kind of sneaky, unbelievably dangerous substructure.

And I mean, Google has no business owning Google flight schools, no business owning Google shopping. And you're right about you're right about Warren. But I do want to give Klobuchar credit.

I mean, it's Amy. Yes, Senator Klobuchar. Really?

Yeah. I mean, here's where our politics are interestingly. Crossing paths now. Where I am, I'm much more of a progressive, a Dem, and I'm closer to both. Warren and Sanders had strong antimonopoly. Yeah, very strong antimonopoly platforms. Warren was great on tech. That was such an exciting moment. But Klobuchar has been great on anti trust more broadly and and the way it's intersected with tech. First of all, she's been great on AG and like just really leading some of the legislation.

Then on big tech and news, because there's just a bizarre passivity where news organizations will fight for sunshine laws, but they'll basically allow themselves to be robbed and beaten to death by Google and Facebook and organization. I work with open markets and Klobuchar did an event a few years ago where she is like this. It's not like there's a natural state of affairs that we need to do some pruning over. We get to choose what kind of economy we live in and we have to serve denaturalized tech.

And I guess what I'd say to your comment about tech and the rest of the economy, one of the reasons I talk about farming and other areas is I think people get intimidated around tech.

And I want to let people know this is a feudal system. You can understand it and they'll they'll wave their hands. Yes, algorithms are a problem. I don't like targeted as we can do that, certainly not for infrastructure, but like this isn't beyond your capacity to understand feudalism.

And when you see feudalism, you should say that that doesn't really fit with my idea of America. Right. Right.

Talk about the role that antitrust plays in racial injustice.

Yeah, I think we tend to think about antitrust in racially neutral terms. But again, I come from studying democracy and like, what are the what are the techniques that Southern white nationalists used to suppress black voters power in the South? Well, the oldest technique in the book was merger. You merge congressional districts together and then that congressional district or that city council district that might have gone to a black representative is now merged with other districts and controlled by a white representative.

You see the same dynamic happening. And I'm not saying the same purpose, but the same effect happening in mergers in the sort of 40 year merger wave and black businesses. So we've seen the total destruction of black owned funeral homes, insurance companies, newspapers, and these were all key locus of political power. So it's right now we're in a Black Lives Matter movement, but without those without the same number and degree of decentralized, locally owned black businesses, that that can provide local support.

I mean, you want to go to the sky, the conglomerate funeral home and ask them for support in civil rights. They're going to say, no way. We give half to Republicans and to Democrats and we're not getting involved in anything. So it's just another example of the way in which we have a it's just a bad understanding of the world to have this false artificial separation between our understanding of the democracy and the economy.

Yeah, I think of it is I mean, I always go to World War to that is something that our colleague, Professor Timothy Wu, talks about, is that if you look at Germany in kind of 20s and 30s, it was playing out.

I mean, it definitely echoes the notion that private companies begin to become the government and it leads to really bad places.

And Facebook with the lubra coin in there, I mean, it just it doesn't it's strange that we don't in America, we have this weird exceptionalism that I think has made us more vulnerable to coronavirus.

But also we tend to think, oh, that could never happen here. And it absolutely could. It feels as if we're not that far from it. And it it's just strange that we don't seem to be as alarmed as we might be when there's a five billion dollar fine against Facebook, which is 11. Cash-Flow, this is. Well, aren't we just encouraging them to break the law? So let me ask you this until they're one of the things that people there say is kind of the moral hazard of not no one really going to jail from the economic crisis of 2008.

Do you think any of this really gets solved not only without any trust, but quite frankly, with criminal charges in a perp walk across big tech?

I you know, I don't mind the perp walk. And it is I think it's it's helpful to remember that the Sherman Act is a criminal law just because it's like. Oh, right.

That's that's like highway robbery. Right. That's that's standing in the narrowest passage and forcing everybody to pay 30 percent. It's sort of helpful to remember that way of thinking. But it's got to be structural. I mean, economy structural. This this is the new business model. Everybody's doing it. They figured out, you know, like this is that this is the game. OK, so now we've got our delivery apps fighting to see, OK, who can control the restaurant industry?

And then, you know, maybe it'll be Uber and then like maybe we'll start to see a merger there. Everybody's trying to create the same choke point, extract value. Control experiment terrify, you know, everybody's doing the same thing. We've just got to stop the business model. It's not a healthy business model. It doesn't lead to innovation. And there's recent research that shows that it may cost as much as fourteen thousand dollars a year. This is Simke Barchi, the economist research for every worker to have the concentration we do on our economy.

I mean, that's a whole lot of money. That's it. You want to talk about inequality? There's a lot of talk about taxes. And believe me, I believe in a very aggressive taxation regime. But you taxation is already after the fact. We should have have our structures right. So people can't extract value and make sure that the people are creating value. Get a chunk of that instead of only focusing on after the fact taxation.

Yeah, we are where we tend to talk about things always. We want to distill it down to a number, specifically the amount of dollars. And I think about the consumer harm test is like, what's the tax on parents when you're your teenage daughter is depressed because these companies aren't aren't prohibited or really have no incentive to to not addict our teens? What's the cost to our Commonwealth when a to weaponize by the GRU?

I mean, it seems to me we're paying exceptional costs. So you have run for office, you ran for attorney general, you run for Congress, described the I love when academics run for office. I think that we need more of it. And I think we need passionate, fearless people or more of them to run for office. Talk about running for office and are you planning to do it again?

Well, I have run for the first time. I ran was a was a was with Tim Wu. He was my running as lieutenant governor. I was running for governor in New York.

Yeah. We saw a poll that showed that about eight percent of people knew who I was and 18 percent didn't like me. You know, I was that guy.

So that's impressive. That's impressive.

Thirty four percent and really making a dent. And actually antitrust was a big part of what we were running on. We went to places where people paid their cable bills and rip them up because this is back in 2014. But it bad and anti-corruption were at the core running for office the other two times. There was a much closer chance. And it is absolutely one of the hardest things you can imagine doing. As my mother said to me, how will you know the answers to all the questions?

And you don't. And academics are used to knowing the answers to all the questions and you don't.

And you have to you have to live with that. But it is it just feels your heart.

I mean, like I think of the night I'm at a, you know, getting to introduce myself to people in Queens right after a local comedian is doing his second set ever. And then a high school winner of the band competition is playing her instrument. And it's just human and amazing and funny and beautiful. And people are so smart. That's the thing that comes across as people have big hearts and they're smart and they're creative. And it's I have a lot of impatience for athletes that look down on our on our amazing sort of the amazing people in this country and state.

And I loved it. And I am look, I'd rather I'd rather be ag I'd still come on your show.

But I also, you know, if you care about something enough, I'm really glad that we pushed the push a lot of the conversation on antitrust. I'm glad that we were out there fighting for less corruption in your government and we're getting somewhere. And I think one of the things that we've seen over the last seven or eight years is that it used to be that there was this sense of like politics is dirty and gross.

And, yeah, you know, there's a lot of dirtiness in politics.

Every time I meet with elected officials, I feel better about America. I think it's critical. But I think there's a lot of very impressive people. So what if you were going to run again? Well, any news? Are you planning to run again? Why would you run for mayor of New York?

No, I'm not planning on running again.

I, I am very I'm not saying I'm done forever, but I'm done for a while. Yeah.

And I really but I'm what I'm focused on is there's a new group of people coming up in New York with new ideas. You testified the other day with the at the at Generis in New York State. There's new antitrust legislation. I mean, talk about energy.

Yeah, it's really exciting because as much as I want Biden Harris to do things, passivity is the worst thing that can happen. And it's really exciting to see people more involved in politics. And Scott, you are so right. The more you get involved in politics, the less depressed you get.

So at least from an outsider standpoint, it seems like you're doing something you really enjoy. You make a good living. You get to do a. Bunch of interesting things, what advice would you give to your 25 year old self? I'll give you one piece of advice I care about enormously is keep art in your life somewhere like somewhere in your life. Have art for me.

I don't know. I guess what I'm here to talk about this, but I paint and I do love to do community theater and I'm, you know, out there not need it all, but I love it. I love having art in my life. And I feel like when you have art in your life, whether it's your singing in a choir or or painting, it just keeps that part gives you access to the sublime and to joy in a way that I think, especially in today's tech world, can be really hard.

Zephyr Teachout is a Renaissance woman. And in addition, as an American attorney, author and associate professor of law at Fordham University, her latest book, Break Them Up Recovering Our Freedom from Big, Big Tech and Big Money is out now. She joins us from her home in East Harlem, Manhattan. Professor Teachout, thanks. Thanks for your time. And let's keep fighting.

The good fight absolutely is a joy to be on the show. We'll be right back. We've heard for years that it's important to have a diversified portfolio, stocks, bonds, mutual funds, that kind of thing, but if you've ever looked at a breakdown of the most successful portfolios, you'll typically see a diversified set of real estate. So why isn't one of the first asset classes you consider when you're looking to diversify? Simple. It hasn't been available to investors like you and me until now.

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Welcome back. It's time for office hours as a reminder, you can ask us anything if you'd like to submit a question, please email a voice recording to officers at Section four dot com. I don't read the questions such that you'll get that sense of authenticity, that buzz, that electricity. So if my if my responses seem lame, fine. But it's your name and it's real. Question number one.

Hey, Scott, it's Blake from Scottsdale, Arizona. My question is a follow up to your interview with Professor Arun Sundararajan, a.k.a. the discussion surrounding platform based businesses. It's no secret that Arizona is one of the key swing states in this year's election. I've been a Zoni since the 90s and have seen my state shift from red to purple. One of the more noticeable changes this November will be Prop 207, which is a ballot initiative for the legalization of recreational marijuana.

Arizona is neighbors to California, which is you discuss. Professor Sundararajan has been catching a lot of heat for about five legislation in the future for gig workers. If you were advising DHARA, would it be the gangster move for Uber to expand the platform towards cannabis, specifically a copycat of the pot delivery service services using EZ as a case study? The drivers are often salaried employees through the dispensaries, a.k.a. these workers have protections, other drivers do not as cannabis becomes more mainstream.

I'd like to know your thoughts on marrying the two platforms.

Thanks, Blake. Thanks for that, Zoni. I've never heard that term. True story. My dad's third wife and he moved to Paradise Valley and I used to spend holidays in the summer in Arizona and I absolutely love it there.

So as a kind of place I could live my favorite my favorite topography, my favorite Eco-System, the desert, beautiful sunsets. Anyways, go Arizona. And I used to go down to Asia and you have eight games for the bronze anyways.

La la la la for the Zonies.

Yeah I like the green wave is here and that is if you look at how many derivative products, whether it's CBD, I mean it's probably the whole marijuana industrial complex has probably gotten overheated, but there's just no going back. The number of people, baby boomers on down who smoke pot and find that is less damaging to their life and their health and alcohol with some of the good stuff specifically forgetting, you know, forgetting everything else. I don't know if I don't know if Uber needs to embrace do the kind of full embrace of weed.

I worry that this probably ends up being they come in and take these guys out and we have more consolidation, if you will. I love the fact that the company you brought up has their employees be salaried as opposed to what Uber does and says basically, if you're not working, we're going to clock you out. So, yeah, great. You know, good for is the green wave is here. I'm not sure if I were on the board of Uber, I would tell them to wrap their arms around it, maybe maybe get a younger voters.

Maybe that makes some people feel more goodwill towards them. But my prediction would be and it's not a it's not an aspirational one, that is, if it carves out a nice nationis and has any sort of technology to get acquired. And if they don't, Uber just flips on a switch and says, hey, we'll deliver, we'll deliver your ganja. True story. When I started work on Morgan Stanley, I was drug tested. And the results, the results, they came back and said, we found some urine in your ganja.

That is good marijuana humor. Thanks for the question. Next question.

Hi, Professor. My name is Shreya and I'm a data scientist at a financial services firm in Chicago. In the past, you've said that FinTech is a field ripe with innovation because of its lack of control by companies that exhibit anti-competitive behaviour. In your opinion, what are the most exciting developments in FinTech and what are some companies to look out for? Conversely, is there anything that could stop the ball from rolling? Thanks, big fan.

Thanks very much for a great question. So I love FinTech and I'm investing it. And I'll tell you about the two companies I've invested in. But essentially there's a lesson here and that is fintech or finance, even despite the fact there are seven players that control 70 or 80 percent of the commercial and consumer banking business, it's still seven as opposed to two in digital marketing or one in e-commerce or, I don't know, two companies in operating systems for phones.

It's not a monopoly or duopoly. So seven companies is actually a fairly healthy ecosystem, even though some people, including our guest professor, teach, I would say it's still to be concentrated. But if you look at fintech, it has a massive amount of startups and a lot of funding wide because it's considered a diverse ecosystem and there's a lot of opportunity. And I think when you think about covid going cashless, it strikes me that this is a fantastic field to be in.

And it's a field that I've identified that personally I want to be an investor. And so I'm an investor in two companies. I'm an investor in lemonade, which is. Sure attack, although I have sold down most of my holdings because it skyrocketed after its IPO, which is essentially trying to disrupt the traditional market for renter's insurance, and it does it using EHI and attempts to do a better job of assessing someone's actuarial risk. Also does a decent job, has sort of a CSR component where it says any unused premiums allocated for claims will be donated to the charity of your choice.

And if you're seen as a disruptor in something like insurance, which is such a huge business, you get what I would call an irrational valuation. And I do think that lemonade's valuation is irrational, if you will. But as long as I can continue to grow and show that kind of vision and incorporate EHI into a great job storytelling, and I think the CEO is a real visionary there, they will continue to have access to that cheap capital and be able to pull the future forward.

But again, I've sold down most of my stake. The other one I'm just invested in or invested in about a year ago as a private company called Better Dotcom, that is using technology to try and make the mortgage business, which is one of the largest financial businesses in the world and one of the largest asset classes, residential mortgages, more efficient. And because of 2008 regulation, a lot of big mortgage providers got out of the business. And the CEO at this company has done a fantastic job leveraging technology to build really efficient crawlers that go out and look at every source of capital consolidated really quickly, find a way to get the get the loan approved in a thoughtful, measured, compliant way and get you a message back on whether or not you qualify.

And in general, across conforming loans, get you just a cheaper price on your mortgage in this company is growing like crazy. So lemonade and better dotcom. I'm an investor and I think it's a fantastic field. According to one report by a joint market research, the global fintech market size is expected to reach four hundred and sixty billion by twenty twenty five. Stripe and online payment processing for Internet businesses is valued at thirty six billion dollars. PayPal's market cap.

Think about PayPal spun from eBay is now two hundred and twenty six billion. My guess is that's about 10 times what dad is worth. eBay. It's like Dayton Hudson. You won't remember them. You're too young. But they were at the parent company Target and then the kid grew up to be much bigger anyway. I think it's a fantastic business area. I think it's a great place to make your career. And I'm voting with my feet in my wallet and investing big in fintech.

Next question. Greetings, Prof.

Spencer here from Kansas City. At the beginning of July, I opened an atrium guesthouse, somewhat of a hybrid between a boutique hotel and a collection of short term rentals, probably the worst time in history to open and travel related business. But it's proving to be somewhat pandemic proof. I have all the rooms listed on Airbnb, which take the small fortune, but they reliably put heads in beds. With Airbnb IPO on the horizon, I'm tempted to buy in.

My question is whether I'd be putting too many eggs in one basket or if I should take advantage of the opportunity to be part of a company that I'm already feeling. Looking forward to hearing what you have to say.

Thanks, Spencer from Kansas City. Thank you and congratulations. I love hearing about these little businesses. And you sound like a young man opening an eight room guest house. That's just awesome. And by the way, you are the strength. You are the the pillar of our economy. Two thirds of job creation is from small businesses. And as I referenced earlier in the program, entrepreneurship. America loves entrepreneurship, including its tax code. So it sounds like an awesome business.

And I think it's great that you're doing what you're doing in terms of diversification. Yeah, it finance theory would tell you that you have a lot of eggs in the hospitality basket and you should probably think about diversifying at the same time. At the same time, your need for diversification is I don't want to say lower, but not quite as urgent. If you're in your twenties and thirties, then if you're in your 50s or 60s, when you're in your 50s and 60s, hopefully you've put a little cabbage away and you're not looking for outsized returns.

You're just looking not to get poor because you don't have the time to make it back. And one of the great insurance policies is diversification. So if you feel like you have real insight into this business and all of this has to be measured against valuation, right. At some point, Airbnb is too expensive and at some point it is too cheap to either own or not own. So I would look at what it comes out at, what it trades at.

And then also if you feel you have real insight into this company and if you think it's doing exceptionally well and that the market doesn't perceive how strong it is, yeah, it might be a decent long term hold, but your ability to diversify or your need to diversify is a function of how much money are making and where you are in your investment lifecycle. And you sound like a young man. So maybe split the baby, maybe put a little money in Airbnb because you think it's you've seen firsthand how powerful it is.

But ensure that if the hospitality sector continues to get kicked in the nuts repeatedly and Airbnb doesn't live up to its expectations because it's facing headwinds that. You are not in a position where you really, really hate your life, I know that's sort of a mealy mouthed answer. So I would say dip your toe into Air BnB. But like you said, you're already pretty invested. And what an awesome business. Spencer from Kansas City, thanks for the question.

Keep sending in your questions again. If you'd like to submit one, please email a voice recording to officers at Section four dot com.

Algebra of happiness, I am having difficulty connecting with my nine year old, or I should say I've had no difficulty connecting with my 13 year old, he and I like the same things. He's a pleaser and our relationship is what I'd hoped it would be. If it's something out of a kind of a Hallmark movie of my nine year old is not nearly as impressed with me. I have a tendency to weigh in too heavy. I try to be patient with him and then I just lose my shit and have these outsized reactions.

But anyways, anyways. You're always looking for moments of engagement, and that is in my my agent, Tim Levine said this, that the key to being a good dad or one of the keys is to try to find and identify moments of engagement and really, really run through those who run to them or lean into them. And what I have found with my youngest is a moment of engagement. That is one of the few places I found that type of engagement with my own dad, and that is breaking the law or specifically minor infractions of the law.

When I was a kid, my father and I didn't really say a lot to each other. My dad was married four times, moved to Ohio, which I loosely interpreted as abandoning me. But anyways, we used to sneak on to some of Ohio's best golf courses at dusk and he would point to a bush and like a bird dog, I would dive into the bush and I would only exit the bush or emerge in the bush, either having found six balls or seen a snake.

And then I'd lay them all out and he would point out a good one. Titleist golf ball, which, by the way, cost 12 cents to make but retailed for two dollars. We had Bitcoin during the Carter administration. It was called Titlist. And he would see the balls and he would look at me and he would mess up my hair with his hand. And that was literally the only expression of affection that I ever received from my father.

But it felt wonderful. And he did it a lot. We would often times not a lot, but often times he would look to me when we were in the car and his Gran Torino accelerating on to the artery of the 405 freeway. And he would look at me after we just dined at ship's diner in the stands out to me. I think it probably happened once or twice. So I don't want to say this happened a lot, but it did happen.

And he would say to me in his thick Scottish accent, you know, did you pay? And I'd look at him as a nine year old would do and say no. And he'd said, oh, yeah, we Skarner and my dad never really died in a ditch, but he would forget to pay, which I guess is like dining and ditching. And he didn't do it a lot, but he did do it. And I know that sounds awful to say, but there was moments of crime, if you will, or mischief that made us made our relationship feel singular or made us feel closer.

And I've tried to do that with my youngest. Now, granted, it's not dining and ditching, which I would, quite frankly, just never do as I was a waiter and a box boy and a dishwasher and a barback. But I have a stash of Coca-Cola and when his mom is gone, we'll break it out. And according to his older brother, who is a total hall monitor and a total unknown, what the term is, he's definitely going to grow up to probably be a you know, an IRS official will immediately remind us that the Atlanta champagne supposedly gives you information and wants nothing to do with it.

The most recent attempt at criminality didn't go well. We were having dinner at Habashi together, all of us, me and my two boys. And we jumped in the car and my youngest said from the back seat, Wait, there's a babysitter, a child seat. And I recognized they had given us the same model car, but someone else's. And I said, it's our car now. And I threw it into drive and said, Where do you want to go?

And my youngest immediately thought, Wow, this is fun. And yelled out Orlando.

But as younger brothers, do he look forward to see or register the look of emotion on his older brother's face? And that emotion was terror. And my oldest said, Dad, you're going to get us in trouble and seemed really upset. So I had gone from in a moment of mischief, from being fun dad to scary dad, which is a terrible feeling for a father. So this car boosting crew known as my sons decided to return the car and we went back and I thought maybe I could speak Scottish like my father and get out of this.

Whenever my father got into trouble, he would literally when the park ranger would pull up to us and figure out that we were members of the country club. My dad would break into this Glaswegian accent that was so hard to understand, yet so compelling. And he's been able to dance between the raindrops, if you will. I did, in fact, inherit, though, that gift or at least the knowledge that I want to try and establish a relationship or moments of engagement around mischief with my youngest.

And a question is why? Why would you why would you want to do that? Why would it be important? And I think it's because, like most dads, you want your kids, you want your kids to know you were there for them. And they will write. You put in the time, you log the time. They'll know that. But would you really want what you really hope for? Is it they miss you terribly that they view and think of the relationship as having been singular, that your mannerisms, your smell, your laugh, your approach to life was like no other.

So, yeah, you want them to need you, you want them to understand you. But I desperately want them to miss me. Our producers are Caroline Chagrinned and Drew Burrough's, if you like what you heard, please followed download and subscribe. Thank you for listening.

We'll catch you next week with another episode of the property show from Section four and the Westwood One podcast network. So does binge watching Cobra Kai define or qualify as embracing sort of er sort of er.

Well it depends on on like the attitude you bring to it. If you're sort of swaggering in, you're setting it up, you're making a moment out of it. There you go. Right. Absolutely. All about the ceremony I like and I'm in.