Our k, C Morgan, hello. Welcome to another episode of the weeds on the box media podcast networks, Matthew Place, he was joined by Sarah Cliff and as recline in the weird current hanging in a circle studio in a sort of fabric jail. we're in a temporary studio to be clear situation, its eerie? It's a little weird help. Yes, a cry for help. We need your help, forgetting Wigan bring great shout EU. We gotta get white paper. We got wig gonna, tell you how to make a fortune in the stock market

But first I think we were going to talk about and why you lost fortunes doc. We're doing is market which most people more or less, and yet would you should definitely be doing, is just like trading minute by minute, based on podcast steps. That's a good way, that's a good way to do it and that's what that's all Warren Buffett would probably tell you when he's not revolutionizing the healthcare and education To tell you about as new venture and healthcare, so we wanted to talk about this kind of bizarre cryptic press, release that Amazon Berkshire Hathaway En Gb? again put out last week that has got in a lot of attention and collation. So I want to start by what has actually happened. I think this confusing. On its own said, the things we know- and this is all mostly based on a four paragraph- press release that came out last week, a coup of marketing this all day, every cell will get to that. So we know what I'm going to read. Some quotes that I thought we'd like the two most important sentences in this process is one is

three major companies. They say they are going to be partnering on ways to address health care for their. U S, employees with the aim of improving and play satisfaction and reducing costs. They also say they will form an independent company that is free from profit, making incentives and constraints. So these are the parameters of the Amazon, Hathaway, Morgan, healthcare collaboration We have not really got in any detail. Since I mean I put a question and our facebook group. What do people want to know is arena tug There's the episode. Milan people said they want But it is an unfortunate variants, satisfying pot gas because we don't quite know what it is. But I think we can talk about it would also be interesting. To do is talk about what it could be where, where a change of care where it could end and as thinking about a less knocking over the podcast. I couldn't saw three possible options of kind of where this might go.

first one that is partly very popular with healthcare wants right. Now is nowhere. So there was a press release it had all this attention, this was like Amazon, it's gonna disrupt Healthcare, Amazon's disruptor like that's what it does and their either as a market difference in the reaction from the Tec people. I follow the healthcare people's words, like men, Seen this before, like this just seems like fluff? We don't know What they're doing we don't know where any day hail about what actually this venture is in one thing: lean that it made me lean in this direction is what I read from earlier that there really looking at their own their own american employees. So they are not necessarily concern working on some. Of consumer facing project at this point there was an interest article in the Wall Street Journal earlier this week about Jamie Diamond calling some of their big like healthcare clients. you don't have to worry too much like your you're going to be fine, and I think that is notable.

And I think generally, you can bet against disruption- and of care. That is usually these safe, that an american healthcare that there's a lot of people who make a lot of money of the way the system is set up right now and you, with the lack of details. I think you ve seen a lot of sceptic some from the healthcare people the world about whether this will do something so to the medium option. I think about is doing something further worker, so let's say they do actually come up with a better way. To serve. I think there's about fifty fifty thousand Employees of that's Amazon, all three of them for talking like to go through his broad, bigger, ok, I'll three, I think, is more like a hundred thousand ash range, so we could cease thing that changes the way they deliver health care to those people which would also kind of small ball. One thing I was wondering about when I read this announcement is whether This might be something called self insurance where essentially accompany works with some kind of

said provider, maybe Amazon water wouldn't do that, but they take on the risk for their own employee population instead of going to Edna and saying we're, gonna pay you five hundred dollars person per month. If things go bad, you know you take on the extra costs. If things go, great ethnic gets to keep that money, a self insured company on that risk and they are responsible for any outsize medical bells. Though it sounded, like maybe they're, doing some version of self insurance, but again like super unclear. But the thing I'm really interesting what could Amazon do if they really wanted to lake go by. To them on this and like disrupt american health care I really interested in Amazon as healthcare supplier. I think he's one of the things we ve seen from their corporate behavior is a willingness to be very patient and not look for profits immediately, and I think there is opportunity there for things that have been charged very opaque, Lee very difficult understand the charge is theirs.

Huge, huge variation in prices. Is that Amazon as a health care supplier, could be a really interesting proposition. What are the things that Amazon has done over the past few years kind of quietly, as they required pharmacy licenses in twelve different states, so they are like making some initial moves. I too am not necessarily drug manufacturing, but Two pharmacy, I've heard some people raise the idea of Amazon pharmacies in sight of whole foods, which is kind of weird and interesting, but I'd really interested in Amazon as healthcare supplier or manufacturer, like an Amazon Generic drug company, is something that seems like a could actually disrupt american health care, but would be a much bigger venture. So those are kind of like this space of there's a lot of space and this press release. Those are the options I think a good place to start thinking about this is what, in the health care system, could actually be changed disrupted,

or just change is disrupted. Also, has its more specific meetings have ethic fit here by Zadig JP, Morgan and and and and Warren Buffett Company Berkshire Hathaway, because I think a lot can't be- and so I think that once you you step the little bet there's a pre limited number of places for them to go. That would have real macro back now, Amazon and that that consortium become a really big company shore right could could they if they really put muscle into it and during Pharmaceutical side bit is totally possible, but when you really like back out there, it's, not that much that I see in the healthcare system that what it is, waiting for right now when you're trying to think about how would change on a country level what it is waiting for, some kind of the logical interface solution or some kind. distribution networks, solution and those things really that Amazon is good at

a tremendous amount of healthcare is about this thing. Amazon is actually not that good at and has been trying till I get away from genoa. Even live opened up a couple bookstores, which is: how do you push care at sick people, whom it's a little bit hard to care for That's one thing: if you want to look like big chief, just to american healthcare costs. How do we deal with the sickest people is a place to stay I dont even doing much there now is there the possible city of creating some kind of unified interface. for employers trying to talk for health insurance and in an office in this in advance on what we have now for sure how much with that shit American healthcare know how much it would change. American healthcare are their opportunities in price transparency, probably by? I think they're definitely are there, but man, big corporate consortiums have been trying to do price transparency and quality for a long time. Like the Leap Prob Group is a big. I mean a lot of the push for price transparency,

equality measurement has come from corporations in this country, from big groups of Blair, employers, providing healthcare and its interest It's done some good stuff, but but but it's only done so much and then I do think it. The final kind of big thing. Although there's a lot of regulatory burden on this is- Could they really aggressively get into the pharmaceutical game either through generic production or some out degrading what they do with whole foods with Bob LAW, and I do think that is possible. I mean there is certainly talk during the CBS Edna merger that won the things they were doing was trying to protect against the idea of Amazon coming in and up ending, whole business, but I don't know the consumers perspective? I could see that being good, but it is hard to see how it will be transformative but maybe I'm missing the utter a somewhat bullish case, and this has to be a little man specific because the planet's nonspecific, but any one thing

it's important understand about Amazon right to reuse in tech people. The reason people watch Amazon were excited about this is that What Amazon has done time and again once upon a time I was almost a website and it was a website in which you would file orders for books right an end. There was all it did I then Amazon would take your order any would actually police it to a book distributor rather like too big. houses. One of the reasons it was located in Seattle is that the West Coast, regional, like book distribution warehouse, was kind of close to Seattle, and then they would get the books from the warehouse and then they would put the books in the mail and send it to your house right. So the company was just this. Very thin website and everything else and Amazon dies has been based on first building a better tool so that it can do that service better. So that meant,

for example, Amazon web services, which is now their most profitable business. That's like all their computer back and stuff that almost every start up in the country. On that was originally. They had to build better web hosting technology for themselves, and now they sell it right there, eventually stopped ordering things from the central book warehouse and they build better warehouses, so they could distribute more efficiently, but then they started leasing warehouse space to other companies. They make some stuff themselves. They buys himself, third parties, but you can also just sell on Amazon as a platform for them. to Amazon the distinction between we're going to try to improve the health care situation for our employees and working to try to improve Healthcare broadly is like not the applicable That's some one thing there really good at read so that if they could get better at delivering health care

to Amazon employees who there already on the hook for Amazon Employees Healthcare, but if they could improve that there, the kind of company that would then turn that outside and because Amazon specializes in that kind of time, you improve the internal tools and then you sell it to third parties. They are in, since incentivize to work on that problem in a way that other companies haven't been right. Like large american employers from time immemorial, have been a little frustrated with the healthcare situation, but the extent of the outbreak pretty has always been a little bit limited because it's like yeah You know we could improve things for ourselves and that would move forward at the margin, but it's I'm really are special to AIDS is on our area of expertise and the upside. Is the upset, is only so big right because your employees come and go. It's one of the problems with a fragmented system, but if you have the card, you convictions in Say: ok, if we can do self insurance or something similar to self insurance, and we could do it way better than we can sell.

Outside. Then it's like it's really worth your while two to dig in right and that's where the the partnership also becomes interesting, because Warren Buffett, the CEO founder Berkshire Hathaway, he's like the master of just random businesses, ride like Britain I always famously just dislike crazy conglomerate. It's like a big freight where road, but also guy, sees chocolate, candies write, em an end, and he he like on the large swathes of american, Express and he's in insurance business in a big way. car insurance, reinsurance, catastrophic stuff, but not in the health insurance spaces like a notable gap in his sort of portfolio- and he is a big believer- in opening insurance companies and then not trying to make a profit off the underwriting read so But you know what can you do with insurances? You pay a premium and then some people get a pay out and one way

money and insurance is to make your premiums higher than what you pay out, but the way buffets insurance companies work, as you just exploits the gap in the timing, like you pay first and you get paid out later and that generates a momentary float in which, like Warren Buffett, has your money and it hasn't got back out tenuous clients yet and that float is invested and that's where the profits come for right. So it's a guy. He has a has a business model for a zero margin. Health insurance company, which just if that existed it would be revolutionary just in the sense that it would destroy everybody else's profit margins. So these also Amazon itself works and am right. It will emphasise core retail business. Similarly does not have profits in the traditional sense, but it exploits the fact that if you buy something on Amazon, you page of bees owes right away, and then he only pays. His suppliers

couple months later, why dispense up several separately from that one of the great innovations of Amazon, which is weird? Is that somehow, Wall Street, does not care. If they may, I mean what the ratio between buffet, not caring of his insurance companies, make profit and Amazon seeming to actively dislike. You have making more money than they spend it. Just great and usually went Amazon bought whole foods right to start price of competing grocery store chains immediately collapsed. Not, I think, because people felt there was this super specific way in which Amazon was going to transform grocery stores, but like they just they cut prices right away and, like that's, that's, really bad. This is why, Think pharmaceuticals are the most interesting place, because this is where it's an. If you are someone who does not care much about profits that isn't, the street that has the highest profit margins in health care. If you actually look at health insurance. The margins aren't that Gallagher, three or four percent- third there there, but they're not good and now you know- depends from farmer

hands down as the highest margins, and sometimes there quite high. If you think of you know stories we ve seen about jacking up generic prices. You could have a massive profit, our Jan on a product that is not patent dead. That's I think, that's the place that the most opportunity, but that also limiting in a way pharmacy, it is over the past year, It has been the fastest growing segmented healthcare system, meaning its costs are going up faster than hospitalization caused the doktor visit costs. but it still only about ten percent of american healthcare spending, so we're still talking about a relatively small fraction of the market but I think one of things away, drug praising typically works is drug companies charge what they think the mark. it can bear so there is if, for example, there is a whole debate about this, a new hepatitis, C drug called Civil DE came out a few years ago, and it

baker. Juliet was charging, was, I think, those about a hundred thousand dollars for a course of treatment under struggling did cure. Hepatitis C is a true breakthrough, big improvement and health costs, but it also lead to a lot of medicate programmes, rationing, the drug, only giving it to people when their hepatitis C was really advanced. I think I am very curious, like see the greatest space for innovation in thy cow, how an Amazon Berkshire Hathaway company would have handled like if they were the ones who had so I d like what would they be doing with that, and I don't actually know the answer to that. I think one thing: that's really tough about this, so you know going back to the press release as they say they have. This aim of improving employs satisfaction and reducing costs that there there is a good question about what using costs means either. As you know, you ve written about the idea that one policymakers say reducing costs. They often mean shifting costs. Unto consumers, when

paid when patients like when I talk about reducing costs, I mean I don't ever deductible or my copies are lower and are often tension with each other in you you, can reduce costs by producing your network going to the more efficient providers, but that's terrific for employees. Action! That's why you see you knew, I think Lot of inefficiencies is because we, like our doctors and we get angry. If, like locks media says, you can't see your door there. You know anymore, sir, on our new health insurance plan. So you really think I think the way of satisfying those two. It seems a good how to be something on prices because of your not dealing prices if you're dealing with network, if you're dealing with shifting the costs from one side to another that there's no real way to address those two twin volatility is where I have a story to tell about this right now. Start: I'm story done. So. I because I think it does go to this point of like what does it mean to reduce costs for whom

so I needed on Friday a diagnostic test, because my jaws total fuckin mess and so I was there at the inn, tease office and they called ensure which Signa and so did I signal like hey. Can we authorizes past four for fresh Europe and sickness it? Shore, but we need to train, the two are informed choice, operation area like what and so we we got transferred overdue, informed choice, operation and somebody gets on the phone and then They say: ok, we're not in any way you to stand in the way of you getting this test, which is great right, thank lacking at the test, but we do want you to sit on the phone with us for a little while and hear how much it would be at a range of different places, round Washington D C or for away from Washington DC, as the case may be, like ok I was like sitting there and in pain and annoyed, and you know it's ok will win. save me money and the people, but we can

Tell you that, as it would mean, you can tell me that we can tell you how much the contracted raiders as like. Ok, but how much will I pay and, like that's a whole different department as it are? You see this he's sitting there here on the phone with me telling me that you're gonna tell me all these prices, but you're not going to tell me how much I will pay, and the reason I am sympathetic to them here on. The reason is the way the insurance is constructed. That's actually not how work right like I just pay a certain percentage or a certain co pay or whatever it is. This have all for all. For all. Services of this kind are through this process I think now but tat they want to save money, but they don't have any. leave her on me to do it, and so then, eventually just authorize the test for me and then They just had a robo call on me for five days ago ten times and front, I picked it up and then the like they put me on hold. So I could talk to informed choice special about something that is now already have. It was so predicted. es as a way of saving money, but it's in part because

Incentives are a little bit messed up on all sides and so that the reason I bring that up in contacts additional what what Sarah was saying about their often being disconnect about who he's trying to save money and how at any given moment and suchlike Signal wants save money, but the way they would save money is by me scheduling, payment for something I could have gotten. Indeed, get done, then getting it done instead lie. Or at a place. It is much further away, but the doktor you don't now with a doctor. I don't know, there's a literally no advantage for me in this whole situation at all. So that is a that that is a system that is not logically making upon a sense and If you want, I think, read the really like bullish case for the Amazon J, P Berkshire project Ben Thompson, its Tucker. He had had a good piece and new, and even saying that look basically Amazon's goal healthcare of seventeen point nine, roughly per cent of the economy. They want to skim that right,

what want some of that money going Amazon, Amazon, and so what has happened? Is it like? This is health healthcare system, Mr Wurtz clear that it is not working in an integrated way. Where does curve? Is not working in a technologically sophisticated way at, particularly as healthcare benefits are provided by employers. Nobody is dominated, market at all, it's extremely fractured and so like. If you just a really patient cause, it takes. You gotta be solvent for a while to try to get into these markets and alone people go bust before, like the changes happen. But if your patient, like you, can sit there wait for the old order. Lapse and like maybe Amazon and Berkshire and J P Morgan with their kind, a mixture of like insurance, expertise and Money. Access to capital markets and technological capacity could come this new layer. Basically, creating a market place for employers take, get pharmacy benefit to get insurance, iniquitous, grow, bigger and bigger and bigger, and that's all pretty inch

sting as a business story and in what asking about reading this was it when you described that and you looking at it from the proceeds from the perspective of like the business I like, oh yet, I could definitely if it worked, which is a very big make Amazon and J P and Berkshire really rich element hand when you're talking about the things people think about in healthcare right like can I get healthcare like how much ultimately woman health care costs, which is driven as you're saying this of all. These situation by drugs the market will bear for them when we talk about health care like in the policy, next week the normally do on the weeds we're. So much more fundamental questions than which companies are gonna get till. I cried, scam, because we integrate a somewhat better informational layer on top of. What's going on as it did, you think it's like this funny trying to evaluate this. A massive success on this would probably mean a sum.

better and even possibly a day for a while at least a somewhat cheaper layer between employers and employees. The health care system and, like maybe somebody nonsense, would get taken out, but in terms of lake would American health care become holes like it is in other countries where you like, don't have to worry about it and you can just get the insurance you need the care you need the answer's no way I mean. I do think it too critical. Remember right that, like the policy problems of healthcare have to do with what happens to people who, though, like the poorest people and the sickest people like that's what they would like the problem. is the business opportunity ill health care is like people who are not poor and madness Early people hoard super sick, but just people with like you need to see the doctor some sweet

and because the healthcare system is so heavily shaped by policy. There's like this big black mass of like roughly average income people with roughly average health status, who have frustrating experiences with the health care system and who also spend a lot of money on it and there's like a market their right there. That's where just a lot of he is and none of the companies involved in that space, like neither sigma nor any other knotted. They just happens. We are insurance company, Balikh, there's no beloved health insurance company right, there's no iconic brand in the health insurance space. I think we are all fans, as a permanente, but it did these. Nobody who like stands out, there's no lake hospitals, the people love registers, I kind of a bummer. That's not true, I think people

There are other cleavage clinically clinic may mayor able to license their name out to other high gesture that I really do. We want to ensure that it is not a private one. Whether Medicare has a great reputation. Yes, Medicare is a strong reputation, but would people like about Medicare is that it's so infinitely flexible? Wait they like? Would you Conseil was on whether you want to choose your doctors and Bob. I like the way to obtain efficiency is in the system would be for an insurance company to exist that people were really enthusiastic about such that. If that insurance company turned around to providers and was I fuck you, you either cutting your prices are you're out The provider would be like afraid, because the customer loyalty, would reside with like awesome insurance co

people just like they love awesome, insurance right and then it feeds on itself, because if providers know that patients really love this insurance company and are like really wedded to sticking that then the insurance company gets a lot of leverage over. The providers can really make things cheaper, which, like makes it all the all summer, but, like nobody has ever made that turn right, once you have this situation, where it's like everybody's mad, all the time right, like The prices are high. Your insurance companies like giving you Robo calls trying to get. You did like drive out to get through Burg and like it it's like shit situation. I dont know that there is any reason to think that the companies in this space can like have off the shelf and awesome solution and that's right, like insurance come if insurance companies knew of some way too on more customer loyalty than individual doctors have like they would be, they would be doing it already. The diner,

facts of the situation are so likely that, like you, are going too far, or more bonds of connection with the people are trying to help you with your health problems than with a voice the phone I'm trying to tell you, you don't need this test that it's it's sort of hard to hard to square there, but but I do think the reality is that, even if it were really well right as a business proposition, even if you had like company that everybody one sign on whether it is not clear that that would do anything about like the problem that poor people or people with chronic health care can genes or elderly people with long term care needs, I get interesting wooden address. The like corners of the market were needs or semi one eye one question I have like when you raises idea why there isn't an awesome insurance co is that let us have a lot of leverage, particularly when they are the only hospital in town. So if you

to run awesome insurance co, unlike the you, could probably pull this off in legal, large urban area. That is a lot of different hospital centres. Again, then, like you, you know if you want a kite like cleaving clinic, there's something I actually came up. Allied with the launch of the Obama care marketplaces, where you saw health insurance company. They didn't have like that. They were not as Austria, but you have the brand name, one saying I reverence oh there's about battle over Seattle Children's hospital on when they were charging high prices. Would it be included in network, After all, we are looking at a more rural area creasy no there's there's nowhere else to go. There is no place for like awesome and shit. And co to take their business unless they're going to tell people like. Oh now, you have to drive two hours to the next house, but also, I think, in a lot of ways. Hospital

This system maintains a lot of leverage for hospitals. I think that's why you see such high prices, and you haven't seen anyone like crack this in the way that matters talking about cracking less. Well, I think I mean imagine what awesome insurance go at half right, but I think this is very straight, forward and it shows the missile line and centres in healthcare, perfectly think what would make you love your insurance company. The insurance company you would love would have streamline low prices right it be like really affordable overlapping it would cover everything right would make you hate awesome. Insurance. Co is, if you had Hepatitis c, but there's a pill that could literally courier Hepatitis C, but they don't coverage of all d like you just or no they make you go through this big clinical review in your found. I would really like to do their different levels of it, but maybe they do say know that this is too expensive, but, like then you're not gonna like us, have insurance go at all, and so the thing that

interesting to be about on the insurance market that it gives me some sympathy for for insurers, but I think is also sort of the argument for why you should just have the government ensure everybody and The prices is that the thing that makes ensuring cheap is saying no. The thing that makes insurance unpopular is saying. No. like insurers or in this kind of crazy bind were on the on hand they say noticed up they'll, be this huge backlash mean in the nineties. H M owes really did bring down the cost of healthcare in this country that got real, happen, and if you look at the research on a period, there is no evidence at all that anybody's health was harmed by this. It seems to be the case that they brought down prices, You know narrowed networks and made you go through reviews and all this stuff and more A cigar are helpless fine throughout dynamiting, though not you cannot find an individual case, I'm sure you can, but but though the aggregate risk

did it looks pretty good and people hated them. I mean there. movies that had ran against each most unpeopled clap in the theater, I think, was as good as it gets. If I'm remembering this correctly, the asian loathing- was unwound not because it was unsuccessful, but because people hated it, and since then, insurers have been trying to figure out. Ok. Well, how do you keep prices down without saying Otis stuff and eventually decided what you just don't keep prices I would like to see if people keep paying double digit price increases every year and it turned out that in Lahti case in particular in the employer based market. They will there's really an answer, and I mean it gets to. My experience was sitting over there like trying to come to be like We just want to say no to this right of. If we say nobody, you getting this diagnostic at the place, you wanna get it. You gonna, be mad. You're gonna go to like you're Hr Department area Charter parents. Can he held us or maybe like go to someone else, but on the other hand, don't say, no, it the more expensive option and just send me ETA

heavy chase or wherever, then, how the to save money. It's a pretty serious bind which I'm not sure, answer for inside the system has an answer for if one ensure and ensure a setting prices like again. This is how the care works, and I don't think it's a accidental vit Medicare is up. Much better, like the most private insurance, I think, there's an ancestor they going to Amazon. Like the answer to me like it goes back to acquire talk drugs in the first place, it's like all about the prices and like every their country. You know the one of the ways they deal with. This is by regulating the prices that are charged for different things, and it is hard for me to see like how we have this like breakthrough disruption, and you knew, though, healthcare becomes more affordable without doing I'm about pricing like I have a story coming out tomorrow. I hope we're running this emergency room building project for the past few months, where, without over a thousand people, send us their Europe?

and one of the things I started noticing and there was the crazy high price of rabies treatment in Amerika. I hear from multiple these were in thousands of dollars as medical debt after they had an encounter with the bat had to get rabies treatment, because rabies is always fatal and then we're builds. You know between three to nineteen thousand dollars for this one drug. You need for rabies, exposure and it's like until Suven Amazon like wants to like be a rabies, drug manufacturer, and they don't care. You know they're going to charge what the prices in England, which is about one thousand six hundred dollars that seems like it could it could matter, and I could change things. and it could reduce prices in a way that night putting more a burden on consumers are putting more of a burden on the premiums in the insurance company, but I think like until you get to the places we hundreds run around, circle, but that won't work until you're dealing with drugs that are off patent, as long as we are dealing with something new that people want Amazon, conscious their manufacture it because whatever Pfizer holds a patent as it then

are these things right? This is where was at assholes they march for Kelly Socratic, like he. He found a couple places where there was like a drug that some people needed, but not many people ended the select their need, for it was really intense, but there was not much market interest in providing the drug, and so he realising that was in efficiency and he could jack up prices, which is what he did, but until there is some stuff like that right. Maybe rabies is like that. I'm lookin for reading a story, but that's not the story, stood up when there's lots of demand for the drug is already a lotta generics red I'm on antibiotic right now is really like. Everything has been terrible for a couple weeks and it's not expensive cause. It's generic antibiotic great, like a lot of people, want this antibiotic, and so people make it. So I just I see the logic of this- and I definitely see how Amazon of Edison side like not to make profit and to offer like better buying interfaces, could have an effect on the margin, but in the end like if some

the advance, secure fur on a no name, your terrible disease at afflicts people simply invent a new hyper, effective form of key. therapy or like a pill you can take the prevents heart disease people going to want to pay for it- and I give Amazon goes to those folks has no- you got to offer this for a reasonable price. Their guest screw off we're not so here said the irony wait. I mean that the whole Amazon option thing by the Van Thompson's optimistic case. It's all it'll Romania that Amazon Andrews Market, it provides a great customer experience and provide zero profit margins and it obtains a monopoly. Ask position in that market, which then turns back around just its suppliers, then, because the suppliers are squeezed its monopoly position, the other side, because even more entrenched right, that's like Amazon, any books, its Amazon and everything. That's like the great free market hope for healthcare, but that's also just exactly what government run insurance systems do

right like in Canada. They like also have the problem that a drug MIKE Hepatitis C and the drug maker, he's gonna reasonably say hey. This is very valuable. You should pay us a lot of money for it and the citizens of care it'll be ok. We would like that drug, but because the canadian government to actually gets bad example. Canada's interpret Anderson Britain right afraid so that the union has they are like they have a monopoly on pharmaceuticals in the UK. So it's not like they can there's a bargaining process, but they have a lot of leverage, the pharmaceutical companies to say like now. You got a lower your price like if you lower your price you'll, have all these customers that occur in the United States. Mediator has happened at rest, and it's just like this. Proven model of doing as it's like can maybe, if you squint and wish and pray imagine Amazon securing the kind of position in the marketplace that, like a standard government run insurance programme has but like you could also

wait right and then you can say like well. Why don't? We have a government run like internet retailer ride like? Why did we leave that to the private sector? the reason why no fucking idea how you would build a downright an internet, retail, our bank. We really know how you would build a government run in It was a pretty american and if we ended up with a single pairs system run by Amazon, you know ready. We could just like go fifty fifty between them, Men Jeff us on a monopoly insurance provider, but that would be odd speaking of exciting news in capitalism, What's your boy break and then we'll have capitalism. I was learning, and indeed what am I love wearing it didn't go away, went when I finish school, there's a lot of areas and interests me stuff. I want to know more about the scandal, in view of, if you listen to the beads and an that's one reason why you gotta check out the great courses plus, I have really love if you haven't sign up yet I mean what are you waiting for its that amazing way to learn from leading professors and experts, but anything that interest you?

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go to our special? You are so start expiring. Today you signed up at the great courses plus that calm, slash, weeds, remember the great courses plus dot com, slash. Yesterday there was this enormous stock market crash down, fell by the largest percentage amount ever then in the ocean trading it when even worse, I sort of bounced, this morning, and now is down again as at the time we are recording. I would say one bit. Take away from this is that, like we're courting this package. Now it's ten forty three I am, it will take hours before this comes out I really have no idea whether, by the time you listen to this, the market will have crashed again or rebounded or not, and that's it the most important thing to remember and coverage. Is that, like whatever happened over the past

yes, twenty four hours and whatever smart analysis of it, you may have really doesn't convey any information about, what's going to happen the next day right, like the one we think we really know about stocks? Is that it? the long term that go up more often than they go down but like inertia, time horizon? Like anything? Have there was one point yesterday, When I think that market went down five hundred points in like literally three minutes and then back up again like we were I have a slight conversation about. Should somebody right about this and had just vanished in the UK as ever dumb question. Why what lies as have been? Nobody young, that I wouldn't idea. I want to say one reason that I don't think it is happening that I saw kicked around frequently so We had a good jobs report on Friday, pretty good and it showed wages going up and when

wages are to rise and jobs are good, you might see, more interest rate increases from the FED and that could drive stop prices down. And so I so I saw a lot of people sort of chicken that around is high level explanation. I feel pretty confident that is not what happened only because every stock market all around the world was down, and also things like the price of you'll was down. The price of metals was down. That's not this is a reason why, like the America labour market, adding jobs a little bit faster than people thought, so maybe interest rates will go up a little bit faster than people thought should make the price of aluminum crash right. if everything goes down. That's because the vague investment Borg just got a little bit more pessimistic Then it had been the previous spirit, some things in general, right, yeah,

and it means that one question people were asking me like holiday season was like well not things to trump like how come the stock market went up? So much- and I said I don't know- but this work. It had gone up three percent less than it had. People would have asked the same question right: people wouldn't have been like a high. This slightly smaller run up and stocks makes perfect sense to me right. So, if you think about it, well, I went up alive and then went down sir, but whatever you just got up at a slower pace, rightly hoo, hoo, who is to set. So there is this access morning, email couple weeks ago now and was talking about how Donald Trump has begun using the stock market as like his own mental pulling for his administration death, relic helix Isaak, Marken, it's like it's a pole of economy, about how great he is making America everyday its record territory has until a week ago we had been in her territory in such as every day America is greater than it has ever been before it is the american stock market also other

markets all around the world that does it get mentioned is going up, and one thing that I would just note about this one. The stock market is not the economy. The stock markets, not there, Gimme. The stock market is not the economy. This right is not the really it is it you can a good stock market and not have good wages. You can have a good stock market, unlike have softness in the labour market. I think it's really important. It did to supper those out about a particular sedated, a fluctuation, But the other thing is It is not a good idea for any presidential administration, one or any other to base tumor. Of their cell on where the stock market is at any given moment, because I imagine its November of twenty eighteen and you Jesse, you have it week right, you have like a big selloff week that might not reflect anything in particular in the economy, But if you ve really predicated her argument on livestock markets, bingo and great that's gonna be really bad for you. Stock markets are super volatile and one of the things

Background of everything is risk right. It's it's! A star. markets, estimation of long term risk short term risk of other Worth North Korea's likely of other America's can enter constitutional crisis. Whether wages are gonna go up with a federal reserve is going to change what it's doing a weather. Europe is going to be able to manage its refugee flows in a way that doesn't creed, systemic risks across the continent, I'm naming some GEO political risks, but obviously the more salient ones, or does the endless series of economic questions that are happening all the time we missed it along. segment on, Amazon. As soon as that, news came out of the stocks of anthem and United Job five percent too. So what happens all the time I think it's one reason that people should not overweight the stock market instead of in compressed periods, You want to think, or has it doing over six months has doing over a year, but also, I think it is It is dangerous for the republican Party that so much of our current argument has been. The stock market is great and also Carter pages. A wonderful guy

HU, we think, probably should not have been surveillance. I think basing too much of your political future. Unlike stock market volatility and our two pages. Trustworthiness and not being a russian asset is not a good. I want to make my case for Donald Trump, relying on the stock market as the sole gauge of his success, because my understanding is that inside the White House, the demand. Oh now that will tank stock markets has been a powerful force restraining from from doing some of his more indulgence more crazy trade policy reasonable, I think I think they should this stick to that. I also think it's obvious that starting a war with North Korea would be would be devastating to financial markets at the korean stock market has been in record territory, south korean, and so you know, don't don't blobs all downside trade feels like the stock market is almost like. Of course it is indicator Trump likes, because it's like flashy its kind. the changing the entire news like CNBC is: is it

Finally, a news network that is devoted to the stock market, like when the Amazon announcement comes out. Like they are, they have other people, their analyzing. What's going on with United, what's going on and then what's going on with Amazon, oh you're, like, of course it is like the metric, that is, that a zalm it it's shiny, the way that, like I don't know, wage growth, you know jobs only come out every once a month later, then it's on this like b s website that, like us, you know no bounds. whistles like unpleasant, has a margin of error. Right and then it gets revised and it's kind of like ailing, who wants to deal with thick those kind of borings but Pretty solid statistics like, of course, the the stock market feels like the the economic indicators that and trampling knowing what we know about his personality would gravity talk right. It's worth saying. The Sakharov itself obviously does invaluable capital allocation purposes, but in a broader sense of the coverage of it is very much the reality show economic coverage and like cigarettes

like the reality show, president loves, like the reality, show economic indicator, or it's like this, like arrows up and down all the time. It suffers always happening alike in general, like, like nobody knows: why do you like everything's, acting irrationally its it'll at all, and I do think it is true. The Sun partners, not the economy- and this is like a big black liberal Talking- point and matter no. No, no, I mean it's it's true, it's true, but I think what it concerns believe it is you gotta make no, but who knows what they believe, what Roger farmers buck prosperity for all and I guess his earlier back how the economy works. Although I haven't read that one, but I assume he agrees with himself about this, the he makes a pretty strong case that Stronger evaluations over the medium term are unimportant: driver of business investment activity right that like when corporate stock is high, it encourages investment, start ups gazettes like her

You might make more stock ended, encourages companies that that have high valuations to invest more and he. Yours is a pretty good. I think statistical argument that this is true, even though the arguments that dog Kenwood makes in his book Wall Street where he he shows pretty coincidence that companies are actually. raise the money in the stock market to invest, but farmers shows a curl, it's quite strongly with with investment. So when you saw this big run up in twenty seventy into the stock market. It gave some reason to believe that ok in twenty eighteen, this Ike Trump boom that has been like largely mythical or like this. On paper in the stock market is going to become a real thing that companies are gonna, say, ok these years of, like just finding well qualified unemployed workers off the street are like over right. There's not that many jobless people left any more.

And now to like DR my business forward. I need like Some machines are new technology, like big investments, I'm gonna make that's gonna drive productivity forwards can drive wages, forwards, gonna like push us into the new frontier. I wasn't like a hundred percent certain. This is gonna happen, but there was one plausible interpreted that run up, and this work it just like crashes and its I now we got too enthusiastic like a good sign that I know that that is not going to happen, that the drip drip drip recovery. That Trump inherited from Obama is gonna. Just keep drip drip drip hang along and like. I do think that that matters right like this has been a kindly very partisan. Every like Democrats, who also thought the recovery, week like until Trump started bragging about are now a guy. You just got Obama's recovery. I think it's true. You just got Obama's recovery, which was weak and we ve been like weight like will there be a breakthrough and the stock market

whom, with some reason to think that weep we may be, would get one and if the same market collapses. That means like we probably won't that doesn't mean like we need to all go on CNN and light clap, louder fur the DOW, but like we we need to make the economy better. I think sir, is leaving us now. I gotta go in Israel where I today, but but when we got what Matt would like us to call a research paper. Yes everything's, Guph man, life is changing, So we get today a paper that its like shocking and its conclusion as a good quantification, its by James Fang, about Alexander Hotel Fernandez, Vanessa Williamson, and it's looking at what happens in politics when states password to work laws they exploit em, but towards climb out a right to work. Law says that a union and an employer cannot make a contract were choirs, everybody in

bargaining unit to pay a sort of representation fee to the union. Right, so that set a standard and a pro union state, you will have a union shop where you dont have to join the union in order to work there, because in a constitution, freedom, etc. But since you are going to be covered by the collective bargaining to pay a representation feet to the union as soon as a way of giving unions cloud with without representation fees, there's a huge collective action problem, it's hard to maintain large scale. Membership has been free, rider problem, exact, easy to join the visa join in and like, while you're already get negotiated. ages. Why why? Why would you do swayed causes that you're, just paying deuce so went to work? Laws come in they d? Do that thing. You know they look at counties on either side of a state border that are typically exposed, more economic and political. This is really clever because what they say and its correct is it. Those differences between states ran past.

To work laws and don't suggest comparing those guys are really work but counties that are right now. to each other on borders does apply more similar than like the states are to each other all raw, and I thought that was like a well. It's a nice little natural experiment, and this is eg. You know it's interesting sooner: methodological propagation from the minimum wage literature area now into into the rent work. Literature They show that the it is bad for Democrats. The democratic presidential vote share falls by three point: five percent. You see something similar for Senate House and governors races, something similar for state legit. Control turn out also falls would write to work laws passed and then they look at the core

mechanisms. For this you get fewer labour campaign contributions to Democrats and in particular you that fewer voter contacts that one thing labour unions do a lot of where they are strong. Is they find people who seem likely to vote for Democrats, but maybe marginally attached to the political process they get in touch with them? They say like hey, you know you got a vote for this guy, some reasons and they are moderately effective at actually doing that. You pass away to work law and there the union it gets weaker, has fewer resources and also it has to target its resources. More narrowly add sustaining itself sustained its own membership inside the organization and Republicans do better this

like blow your mind kind of stuff? I mean, I think most people would say like this is one of the reasons why republicans like to pass on to work was also one of the reasons why Democrats tried to not that you have to try to stop them from past No, but it's it's useful to see like a real quantification of the effect of the manager. There's big, like you would say, like Donald Trump, one Wisconsin and Michigan, because those states past right to work laws during the Obama presidency right. That's me, that is, if you, if you, if you take this letter to her son, I think it's worth doing look, I don't know is an actually be in here, and I just missed. It is what is the timeframe on which this operates? Like doesn't operate like the year, after you pass the right to work law or is it you know on up over time things change- and you know the union's powers

into a road and air, and so in terms of whether or not is literally responsible. Twenty sixteen election due to recent right to work while changes, who knows maybe they pay I just do not remember this question to the paper, but yes, three point two percent, which is a big difference, that I think is interesting about this, Bert interested should get one thinking about is loops of political power, and what I mean by that is look like in this you right now you're the Republican Party, I think, reasonable, look at the situation and say we have a lot of political power, but actually seem to have comparatively that many voters, since two thousand forty percent of President Elections have been won by the loose from the popular vote. In both cases. Republicans be Senate is only held by a party that had fewer overall votes for its senators and then the Democrats did and wall. That's not true for the house. It is true that the expectation as Democrats have to win some of the range of six

percentage point six percentage point already how you about then Republicans well, and so one thing that do so. One thing the Republicans have right now is political how're, but also you know looking forward like some real demographic and popular issues and one way you might rationally spawned divide that if you don't care that much about abstract democratic values is to begin sing laws just make it harder for the other party to compete, that that a road there actual vantages right to work, laws or one obviously aggressive forms, gerrymandering or another, but de laws or another. You could do things with money in different states at our are another, and I think the Republican Party is doing this. They are doing it all over those. I, Albania, a judge, just a cautious knocked down there.

really really really intense gerrymandering, and there is now a effort, at least among one republican legislator, to try to impeach that judge. I you had you ve had a lot of voter Idee pushes or across the country from Republicans, one way in which a minority a popular, but minority can maintain political power by actually just changing the rules of the game. With that political power to weaken their competitors, and here you see like in a pretty straightforward way. It works like there other reasons. People might like her dislike right to work laws, but definitely one thing happening here is a political power. Fight and political power fight has a clear effects in the way that we would have thought they would in a way that both parties believe they do and in a way that also helps expense the tragedy of this, too, did too many republican stay agendas, but in the oven, I would say, is that the flip side of this research is that it's a big insipid problem for labour unions in some way that line

If you were talking about estate legislative debate right, if people were arguing in the Iowa State Legislature like hey a bunch. You just voted for republican state legislators because I don't have some- You think abortion should be illegal, some you're frustrated with Obama's handling of the economy. Some of you are subconsciously, driven by growing racial polarization of the United States and others, is like new republican majority, and they are saying oh, we want to pass a right to work law, and now Democrats in the legislature need to make arguments that are gonna like not pass this right. Mark law. An argument like this is gonna. Work who's your wages right, like that's, that's good. That makes sense you might believe that you might not believe it. But you know if you go in some argument like they make it harder for me to win elections like this terrible. That's a terrible argument right end. is a really good argument that, like no man like, if Republicans got this,

it's a tory majority because people are concerned about Obama's handling of the economy? They should definitely take action to curb union representation rights right that like this is not. the question of fundamental fairness in the workplace, but like of raw partisan politics, where you gotta go, they mean in the paper that in an earlier era right the pre nineteen eighty, when the parties were less polarized and the geographical spread was bigger, is less Less reason to believe that there would be this kind of strict partisan impact that southern Democrats were very Anti union, because unions were pro integration, that there were union friendly, Republicans from Strong union state, and the union's would try to help candidates who they thought. Would advance their agenda. They were important to politics, but they were an important in the same way to partisanship and partisan ship itself was not as important to power tax, and so it was a lot

easier in some ways to like see The union question as like an autonomous sphere of social activity was now it's like like if you, if you love guns and you hate abortions, you, like you, sorry to have to hate labour unions too, but that doesn't work as like a workplace, our its fighting in a week, there was recently in organizing at vocs media, which I think probably very few, of the place of this company love, guns and and hate abortions. Sodium become an issue but like one, Volkswagen was trying to organise a plant in Tennessee. The fact that. I did. Auto workers is seen rightly as like in part as an arm of democratic party. Politics is not gray, when you're trying to organise the plants in the south- and this goes both ways I mean it is worth noting that the conversation were having about union right to work. Laws is a conversation, but you here on the right a lot about immigration policy right the view that if you

the pathway to citizenship or you you get. You give Dreamer citizenship that that's really what is really happening. There is a democratic party creating out of whole claw. like millions of new voters for itself who we shape american politics forever, that's it let me you regularly see that conversation happening in republican circles Similarly, it's not really like the front like public. Facing conversation like you kind of see it like Republic into Republican. talking about a bit by bit, it's not sort of like Paul Ryan doesn't like get up to the podium Inzana problem with legalizing. Dreamers would be that they would vote for Democrats, because Donald Trump is, as a precedent is believed, had not very much like a spanish people like That's not the argument they make, but but it is a way. This way this happens in, and so I think the broad point making is right that there are a lot of issues in american politics that have this sort of quiet background

like this one argument, as is happening in the front. Often it's a very real part of the argument I mean it should be said that the the arguments people say there having overwrite work was are really part of the like a big money argument being had a right to work was suddenly argument being here. Over immigration. I think, is a central arguing over immigration, but they also have these a background effects on political power that end up some may, give like a little hard to see, was going and also making it more existential, all four, oh,

one party or the other to find a way to really oppose that, where maybe otherwise they would feel strongly about eight or be more willing to make a compromise on it or or whatever my baby took. No here's an interesting question is it would spin study here primarily is states that had been union friendly states there were publicans took over, and then they passed right to work with us for various demographic and whatever reasons there are several states that have traditionally been conservative states that have had right to our clause for decades. Where is plausible, the Democrats could take control in the near future. Nevada Democrats control both houses of legislature, there's a very popular moderate incumbent were public governor who is terminated out so Democrats could get the the trifecta there very plausibly, Republicans of a very narrow majority in Colorado State Senate. That's a state where democrats have gained a ton of ground over the past fifteen years of Virginia

has this legislature and republican hands, but the stage Yo P seems to be somewhat in a state of of collapse. You could imagine Democrats gaining their commissioners. Is real Democrats play offence on this issue in those kinds of states right in states where unions are weak? Are they going to pass legislation that tries to call into existence stronger labour unions? Traditionally they have really really shied away from that right that there was a big spurt of union organizing. Basically, the war were to era, and then there was some pro union legislation passed, and that was the high water mark and like since the fifties, it's been all down hill and it has. It is her Democrats, particularly in the midwest, but hasn't like

rushed progressive politics and in some ways I mean those hard to civic counterfactual. Exactly yes, but I mean ten years ago, when you use in decline in one expectation that I had was that, like if labour unions keep withering, but you go in the private sector, the Democratic Party was sort of increase its like NEO liberal turn, not swayed, and the opposite has happened. Right Democrats are more left wing just like conceptually, unlike we need to tax the ridge. More opened a single health care, more open to free college. You know than they were ten ten years ago, despite weaker labour Europeans, and it raises the prospect. The Democrats in weak union states would actually consider passing pro union legislation, was it in due throughout the whole second half of the twentieth century.

That would have this sort of reverse intrenchment effect right that, like suddenly, you could go from Colorado being a state that tilt stored Democrats to a state that, like really has a heavy blue Lee and that was union other. What one reason I'm sceptical that happening is that I think when you look into the gutter this paper in and you begin to look at the mechanisms causing me what they basically say, is that in states it pass a right to work law the amount of money unions could spend undemocratic, organizing and get out the vote in the rest of it goes down and the democratic parties are not able to replace that money. If democratic parties which do relying substantially on corporate donation, still right. Donations from people work corporations mean that their rich supporters of of of Democrats in all of these states. You know the Democratic Party, often this in an equilibrium with its corporate supporters, you know there are some people who support single payer, but there's a lot of other stuff going on to and and and

There are no identity issues, it matter a lot and environmental issues in their places were like which people disagree. With Democrats, I mean it's complicated of corporate money favours republic. but it's not overwhelmingly there, but corporations The union organizing in their corporation as existence, oh yeah. In a way they don't even see like a tax changes existential and so what Democrat would be dealing with there. Is it in between like here and more democratic future where unions have been more money to spend on them? Is massive corporate backlash and did you see? You know, Obama came in two thousand and eight one of the, like every Democrat in Congress, had promised apart as in play, free choice, act which would have a mandate, carjack elections, nationwide and diminishes like did not push that like that. Just collapsed or quickly, I think what my sense of what happens with Democrats it. They look at this. issue and like the game out the corporate backlash, given how they in fact fund elections and psych leg, the math for them

thick, doesn't work out or the not willing to take to take a short term here. How do you say that, like since the twenty six seem primary right, there has clearly been like a vibrant desire to have like a vicious brutal fight between the Like Bernie Sanders Wing and Hillary Clinton Wing of the Democratic Party, and I have not actually see this subject at which it makes sense to have that kind of fight right. But a real thing, we're like for exactly the reasons you outline like progressive organizing inside the Democratic Party would make a big difference to policy outcomes would be in Virginia Colorado the these sort of polish bright toward states where I agree with you like poor, I'm. What happened with Obama right with the Democrats who wanted to see

they were in favour of the play. Free choice act and they were just assuming that they would not have sixty votes in the Senate and therefore it couldn't pass and they would be like hey man too bad enough, but we want to pass it but fuckin Republicans when he now but they like one more elections than people, thought they were going to win, and suddenly everyone had to look around the table. Hollenbeck. Are we going to pass this thing Well said we were going to pass and like they freaked out and said they wouldn't do it, and I think you could really imagine that happening and in some of these purple states, if you get, if you get kind of democratic weave. But it's also were you: don't have that, like robust, Inter Party left in two thousand and two thousand nine?

The Hilary Obama primary was an impassioned, but did not like have a ton of policy content to it, and this clearly like a desire to like push a more robust, Sir Social Democratic agenda- and this is like a concrete non crazy achievable thing you could do is like. I don't even know what you call the opposite. Were I to work law better like pass? Those is like one imagine that it will make a big long threatened by the way, repealing rhetoric clause which our petrella guts and other rights ability and a bunch of these states for organizing so like relating to the weeds. They get a bad and Sarah Tar Engineer, Peter Leonard Weeds Box, media biogas production and we'll be back on Friday.