Breaking Points with Krystal and Saagar - Mini Show #33: Amazon Subsidies, Corporate Profits, US vs China, Media Meltdown, Labor History, Mental Health, & More!

Episode Date: April 30, 2022

Krystal and Saagar talk about Amazon subsidies, Obama dropped from Spotify, Teen mental health, worker history, corporate price gouging, US vs China, hearing aid monopoly, media’s Musk freakout, & More! To become a Breaking Points Premium Member and watch/listen to the show uncut and 1 hour early visit: https://breakingpoints.supercast.com/To listen to Breaking Points as a podcast, check them out on Apple and SpotifyApple: https://podcasts.apple.com/us/podcast/breaking-points-with-krystal-and-saagar/id1570045623 Spotify: https://open.spotify.com/show/4Kbsy61zJSzPxNZZ3PKbXl Merch: https://breaking-points.myshopify.com/THE LEVER: https://www.levernews.com/Matt Stoller: https://mattstoller.substack.com/James Li: https://www.youtube.com/c/5149withJamesLiKim Kelly: https://www.simonandschuster.com/books/Fight-Like-Hell/Kim-Kelly/9781982171056 Learn more about your ad choices. Visit megaphone.fm/adchoicesSee omnystudio.com/listener for privacy information.

This is an iHeart Podcast. mainstream by becoming a Breaking Points premium member today at BreakingPoints.com. Your hard-earned money is going to help us build for the midterms and the upcoming presidential election so we can provide unparalleled coverage of what is sure to be one of the most pivotal moments in American history. So what are you waiting for? Go to BreakingPoints.com to help us out. Join us now for our weekly partnership segment. We have Matthew Cunningham Cook, a wonderful reporter with Lever News, who has a great new report out this week about some tactics the government could use to push back against Amazon's union busting. Matthew, great to see you.

Good to see you, Matt. Thanks for having me on, guys. Appreciate it. Absolutely. Our pleasure. All right, so first off, so I don't forget, the Lever has also just launched a new YouTube channel. I think we have a screenshot there. I've watched some of these videos. Whoever is putting them together is doing a phenomenal job. So highly

recommend everybody go over and subscribe and check out the content there. But let's get to your story. Put the tear sheet up on the screen there, Colvin. We've got Amazon's union busting is subsidized by the government. The retailer's anti-labor activities could be violating the terms of multi-million subsidy deals it has scored in New York. Matthew, go ahead and break down this report for us. Yeah, what we found is that Amazon has received $387 million in subsidies from state and local governments in New York. That's nearly 10% of all of the subsidies that Amazon has received nationwide, $4.1 billion from state and local governments. And we looked through the original documents, and they say that Amazon needs to be in compliance with the law to receive these subsidies, and in most cases, needs to be in compliance specifically with labor law to receive these subsidies.

And what we found with the NLRB investigating firings by Amazon related to union organizing is that they aren't consistently in compliance with labor law. And there's also tons of health and safety violations that frequently occur at Amazon warehouses that indicate they're not in compliance with the law. So really, we found that the onus ultimately is on the state attorney general, Tish James, to do an investigation as to whether or not Amazon is in compliance with the law, and then let these agencies know, these state and local agencies know, that Amazon is not in compliance with the law clearly, and so you need to suspend these subsidies until they can attest to compliance.

Wow. Yeah, so let's go into this again and just really measure out the scope of this. So what are the exact levers of power available in order to hold Amazon accountable? Yeah, if the attorney general launches an investigation, and it can be very quick, you know, 30 days, and then says Amazon is not in compliance with the law and sends a letter to these agencies, then theoretically the subsidies are supposed to stop. So it's really a significant amount of money, a significant amount of value added to Amazon's bottom line that Democrats in New York can stop until Amazon comes to the table,

recognizes Amazon Labor Union, and sits down at the table across from Chris Smalls and Derek Palmer and negotiates a contract in good faith. There's going to be conflicts here. You know, Amazon has been very generous with the Democratic Governors Association, making a substantial contribution right after the DGA

endorsed Governor Kathy Hochul, who despite the fact that she faces a very competitive primary from both the right and the left, the DGA has endorsed her. Amazon's pumped money in there. They've pumped money into the Democratic Legislative Campaign Committee, which is chaired by Andrea Stewart Cousins, who's the Senate majority leader in New York State. So this is really, you know, any type of action against Amazon is going to run up against some really powerful interests. And that's what I think really underscores the importance of independent media like you guys, Crystal and Sagar. And what we do at The Lever is there really needs to be sustained, consistent attention devoted to these massive subsidy deals that legacy media has not

devoted substantial attention to, to be able to ensure that this issue continues to stay in the public consciousness and is addressed in Albany like it needs to be. Yeah, I think that's really well said. And the last one I have to mention here is you surface also that Jessica Schumer, the daughter of Chuck Schumer, is a registered lobbyist for Amazon in New York, too. So it just goes to your point of they definitely have some powerful friends, Jay Carney, you know, being their former press secretary to Barack Obama, now head of Amazon Worldwide Communications. So they definitely have their tentacles in all of these places. They will be using their money and influence and bullying tactics, whatever they can,

to make sure that they still are getting the benefit of these subsidies and these massive contracts. But listen, it should be very simple. If you are in violation of the law, you don't get taxpayer money. And so you all are doing wonderful work pointing that out and giving legislators who are sympathetic, like Ron Kim, like Bernie Sanders, the tools that they need to be able to make the case within their legislatures. So thank you so much, Matthew. It's great to see you. Thanks, Matt. Thanks for having me on, guys. Appreciate it. Always our pleasure. And thank you guys so much for watching. We're gonna have more for you later. Some interesting news in the podcast realm. Let's put this up there on the screen. The Obamas are leaving Spotify after they were unable to secure a deal. And by that, I mean

whenever their contract came up with their production company, Crystal, Spotify declined to make an offer, essentially passing on the exclusive content that they had had. And inside the story here is really interesting, which is basically the Obamas wanted a multimillion dollar Spotify deal without actually doing that much work. They only wanted to be on their podcast like eight times, and the rest of the, a year, by the way. And the rest of the time, they were like, well, we wanna build up a community.

We wanna highlight emerging voices or whatever. Emerging voices, and Spotify's like, we're not paying you for that. Also, your podcast is not even that good. I mean, the one with Bruce Springsteen was a disaster. So cringe. Internally in the company, and you can just look at the charts internally within Spotify in order to determine that. I mean, all, a lot of these Spotify deals like Harry and Megan, who have yet to work since

like December, despite signing some a hundred million dollar deal or whatever have not been good for the company and the company's learning, which is that, yeah, you know who drives views and who drives downloads? Joe Rogan, Tim Dillon, Andrews. I mean, all of these people who are online natives with real audiences, these fake big names like Obama and them, it may give you a pop in the beginning, but you got to do that stuff consistently. And the Obamas simply don't want to put in the work. So now they're taking their podcast elsewhere. I think there's also, in terms of how people feel about the Obamas, there's no doubt that there's a lot of like a reservoir of goodwill towards Barack and towards Michelle. But in terms of being like media personalities where people really want to like, you know, show up to listen to them every single week, I just don't think, I mean, there's evidence here

to say that that's not really what people are looking for. I thought it was interesting too that according to this piece, they said the Obamas were also reported to be frustrated the exclusivity deal with Spotify was preventing them from reaching wider audiences on more platforms, which is kind of a way of saying like our numbers here weren't very good and they're blaming the platform rather than the content that they ultimately were putting out there. So it is interesting and it's once again a kind of indictment of legacy, establishment, ideology, and personalities where, yeah, there may be a sort of generalized affection towards them but actually the willingness to show up tune in routinely was clearly just not there so i wonder if they i mean they may just drop the whole podcast thing all together i wonder if they are going to go

somewhere else it looks like what they're doing is they want to sign a deal with iheart radio because like you said they're blaming the fact that it was on a walled garden of spotify it's like no spotify is not the problem you can do super super well on Spotify. Ask Joe Rogan. I mean, our audience on Spotify is huge. But whenever you go and you take a look at what they want, what they really want is to have shows where they don't actually have to do the work. I just love how even when you look at it, like they barely appear even on their own podcasts and they've been highlighted, which is I think the the fact is, they don't actually wanna weigh in. They don't wanna do the work. They don't wanna have to do the work necessary

to build an audience, and they just wanna rely on their star power and then build out other voices. Obama's Netflix show, reportedly, has been a total disaster. His Parks one, Netflix is not highlighting it on their homepage. You have to go and really find it.

Also, it was supposed to be about national parks, but it's about national parks in other countries as well, which is weird, given that he's the American president. Oh, I wouldn't mind seeing those. I mean, look, I'd be happy to take a look, but I'm just saying it's strange. I didn't even know they were doing that.

They're doing some series on national parks? Obama, yeah. He had a whole series on that. He's like, touring the national parks. Basically trying to do a Ken Burns 2.0 thing. I kind of want to do that. That sounds like a good job. I would love to do it, too.

Guess what? Ken Burns already did it. So unless I have a great angle, and I'm not even Barack Obama, I'm not sure exactly if that show can be sold. But I think the real point is here is that their translation of star power to streaming is not necessarily going the way that it wants. And it's very telling to me that Spotify was like, nah, we're good. We're not going to pay you hundreds of millions of dollars or tens of millions of dollars to produce eight podcasts,

given the attraction. Here's the thing. Only the Obamas and Spotify actually know the numbers on that pod. And the fact that Spotify was like, we're not giving you money in order to keep doing this, that's a very bad sign. I think it's also very consistent with Obama's whole personality and MO while he was president, which is like, he didn't want to get his hands dirty. Exactly. Didn't really want to wade into like the messiness of politics. He wanted to opine on the things that he wanted to opine on and that was it. And so, yeah, when you're, you know, content creator and you're in this business, you got

to wade in on all kinds of stuff. At this point, the only things he really cares to talk about are things that have to do with his legacy, showing up here at the White House around the Affordable Care Act, intervening in the Democratic primary to make sure someone who supports Medicare for all couldn't sort of upstage his principal achievement during the Obama years. those are the things that he gets directly involved in and is willing to get his hands dirty on. Sort of the general day-to-day of politics and weighing in on whatever issues are going on in the day, he's not there for that and really never has been. Oh, wow. It's a fitting thing to the Obama career, his Netflix show, his Spotify,

and all of that lapsing. I think it's really a tell, even when you combine it with CNN+, which is that this establishment type content, it just doesn't do well. You can't force people to watch it. And when they're forced to really compete out here in the game, you just see how quickly a lot of that can erode. That was kind of the point Sarah Fisher was making to us in a very like neutral and diplomatic way but yeah but um you know if you are going to survive in on a walled garden platform something like spotify you have to really have that fervent base of support where people are willing to make an effort to show up for you if you have the obamas have sought to create this sort of just like broad sense of, you know, general sort of warmth towards them.

Yep. Versus the diehard audience that is going to show up for you wherever you are or pay for a subscription to hear what you have to say. And so in that way, it probably never did really make sense, this exclusive deal they did with Spotify. Yeah, I think you're absolutely right. All right, guys. Thanks for watching. More for you later. All right, guys, we have some new hard numbers to explain to you exactly what is causing the massive inflation spikes that we have

ultimately seen. This comes courtesy of the Economic Policy Institute. Let's throw this report up on the screen. According to their research and analysis, corporate profits have contributed disproportionately to inflation. They asked the question, how should policymakers respond? So there are basically three inputs to potential inflation here, corporate profits, non-labor input costs, and unit labor costs. Non-labor input costs are sort of like supply chain issues is what that could be. And so what they find here is that since the trough of the COVID-19 recession, the second quarter of 2020, overall prices in the non-financial sector

have risen at an annualized rate of 6.1%. That's a pronounced acceleration over the 1.8% price growth that characterized the pre-pandemic business cycle, so huge inflation. And they say, strikingly, over half of this increase, 54%, can be attributed to fatter profit margins, with labor costs contributing less than 8% of this increase. This is not normal, they go on to say. From 1979 to 2019, profits only contributed about 11% to price growth and labor costs over 60%. Non-labor inputs, a decent indicator for supply chain snarls, are also driving up prices more than usual in the current economic recovery. These are hard numbers to put to what we already knew based on what corporate CEOs were saying on their earnings calls of basically like,

oh, since there's a little bit of inflation, we can use that to justify price increases above and beyond what our input costs actually would require. And also, we knew this was the case because when you look at corporate profit margins, they are through the roof. So it wasn't like they were being, you know, there are definitely supply chain issues, no doubt about it. But it was not like they were being squeezed to the extent where they had to raise prices to the extent that they have. Instead, they have taken this as an excuse to have fatter profit margins. And let me go ahead and channel Matt Stoller and say part of why they are able to do that is because of massive monopoly consolidation across so many different industries. Well, they actually write that. They're like, you know, it's not like corporate greed got worse in the last 40 years.

It's that they have the ability in order to enact corporate greed. I think that their warning here is really important, which is that evidence over the last 40 years says that you should see lower profits, they should shrink, that the corporate sector income should go towards labor compensation, and it should rise as unemployment falls and the economy heats up. But the fact that the opposite has happened so far in the recovery should cast doubt on inflation expectations, claiming that it's all because of macroeconomic overheating. All of that is a very fancy economic way of saying that if it were traditional inflation caused by sole government spending, then you would see a very consistent pattern where price increase would be commiserate with a drop in profit and purely as a result of unit labor costs. And because public companies in America have to report profit based upon the shareholder system, we know how much profit that they are making.

And we're like, hey, your profit is going up a lot. And also, as you point out all the time, they brag about it on the shareholder calls. They're like, well, consumer price sensitivity has gone up in the days of inflation, contributing to profit. What do you think that means? Do you even need a translation? You go and you're like, oh, I guess meat is $12 a pound now.

Just is how it is. Same with gas. I get excited when I see 390 gas, which a couple months ago, I would have been like, oh my God, 390. Now I'm like, oh my God, under $4 a gallon. You'll go hunting around for that. So that's what price sensitivity looks like. The only check on monopoly pricing power is basically consumer outrage. Because otherwise, if you've been conditioned to expect, as we are during these times, that prices are just going to keep going up and up and inflation is out of control, then you look at these prices and your rage doesn't go where it

should at the corporations that are price gouging you. It just goes to the overall economic frustrations, this sort of amorphous blob of trouble. And so that means there's no sort of consumer check and outrage around the specific price hikes on these goods and services that are, you know, really hurting working class families. So that's why it's so important to understand specifically where this is coming from. I expect that it also has some implications in terms of Fed policy, because if inflation isn't sort of in the system in the same way and the Fed is making these aggressive moves, then that's going to change the way that the economy ultimately responds to the

aggressive moves that the Fed is making. The other thing that it really exposes is these corporations that Starbucks, Howard Schultz and Amazon and those folks that are crying about all these union efforts and they're going to kill us and all this stuff. Clearly, you can afford to do a little better by your workers here, guys, especially giant monopolies like Amazon and like, you know, Starbucks isn't exactly a monopoly, but they have plenty of market position here as well. So I think it shows you too, labor costs have only gone up, you know, 8% of the increases from labor costs, 54% from corporations just using this as an excuse to jack up their prices and earn a fatter profit margin. Really super clear here.

I think what's funny too, though, is that we're all going to find this out real the hard way, sadly, because here's what I think is going to happen. I that we're all going to find this out real the hard way, sadly, because here's what I think is going to happen. I think GOP obviously going to win the midterm elections, and we're basically going to have probably some fake Tea Party type shutdown. They'll probably win in the 2024 election. They're going to cut corporate taxes even more. Profit is going to skyrocket. And in that environment, they're going to say, this is the way that we combat inflation. But really what's going to happen is that inflation, consumer goods are only going to go up even more. So you are going to see very clearly exposed the deficit ideology on whether it's an inflation problem or not. And in that environment, maybe it's good because the public

will have been cured of the idea that all you have to do is slash spending and everything is going to get better. So you'll see it real quick. Unfortunately, rich people are going to get a whole lot richer in order we find that out. I think that will almost play out to a T unless something happens on the supply side, which I don't see that happening in the next couple of years. Yeah. I mean, we're in very treacherous financial terrain right now. No doubt about that. There you go. All right, guys. Thanks for watching. More for you later. All right, guys. Very excited to welcome Kim Kelly, wonderful labor reporter and great friend of the show, back to the show for a very special reason, which is that she has just released her very first book. It is called Fight Like Hell, The Untold History of American Labor.

That is what it looks like. think tells stories that everyone should know but doesn't know because labor history has just basically been erased from any sort of like official study of American history in this country. So let's actually start there. Why did you want to write this book, Kim? I wanted to write this book because I wanted to read it. As a big labor nerd and a labor reporter, like this is the kind of book that I've kind of always been looking for because I'm always interested in reading about the people who have been pushed to the margins, who aren't getting the headlines, who aren't as easily accessible as, you know, the Cesar Chavez's, you know, Triangle Shirtwaist Factory stories of the world. with this book to pull together a bunch of different people and events and eras and present that in a way that shows today's workers that, you know, whatever your identity is, wherever you come from, whoever you are, you're not alone. Someone just like you has done something really incredible in the past or is doing it right now. Like, you belong. The labor movement belongs to you, too.

Yeah, I mean, Kim, tell us a little bit about some of the stuff that you report in the book. Just give the audience a taste about some of the stories that are undercover and that people need to know if they want to really know about labor in the U.S. Sure. There's one story about this one woman in Ohio that I love so much. Her name is Ida Mae Stull. She was the first white woman coal miner who really loved her job. She was a part owner in a mine. She was from a mining family. You know, she was really good at it.

She was apparently, you know, pretty brolic. And she was told by mine inspectors like, oh, you can't work here. You need to get back in the kitchen. Women aren't allowed to do heavy labor. And she was not about to have that. And she fought back in the courts and she got her job back. She got, you know, she wanted to be doing that work. She was told she couldn't because she was a woman. And she was like, well, that's not acceptable. This is who I am. And she set such a precedent for other women who are in these heavy manufacturing or extractive industries that have

been told, oh, you can't do this. You're just a girl. Like, well, no, we've been doing it for a very long time. And there are a lot of people like that in the book, whether it's Baird Rustin, a queer black man who organized the March on Washington for jobs and freedom, but was kind of left out of the story because various people were uncomfortable with who he was. Or, you know, the multiracial, predominantly Asian and Native Hawaiian plantation workers in Hawaii that staged a massive strike against the big five sugar companies and won in 1946. There are so many stories like that throughout the book, and it was so much fun digging into them. You know, one of the reasons that labor is really core to my politics is because I think it's one of the most hopeful ways to truly build solidarity across these typical divides of race or gender or other identity issues. And, you know, to really foster understanding and like grapple with those

things in a real way and to also fight for shared collective goals. And that is certainly one of the themes that comes through in your book, along with this tension between the way that working class people are frequently weaponized and sort of like torn apart in order to serve the interests of capital and of the boss class. I wonder if you could talk a little bit about some of that tension of how the labor movement has both been a source of the best of sort of multiracial working class solidarity, but also a source sometimes of exclusionary beliefs and rhetoric as well. Yeah, that was the part that was a little more challenging when I was researching this and talking to people is that I love the labor movement.

I love unions. And I think that if you love something, you should be able to criticize it and make it better. And throughout the history of this country, there have been some really incredibly progressive and radical and militant unions and leaders who really held up those ideals. And there have also been racist, xenophobic, misogynistic, homophobic bigots like the American Federation of Labor, the predecessor of the AFL-CIO. They were huge supporters of the Chinese Exclusion Act. They were, you know, they have not, they were seen as the more conservative option back

in the 1880s when the Knights of Labor, who welcomed all workers, including women, they were falling apart and the AFL was like, oh, well, we're the conservative, like capitalism friendly option. And they kind of swept in and dictated that rise in their own way. And it's always been unfortunate to see unions and union leaders doing the boss's work for them by allowing and fostering these divisions. I mean, in this country for a very long time, like black workers weren't able to join traditional labor unions. They're segregated or left out of the, you know, left out entirely.

That only changed much later on, much later than is in any way reasonable. Like it's something that we see now with, think about how Jeff Bezos and his cronies tried to paint Christian Smalls, the leader of the Amazon labor union, as someone who was ignorant, someone who wasn't articulate, someone who wasn't worth listening to. Lo and behold, he's turned into one of the most effective and beloved labor organizer leaders of our current moment. Sometimes you just have to count on what

you and your coworkers see, what you're building, how you feel about one another, and ignore what the people who are supposed to be in charge have to say. Kim, based on what you learned in your studies of labor history, how do you view the current moment? I mean, you just brought up Chris Smalls. Obviously, we've followed it here really closely, what they pulled off on Staten Island, another election going on this week, so fingers crossed. You also see the Starbucks workers overwhelmingly young, sweeping the country with, I think they've unionized now 30 stores in a very short time frame, something that would have been inconceivable just a short time ago. You know, do you think that this new wave and interest is sustainable? Do you think it

presages like a true sort of reawakening within the labor movement? Or do you think like, you know, that these are kind of fluke occurrences coming out of a pandemic and the system is still so rigged against workers that it's likely to be, this energy is likely to be snuffed out? I don't think it's a fluke. And that's because we've been here before. Throughout history, it's always been those moments where workers were able to build these strong multiracial, multigender, multilingual, multigenerational coalitions to keep pushing forward. That's what makes it hard to break. Once you build that kind of community and that kind of solidarity and that kind of enthusiasm, the bosses can't really say anything to you that will get through because you know the truth,

you know what you have done. And seeing what's happening at Amazon and Starbucks and seeing the amount of public support, I think is very important too, because, you know, these are big multinational corporations who are, sorry, who are very well known. And seeing that workers at these companies that we know are owned by these evil billionaires who have more money than God, seeing that the workers there are standing up and saying, no, we're not going to take this anymore. We're going to fight back. I think that's very inspiring to folks.

I mean, if you can take on Amazon, you can take on the richest man, the richest company in the world. What can't you do? And I think that's the kind of optimism and inspiration that we really need right now, especially after some of us lived through the pandemic. Some of us are dealing with this inflation and great resignation, all of these buzzwords. What really matters is that workers and specifically a new generation and younger generation of workers are excited and they're interested and they're ready to fight like hell. And we need to be following their lead. Well, I think your book comes out at a really crucial moment. And again, guys, go ahead and throw the book jacket up on the screen. The book is called Fight Like Hell, The Untold Stories of

American Labor. And, you know, as I mentioned at the beginning, we are not, there it is, we are not told these stories. We don't learn about it in school. In fact, throughout history, there have been coordinated, organized efforts to make sure that labor history is not taught in school. I know specifically in West Virginia, you know, the history of the mine wars, which is rich and fascinating and core to that state's identity, was excised from school textbooks for years and years. So at a time when there's renewed interest in what it means for workers to come together and organize and try to unionize and all of the ways that the system is rigged against them, now is exactly the time to really learn what the history of those struggles are, how workers overcame even longer

odds than what people are facing today. So I really highly recommend that people check out the book. And Kim, thank you. Congratulations. Great to see you. Thanks, Kim. Thank you so much.

Solidarity forever. Yeah. We'll have a link down in the description. There's a new New York Times report based on some studies of just what a dire mental health crisis adolescents are suffering through. This is some of what we talked about

with regard to Derek Thompson had a piece sort of debunking some of the myths, pointing out that, no, there's a real crisis here by the numbers and also floating some of the reasons that might be happening. So this is an addition to that conversation. Let's take a look at this tweet. Go ahead and throw it up on the screen. So they say American adolescents is undergoing a drastic change. Three decades ago, the gravest public health threats to teens in the U.S. came from drinking, pregnancy, and smoking. These have since fallen sharply, while rates of mental health disorders are soaring. In this piece, they point out that in 2019, 13% of adolescents reported having a major depressive episode. That is a 60% increase

from 2007. But it's not just self-reported feelings of depression and anxiety. You also had emergency room visits by children and adolescents in that period rising sharply for anxiety, mood disorders, and self-harm. For people ages 10 to 24, suicide rates, which were stable from 2000 to 2007, leaped nearly 60% by 2018. That's according to the CDC. Some of the potential reasons that they point to here, they say federal research shows teenagers as a group are getting less sleep and exercise and spending less in-person time with friends, all of those things crucial for healthy development, at a period in life when it's typical to test boundaries and explore one's identity. So that's kind of the reason that they're pointing to here. And then the last data that I'll throw into the conversation

is, as I mentioned, some sort of like typical teenage behavior, smoking, drinking, having sex seems to have all declined at the same time as these depression and mood anxiety disorders are on the rise. You've got federal research shows that 38% of high school age teenagers report having had sex at least once. So 38% as compared with roughly 50% in 1990. Teen birth rate has plummeted. Cigarette and alcohol use way down in 2019. 4% of high school seniors reported having a cigarette in the last 30 days. That's down from 26.5% in 1997. Vaping has gone up, though. Alcohol use by high schoolers hit 30-year lows at the same time. Use of drugs, Oxycontin and other illicit drugs among high schoolers is down sharply over the

last 20 years. A couple of things that have risen are vaping of both nicotine and marijuana, although both dropped sharply during the pandemic. So those are kind of the statistics, and it's still very early days in terms of figuring out what exactly is going on here. It's just very multifaceted. I don't think there's a way to know. If I had to blame a single thing, I think it's the internet. And I don't mean that in the boomer way of like,

kids are spending too much time on TikTok, although I do think that's true. Really what I think is that the internet has just facilitated the balkanization of culture and has made it so that there's a higher cost to social interaction. Because real social interaction requires effort, whereas you can have fake social interaction on Snapchat, Instagram, TikTok, all this other stuff. And there's just a lot of downstream consequences to that. So I don't think it's singular use of social media.

I just think the internet completely changed the way that people communicate and interact with each other. And that's having very bad consequences. I also think this is why, and you tell me this, it's so important I think for parents to try and basically force your kid to do in-person stuff and limit their time on the phone and be like, hey, I can't even imagine. I've seen little kids on

planes freak out whenever you're trying to take their iPad away from them. It is like an addiction. I mean, they really like, they do freak out and go through withdrawal. And also like, I mean, you're up against, as a parent, you're up against, you know, a lot of money and a lot of minds put towards making sure that they stay on the device and that they stay addicted to the device. So it is an almost impossible battle that you're waging. And it's interesting because, you know, it could, I'm sure there are some people who look at this and like, well, maybe it was better when the teenagers were like smoking and drinking and having sex

more. But this research is careful to point out that even though the decline of those things is correlated with the rise of the mental health issues, it could very well be that, you know, the reason that teens are drinking less and having less sex is because they're in-person less. And so it could actually just be the fact that they're in-person less doing anything. That's what I think. That actually is ultimately the problem.

And they're also careful to say that, you know, it's too simplistic to just say, oh, it's social media, because teens will also self-report that, you know, they do have positive associations with social media, that they gain's social media, because teens will also self-report that they do have positive associations with social media, that they gain positive interactions. But I think probably what you're saying to me as a parent makes a lot of sense, that it's the fact that social media is taking the place of other activities that we know to be positive and important for healthy development that's ultimately creating the

problem. By the way, of course, all these things were exacerbated and made worse by the pandemic. The trends were there before the pandemic. The pandemic definitely accelerated things. And it's a very, it's something that I want us to continue to pay close attention to, because what could be more important than this, you know this absolute crisis of identity and meaning and feelings of hopelessness and despair among the future of our country, among our children and our young adults? So I do think it's a critical issue that we're just kind of wrapping our heads around what's going on. It's horrible. I mean, the Surgeon General put out a warning about a youth mental health crisis. Like I said, on the measurements, it's hard to say.

I mean, it's just taking a phone away is not going to do anything. There's got to be, I don't know what it is. I can't imagine what it's like to be a teenager at this time. I was actually thinking about in the context of two years, it felt like a long time for us, but we had the most critical developmental years years ago. If these are the two years, let's say you're 16, I mean, that's an eighth of your life that you spent in a semi-lockdown. That's nuts. And when you're 12 or even younger, that's a significant portion of your life.

And that is gonna have a longstanding impact. Now, I hope that we get back. Part of the reason I'm so pro going back to normal is I wanna get this over with as soon as possible so that people can try and find some sort of different semblance. Because if we don't, we're going to be in big trouble. I think especially for a lot of these kids.

I think it was especially hard for people who are natural extroverts. So like my teenage daughter is a natural extrovert. I actually am sort of like 50-50. I'm like fine to be by myself. My son is much more of an introvert. So I think it was less of an issue for him. But my oldest daughter, she really needs to be around people like that's just how she's wired, you know. And so that's the

other thing that Derek Thompson said in his piece that I thought was interesting is like social media can be sort of like alcohol, like an effective social lubricant that in, you know, certain reasonable quantities can actually be a good and beneficial part of a normal, healthy social life. But for a certain percentage of people, relatively small, probably, percentage, it is actually a problem and really detrimental. And I think that might be kind of the way

to think about some of these things. That's a good way of putting it. I like that. All right, guys, thanks for watching. More for you later. Well, very interesting. This weekend is the Nerd Prom here in Washington, All right, guys, thanks for watching. More for you later. ethical, but whatever. Let's put this up there on the screen. Turns out Dr. Fauci is backing out of the White House Correspondents Dinner over COVID concerns. He says that because of his personal individual assessment of his own risk, he will not be attending the dinner. So this is sparking.

I mean, this dude is a lot older than people realize. To be fair, the guy's like 80 years old. Looks good for his age. How old is he, I guess? I think he's 80. But look, I'm not criticizing Fauci for doing it. 81? There you go. I was close to it. Almost a little bit older only than our president. But it has raised a question then of why is the president not going to be wearing a mask? Why is he attending? Is he going in violation then of Dr. Fauci? And the White House Correspondents Dinner finds itself in a hilarious place where they're like,

well, we're not going to be requiring masks in there. And then the Biden administration and the top officials there will be attending the dinner. And so actually, after we cut this segment, this just happened. Pete Buttigieg was on Fox News last night, asked exactly. So why exactly is the White House and you and all public officials who are attending the dinner not required to wear a mask, and you guys are going to do that, but you're also in court trying to force people on airplanes to wear a mask? Here's what he says, quote, most of us understand the difference between a hotel ballroom and an airplane, Secretary of Transportation. Well, that's actually worth parsing because in both instances, people will

not be wearing masks when they're eating, Crystal, at the dinner, ergo making it irrelevant as to whether the mask is worn in the first place, either in the hotel ballroom or on the airplane. Just completely ridiculous policy. So number one, obviously, Fauci being a COVID Karen is kind of hilarious, but also he's 81 years old, so I I respect his decision but the Buttigieg part of this really bugs me maybe just the complete hypocrisy maybe he's just using COVID as an excuse to not have to go to this yeah I wish we could use that excuse we're like oh we're not going because of COVID well I mean we didn't get invited yeah first of all we didn't get invited there's no way I nor would I ever pay did you go to it uh I was I was supposed to attend uh my friend's wedding

was on the same day and I was like I'm not gonna skip my friend's wedding I went to it yeah two or three times yeah

and it really is as kind of awful of a scene as you think it's like you know all these

social climbers like all the media class oh yeah Kim Kardashian's coming trying to be social climbers, like all the media class. Oh, yeah. Kim Kardashian's coming. Trying to be seen with the right people. All the media outlets, yeah, they try to invite like some cool celebrity and all of these like political types who haven't been around a lot of celebrities sort of freak out about that. And it is a whole thing.

I did a, this is super cringe that I'm even owning up to this, but I did like a red carpet coverage thing. Right, but that's when you talked to Trump. That's why it was important. And I did end up, it was before Trump. It was when he was weighing running for president. And I ended up like interviewing him on the red carpet with Melania. And yeah, so it was interesting because that was my first, that was actually my only one-on-one interaction with him. And he, I was at MSNBC at the time.

He clearly, like, watched it all the time. Knew me, knew my co-host, knew what our whole energy and what the show was all about. And then when I asked him, because at the time he was, like, you know, had just gotten off the whole, like, I'm going to send my own team of investigators down to Hawaii and figure out what's going on with the president. So I asked him, I was like, oh, so do you ever find the president's birth certificate down in Hawaii? And he's like, that's the wrong question, Crystal. And then that was the end of the interview. But, you know, at the time, I felt sort of embarrassed that I even interviewed him and like took his presidential thing seriously. And then, of course, you know, we know what happened. But but yeah, that was probably my

most notable White House Correspondents Dinner thing. Otherwise, it really is just this uncomfortable people who are way too full of themselves, people who are like climbers trying to throw themselves at news executives to get a job or get noticed or whatever, and no one paying attention to the scholarships that that is supposed to really be about. So it's basically the vibe. The whole event is just so entirely cringe. But look, there- And then there's a whole thing, too,

about what after parties you get invited to. Yes, of course, the Vanity Fair party. The cool kids get the Vanity Fair party. And actually, I don't know if it still is, but the MSMUC party was considered one of the good ones, too. Actually, no, the real ticket in town is the CNN brunch the day after, the hangover brunch,

apparently, from what I've been told. Yes, and there's, did they still do that, the brunch the day of the Tammy Hadid, that one? Yeah. That's a vintage one. If anybody's ever gone and read This Town by Mark Leibovich, great book. Actually describes it entirely perfectly.

Yeah, a bunch of people trying to preen and show off how cool the fans are. I'm not in these circles anymore, so I truly so i truly have no reaching back in my memory to remember what it's it's a fun view into how decrepit this town is i do will say this i think that post-covid and in the year 2022 it really is like versaillesque in the way that everybody is gathering and it has no credibility right 10 years ago it was an entire it was actually a media-driven event and all of that, but now they're just trying to recreate some of that old magic, and the country really sees these people, I think, for what they are.

So I don't think it carries nearly the amount of cachet that it does do. I don't think so either. I mean, we've talked about it before. The best one was Colbert, George W. Bush. I mean, that was an incredible, still, like, really stands up if you go back and watch it. And the other spectacle you're likely to have at this time is all of the fancy attendees unmasked and the servers masked up.

You're very likely to see that divide. I mean, listen, I don't know for 100% sure, but we've certainly seen that in a lot of other fancy events. Yeah, very terrible. Anyway, enjoy, everybody. We'll see you guys soon. So if you're wondering if there's more unhinged takes about Elon Musk and Twitter, well, we can always leave it to The View to give us the worst possible take. This one from Sunny

Hostin about what free speech really means. Let's take a listen. And in fact, on Twitter, it is predominantly straight white men. So when Elon Musk says, wow, this is about free speech, it seems to me that it's about free speech of straight white men. And so let them have it. Let them just go at it. I enjoy the block button on Twitter. I think it has a real outsized influence in our world because politicians and celebrities are on it. Okay. All right. Straight white men is what frees. It's like, why do we have to reach for this every time? First of all, I think it's ridiculous. The idea that they're straight white men is supposedly the dominant thing on Twitter. I don't think that that's accurate, but it fits this

broader trend in order to paint free speech as some sort of link to white supremacy. We saw that happen on MSNBC. Let's put this up there on the screen. Again, just completely hilarious that they say a future of abundant equitable speech terrifies people like Elon Musk. I just love here now that equitable speech is the moniker for censorship that the viewers have come up with. Yeah, that's a new, I guess that's a new term. New current thing just dropped. You know,

put a positive spin on restricting people's right to speech. I mean, I just, I really actually, I find it offensive because, listen, the founding of the country has a million issues. The constitution is not some perfect infallible document, nor is the Bill of Rights. But the whole reason you have constitutionally protected rights is actually to protect the rights of minority groups so that they can't be subject to being stripped away from a tyrannical majority. So it's really the core concept here is exactly the opposite of what Sonny Hostin is saying or what Anand, and I think that was a segment that Joy Reid was trying to intimate. The fact of the matter is there is no doubt that if

you are in favor of handing more powers of censorship and stifling to billionaire class or the political class, the people who are overwhelmingly going to be targeted are dissidents, are people who are challenging power, who are outside of the majority and the mainstream. Those are always going to be the people who bear the brunt of the censorship and are pushed out of the public square. So that's why I find this issue important.

That's why I find this not only to be wrong, but to actually be the tyranny of the majority. So this is insane. I mean, listen, I always put the caveat, is Elon actually going to usher in? Who knows? We don't know. We don't know. Neither do you. But I don't know why you're so much more comfortable with the kingdom of Saudi Arabia having massive stake in Twitter than Elon Musk.

To me, look, and I think some, you know, I think Anand would say like billionaire control, no matter which billionaire is a problem, like that's a core part of his view. But obviously his views on censorship and what he would actually like to see in terms of a regime. He's actually advocating for people like Elon Musk and his other fellow billionaires in that class to have more power. So it's counter to what his whole thing is supposed to be about, which is we need to not have the billionaire class in charge of everything. Yeah, that's right. And I completely agree. And it's like, oh, this billionaire is bad, and this type of free speech is bad, and more equitable speech straight it's like why do they have to uh use and and really defile these time-honored principles in the name of the culture war but i think i know the answer which is that they know that they'll be protected and that

others won't also blocking somebody's on a violation of free speech that's not the point you should have control more control over your user experience that's actually a good thing yeah you know that's actually a decent a decent yeah that's actually a good thing. Yeah. That was actually a decent point. Yeah, that's the only good point that she was making. I saw an article that was like what free speech actually looks like is some random guy sending you a dick pic every single day unsolicited.

I'm like, you know, there is a block button. What are you talking about? You can mute people, you can block people. You don't have to like subject yourself to whatever randomness comes at you online and advocating for those tools and being and availing them yourself of them i think that is really important to be able to have control over your experience but yeah anyway they're silly that's the bottom line all right we'll see you guys later more for you later

hey guys we're excited to partner with upcoming youtuber j Lee of 5149. He's going to explain culture, politics, anything else that needs explaining, and we're really excited about it. Yep. Here is his latest effort. Let's get to it. Hey there, my name is James Lee. Welcome to another segment of 5149 on Breaking Points. Today, we are going to look to understand China's unique form of autocracy to hopefully illuminate how power structures and incentives in China and the United States manifest in policies that deeply impact the lives of its everyday citizens. And I think the most useful lens for understanding China is the country's pandemic response policies over the past couple of years.五分钟后,他们叫了不几个人,突然之间所有人都叫了

老师 要命了,这干了我去工了,这个要插进去了,麻烦了 更是什么呢,因为数一个年,你都不晓得这个状态 I'm sure many of you have seen some disturbing footage like this coming out of China in recent weeks, as some of China's largest cities, including Shanghai, with a population of more than 26 million people, have been under a strict lockdown amidst a recent COVID-19 outbreak this strategy, the zero COVID strategy, because he is seeking a third term at an important Communist Party Congress later this year. He wants to use China's success in containing the virus to prove that its top-down governance model is superior to that of liberal democracies. I think without a doubt, there is an intensifying battle between two economic and geopolitical superpowers, China and the U.S., and the seemingly diametrically opposing cultures and values

they represent, one being democracy and individualism and the other being authoritarianism and collectivism. And I think in the West, we have watched with kind of confusion and horror at how, you know, just how extreme a position China has taken in terms of their zero COVID policy with very little acknowledgement or discussion about the inherent trade-offs of such an extreme strategy, such as the mental and physical health impacts of an indefinite lockdown. But I think in order to make sense of this policy, we have to understand how the Chinese Communist Party is organized, the incentive structures in place, and what kinds of behavior is rewarded. I'm going to read a

little passage from The Diplomat, a current affairs magazine focusing on the Asia-Pacific region. Scholars such as Kevin J. O'Brien describe the Chinese state as responsibility-driven, meaning local officials operate under what is known as a cadre responsibility system. The cadre responsibility system evaluates the performance of local cadres based on their fulfillment of assigned policy goals. During mobilization, the task from the top leadership becomes the priority, outweighing all policy goals in the cadre responsibility system. Under the current zero COVID policy, the task of preventing a COVID-19 outbreak outweighs the imperative of economic growth, usually the most

critical policy goal in the cadre responsibility system. So you take this overarching national strategy of zero COVID, and just to give you a little bit of a visual, the directive funnels down from President Xi and a small group of senior officials known as the Politburo to the local Communist Party officials to implement. ambitions to move up the food chain, and if their performance, loyalty, future prospects, etc. are based on this one policy goal, with the most important metric being zero cases of COVID, then that doesn't lead much choice but for them to double down with some pretty extreme measures, along with sacrificing other priorities and duties to ensure that China stay COVID-free. And such an imbalance between the demands and incentives of the government officials and the needs of the people can have extremely harsh consequences for the general public, something that I think critics are worried about rightly right now with China's zero COVID policy. Now taking it one step further with the numerous entanglements between the public and

private sector in China, one might think that, like the United States, billionaires wield as much, if not more power than any one government official. But in China, that's not necessarily the case. Take the Chinese government's response to their most famous billionaire, Jack Ma of Alibaba, as an example. This is from the Wall Street Journal last year. During a visit last summer to Hefei, a Chinese city northeast of the epicenter of the COVID-19 outbreak, Mr. Ma invited medical workers to a hot pot banquet to show his appreciation. A local media report referred to him as, quote,

Teacher Ma and said he sang opera for the guests. Senior leaders were annoyed, according to a person familiar with the matter. Beijing took credit for China's COVID-19 response, and some officials thought it wasn't Mr. Ma's place to thank frontline workers. That's right. It's not a billionaire's role to thank workers. It's the responsibility of the Chinese Communist Party. They don't want any allusion to the idea that the private sector can be an answer to a challenging situation or problem with even something as trivial as a thank you hotpot banquet to send a message that China only has one leader in a time of crisis, as the Wall Street Journal headline alludes. And I think unlike the US, where I think

pretty much we have this common idolatry of the billionaire entrepreneur and this narrative that business can do a better job than the government, in China, you could be a billionaire tech entrepreneur. But the head of the Chinese Communist Party, Xi Jinping, still calls the shots. There's no way a group of billionaires could control the Politburo as billionaires control American policymaking. So in China, you have a vibrant market economy, but capital does not rise above political authority. Capital does not have enshrined rights. In America, capital, the interest of capital,

and capital itself has risen above the American nation. The political authority cannot check the power of capital. That was Eric Li, a Chinese venture capitalist and political scientist. And I think I'm going to repeat what he said once again, because I think it explains so much. Because in China, as he said, capital does not have enshrined rights. It doesn't rise above political authority. But in America, capital and the interest of capital has risen above the American nation, and political authority is actually unable to check the power of capital. And we see this in practice all the time. On December 21st of last year, Delta Airlines CEO Ed Bastian asked the CDC to shorten the COVID-19 isolation period from 10 to 5 days.

And lo and behold, a few days later, on December 27th, the CDC updated and revised their isolation and quarantine guideline from 10 to 5 days. Many have suggested that the motivation for the change in the guideline was economic rather than scientific, and I think with some pretty good reason. Quoting Dr. Fauci, with the sheer volume of new cases that we are having and that we expect to continue with Omicron, one of the things we want to be careful of is that we don't have so many people out, Dr. Nancy Fauci, the Biden administration's chief medical advisor, told CNN's Jim Acosta. I mean, obviously, if you have symptoms, you should stay home. But if you're asymptomatic and you're infected, we want to get

these people back to jobs, particularly those with essential jobs to keep our society running smoothly. In the case of Delta, staffing was and remains a major issue for the airline industry as a whole, and having a shorter quarantine period would certainly help the cause. Also, a bit of the quiet part out loud there for Dr. Fauci, admitting that the change in quarantine length isn't necessarily scientifically driven, but rather to mitigate economic disruption, which is a clear deviation from past messaging that asymptomatic infection fueled the spread of COVID-19 and that folks should stay home until testing negative. Another example, President Joe Biden, to his credit, has, at least in rhetoric, continually

called for intellectual property waivers on the COVID-19 vaccines. And at last year's WTO meeting said that the discovery of new variants demonstrates that the pandemic will not end until the entire world has access to vaccines. But he, along with the rest of the U.S. government, have been continually thwarted by massive lobbying efforts and the power of big pharma. And so like we just talked about before, in the United States, with money being the number one interest of the country, political authority is actually not capable of checking the power of capital. Wealthy individuals and businesses almost always get their way, while in China, the interest of capital cannot rise above political authority because in China, the interest of capital cannot rise above political authority, because in China, the number one interest is, of course, to preserve the Chinese Communist Party. We talked about Jack Ma earlier, and this is once again from the Wall Street Journal.

Mr. Ma failed to keep pace with Beijing's shifting views and lost an appreciation for the risk of falling out of step, according to people who know him. He tuned out warnings for years, they said. He behaved too much like an American entrepreneur. Mr. Ma's exit from the world stage followed a typically frank speech in October when he criticized Chinese regulators for stifling financial innovation. Mr. Xi personally intervened days later to block the record $34 billion plus initial public offering of Ant Group, Mr. Ma's financial tech company. So money does not talk in China, unlike in the U.S., where money not only allows you to buy influence in public policy. This is a quote from Jackman Magazine in reference to Bill Gates, quote, this is a private billionaire in Seattle at the highest

levels of scientific discourse, the New England Journal of Medicine, telling governments what they should be doing. So right, capital allows billionaires to bend the ear of not only the politicians, but also academia. And it can also be used to shield you from any media criticism. Quote, if you're a journalist covering global health, the Gates Foundation should be one of your most important targets, but it can't be if it's funding your newsroom. So in America, policymaking and capital

are inextricably intertwined with the country's number one interest being to protect capital at all costs. But on the other hand, in China, they've been willing to put economic considerations on the back burner. I think Forbes estimates about $46 billion a month in pursuit of zero COVID. I live in the US and I think so do a lot of the audience watching this video. And I think in the US, at least in the Western world, we think, we look at a country

like China and think, you know, man, I'm glad I don't live there. Because look at all the human rights violations, now the indefinite lockdowns in some cities with other cities watching on knowing that it could be them next. Not to mention the strict speech, information and media censorship under the Chinese communist regime. But I think what's important to note here, you know, in regards to something like censorship and free speech, which I find quite interesting, is that in China, sure, the government decides who can and cannot speak and what you can and cannot say. But in the U.S., the government doesn't censor people.

Capital does. Even government officials like Marjorie Taylor Greene and, of course, former President Trump can actually be censored by corporations like Twitter. Although, you know, now with Elon Musk's takeover, that could very well change. But once again, that change is based on the whims of capital and not the government. So in a way, the freedoms and liberties of citizens in both countries are infringed upon by different groups of people and in slightly different ways. My point, of course, is not to be pro-China or anti-America, vice versa, or to draw any kind of false equivalency between these two countries, but rather to hopefully illuminate

and understand the underlying incentives and priorities driving the policymaking and the trade-off decisions. Because the truth is, both countries seek to preserve something. In China, the number one goal happens to be preserving the Chinese Communist Party. And so sometimes the Chinese government will sacrifice the rights and the well-being of its citizens to preserve their power. In the United States, the number one goal of the current bipartisan consensus is to protect capital, corporations, and the wealthy. And so sometimes the U.S. government will sacrifice the rights and the well-being of its citizens to protect the interests of capital. Now, you draw your own conclusions on which you prefer, but for me, if the primary purpose of government is to protect and provide

for the well-being of its citizens, and if you share that similar vision, the truth is that any government, democratic or otherwise, whose primary function is either to preserve power or protect capital could never truly prioritize the well-being of its citizens. I hope you enjoyed today's discussion about China. If you'd like to know more about this topic and many others please check out my channel 5149 with james lee on youtube where i release weekly videos relating to the intersection of business and politics and as well as society the link will be in the description below of course subscribe to breaking points and thank you so much for your time today. experience hearing loss. It's just something that happens as you age. And untreated, it can lead to dementia. But fortunately, we have something for this. If you have bad eyesight, you get glasses.

If you lose hearing, you get hearing aids, which are basically it's a microphone and an amplifier meant to fit into your ear, along with software and an app to control it, algorithms and things like that to improve hearing. There are different styles depending on your hearing and what feels comfortable of hearing aids. But there's a major problem going on with this market with hearing aids. Only 20% of people who have hearing loss actually end up buying and using them. Why is that? Yes, there's a monopoly story, and that's what I'm going to be talking about today. Now, a good amount of the problem with hearing aids is that

they're kind of embarrassing. People don't like to admit that they need help hearing. It makes them feel old, and they don't really like feeling stigmatized. No one does. But there's another problem with this, more measurable problem, and that's the hefty prices. A few years ago, buying a hearing aid cost roughly $4,800. That is the third largest purchase for many people after a house and a car. It's a lot of money. And as a result, a lot of people can't afford hearing aids. And they can't afford to replace them when they break, especially if you're a retiree

living on Social Security or you have limited amounts of income. With today's technology, hearing aids just shouldn't cost this much. And in truth, the prices are much higher than the costs really are. So I think we can see this because we can compare the prices abroad with what we have in the United States. In England, the government buys hearing aids, the same hearing aids that we use here, at $68 a piece versus the wholesale price to retailers and hearing aid specialists who are called audiologists in the United States. That price is between $300 and $600. And that's not what consumers pay here. That's the wholesale price. The actual price to consumers runs into the thousands, as I just pointed out. Now, the driving force between the

gap between what Americans are paying for hearing aids compared to their counterparts in England lies in the market power of the firms that make and sell hearing aids. The industry is controlled by five very profitable hearing aid manufacturers, firms you haven't heard of because they receive very little publicity and the brands are not well known. So these are companies Sinova, WS Audiology, William DeMant, GN Resound, and Starkey. Now, according to the Global Partnership for Assistive Technology, these manufacturers control 90% of the market,

and they make a lot of money. Their margins are around 25%, and gross margins are around 70% to 80%. So why can these companies keep prices so high? Well, one reason is that the Food and Drug Administration requires a prescription for a hearing aid, and that makes it hard to bring cheaper and more innovative devices to market. That's why Apple can't say that its AirPods can serve as hearing aids for moderate hearing loss, even though it's likely that AirPods can do this, and tens of millions of people already own AirPods, and there's not really a stigma to using them.

Now, in 2017, Congress acted to solve this problem by loosening FDA rules on prescription requirements. The goal was to introduce new, cheaper competition by allowing firms to sell hearing aids over the counter, without a prescription. Hearing aids would be like glasses. Today, you can go into a store and buy what are called readers that are glasses that, you know, they're not prescription. And eventually people, you know, if they work, they often do get real prescription glasses. And a lot of people do it that way. You can't do that with hearing aids,

but you should be able to for the sake of competition and prices and just being able to hear better and avoid dementia and live your life fully. Or so went the thinking, according to this legislation that passed in 2017. And after the bill passed, it seemed like it worked. Bose, which makes speakers and great audio equipment, soon sought to enter the market. And indeed, there is a BOSE OTC hearing aid that's over-the-counter OTC hearing aid on the market today. Sort of. Because it's currently only being sold in a few states because of state regulations.

When the FDA finally came out with proposed rules last October, and this is important, something weird happened. The stock prices of the major hearing aid producers, which you would expect to fall when they face more competition and their margins are under pressure, didn't budge. Wall Street, in other words, wasn't particularly concerned that competition would bring down prices and impact profits like conventional economic models of thinking would portray. Why is that? Well, it turns out that these firms use a variety of techniques to keep prices high. So the creation of an OTC market is just the beginning of the fight to make these products

cheaper. It's also possible that Wall Street is wrong. I actually think that Wall Street probably is wrong, but it's important to go through the barriers to understand why hearing aids, but also more broadly medical devices and things like glasses and dental implants and whatnot are way too expensive, cost much more than they should be. So how do the hearing aid firms do this, the incumbents? Well, first they share patents through a common pool called the Hearing Instrument Manufacturer Patent Partnership. HIMPP controls 90% of the hearing technology available to consumers worldwide. That's according to their own website. So if you want to enter the market with a new device, it's possible

that you'll infringe on one of these patents, which means you'll have to pay up. It's just a barrier to entry. Second, these firms have also bought up a bunch of companies trying to enter the space and made deals with popular consumer brands that compete with them. So they're taking out competitors through corporate mergers and alliances. Now third, these companies control the whole process behind a patient getting fitted for a hearing aid, from the insurance to the audiologist. Several of these firms have subsidiaries

that manage the hearing part of health insurance. WS Audiology, for instance, owns True Hearing and Hearing Care Solutions, which runs healthcare plans and discount plans for Medicare Advantage insurers, including Humana, Blue Claws, Blue Shield, Anthem, Aetna, Cigna, et cetera. So if you have health insurance with, say, Aetna, Cigna, etc. So if you have health insurance with,

say, Aetna, and you need a hearing aid, who does Aetna send you to to find out, you know, what kind of hearing aid you need or what kind of hearing assistance you might require? Well, they send you to someone who will tell you that you need one of their particular hearing aids, or at least a hearing aid that is very expensive. Now, these manufacturers also own or affiliate with networks of audiologists and hearing specialists. Starkey, for instance, not only owns the benefit management company Start Hearing, but runs the hearing aid specialist network Starkey HearCare. So most people with a hearing loss problem will go to the doctor, they'll use their insurance, and that's controlled by a hearing aid maker, which will then send them to an audiologist who is perhaps also employed by that

hearing aid maker. And here's what's craziest. Hearing aid makers sometimes even pay these medical professionals more if they recommend a more expensive hearing aid. That is legitimately crazy. Doctors are not allowed to get a cut from the pharmaceutical company when they prescribe medicine to you, for good reason. But that's how the hearing aid market works right now. And most patients won't know about these embedded conflicts of interest, or the kickbacks that are likely involved. It would be bad business if you told them, because there would likely be a negative reaction to the structure of the market. Consumers would be like, what? You're making a lot

of money on this massive purchase that I have to put forward? Like, that is wrong. The entire business model around hearing aids causing the prices to be way higher for U.S. customers, at least to me, seems highly unethical. Now, one simple way to fix this problem would be to charge for the audiologist's service, which is quite valuable, and the hearing aid or software packages separately. These firms make that impossible because they bundle the device and the fitting service. So they make it impossible for consumers to understand exactly what they're paying for and who the money is going to. Now, if the products were sold separately, audiologists would have an easier time servicing patients with a range of devices. They could choose which one is best for you or for the patient

instead of choosing the one that gets them the most money. Now, there's a lot of cool technology here. There are even software packages coming out that allow people with moderate hearing loss to use off-the-shelf electronics without any new hardware at all. Here's a quick demonstration of a software suite called Jakati, which I thought was particularly cool. It's just a few seconds, but just take a look

so you can see how this technology is developing. His commitment to fresh ideas often stretched what we thought we knew about his... It transmits high quality audio wirelessly back and forth from speaker to listener with no perceptible delay. Third-party products can also use the following Jacody hearing suite built-in proprietary technologies. That's pretty cool technology. The thing is, is audiologists who might like these newer options, and many of them do because these people went into this profession not to make money, but to help people hear, are often scared to offer these kinds of options because right now they need, they actually need

the hearing aids that these firms provide. It could also easily get cut off and have their livelihood threatened. I mean, they also get customer referrals from the subsidiaries of these hearing aid makers. They are, you know, they're both given incentives, but they're also, you know, there's an implicit threat there as well. So it's not so much the audiologists that are the problem here. It's the hearing aid manufacturers who have structured this industry through a whole range of, you know, what's called vertical integration or owning multiple pieces of the supply chain so that you can control the whole industry. Now, there's also the problem of maintenance. Suppliers have proprietary fitting software, and that can make it harder for hearing

aid specialists to learn, you know, to actually use different hearing aids when they shift to another supplier. And for some of these products, you're not allowed to repair them if they break. This is, you know, you guys know about right to repair. It's the same problem. And if you have to get the manufacturer to do the repair and you've upset the manufacturer, that can be a huge problem. It's just not a good idea if you're an audiologist to piss off one of these big companies who often dominate the hearing market or can dominate your particular medical practice.

Now, undergirding the power of these incumbents is the usual bundle of lobbying and campaign contributions, with hearing aid firms using political muscle to press states to prevent the sale of over-the-counter hearing aids through the internet. The FDA rules would actually preempt this, and that's when they started getting federal. So in 2017, when Congress acted, as I outlined earlier, these firms immediately got political in a big way on a federal level. The president of Starkey, Brandon Solowich, who runs the biggest hearing aid maker in the United States, launched a lobbying campaign called Listen Carefully to push back on Congress. So let's take a listen to his message to lawmakers. It's a little bit boring, but this is actually how

political conspiracies work. They are actually a little bit boring, but this is why things are expensive and crappy across the economy. Your hearing is as unique as a fingerprint. So why are some politicians oversimplifying hearing health solutions? They are narrowly focused on costs, while many other factors such as social stigma actually influence hearing health outcomes. That's why Washington must get the OTC hearing aid regulation and Medicare expansion right. Hearing health professionals should be part of the equation. Because hearing loss is not a one-size-fits-all approach. Are you listening carefully?

So he's not wrong about stigma, but being narrowly focused on cost, I should say, put sarcastic air quotes, narrowly focused on cost, is bad, of course, if you're making money by charging high prices. Now, ever since the 2017 bill passed, Starkey has become one of the leading donors in the medical device space. In this election cycle alone, the founder of Starkey donated $125,000 to GOP leader Kevin McCarthy. You can see Kevin McCarthy talking here. He's the House Republican leader and potentially the next Speaker of the House. This guy also donated $330,000 to the Republican Party Committee, whose goal it is to win back Congress and make McCarthy the Speaker. Last cycle, Starkey spent $1.6 million

on campaign contributions, which included contributions to state Republican parties nationwide, because they wanted to control state rules. Now, other Starkey executives gave tons of thousands of dollars to both Democratic Senate Majority Leader Chuck Schumer and the powerful West Virginia Democratic Senator Joe Manchin,

and this was to try to get some of their hearing aid restrictions into the Build Back Better bill that failed. Now, for a time, this sort of quasi-cartel, we'll call it that, was afraid that the OTC hearing aid market would take off and cut at their business. But back in February, over the course of just a few days, five hearing aid makers raised their prices on hearing aids at the same time, all citing inflation. They are no longer worried that they will face real competition. If they were, they wouldn't be raising their prices because at this point, they don't think there's any way that consumers will choose OTC hearing aids without them. Now, they may be wrong. They may be right. We'll see.

So what can we learn from problems in the hearing aid market and Congress actually doing the right thing? Well, first, what I've described, this kind of corrupted middlemen driven industry that actually costs people not just money, but literally their ability to think, to hear, to live a full life, to communicate with their families and their communities. It's not just a problem with hearing aids or hearing. As I said earlier, this market looks a lot like glasses or dental implants or in some ways pharmaceuticals and other forms of medical devices. Consumers are relying on a trusted medical professional who has in some cases been subverted by a dominant firm

or in other cases is holding out to help patients but has increasingly less power in either case. Now in glasses, the dominant firm is Luxottica. Warby Parker has a little bit of power there. In dental implants, it's Henry Schein. And you can go down the list in all of these different industries. There's usually a couple of dominant players who use similar arrangements. It's not the same arrangements, but it's similar ones. The second thing we can learn

is that despite the rancid nature of current politics, we actually can make things better. If we undo some of the corruption in our economy, prices will drop and service will improve and our lives will get better. The point is, don't lose hope. We have amazing technology and politics can actually work. In a few years, there will be an over-the-counter hearing aid market. In fact, it could be as soon as this fall. Apple and Bose and probably a bunch of others are coming in to challenge the dominant players. And more importantly, help people who need to hear again for less money. Thanks for watching this big breakdown on the Breaking Points channel. If you'd like to know more about big business and how our economy really works, you can sign up below for my market power-focused newsletter, Big, where I go

into weird monopolies, fun monopolies, unexpected monopolies, and then the policymakers who are trying to address the problem. Thanks a lot, and have a good one. This is an iHeart Podcast.