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Our undemocratic primaries, Obama's new fiduciary rule, and the challenge of information polarization


With Sarah still on vacation Ezra and Matt ask what we want out of our presidential nominating system, explain a new regulatory initiative that could save the middle class billions, and look at some new research on media consumption and polarization.The Weeds is supported by Goldman Sachs. To learn about developments currently shaping markets, industries, and the global economy, subscribe to the firm’s podcast, ‘Exchanges at Goldman Sachs,’ available on iTunes.The Weeds is also brought to you by The Great Courses Plus. Visit TheGreatCoursesPlus.com/Weeds to stream Understanding Investments and hundreds of other courses for free!And by Harry’s Razors. Visit Harrys.com right now and get $5 off your first purchase with promo code WEEDS.

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
The weeds is supported by Goldman Sachs to learn about developments currently shaping markets industries and the global economy subscribed to the firms. Podcast exchanges Goldman Sachs Available on Itunes. This week's episode of the weeds sponsored by Harry's razors. We ve got a special offer fans of the show. They're gonna give you five dollars off your first purchase with promo code, weeds, gotta, Harry's, DOT, com right now, that's h, a r r. Why asked dot com and make sure use promo code weeds at check out to let them know who sent you? This week's observe the weeds has brought you by the great horses, cities and now gray courses plus is offering our listeners attends to stream hundreds of their courses, including understanding investments for free. That's a two hundred fifteen dollar value when you just go to the great courses plus tat, calm, slash, weeds, that's the great courses plus dot com, slash weeds, the following
cast contains explicit language, hashtag Obamacare financial planning welcome to another so did the weeds boxes. Policy podcast on apparently network Matthew, Ecclesiastes tremor, my colleague recline Sarah Cliff is remarkably still on vacation. While one well feels like it's been a long time. Hope. She's having fine every week without sir on the weeds is an eternity does feel like a lifetime. We ve been here in this small room together for like two weeks he asked who have just prepping for the shell in its it's terrible turns up. Man is very good. Twenty quest so we had a little voting in the primary is less neutral voting. Yes, midge.
Major voting, and I think we wanted to talk not so much about the election race. But one thing that came up a lot in the course of this campaign is that New York State has a closed primary. Only registered Democrats can can vote in it and, unlike some other closed primary states, they take an ungenerous view of this there's. There's some states where you have to register is Democratic Republic and about net parties primary you can just kind of show up day of rising. I think that's how DC works. In fact it's closed, but nothing is actually closed off me. Your close primary along with some other northeastern states that are coming up. In short, a genuinely closed you have to have registered months ago into the party you want to vote for. So, if you were not that interest in voting in democratic party primaries, and then Bernie Sanders made you interested over the past few months. You can't vote for him and the same for four Donald Trump since Trumbull one
he did a little less complaining about this, but, like his own daughter, was not eligible to vote for him in the primary, but but to connect some things here. Trump in his victory speech complained or at least offered the Republican Party warning about a brokered convention. Writing these things actually convergent and interesting way. I think that we are seeing across a variety of dimensions, the primary process, which includes Caucasus, and conventions and all the rest of it are lot lot small de democratic than than people think, and a lot of that I think, tends to get papered over because by the end of the process there is an equal very good reason for one side or another to contest the outcome. By the end of the process, the front runner has usually wrapped up the Stella gets, has usually really started dominating. The poles has almost official party support and oh, it isn't really in anybody's interests to be complaining about the rules of potentially brokered conventions to be upset about,
your primary works or any of the rest of it, but we have a situation or where Sanders following further and further behind in delegates. But his national Paul numbers are actually rising: Donald Jobs, clearly in the lead in the republican primary, but there is real talk that he can be denied the nomination in a contested convention, and, as such, all this, A lot of the things that we usually ignore in primaries are coming to the fore I don't want to complicate this a little because guerrillas. I thought that was pretty can't be. Doesn't it doesnt seem to me that there is any reason at all that the nominating process should be democratic, and I dont think that the any of the campaigns are in a particularly diligent our consistent way.
arguing that they ought to be made democratic grieve. What they're doing is they are arguing opportunistic laid against rules that happened. Disfavour them what's interesting about american political culture and and labour tells has a good, weird, Randy essay. I think he got it publishing a journal, but it's like more like a blog post than your political sigh and other things in political science, I'm late, but I really love it and he eat it. Points out that, like in America the only political reform you're ever allowed to argue for is more democracy. You can, per se there's some other problem with this like it's just leads to bad outcomes, and so your relentlessly, driven toward increasing that the level of democratically I'm, assuming that this is a about, became a near reactionary? Nobody meaning
moreover, the big but you're, just particularly, I think you see. The issue is very clearly on the democratic side. Cinders has don't really really well in caucuses, Roger hideously under requests, but he does poorly in restrictive voting closed primaries. Which are also undemocratic. I guess I would say a little less so, but I mean they ve limit. You weren't. Stop for a minute ago and say why Caucasus are undemocratic as a matter of not shores intuitive. So for one thing, some of these caucus states themselves are closed away. Caucus works is you ve got to show up and give up hours of your day to go sit around and like cubits with other people, listen to people give speeches about candidates year and the idea Caucuses originally was to accomplish something
actually similar to closed primaries. The idea was that only people deeply involved in the state Party would bother to show up to a cautious, so the hope of reformers at Pee, Mcgovern, Frazier reforms which spurred the creation of these Caucasus. Their hope was that we were gonna happen. Is you can get a lot of sort of like earnest issue activists, we're gonna come to this like big old meeting, and they were going to talk about like what is the Idaho Democratic Party. Gonna do and an Babo bought What really has wound up happening is that people only show up to these things because they care about the presidential campaign, but so Lindsey, health to sort of more cortical inspirational? It's like Sanders this year and Obama into thousand eight, but is also very favourable to animals any disparaging way, but like college kids and just like other people on a family see
but with a lot of time to way straight like if you work job we're like your job is to be it the cash register for a certain shift right. You just can't vote in rock sway. and so you can. You can find that so in innovation, in a way they made, the clock is even less democratic but in some ways more participatory. By saying that there are special caucus locations on the LAS Vegas stress, that casino workers can go to and the Labour Union that report. since the casino workers has special provision in the contract that people can go off and caucus Silicon Nevada, working class retail shift workers generally can't vote, but members of the hotel restaurant workers union can anyway to it's been beneficial to Santa centres, is the type of candidate who does well in Cox. Its people feel that he's a cause and he is the demographic profile young people,
We have a lot of responsibilities in life and, if they happen to feel strongly about, the campaign can blowhole, and so when he does, and Caucasus is a thing to be nervous, he outperforms is pull. in those that yourself so compared to what he does in primary states where send us poles and where it finishes in a cock state, he tends to get more delegates than his initial polling would suggest Ray, and- and this is a particular thing where Democrats allocate delegates proportional, but one thing- it, particularly I it seems to happen in these caucus stage- is that a psychology futility takes over we're, like it's obvious that Hilary gonna lose in these sort of planes. Caucus states so she doesn't campaign there much to try to reduce the emphasis on it. So then people really don't want to show up to like row in this time consuming losing demoralising pay.
There is also the more demoralising to lose a carcass right. If you are, if your participant in a cocksucker, what you are doing is you are sitting there and lets say your Hillary Hillary Clinton fan and you are coming in and are voting for. Hillary Clinton and leaving you are hearing like eighty sand or supporters were not eighty. But a number of sand is pretty to give these long speeches, and you were looking around a room where there, like fifteen Santa supporters and for Hilary supporters and adjust sucks, is unpleasant, drag just say any. This is working on an affair in the rural exactly, but this has been a big sort of man did to Sanders during this particular fabled run of winds that is put together, and you know he hidden minded and Hilary people were making no actual effort to change that sport were spending a lot of time. Snarking about boxes. Then you come to New York, which limits participation in a way that has the complete opposite. Valence a lot of sanders. Voters are what we ve come to call negative partisans. They are people with left wing poet,
ideas, who really wearied dont, like Republicans because of their left wing political ideas but dont, particularly like the Democratic Party they're. So they have never been inclined to like go register as official Democrats or necessarily vote in previous democratic primary. Is more. Its Clinton has a strong basis aboard among African Americans among older people. The kind of people with whom that negative partisanship dynamic is less less of a thing or to put it differently. People who are more Part of the democratic parliamentary hide two more institutions within the democratic. Yet again, there is strength among union member speaks just ranked among people tied institutions that are tied to the democratic for exactly so so it turns out The New York's wars actually succeed, choosing what the carcass system was meant to do, but has actually failed which is exaggerating the power of party regulars and veteran activists, and so that's been very, very, very beneficial
to her- and it looks likely that it will benefit her in a bunch of other sort of MID Atlantic states that have a similar system. Both sides complain about a lack of democracy when it disadvantages them. and most likely the ratchet is going to move. I mean, I don't think democratic and a scrap all primary primaries everywhere. But there is- of renewed sailing, to this attention. My guess is that if any states change their system- and usually someone does change, it will be toward creator. more openness, because Body wants to say what I will say, which is that democracy is about voting in general elections nominating system are about producing good nominees and open primaries,
I think, for a reasonable idea at a particular point in time to improve the quality of the nominees for the parties were getting, but the situation has changed and I think it is much more likely now that that close primaries will produce the desired result. Do want to say why. Why do you think that we also, if you look at when open primary started, to be be a fad? One big place where they came in? Was this and it was driven a lot by Republicans in the south, who I think correctly realise that an important part of the National Republican Party presidential base in the eighties, was older conservative living in the south, who were members of the Democratic Party, but things were actually a core element of the Ronald Reagan coalition and they wanted those people to be able to participate in the primary process, and I think not as a question of abstract fairness is a question of actually,
How is a party gonna make a good decision and forcing those kind of older conservative southern Democrats to rethink their personal identity to be able to participate in the question of who will be rattled Reagan? Successor was just not going to work and you're gonna have a really suited disproportionately of republican Party. That was out of step with reality. This was period of time, and you had something that's almost at the opposite of the negative partisan exerted somebody who liked the party they were four, but did it. Fear the other party and actually prefer the other parties candidate, yeah yeah, and then you had another thing, which was prominent democratic side it at that time, where demagogues worried that the nominees wouldn't be too liberal in and they wanted to win elections at that time. The typical independent was a kind of floating voter who might go one way or the other, and what they wanted to do was let independence get into the process to help moderate can.
It's come in and when I think we ve seen him in recent years that and we we post about there's a bunch of vocs but there's like no relations between people deciding to self identifies independence and then behaving like people with moderate ideologies or then behaving like people who are up for grabs swing vote yours non party identifiers are just sort of less connected, but they're not ideologically. Center, and you see that on the democratic side this here right, it's not that Pensions are coming out to vote for Hillary Clinton because she's the more moderate nominee independence to vote for Bernie Sanders, because there two left being there too, disconnected to want to affiliate as Democrats, so on that
democratic side at any rate this year, the closed primaries are accomplishing what Democrats use to want to accomplish with open primaries, which is to say helping the more moderate, more electable candidate win I want to push on this there bunch of things I want to talk about in terms of housing in a planet, selection, but I want to argue with you a little bit about whether the objective structural situation now pushes towards close primaries. So one thing I don't want to do is over read the dynamics of Sandwich MRS Clinton. So it is completely true that voters who do not identify with the Democratic Party but vote Democrats are favouring sand was this year, but they favorite Obama, two thousand eight. I think Obama, probably As a little bit more liberal than Clinton, but I don't think that was actually the real cut in the primary, and I think that this has much they do with an establishment versus anti establishment dynamic, but even if it doesn't, I'm not sure we know how it would play out over the course of five or six election. So I want to be a little bit. A careful and saying
first that we are sure about what kinds of candidates would be would be valued by this That's because I am not sure we are seeing is a try. moderation here with, could then I think we might be saying to some degree a triumph of just party structures, which means you can I think, debate whether you want that denominate, but then I think that the question of negative partisans is actually important here. We are in a period of time I am aware the reliability of voters in terms of their parts and preferences higher than its ever been, but the party allegiance of voters in terms of their affiliation is lower than its upper Ben, and that is a moment that it is a weird in many ways, but in so far as we want. primary decisions to reflect more Then an increasingly unrepresentative group of people who really a patch himself to parties- I think you do want open it up to those negative partisans of his illicit attached voters.
and one reason I think you want open it up to Them- is that in this relates to dinner something that have been more salient really in their public and raise him the democratic race. One reason you want open it up to them is that if the party ends up drifting too far from a very large faction of its support, since then, the long term outcome of that can be very unpredictable like as it as an Donald Trump, and I think Interpol Brave had a situation where the party was able to exert enough control over. Candidates over nominating processes that, despite the fact that much of its base had become more economically populist, much more anti immigrant and somewhat more more nationalist in its approach to politics. The party structure was pushing. The more marker Rubio comic candidate, that was more open migration, less economically populist and until our Mitt Romney kind of candidate in that way, as well or John Mccain before them, and I dont think you
to see those dynamics persist over time and if, as people get more and more frustrated with parties, which seems to me to be there, Ruction things are going if you close down party now in processes. The distance between who the parties nominate and who many of their voters want nominated is going to get larger, not small, now, I could see within here an argument to say that the problem here is weakening of parties and closed primaries. Give people an incentive to join the party I don't buy. That will be a big enough effect. Offset the fact that you're having a lot less input in the decision making process from people who, ultimately for the party to be a healthy party, is going to need to be appealing so two things one I mean I agree that I dont want to make some like long range, forecast or say like closed primaries are awesome, and everybody should do them just to say that I actually think that people's thinking about this is being
Riven by short term, instrumental Azalea, so grand. Then they want to back up and reach for principles of democracy. I really want to encourage them to not back up and reach for principles of democracy. That thinking about nominating rules. Instrumental II is the correct way s I think about it, and you should own your instrumental us and say that what you want is rules that are conducive to the kinds of nominees that you want. I think the fact that the New York state closed primary is helping the the more moderate more party. Regular candidate win is infected completely sufficient justification for it. Now, if you do like the idea of party, when you know that that's definitely there's this question. You raised about elimination from parties and sort of should we should we give, to that end? Just say that, like ok, it's can be a free for all. You don't need to be a member of a party to influence what is doing because people don't wanna, be members apart,
these verses. I do kind of thing that you need to try to think of a way is to put the Genie back into the bottom. I'm not sure that closed primaries with a very long registration lead time, the way Democrats do in New York accomplices anything in that regard. I do think that closed primaries with same day, switching or get up, maybe weeklong buffer, does shorter help. Do that it like says to people ok! If we want to vote for Bernie Sanders, you totally can we are not going to stop you, but first sign up to join the political part of bologna push, because this is where I think this actually makes sense in its an argument by Bernie Sanders himself makes makes, although not sure how true it is, but I was definitely true. Definitely true for Obama. One argument that Sanders makes about why the Democratic Party should nominate Sanders is that these Hillary Clinton Super Democratic,
there is. A third is gonna, be Democrats when my Father, this Sanders voters are more nominally attached, end and in other ways, increasingly, possibly because of his bitter primary, increasingly sceptical to party establishment, and so when you ask what would it take to these people and put that Genie back in the bottle. I think for the place at leads. You a nominating process that can find candidates who, on the one hand, appeal enough to the Democratic Party regulars which in this case it looks like centres, has not done. But on the other hand, appeal to this world of voters, because if that candidate then became the nominee and then became the president, that would tie them to the Democratic Party to some degree through the person of that nominee. I think it's clean up ness. I've been a lasting phenomenon. But I think it's cuban Obama did this to some degree, the young voters in o eight and then again in two thousand twelve. Now the yards Yoda happening amid, but there's a view
very very sharp shift from the patterns. We saw no for rum, which looks at this one to be somewhat persistent and the parents who saw two thousand as well, and so I think I do think that for bringing People into the party for bringing these unattached folks know party. The way they're going to come in is not rules. It is they're. Gonna have some kind of Tribune somebody get excited. about who led them into the way I mean I really want things were that's easier way but eight, but I do think that still having He closed primary, even if it's a permeable closed primary is better in that regard right. The best outcome for me would be if Bernie Sanders could bring, non Democrats to the polls. The way Bernie Sanders himself was just hanging out in Congress Caucasus with court on court and Democrats being one, but then he decided he wanted to run for president. So he had to join the party right, but it was like New York style, you don't have to travel back in time and
so you're saying that you're not saying that you want New York style, primaries. You're saying you want new, I think like New Hampshire style primaries, I'm not. I am not sure on wages. But what you're saying is that the problem of the New York primary is not its close status, but the space time in which you need to register that it was literally impasse you, I think, a good thing would be to say, like Bernie Sanders you and your campaign, if you want to take these non affiliated, liberals and power them to victory. You have to bring them into the democratic partner. What New York did was it made it? Actually, possible right for him to bring them into the Democratic party, but what too many states do? Is they like? Don't even make you bring? Them I think that's totally reasonable. I want a backup to another. Part of this, I think is, is interesting and its potential to be important in this particular election, something that you have, said a couple times here is that there is an opportunism to the arguments people are making and there is there an absolutely as Bernie Sanders
one a number of closed primaries Caucasus without complaining about how unfair they are, and he was not campaigning against this kind of thing during his time in Congress he's one of us carcasses which, as you say, are also very exclusionary and he's not have a problem with Caucasus. So if someone has been found on the, lie, and then his campaign manager Weaver came out and said their new plan? Was it there behind him in delegates to win by turning superpower and so on the one hand you have Bernie Sanders, saying hey the problem is this democratic enough in them. On the other hand, saying hey we're just getting the will of the voters and, as you super delegates to flip the outcome which is not going to happen, supermarkets Orewhelm only favour Hillary Clinton, but on a principles level. I think it shows how malleable these principles really are, but what they think you're. Seeing sing it under this, why brought Trump and the discussion earlier is that the different states Do these elections so differently with
bidding Olano Republicans took on the public's, have also democratic side, Caucasus versus primers open disclosed, and then you have the conventions with super delegates the democratic side, with the ability to change a thing if nobody gets a majority on the first ballot and what that gives a campaign that is sort of competitive late into the primary does not want to give up. Is the ability to find a lot of these opportunistic arguments that two motivated soup what are very, very convincing. So one of our report has just Stein had gone too New York, which is super Bernie Santos country and talked a lot of people there and Bernie Sanders supporters. They're just don't believe. A lot of the election results I believe Heller contains Delegate is all super delegates which is not the case. They are open to the idea that it's a voter fraud or it's all just rules. I I did a facebook chat, the other ninety percent wasn't this just about. You know that we start rules of closed primaries and what's happening there is, I think that
Santos himself is encouraging his supporters to think of the primary as illegitimate by highlighting parts of the primary system that are strange, indifferent in the places he's losing Clinton does not at the moment, have a really strong incentive to do this, but I think that you know. If this issue on the other foot, I think it very well might be doing Graphic Summer caucus states. Donald Trump is out there saying way convention's work is illegitimate and of their public party does that Republican should basically riot, and so just one thing, I think, Seeing in a year we have seen a lot of different spaces in which party institutions or may be weaker than we thought is it is tremendous variants across the country that appears to be based from place to place on no kind of consistent principles or easy, transparent process you can track backwards. Very simply is a creates. A real opportunity for one candidate or another
de legitimize outcomes are when you deal legitimize outcomes. That really does radical supporters right. That really does make your support us feel that it's one thing to what candidate lose nothing to fill. Your candidate was robbed by corrupt party establishment, and so one I think Sanderson himself was playing with over the fire here, but but too, I do think some that I become more tune to as a possible failure point, maybe not in this election, but in but in some election, isn't it the absolute seemingly arbitrary, random nature of these different contests really creates an ability for campaigns. Produce campaigns at her losing sight of these rules to contest their legitimacy in ways it is very space certainly to their supporters. Although I mean, I would just say if you go way back in America history too, that the previous century. You may recall that Al Gore Uncontroversial, I got more votes than George W Bush. Even less controversially, the median voter selected
or somewhat controversially, his supporters intended to vote for him in Florida or didn't any just. It happened to be the case that the leadership The democratic party at that time chose not to make a big deal out of this right and that's why the United States today has a functioning political system with the world of law. Is that, like leaders of the Democratic Party, decided that principles of democracy, but not important to them that the concrete interest of their constituents were not important to them that, like being skies and saying you know we fought and we lost fair and square was what was in to them at the time, was really angry, that they made that decision? that I am more of an old phobia I sort of see it as a wise and statesmen like and really admire Al Gore for good. gently with the political system exists. It is so fraught with those kind of fail points. When I actually think that this
day. Seen s around the presidential nominations is not that salient of wine. It happens to be the case that, because a primary are so freaking long have like a lot of time for the candidates to like toy with these things? Hilary is campaigning in two thousand. They ran with a lot of these kind of ideas here and there and like trying to seat this Miss again delegation that was barred by the rules, because they had actually voted in that car weren't fair and that super delegates we're gonna, help them and Bob. I in the end they step away from right, which is what I think Bernie Sanders will do, but the eloquent I agree that Romania will, if he's not winning, will step away from us, but I do think that the kinds of diligence rising arguments are actually the very powerful among us right, because they they create a rationale for what happened there,
IT fair and square yes, but something that you see is that, but I have some very, very, very intense Bernie Sanders. Supporters in my family right, and so I get My email, when I wake up in the morning everyday and fair, very very upset, like the feeling that they have is that there is a lack of robbery happen. here, like a legal literal, miscarriage of democratic, just wasted. But I read this: the other way is based on my dialogue would centre supporters. They are at ten out of ten, unlike legitimate beefs, with the democratic process and also ten out of ten totally made up shit. The people who are convinced that the only reason Bernie Loss New York was at the Mary is closed, which is wrong, but like plausible and grounded on a real procedural objection, also thing super delegates are the only reason Hilary has led in the delicate count which is false. They also think Bernie has overtaken Hilary and National Poles
just false, they think that Arizona was of a load of good will see in a whip me there. But again been waiting. Maid benefiting mean these, but I mean. But yes, it is a good information. They structure. That is, as we have seen, an exemption places right so's. I heard that Arizona. loaded for Hilary, not because as a large latino population, but because a massive vote or fraud Koona smite may be. It is me because I have also heard The whole mainstream media is completely in the tank for Hillary Clinton, which I think is actually the opposite is true. I think the mainstream media has been complicit in creating a sort of fake narrative of a close primary contest for the sake of trafficking and ratings. I think it is bad that people get this sort of toxic mental state that the candidate that they are very emotionally invested in is being cheated out of the nomination, but
It seems to me that that is not that driven by fat in reality, and then I think it's unfortunate, I feel, like the steaks in recent democratic primaries have been kind of low compared to how they've been in the past. You like in nineteen, eighty four one thousand nine hundred and eighty eight you can't it's really smacking each other over like It is illogical and conceptual divide room what they want to do, whereas in two thousand eight and then even more so in twenty sixteen, I thought you ve had a lot of whining about process and a lot of like characterizations of who is supporting the other opponent because they're so isn't a meaningful disagreement about the campaigns do not agree. Another way. Putting this, I think, is a committee not agree on what the disagreement of this primary yet freight, due to some extent there was an agreement into
in an eight that broke a bomb had opposed to the Iraq war and healthier than had supported it and was we're hawkish and he wasn't. There was an agreement. The brok about my had healthcare plan without in individual mandate and couldn't happen within individual mandate, and that was a place where I think and in a bomb eighty extra quite near to each other. But there was more directional differences, whereas in this primary think this December, a bit of a strategy of Clinton's Rafik some she fuzz this stuff up. Yes, but there's a lot of while I support that too. I just have a more realistic plan to get us on the farewell, while Europe, let you not, I mean see you you're getting into low, but of officials in the last debate was full of this kind of thing, but I do think too to maybe just the other point, a slightly different way. With reason worry sometimes about if the Electoral college came up a lot whereby electoral college for sure, but the real I worry about this stuff. Is it
I think that we are in extended era in which trust in major institutions that it is important for people to have some level of faith in has been going down. It's been going down for decades decades in decades, and then, when you have within these institutions, a bunch of fail points that, when everything doesn't go right, all that in their lot of reasons for we reasonable people to feel mistrustful. What's going on, because the actual process he's do not make sense in some fundamental way. They give everybody had a close primary and every closed primary need to be done cut for months before the cut off she don't the good be people would be arguing about this because it feel like ok, we'll just how this particular game works. It's a fact that all the things are different, so you have seats like New York that are real outliers on something they creates this, and so I, we with you that I think this happens and lotta primaries, and I also agree with you that there is- only so much that could have been protected here, but I do think this kind of
much like the debt ceiling fight of recovery- is a go much like for that matter. It act or college stuff. In two thousand the vote I d lost, he began see the inclusion of super packs. I don't think you're seeing more and more and more reasons. The completely reasonable people will, in different circumstances, come to feel this game is really reg. He and I think that when you look at this election and you look at the support for Santos, any look at the support for chump and you look at how much people feel the scheme is already super rigged. I think that should make you long term concerned about frontlines here yeah, although here the problem of his own. I was talking to a cinder supporter about this, and I was saying one really quick easy transparent everyone understand it way to eliminate a hundred per cent of these system rigging. Complaints about this when seeing of the southern slightly in all, this would have been to have just had a national primary on February. Fifth, that Hilary, what a one in a huge landslide
in fact, everyone agrees that the long sequencing primary the starting with small cheap states that that all that stuff makes insurgent campaigns pop upright doing if you had a broad national primary, the sort of front runner, which is when all the time and so I mean I don't know I mean like- maybe maybe that's the answer like. Maybe we can have a cake and eat it too, by making system, cleaner, simpler and more democratic party establishment candidate will win more reliably and we'll have less of this sort. Hurt feelings and so on so forth. But I actually think people find there to be something valuable in creating a system that I think fundamentally, loads, the dice against establishment candidates and means that we have to have a meaningful dialogue. Every year you we so even a dominant candidate, like Al Gore and two thousand had to face down Bill Bradley. Unlike
too. Weird crappy states that he could drive around in and like a tiny little car with no staff and mount a real campaign in and to me, there's something good about that is problematic. If the way people experience the establishment, winning a tough campaign is that the system was where is giving the establishment like a quick, easy super early blow out, would be like fares fair. I mean that's a sort of a tough one and I think some tension and do we value the process of like having a fight and seeing what the outsider can do and seeing that sometimes like with Barack Obama. You can get far enough inside. You know, as an outsider too, like actually went in and change things and and to me that's that's valuable and the only way to address the kind of complaints that outside or have would be to actually criticism that would be much more hostile to them. I think it's a good place to it and the segment so we're gonna take a break and be right back with what is our next
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and make sure use promo code weeds at check out to let them know who sent you. She went out about a little non campaign, public policy news here and last week a sort of a rule came out regulation, perhaps from the Labour Department. That's really very worn and will actually and with its a little unusual for politics, is going impact the broad swathes of a middle class- Americans, not poor people, and they will probably never know. Yes, you will probably notice. But what this rule says is that investment advisers, when they give advice to clients, have to adhere to what's cloudy fiduciary standard, which is to say they have to give you advice. That is in good faith in the best interest of the client. The witness turns up for for most people is that, if you have a company for one k, plan If you just set up an IRA account with your bank
you will normally be set up with by the sort of financial firm that offers at service with an offer to meet for free with a financial, planner or investment adviser to help you sort through your decisions about what you said. with your money? Those guys are actually or up until this rule they are salesman, and it's like going into a card dealership. You know where the guy's job You talk you into buying the most expensive car you can, because that's how the dealer makes money and then he gets paid on commission. The job of the court and quota adviser with your retirement account is to talk you into buying high fee funds that will make a lot of money for the company he works for and then he will get paid a commission but its structure to be. This is a guy who's here to help you as if you were going to the doctor or something to the rule, changes
standard and if it is effective at all which it seems like it it well be. It should save people billions of dollars in the aggregate in it here in switching air, their money into lower Phoebe talk about wise, so delors, vehicle. That is what is spent moment on why it would save people billions of dollars because, I think, is a little bit. O pay cried, for instance, what force, a advice or even within the context of this rule, to steer it lower few vehicles. What happens if they don't I mean, if we're just saying, hey you gotta work in the best interests, and I say: well I thought that was the best interests. I think these high risk investments are gonna, be great for people what stops them from doing I mean, I think it would stop them from doing it ultimately. Is that it's going to impact the compensation structure so that these companies are allowed to offer people? If you have people who operate
under a fiduciary system. You can't really be paying them on commission what, with the logic of that, be that's like a huge, transparent red flag that is going to be caught by regulators. Who then go do it. That would be like one big change right, you're going to eliminate the who compensation structure of this industry. Once you do that, I think that in practice, you're simply going to not have as much interest in sending these people out in into doing things. I'm not a hundred percent shore. What sort of after that kind of like big new king of the industry? What does it look like five years later right like? How do you do spot enforcement and, as is the case in general, with regulatory, things you never know. If the next administration is this going to be like air, we don't really care about this anymore right, but in theory we will
very, very sound body of research that shows that actively managed funds underperform pass it funds, so do not going to be able to claim in for him any kind of legal body that steering people into actively managed funds was acting in there. Best interest. So previously they had been operating in what's code of conduct as suitability, standard, which sort it doesn't mean anything at all. You need to do. There is show that you're not steering people until I frauds that it's really know it's a legitimate vehicle, but you know, acting in best interests is going to mean you have to put people into passive funds, because passive funds are relatively easy to set up an easy to compare. There's more, petition between them and the fees you can make as a company just tend to be much much lower its past
well, you'd, see some kind of collusion in the future. There was a Bloomberg article showing that the trend has already been in this direction. People have heard this message about passive funds from every media outlets. That time from it s pretty constantly for ten years and money has already been moving in that direction, and it's only driven fees even lower down, because people are starting to become more perceptive and shop, ear about it and so big of dollars in revenue have already been lost too, that the sort of switching into passive- and it looks like that- is going to continue if this world stacks- and there is actually a secondary loss to Wall Street, which is that not only do you collect lower fees on passive funds for its active funds, but active funds by their nature involve more trading
so there's just work for the right to do executing these deals and is going to be less of that too. And it's it's really just in dollar terms as a staggering defeat for the industry, political economy of it is actually pretty interesting. I am somewhat surprised that this rule got through absence some kind of precipitating crisis, because this is something that the Obama administration has been tell people is very proud of, but it is a scenario which you you see. Sometimes in politics in usually means you lose, where you have an industry that is very conscious. They're getting this money does not want to lose. His money is now on the loose these job, so they're gonna pump up all the lobbyists. Can there be any use like every member of Congress? They can to call the administration like they will try to stop this, and then you have a very diffuse Cooper benefit, sure he doesn't even know this is happening, doesn't know what these rules are doesn't know why it would be a good thing if they change doesn't know the Labour Department controls this kind of thing. I mean all over the board. There is,
very little mobilization on behalf of this rule, except from consumer advocacy groups, or politicians like Elizabeth Morn is so that construction of political forces tends to mean the world gets destroyed in this case is actually meant that the rule passes which you know fairly big impressive regulatory maneuver for this late in the presidency, but something What the other Athos pretty interesting about this, which is that, when you connect what's happening here with a couple other place, The administration is running. You dont have a world where they're trying to break up big banks, away Bernie Sanders like them to be. Do have a rule where they are attempting to cut major profit centres and business lines of big banks. Here they're trying to cut things, they believe propping up Wall Street and the financial industry without being actually productive, her for the economy and that the cumulative impact of a bunch of these particular some of the tax changes they want
password pass. But the cumulative impact of these could be relatively substantial in simply cutting the incentives of Wall Street to be Wall Street and actively to turn to shrink Abed. I mean, I think that you see between this move, moves that they're making against tax shelters. The higher cap, requirements that they ve levied did they are making the financial services industry as a whole, simply the less lucrative, there's just less money in it and then you come that with a non policy, change which is just happen to which is that companies, are doing fewer ip oaths and are staying private longer, that's cut out another sort of big business line from the arrest of banking world and the vulgar rule which I forgot to mention in the article that which restricts which kinds of entities can't can do which kind of trading? And it's not,
on its own that big of a deal, but it just is another example of a sort of war of a thousand cuts against the industry, and this approach reflects a very different kind of idea. From from what you hear from from Bernie Sanders, because part of what the Obama administration is doing, is it they, I think, really do believe that financial services is a legitimate line of of undertaking. They think is important for the United States to have deep and liquid CAP or markets and, more to the point, I think they could enter into a discussion about what that means in a way that I'm not a hundred percent Shore Bernie Sanders, you know even would want to or or care too, but then part of it they have a view where they agree with the banking sceptics. If there is a lot of sort of nonsense happening here and what they are really trying to do is prohibit or discourage or tax or regulate,
way, the nonsense as having a banking saving banking from the bankers. Well, just more like it, we regulate other industry where no one is like nobody said. I hope- oh, my god, these factors are creating so much pollution. Let's not have car factories or like let's break up the car company is right. The idea was to regulate the conduct so that the factories would not be as polluting or the machines would be safe and not to cap eight people or or things like that, and that stems from the fact that everybody, I think, heads like a broad consensus that it was legitimate for people to be manufacturing and selling automobiles, even if they were upset about some of the specific around it, and the Obama administration thinks there should be investment banks and the things that should be read banks and even things that should be big ones, and I think that they would admit off the record that they think in some ways it's better for them to be big event for them to be small. But they agree that the industry,
whole became extremely large in part, on the basis of doing things that have no real value and that aren't connected to the useful things that that finance does and they ve been whittling away at them chopped up cup trap and there were flex of a change in vision of the american economy. From what you had when Bill Clinton was president, even though its a fair overlap and intellectual continuity between the actual people, but when Bill Clinton was president, I think the ministrations really felt that financial services was just a good straight for the United States that these were high, paying jobs. America was globally competitive in them. You know, manufacturing was going to Asia was going to Mexico, we had to move into high value services and that exporting financial services all around the world was like gonna, be part of the business of America.
You think that the Obama administration- I just looked on what happened in the intervening time. Any is much more sceptical of that. I mean they're glad these companies exist. They want them to operate internationally, but they look both internationally and domestically a little askance at a sort of The lines of business had gotten into speaking of lines of business. We have a paper of the week that speaks about the line of business. We have gotten into this week's episode of the weeds is brought you by the great courses we ve talked about the way courses not here before, were really excited about. The great courses plus video learning surface gives you unlimited access. this enormous library of great courses, lecture series in tons and tons of fastening subjects, everything from history and science, all the way to cooking We really want you to try. The great courses plus show the giving our listeners especial chance to watch one of their most popular courses. Understanding investments absolutely
free understanding. Investments is presented by award winning professor of financial Economics, a Duke University Conall, full in camp. The course explains the fundamental soon for people not familiar with the process, and it also covers a lotta, showed an interesting areas that more experience. Investors won't find beneficial with the great courses plus you can watch many different lectures as you want anytime, anywhere and now gray courses plus, is offering listeners, a chance to stream hundreds of their courses, including understanding investments for free. That's a two hundred fifteen dollar value. When you just go to the great courses plus dot com, slash weeds, that's the great courses plus dot com, slash weeds, so we have a paper this week that I think is really fascinating. That's called a filter bubbles, echo chambers and online news. Consumption is by Seth Flaxman, who is at the Department of Statistics at Oxford. 2N Eastern, Rau and sure I'd go l and apply butchering some people's names here, but the papers
to do is cast a purposes that becomes up a lot, which is that all my news. Consumers filter themselves into echo chambers that, by using search algorithm, so Google, the more you search. The more google knows what you like, and hopefully zone, showing you box content at this point, but but the result of that would be that you see content that comes from fear, illiberal from the liberal cited the isle of your conservative conservative side of the Isle. If you're on social networks, your probably friends with people who like you, and so your feed, which is also algorithm driven, but has also given by who your friends with, is showing you In a very congenial to you, and so what they find, they they look into the web, browsing history for fifty thousand. U S, users, who regularly read all my news and they find it I'm quoting here that social and search engines are associated with an increase, in the mean it illogical distance between individual. So it is true that if you're reading my news a lot that looks to be leading people to be more poorest, but they
also find out is a somewhat counter intuitively that these, channels also are associated with an increase in an individual's exposure to material from his are heard, less preferred side of the political spectrum. So two things are happening here what time is it? What is it reading on? My news does polarize you, but the other it does not appear to put you in ECHO chamber in fact, compared to people, don't we news, you're not searching for needs are not getting these on social networks, Europe, cheating more things from the other side, Just not changing your mind or moderating you at all. Now one possibility is that people who are doing this- strong news, consumers are already strong political partisans and, as such, they re things from the other side. It doesn't do much to change their minds, but another possibility which I find interesting is that in my experience on social networks, particularly the fact that you are, in things from liberal sources or reading things. When certain doesn't mean you don't see things move aside about what it means that the pieces
from the other side of the Isle are hate. Reads there like that convincing things there are politicians, citing the worst thing or someone from a magazine from it. Spected, you know, like writing, really noxious article and so that what you do You are reading things that are coded from the other side, but that even you're doing that. What you're getting is a really really terrible view of the worst work being published any of us the worst things being said, and that also increases radiological distance from tell the state is not really with separate that out, but it something I've always thought is very possible mechanism here, and I assume this also just a certain amount of Weber nagging like this one person who I am Facebook friends with whom I am not really real friends with at all, but I knew him well once upon a time early days of Facebook and as happens, he's like a strong Donald Trump supporter, so I think the first time. I like saw his like pro trump commentary and sharing. I liked it because I was like that's that's fine
because I don't know a lot of jobs quarter and so I'd like kept engaging with disguise, content, and so now in facebooks sort of nutty way of seeing the universe. Our social graph keeps getting closer and closer together and I'm seeing higher and higher proportion. I think of his shares from obscure, conserve outlets, and if I were, I happened to be a professional, so I am aware that actually most conservative media is pretty hostile to trumpet this point. But what I am saying is like nudges conservative media, but I really do witted pro trump conserving media, because I think it's funny to an extent. I think that indicates both The mechanisms that you're proposing waited sick. You have to be pretty into politics to even think that it's funny to ride stupid
from the other side wait a normal person just wouldn't care right, the end. So yeah, it's I you know you can be this like. Oh I'm, this consumer, I you know, I see everything or I'm hate, reading or or I'm just dipping in sing informed. I mean, I know, lots of people who, like to flip over to Fox NEWS, to watch election coverage because they're not regular, cable news viewers, but they are liberals and then, when I want to put something on cable like they wanna see where Billow Riley has to say about it, I mean, beyond the specific in the lesson here. I think it just keeps being there, there is no exit from the realm of polarization certainly not, unless you're really trying right, like and in the family, seeing things on the other side does not mean that you are seeing the correct thanks the other side, and in fact one of the really dangerous things I think about media polarization is that you,
have an outlet that is actually not that far left or not that far right, but that in trying to appeal to other bore, conservative audience is going to just in the sampling of stories it chooses in a world where there is always more things to cover them than you can really cover is gonna pick. Let's say, liberal outlet is gonna pick stories where, if it's coming things republican say it's going to cover things. Republican say that maybe paint their appalling party in ITALY. Flattering light. That's actually gotten a little harder this year. Could Donald Trump is the guy you normally cover costs? Is a front runner in he's paying some really crazy things, but there are a lot of Republicans who were made Israel, Lotta Nebraska lawmaker yeah has kindly nothing. I've been SAS coverage or wherever and as such, that you just did that the liberals reading that site are not trying to at a bad impression of her but they're getting one just along the way and so They, when you're seeing stuff coming from either side it can be easier. The lot on twitter and stuff to something will go via
and above all, for bad reasons and then it'll become like a definitional piece of how liberals think, conservatism x or conservatives think liberals view why and it just isn't it's an outlier. That's why he sought in the first place. talk to John Height awhile back he's a psychologist specializes in political thinking. And ass. You know how do you try to protect against us and hidden interesting commentary said you want to find people who could belong your try, but which, for a lot like super intense news, consumers is highly educated it is a certain style of political discourse. Maybe your populous! Are you like more populous commentators etc, but who have different opinions and you can eat actually search out people who you can listen to, which is not what you were just gonna get and naturally you're gonna get things should people you can't listen to convince you that the other side is out of your tribe and novel just poor as further Simonis have gets funny executor of I'm not super familiar with, but Jonathan heads were and he
to my attention as a twitter persona, who appears to be part of a small tribe of extremely famous and apparently powerful white male tenured academics, who spend at least the time on twitter whining about political correctness and how it sighed ruining all of their lives and- and things like that, unlike in our minds then there's like polarization like like many layers of it. You know, I think, for the purposes of doing research paper is the easiest thing to do, is it? I got broad left right politics thing, but you see whenever you have like a primary campaign or you have some of these debates. It don't cleave the partisan divide quite that well, the eggs same dynamic, EC, seem to reassert themselves continuously right. Whenever you have extended argument in that sort of performative, realm of social
media people get very polarized and again not because their cocoon ing but oftentimes, because their net picky right, yes, re very much because you're, not picking seeing the other side, but the seeing a part of the other side that convinces em they don't need to listen to. The others to like Jonathan Chain is much more aware of the day to day goings. On of, like left wing campus racial justice activists than I am because he's obsessed with the evils of campus political, correct rise. I have a real heavily like scarce media, diet of that kind of stuff and a sort of uninteresting on polarized opinion about it. But it's like when you get really hyped up about something you do start paying a lot of attention to what the other side is doing and like often for the purposes of discovering, but the really bad out there, and that's certainly where I got with my with my trump buddy- is that from for the New York real estate,
community and what I have never done, and I think a lot of us have have never really done specifically. That regard is like TAT. To go through that exercise with like ok, we're are now the corner, reasonable, Republicans bike where the reasonable trunk people, but I like, who is the least below hardy trump supporter out there, because I'm not like Cocoon we isolated five guys actually looked around for this, and it's been hard to find. It's been easy to find people who have non trump supporting trumps support. It right, like Trump, is raising important issues. the thing. I found a lot of really have done this exercise, because I really wanted to get one m to read a piece for box and and we got the something like it from sort of a near reactionary guy, which is worth looking up on box, but it is very difficult to find people who really there argued they're, making a really rigorous com argument, for I don't want to be a good precedent brand, as opposed to like why they want to use the launch up as a missile against the political establishment, or why, like your old asshole,
not supporting Donald, charming, there's a lot of versions of chump support, but it's actually funny how few of them, among so many the writing class, boil down to you. I think double shall be. Do a good job and its opposite even saw than Europe. over indorsed him recently am that's like one of his first big, I think paper endorsements and their argument. Is it like Donald Trump is a political superstar and it's worth noting The New York observers, publisher, I think, is his son in law. Yet so me, that's why they really endorsed him, but their endorsement was dull job as a political scene on raising on important issues, and we think that if you want the presidency should be completely different person right. We think that he'd be. all he'd get better people around him. He loses immaturity and is thin skinned. It is he showed in the primary, so even there, even trumpet door spends have as quality of like refusing to actually make the case for chop cause. I think it's too somebody a very hard case to make, but I do think that to that point about doing that exercise, it is
worth. If you care about this in your died in- and maybe you don't it's not, I think, a subject that you need to. But if you care about this diet, it's worth finding three or four or five people. a little bit the way you did with your your trump supporter and trying Who train the ways you renews. If you haven't, I says feed its are easy to put them in the earth s feed, but if you're like on Facebook being to start liking their work, but people you can listen to who see things from a different perspective and try to get them a little bit more in Europe. I discuss a lot. If you go back and the weed archives, I did an interview with Rostov that whose at the New York Times in an Ross comes from very different perspective. I do particularly on religious and family issues, but I find someone who's judgment. I trust me who I can really listen to, even when I disagree with them and I think a lot of us by have people They're like that, but you ve actually gotta go find other. I mean this is where the sword, the tribes point, that ok gets interesting. What with the term phenomenon
one thing that's nice about wash in DC as it as a place to learn. Is that because it's the capital of the country read there, are lots of conservatives and Republicans to be found here, working professionally in politics, which is not true. other should have big coastal city. If you live in the Boston area, where the Bay area, our or New York you're gonna find that people like you living similar kind of lifestyles to use structurally all have the same political opinions you in D C, I mean there definitely tends to be the case, but it is easier that mean you and I used in part of libertarian poker game right. I mean exactly because, because people around so you get to know them and then you can see, I mean per this, pointed it's like. Ok, these people are like. Men, beings who I understand and relate to, and then they have like some different idea about Medicaid and you can really here are the ideas as an idea. The problem with that, though, is that if you are labour,
conservatives who are relate a ball become very unrepresentative. That's true conservative So you can hear a really good argument about an abstract issue like Medicaid, but when you get into something like this primary who am I for is just a much more level question then, like a big absence, question about ideas, and so you, wind up with a group of people, you don't conservative intellectuals and policy professionals, have a distinct take conservatism. Bush was very popular figure re examining any of them, not in the end and Mark Rubio in some way Where do we all sort of different interpretations of it, and it turns out that rank and file? Conservatives in America seem to be really into Donald Trump TED crews and polarize between tramping crews, largely on the basis of a church attendance, it's much harder to sort of like hack into that
which only say I think there are two different things you could be trying to achieve here, one is A sort of self disciplining effort of making sure that your thinking is being challenged from interesting directions and the you are hearing arguments that are unlike the ones you would naturally here and then another is almost more formation or almost anthropological question. Do you understand the party you're not part of the euro? A conservative do understand why liberals think what they think of your liberal. Do you understand what an average conservative thanks in and that countries, often just in a general sense, all across the board, not the way do that cause pundits themselves are systematically bias towards being super highly edge. Hated Super cerebral having information sources at a very unusual way. They can be good for analysis, but they are not going to represent most voters on either side of the iron Rhine right, but I also with its just that they're not good it representing, but that they are bad at it,
in a skewed went right, which I think is something people need to at least keep in mind as they watch these primaries unfold and as they listen to me podcast, which hopefully their sharing on social media and rating on Itunes and telling their friends about exactly rate them share them. Tell everyone wait them again, then another fun episode of the weeds bleed next week will be joined by Sarah Clip again I shall get started a god of we will. Be allowed out of this room, which would be nice. Thank you, doctor producer He valdez weeds, a car production of ox dot com, and you should all be reading and liking on Facebook and panoply, and we will see an extra.
Transcript generated on 2021-09-14.