Breaking Points with Krystal and Saagar - Mini Show #57: Favre Scandal, Corruption, Federal Reserve, Amazon, & More!

Episode Date: October 2, 2022

Krystal, Saagar, & friends break down the Favre scandal developments, revolving door corruption, Federal Reserve policy, Amazon's new executive, & 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/Chicago Tickets: https://www.axs.com/events/449151/breaking-points-live-tickets The Intercept: https://theintercept.com/Matt Stoller: https://mattstoller.substack.com/ Learn more about your ad choices. Visit megaphone.fm/adchoicesSee omnystudio.com/listener for privacy information.

This is an iHeart Podcast. Table news is ripping us apart, dividing the nation, making it impossible to function as a society and to know what is true and what is false. The good news is that they're failing and they know it. That is why we're building something new. Be part of creating a new, better, healthier, and more trustworthy 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.

So as you guys know, we've been closely following the scandal involving Brett Favre stealing welfare funds for poor people in the state of Mississippi in order to build his daughter a $5 million volleyball stadium. He also received over a million dollars in speaking fees for speeches he never gave. He also solicited investment to multiple millions of dollars into a company that he was involved with. A lot going on there. He denies any allegations of wrongdoing. He had no idea where the money was coming from, et cetera, et cetera. Okay. So he is not, in my opinion, facing the legal accountability that he should probably be facing, but the media is starting to pick up on this and he is facing some sort of public backlash and endorsement accountability, I guess, in a sense. Let's go ahead and put this up on the screen. So Brett Favre's Sirius XM show has been put on hold following this welfare

fraud scandal, according to Mediate. Sirius XM confirmed to The Hollywood Reporter on Saturday that Favre's long-running radio show, The Sirius XM Blitz with Brett Favre and Bruce Murray, is going to be put on hold. The show premiered in 2018. It featured him as a co-host. Up until two weeks ago, it aired every Tuesday. Also, a local Milwaukee radio station announced it has suspended his weekly Green Bay Packers recap program on the station. And it's taken a little bit. So this scandal involving welfare funds, which isn't just about Brett Favre. It's about this lady and her son and this nonprofit they ran. And it's about the former governor and a potential cover up from the current governor.

And we're talking about literally tens of millions of dollars stolen over years out of this welfare fund. This has been unfolding for years at this point. And it really is just now that the media is sort of catching on to it and the story is gaining any kind of real traction and understanding of just the depths of depravity we're talking about here. So this is the very first little bit of actual backlash that he has faced over his actions with connection to the scandal. 100 percent. Yeah. And look, I know it's complicated, but at a very basic level, there were public funds for poor people, mostly single moms in Mississippi, one of the poorest states. And he took a lot of money from that fund. Now, he claims he didn't know it was from there.

There's a lot of text messages which say that he definitely did know and that he himself put himself in legal jeopardy. There's a text message where he specifically asks, how do we know that the media can't find out what's going on here? So he knew there was something untoward. Now, he claims everything's out of context. These text messages are being selectively revealed. He is welcome to set the record straight any time he wants. Release your text back. Release all of the text messages.

Release the transcript. The Mississippi governor can also do the same thing. But as it stands right now, it's a disgusting scandal. Again, I'll reiterate, he is worth $110 million. He could have built that stadium 10 times over, could have done some stupid commercial, and could have paid for it himself. But he let greed get to him, and he took public money, and now he's at the center of the storm. So this is absolutely the quote-unquote cancel culture that I support. Yes. Canceling rich people who steal from poor people. I'm 100% in favor of that. The latest development, and it just keeps getting worse. Yesterday we talked

about, or whatever, I don't know what day this is airing, but whenever we talked about the fact that he had suggested using prison slave labor to build the daughter's volleyball stadium. Okay. The latest development is that there are texts that were just revealed in a legal filing, which show he also tried to get welfare money for an indoor football practice facility as well. So it's just like, the more you learn, the more you're like, Jesus Christ. I mean, I just can't imagine. Just Christ. I mean, I just can't imagine. Just pay for yourself.

I just can't imagine. I don't understand. You know, I think a lot of people I've noticed are transfixed by this, and it's because, you know, he was a pretty beloved figure in his time. Yeah. People were like, oh, he's a nice guy. Like, he seems like somebody really grounded. Like, it turns out he's just like all of them.

He's just like the rest, like absolute greedy scumbag. I cannot imagine taking money that's intended for like poor single moms to like, you know, make their life work and feed their kids and pay the rent and keep the electric bills on or whatever. And you're a hundred millionaire and you're taking that money for your daughter. Do you know how much money you even need to make? Basically, in Mississippi, I don't have the exact numbers in front of me, but TANF in general, you basically have to be below the poverty line. Well, Mississippi is perhaps the stingiest state in the nation with regards to welfare funds. In that monologue I did, I pulled one of the statistics.

I think it's something like, because I looked at it again yesterday, in one year there were 12,000 people who applied for the benefit and only like 165 people got it. There are so many people who don't even bother trying because the process is so dehumanizing and the results so incredibly uncertain that it's basically like cash support for poor people in Mississippi does not really exist. It's terrible. Now, this is the legacy of Bill Clinton and the way that they, quote unquote, ended welfare as they know it and changed it from, you know, like guaranteed funds for a certain income threshold to these block grants that states can do, have a lot of leeway with what they do. Now, what you cannot do is fund a volleyball stadium. Even though they're given a lot of leeway, there are specific provisions actually in the law that says you can't fund, quote unquote, brick and mortar facilities. So actual construction projects, for example, a football practice facility or a volleyball stadium. So clear violations here.

They knew that. One of the son of the nonprofit owner who has already like pled and is cooperating now, one of the things he pled guilty to is trying to structure this as a lease to get around that. So they knew what they were doing was an attempt to circumnavigate the law. They knew what the restrictions were and they did it anyway. So anyway, very latest, tiny, tiny measure of some kind of blowback for Brett Favre, but far less than what he deserves at this point. Absolutely right. Our friend Unusual Whales shared this clip from a House Financial Services Committee meeting that is quite incredible, them yucking it up about the revolving door and corruption between

members of Congress and the industries they're supposed to regulate. Let's take a listen. The gentleman from Indiana, Mr. Hollingsworth, is now recognized for five minutes. Well, good afternoon. I'm excited to be here with each of you. Before I get started on my questions, Mr. Moynihan, I wanted to let you know, Saruthi, raise your hand, Saruthi. She has been my team member for a couple of years now. But on Monday, she becomes a Bank of America team member, about which she is very, very excited. So I hope you'll take good care of her and know and recognize the talent that she has shown already in our office.

I'm sure she'll do the same at Bank of America. We will do that. And her father already works for us, so he'll take care of it. You should have called us. Well, I appreciate the opportunity to chat about some of these issues today. What I'm really interested in is the state of the economy. So the voice you heard there was Representative Trey Hollingsworth. They're doing this, you know, supposed inquiry of all the top executives at a variety of banks. And, oh, they just think it's

so charming and funny that a staffer from his office is going over to work there. And, oh, they just think it's so charming and funny that a staffer from his office is going over to work there. And, oh, this isn't the first time that we've had people in your circle come work for us. And also her dad works there. Yeah, so it's like, what? Yeah, I mean, the thing that really got me about this clip is that they consider this so standard. And affable. And so unremarkable in D.C. that they're totally unselfaware about the fact that they're, like, just laughing about total, disgusting, brazen corruption of the fact that would be absolutely grotesque to anyone out there in the country watching. Like, they don't even understand that this is a problem because it's just the sea that they swim in.

Yeah, I completely agree. I mean, looking into her background, it's very annoying also. It's just shruthy. It's actually not that hard to pronounce. He didn't even say it properly. But it's a very classic Washington resume. It has no actual prior service in the financial sector. Her dad happens to work for Bank of America.

A long time, started off career as an intern in Tim Scott's office, worked on Capitol Hill all the way up to LA, legislative assistant, financial services, now going over to work for Bank of America. Like, extremely standard Washington resume. And that's the problem. That's exactly the issue that we have. So this guy, I mean, he's not even that high ranking on the financial, but it's like, this is the level of, you know, you get paid a couple hundred grand, your dad works over there, now are you really going to push for some sort of legislation? I mean, is that the direct cause? Maybe not. But, like, you can't ever consider that it doesn't have some impact. And then you take that times 10,000 in terms of the city of Washington, and you have our current enforcement regime.

And it's across, it's banking, it's pharmaceuticals, It's defense industrial comp. I mean, it's everything that you have this total revolving door where people feel like they put in their time in, quote unquote, public service. And now that they're entitled to go better themselves, as Crenshaw might put it, in the public sector and cash in. And so when they're sitting there in these positions as legislative assistant or whatever level they attain and they have their eye on what that next career is going to be, how hard do you think they're going to be on their potential future bosses? Yeah, exactly. How hard do you think they're really going to go when they know that their pot of gold at the end of the rainbow is over there at Bank of America?

Ask yourself that, and it explains a lot of the toothless, supposed oversight we get from members of Congress. Absolutely right. An interesting thing happened over at Vice News. They did a whole documentary about rehabilitated sex offenders making the case that the laws are too strict against them about how they can successfully reintegrate into society. And unfortunately for them, one of the subjects that they chose to sympathetically portray had a real twist at the end of theirs. I won't give it away. Let's take a listen. We all out here in this world and we all got to make it happen.

And it ain't nothing stopping me. So, like, I'm very hopeful and confident. After this interview, Ashif sent a picture of his penis to our producer. So, I'm not laughing as hard because I've probably

watched it over a hundred times. Maybe like 200 times. I can't get the cut of just like that straight to it. It is pure perfect timing.

And now, apparently, Mr. Ashif is in trouble because what he did there, unsolicited dick pic, is actually illegal in the city of Chicago. See, I was wondering about that. I support that law. I was going to say, I feel like it should be. Great law.

Because if you are like a flasher. No, that's what they call it. They call it cyber flashing. It's actually illegal in the city of Chicago. It is the same thing. Right. So I actually support that um but yeah i mean talk about like i didn't watch the whole documentary so i don't know the ins and outs of how they're portraying things or whatever but if you were

trying to have a sympathetic portrait of this individual which they seem to want to do whole thing just instantly clear about who this dude is. He served six years in prison for forcing oral sex on a woman and penetrating her when she was 15 years old. I just want to be 100% clear about who this guy is. He claims he was wrongly convicted. Okay. Just saying, that's who this person is.

So, you know, if you're going to start with criminal justice reform... You can't resist. Yeah. He says he claimed... His lawyer says he sent it by mistake. Okay. Well, then who are you sending it to? Who are you sending it to start with criminal justice reform. You can't. Yeah. You can't resist. Yeah. He says he claimed, his lawyer says he sent it by mistake. Okay. Well, then who are you sending it to? Who are you sending it to then?

Yeah, it's like, were they overage? I would hope so. I don't know. I find with a lot of these criminal justice reform types, I'm like, why don't you just focus on like weed and like other victimless crimes? And like, you don't actually, like some people are actually very bad. And we have. I mean, sex offenders is a really tough one.

It's not tough at all for me. People who are like, well, I'm just saying, it's a tough one to make the case on. They're a lot more sympathetic cases. I mean, obviously, I think we have an insane mass incarceration system, etc., etc., but this was maybe not the individual to try to rehab with your puff piece. That's right. I could not get over it. It was the funniest.

I really have nothing to say about it other than it was hilarious. And so we had to share it with you. I just had to show it. It's like the Southwest thing we showed you all last week. Every once in a while, we got to change it up

and put something positive on the channel. We got a new little piece of information about the ever unfolding scandal involving Brett Favre, who now stands accused of siphoning $5 million out of state of Mississippi welfare funds

in order to build a volleyball stadium for his daughter at a university there. This is from the Daily Beast. Let's go ahead and put this up on the screen. Apparently, this is not the first time he has built some volleyball facility for his daughter using questionable funds. Here's the headline here. Brett Favre's charity for needy kids gave $60,000 to another volleyball gym. How does that work? Yeah, well, it's not okay. That's how it works. Here's the details.

They say, the brewing outrage over Favre is perhaps no surprise to some residents of Hattiesburg who helped erect another Favre Passion project, a $1.4 million volleyball facility for the high school that his daughter was attending. Which, first of all, insane. $1.4 million for a friggin' volleyball facility at a high school? How corrupt is this guy? It's just so weird. Seriously. So he was trying to raise the money for it, and then he had his foundation or whatever, which a lot of these athletes will have foundations basically to get out of taxes, essentially, is what these charities are for.

And they say that he directed the charity, which, again, is supposed to be money for needy kids, to donate $60,000 to the booster club for this volleyball stadium situation. And then on top of all of that, he hired this guy who was supposedly a friend of his to do the build and then left the guy high and dry with, I think it was like hundreds of thousands of dollars in unpaid fees that this guy, you know, who built the stadium was supposed to get and was, like, reneged on. So the whole thing is just insane. I guess if we're going to keep going back, like, was there a middle school volleyball stadium? Was there an elementary school volleyball stadium?

What is that preschool that your daughter went? What kind of a volleyball stadium do they have, too? It's just absolutely insane and shows that clearly the shady behavior was not constrained to just the welfare fund situation. Yeah, completely. Yeah. I mean, I think there's a pattern obviously here. But what I think what drives me nuts, some sort of federal prosecutor, like somebody take notice for God's sake. Can a state's attorney or someone in Mississippi, I get it. You know, he was a great football player like a long time ago. Well, now he's just another rich 110 millionaire who's like abusing the tax system and his connections and his own celebrity to violate allegedly charity law, like nonprofit law, misuse of funds and bilk with

one of the nation's poorest states, their welfare fund for single moms. I can't imagine a more depraved crime. Wasn't he another one who got caught sending unsolicited dick pics? I don't know, actually. Yeah, I'm pretty sure. Pretty sure. Let's see. There's a lot going on. You've got a headline on this one.

Yeah, you're right. There it is. Did he admit to it? NFL's probe into nudes to a Jets hostess to minifize the publicity of a star. There's something there. I'm not going to go ahead and comment on the entire thing. You can do your own research and dig into that part. But the welfare funds part.

Yeah, sports fans, let us know. Yeah, welfare funds part. We've had a real, we've really dug into that one here. And that one, I can tell you, it looks horrible. Because it wasn't just the volleyball stadium. It was also over a million dollars for speeches he never gave. It was millions of dollars directed into a company that he was like the lead outside investor in. Just absolute insanity. And he's already been caught in lies, by the way. I think this is something I haven't mentioned before,

which is that he had claimed he never spoke to the former governor about this volleyball stadium. Well, that is provably patently false at this point, based on text messages that have been revealed in multiple legal filings. So caught in a massive lie, claims he had no idea where these funds were coming from. Okay, but yeah, apparently there was a high school stadium as well that he used, you know, funds that were supposed to go to needy kids to help build. So there you go. Absolutely right.

Hey, everyone. This is Ken Klippensein with Breaking Points Intercept Edition. I'm joined today by Professor J.W. Mason, an economics professor at the City University of New York. I'm going to be talking to you about what the Fed has forecast as a forthcoming recession, what the stakes are for labor unions and for ordinary people that have to live off of their weekly wages, such as myself. It's really scary to see that the Fed has just accepted that there's going to be an increase in unemployment and indeed is engineering that as part of their plan to bring down inflation. And I'm having the professor on to talk about what exactly that means, that trade-off, because

you're only really hearing about the inflation half. There's not a lot of willingness to speak candidly about the effect on employment, the labor market, and what that could mean for organized labor. Professor? Well, you know, as you say, everybody is sort of obsessed with inflation right now, and the Fed certainly is talking about nothing but inflation. But there's a lot of other stuff going on in the world besides inflation. It's not the only thing happening right now.

And one of the other things very important that's happening is in the labor market where we are seeing a labor market that in many ways is more favorable to workers than we've probably seen in our lifetimes. You know, if you are perhaps a young person or you know any young people coming out of college, going into the labor market for the first time and looking for a job, you know, if you are perhaps a young person or you know any young people coming out of college, going into the labor market for the first time and looking for a job, you know, it's a very different experience than for most of us historically. It's much, much easier to find a job right now. And that, of course, applies to people who often have the hardest time finding work, young people, people without college degrees, people who are disadvantaged in other ways. But it also means for anybody, if you're not happy with your job, you have a much better chance of just saying, you know, I'm leaving, I'm going somewhere else. There's other people who, you know, treat me better for

my work. And if you're an employer, you can't just, you know, say, I don't care, I'll replace you tomorrow. I'll fire you if you don't do what I say. And, you know, there's a lot of things that happen as a result of that. You know, we're seeing a growth of the union movement that we haven't seen in a long time, or at least some successes in organizing in, you know, companies like Amazon and retailers and food service, you know, fast food restaurants. You know, if you go back to the 40s and 50s, there were a lot of union jobs in retail and food service. But in most of our lifetimes, the labor movement has

never made any headway there. And the fact that's happening now, there's a lot of reasons for that. But one reason is certainly this very tight labor market. And, you know, that's obviously good news if you're somebody who, you know, works for a living or you're on the side of workers. But it's also has a lot of economic significance because it means that businesses that can be more productive, that can get more value out of an hours work, can afford to pay more for it. And they can pay more and they can attract more workers. And businesses maybe that were able to survive in an environment of very cheap and abundant labor and so they didn't pay much, they didn't produce much, but it was okay because they had lots of

cheap labor. Those businesses can't necessarily succeed in the kind of labor market that we're seeing today. And that's actually, you know, obviously you're mad about it. If you're one of those employers who always took it for granted, you could get all the cheap workers you wanted and they'd do whatever you told them to because they were scared of losing that job. So if that's you, you're probably pretty mad right now. But for the economy as a whole, that's a big way that progress happens. Productivity grows. In part, of course, we have new scientific discoveries. We're learning to make better solar panels and windmills every day, and that's great. But it also just happens when businesses that are more productive displace ones that are less productive. A business, you know, that just depends on cheap labor to produce something that's not very valuable is not going to survive in an environment where labor becomes more expensive.

It's harder to hire people. And that's actually a very positive thing for the economy as a whole. know, are finding, I think, on our way to finding new ways to manage the workplace that aren't so much based on fear and domination by the boss and are more perhaps, you know, give workers a little more of a voice. And in the long run, again, I think that's really very, very positive for all of us. But that can only happen if we, you know, if this tight labor market continues. And the danger now is because we've got this sort of inflation monomania. We've got this idea that nothing matters except whether this price index, you know, the CPI comes out two or four or six or eight percent. Well, if you step back and you say, wait,

why is this so consequential? It might be hard to actually figure out why. But we've somehow got ourselves convinced that that is the only thing that matters. And we're going to sacrifice everything else, including these really positive developments on the altar of low inflation. Yeah, that's something that's really puzzling to me, is not that we're talking about inflation. Of course the price of goods matters to ordinary, everyday people, but that we're divorcing that from the labor context that you're describing, from the wage context. You have to compare any sort of inflation you're seeing with the extent to which wages are improving. Isn't that the only sensible way to look at what conditions are like for any sort of ordinary person? And they don't do that.

It's just looking at the prices. But it's not even just wages because you can be better off in other ways. You know, people carry a lot of debt. Most Americans have quite a bit of debt. You know, if your wages go up and the prices of the stuff you buy goes up, you might say, oh, you're no better off. But you are better off because the amount that you owe didn't go up. And so you're actually, you know, that debt is less burdensome to you. You know, the relatively high increase in prices and wages, both that we're seeing today, certainly one silver lining that has is it makes the debt that people are carrying less of a burden.

It's also the case, as I said, that, you know, with your work, your wages are very important, but it's also important, you know, what kind of conditions you work under. You know, the fact that people have the option of working from home today, that's a big improvement for a lot of people in their lives. We had all that unpaid time of commuting back and forth and so on. And the fact that people can actually, you know, bosses say, we want you back in the office, but people can say, well, I don't really want to do that. And, and, you know, they can't really, they can't really make it stick. And that's, that's the function of these tight labor markets. And that's a way that people are better off, even if it

doesn't show up in our, our, our sort of real wage sticks. That's a really important point you touch on in your piece, which is that, you know, there's all of this discussion is, you know, what if the expectations of inflation become fixed and people expect that this is the new reality? Now, I'm not saying that's not an important part of the story, but that's only half of the story. The other part of it is what if employers begin to think that the tight labor market conditions, so-called, are, you know, the new reality, they might actually be incentivized to try to retain employees. And that benefits everyone because we just have a more sane working environment that people can want to stay at and advance through, as opposed to the insane churn and burn that we have in virtually every industry now.

Can you talk about that a little bit, how employers' expectations might change? Yeah, that's absolutely right. It's this weird thing where we talk about, oh, inflation expectations. Well, sure, people may have expectations about inflation. They have expectations about a lot of other things, too, that may be relatively fixed or changed. And, you know, I feel like some of these inflation hawks, which unfortunately today includes a pretty wide swath of the political landscape, these people who feel, you know, get inflation down at all costs, they really, they have surprisingly little belief in markets. I mean, anybody who knows me knows I am not a great advocate for the free market or, you know, but I do think that

businesses in general try to pursue profits and look for, you know, lower cost ways of doing things and respond to the conditions that they find themselves in. I think businesses do have the ability to adjust in a sort of rational way. And businesses, you know, that find themselves short on capacity or find themselves dealing with higher labor costs, they're not necessarily just going to sit there and throw up their hands and say, oh, well, nothing we can do about this. I guess we'll just raise our prices. You know, they're going to say, let's look for ways, if labor is expensive, let's look for ways of doing more with less labor. You know, when the minimum wage goes, let's look for ways, if labor is expensive, let's look for ways of doing more with less labor. You know, when the minimum wage goes up, everybody says, oh, my God, you know, they're going to replace all those fast food workers with kiosks.

But, you know, in an environment today, like where we're supposedly dealing with a labor shortage, that would be a good thing. Get people out of the fast food restaurants. Let them do something more productive and meaningful with their days. That would be a good outcome. And if labor is scarce, that's an outcome we will see. And it's fine. You know, we're going to see other types of adjustment by businesses, again, if they think these conditions will continue. We're going to see investment. You know, one of the real problems we have now is that after the Great Recession, a lot of businesses cut back on investment. They cut back on capital spending. And so they didn't have the capacity to respond to the surge in demand we've seen more recently. Even if you go back just to the beginning

of the pandemic, a big story there is that the auto companies said, oh, well, you know, nobody's going to be buying cars for years. We don't know what's going to happen. It could be another, you know, recession, depression. So they canceled all their chip orders and they scaled back their production plans and then come to find out for once we actually handled an economic crisis well in this country and maintained people's incomes. And people actually had plenty of money to spend. In fact, they had more money to spend on cars because they weren't going out to eat or going on vacation. And the auto companies were completely flat-footed. And these – the chips and other inputs, you have to source them well in advance of producing the car.

These are very specialized. So the result of that is the scarcity of cars and a rise in price in cars. And we say, oh, my God, inflation. But we have to be clear, the reason we're having that inflation is not because people are spending too much money now. It's because these companies were too pessimistic a year or two ago. And the solution to that is not to say, oh, well, I guess we have to make their gloomy forecast a reality. The solution to that is to keep the boom going long enough that businesses can adjust their expectations, say we're going to face strong

demand, and we need to boost our capacity so we can actually produce enough cars to meet people's desire to buy cars. So moving back to the Fed for a second, a point you raised earlier, which I think is a really important one, is that the sort of unprecedented, in recent times at least, labor ferment that we're seeing right now, the unionization efforts, the demand by workers for better conditions,

is in part contingent on the economic landscape that we have, which the Fed is just, to my mind, going to destroy with these interest rate hikes. To what extent is that being factored in when business is pushing for these changes? Because as you said before, I can't imagine they're very excited about the state of the labor movement right now. And how seriously are these interest rate hikes going to have an effect, just the ones that they've put in now, not even speaking of the ones they're talking about putting in place next year?

Well, I think the silver lining, I think that the silver lining, maybe, the grounds for being a little optimistic here is that the Fed, when it comes to the real economy, when it comes to the labor market, the Fed is not as powerful as people sometimes imagine. You know, the Fed is extremely powerful when it comes to financial markets. If the Fed were to pick some financial asset in the economy, you know, whether it's, you know, mortgage-backed securities or Bitcoin or a 10-year treasury bond or whatever it is, and they say, we think the price of this thing should be X, the price of that thing is going to be X. When it comes to financial markets, they're pretty close to the god of the Old Testament.

Let there be light and there was light. But when it comes to the real world, they're not always that powerful. The ability to change the price of a financial asset actually does not give you the power to dictate hiring decisions by business or spending decisions by households. And there's a lot of tailwinds right now. And, you know, households came out of the, you know, the pandemic with very strong financial conditions in a lot of cases. A lot of people really built up their savings, paid down debt, and that creates some headwind, you know, I mean, tailwind. And businesses, you know, are seeing strong demand, which is the biggest factor

in investment. So I think, you know, if you could imagine if the Fed somehow, you know, saw the light and stopped hiking rates today, you could imagine that perhaps what they've done so far would not have much of an impact. You know, the rate hikes so far are pretty much equal to what we saw in the last tightening round, you know, 2015 to 18, roughly. And it's very hard, if you look back at the statistics on growth and employment for that period, it's very hard to see much of an impact there. So now I think you're absolutely right. Unfortunately, if they continue hiking aggressively enough, long enough, they will set off a recession, a downturn. My concern is the rapidity with which they're pursuing this.

I did a story recently on a Fed research report they put out warning not necessarily that the hikes in total are huge, but that they're pursuing it too quickly. And the idea is that there's a lag time between when the Fed introduces a rate hike and when the effects on the economy register. And it seems like they are just going boom, boom, boom, pursuing this stuff as quickly as possible. And it's like I heed the Fed's own warning.

It's kind of interesting to me that their own research is warning these things. The IMF and the World Bank put out similar warnings last week about not necessarily rate hikes in themselves, but how quickly and also the multiplier effect that all of these different central banks internationally pursuing this program at the same time can have, and one which can't be anticipated until you've sort of seen the effects down the road. Yeah, that's right. If you look at the Fed's own sort of basic macroeconomic model, they say it's about two years between a change in the federal fund rate or the policy interest rate, and it's a sort of maximum effect on GDP and employment. So the rate hikes that are happening now,

you know, might have their strongest effect in, you know, towards the end of 2024. And we really don't know what economic conditions are going to look like at that point. It's very possible that at that point, we'll be saying actually inflation is too low, or it's very possible we're saying, you know, unemployment has gone way up, and we're in a recession and we need more demand so it's it's this is one of the reasons why this is not a very good tool to try to sort of precisely steer the economy because they call it they call it what a blunt instrument yeah it's a boy it's not a scalpel it's just bring it down the sledgehammer yeah that's right and it's and it's it's also there's this big lag so you know if you're steering a big ship and you know the time between when you turn the wheel and the time

the actual vehicle turns, there's going to be a big delay. You don't want to try to make sharp turns in those circumstances. You want to be very cautious, make sure you see the results of what you've already done before you, and they are definitely not following that principle right now. I think, I mean, who knows what's going on there, but it certainly seems like they've gotten a little panicked. They've gotten spooked. You know, maybe Jay Powell, who was, you know, very much on the sort of dove side not so long ago

and was talking about the importance of pursuing full employment, maybe he feels like he's got to now be twice as tough to sort of compensate for his softness, you softness a year ago. I don't know. But you're certainly right that most people who study this stuff would say you need to move slowly because your tool does not, you don't get feedback in real time. Right. And one other thing, what would be a more constructive response to inflation? Because again and again, particularly in the sort of mainstream financial press like CNBC, you'll see them say, well, okay, so the Fed might trigger a recession, but we've got to do something about this inflation. And that, to me, strikes me as disingenuous because that's completely ignoring the potential for a fiscal response or at least pressuring for a fiscal response or maybe even a more targeted set of policies by the Fed. What would be a more sensible reaction to the inflation?

Right, well, the first thing we have to say is we have to get out of this mindset we must do something. Look, nobody wants 8% inflation. But if you try to figure out what are the costs of 8% inflation, what is the actual bad thing that happens when inflation is 8% rather than 4% or 2%? It's very, very hard. We know when inflation gets up to 50% or 100% a year, there's going to be very clear effects on growth. A lot of types of forward-looking economic activity are very hard to do. It's hard to even budget in a rational way when inflation is 50%

or 100% a year. But if we're looking at single-digit inflation, people have done an enormous number of studies on this. It's very hard to see the costs in a consistent way. So the first thing we have to do is get out of our heads that this is a crisis and we must do something. You know, it is a problem and we would like to do something, but there's other problems in the world. And it's not obvious that if we had, you know, 2% inflation and 8% unemployment, we would be better off. In fact, I would argue pretty strenuously in that scenario, we would be worse off. There has to be a weighing of costs and benefits here and not just this absolute, we must bring inflation down no matter what. Why is it seen as acceptable to trade inflation for unemployment? I mean, if I'm a worker, I'd rather have goods that are 5% or 10% more expensive and have a job. To me, not having a job seems worse than having slightly more expensive goods.

So why does that find no expression in the media ecosystem? Right, obviously it's about who's making policy. The people, you know, Larry Summers or Jason Furman or Jay Powell or all their cheerleaders, they're not the ones who are going to be losing their jobs. They're not the ones who are going to be evicted from their houses. They're not the ones whose kids are going to be going to bed hungry. So, you know, it's very easy to inflict those costs on somebody else, whereas inflation, you know, everybody is paying that. But I think there's deeper reasons, too.

It's about, you know, I think some people actually don't like a tight labor market. They like it when labor is scared and kind of compliant. But let me go back to the question you asked before, which is what else could we be doing instead? Because I think it's a really important question. And I think the way we have to answer that question is to stop talking about inflation in the abstract and talk about specific prices. Because there's a lot of different things going on behind that. So if you talk about energy prices, which is a big part of the overall picture, and I think a bigger part than the statistics tell us because that's an input into almost everything else. You know, I saw a study recently that I thought was pretty well done that argued that the overall impact of inflation on the price level is about

double the direct impact. So look, energy prices are set in global markets. There's nothing the Fed can do in terms of the U.S. economy. You know, the Fed is a little bit the central bank of the world. Maybe they can trigger a global downturn. OK, but certainly nothing that's happening like in U.S. labor markets has much to do with energy prices. What we need to do, first of all, is to is to well, we need to de-link from global energy markets, which we can do, fortunately, by doing something else we really need to do, which is move towards much more sustainable energy to the extent that we're, you know, depending on fossil fuel, I mean, wind power and solar power and so on, we're going to be less vulnerable to these swings in global fossil fuel prices. We need to, you know, address somehow the instability that drives a lot of these global swings. And in the short run, we just need to send people checks to compensate them, you know.

But that's one set of problems. Housing is a different set of problems. Housing prices are going up a lot, and that's a real source of hardship for people. But it's not a new problem. You know, if you look at the last couple of years, I was just looking at this. In Los Angeles over the last couple of years, housing rents, market rents have gone up by about 6.8 percent a year, a little under 7 percent a year. That's a lot. But if we go back to the years before the pandemic, you know, rents in LA were going up at 4.5% a year, which is also a lot. Yeah, and suddenly, yeah, suddenly it's a-

It's not a new problem. It is a longstanding problem. We need to boost housing supply. We need land use reform. Some people on the left don't want to talk about that, but we need actually to allow the market, private, for-profit developers to build more high-density housing. But we also need social housing.

We need a lot more public money, and we need rent regulation, at least in the short term. So that's a problem that is not really – it's a very important problem, but you're not really understanding it if you just stick it in a box labeled inflation. And then we have education, health care, which are areas where there's already huge government involvement. And there it's really possible to use the leverage the government already has to influence price setting, which we're getting, you know, a smidgen of, you know, in the IRA, the Inflation Reduction Act with, you know, Medicare negotiating over drug prices. But, you know, we can do a lot more using those levers. But again, it's not really an inflation problem. It is a healthcare and education prices problem. And then we have ongoing supply chain problems

for manufactured goods. And some of the solution there is we need to really invest in our port infrastructure and our transportation infrastructure and maybe think about onsourcing some of these key, I mean, on-shoring some of these key components that we're dependent on imports for. But also, frankly, that's an area where I think there is an argument for letting the market work. You know, the chip manufacturers are not holding back supply to boost prices. They would like to be selling more chips. The auto manufacturers would like

to be selling more cars. And if we give them time and don't crush demand with excessive interest rate hikes, they will figure out how to solve these problems. So I think you really have to get away from the notion that there's a one-size-fits-all solution to rising prices. Yeah, I think that's a really important point because when you see the sort of discourse on cable news about these things, it tends to be an across-the-board treatment of things, whether it's inflation or labor conditions, because there are subsets within, as you said, there's different price rates for different things, and even within the labor market. If you look at, say, the data suggests that people in the hospitality industry, the lower working class, are doing a lot better than other segments.

And so to make these sweeping proclamations about inflation and workers without talking about, well, who do you mean? What do you mean? Seems not just irresponsible, but sort of disingenuous because it feels as though they're trying to trigger a sort of panic and not that we don't have problems that we need to solve, but trying to make people think that they're all in precisely the same boat, as you said, as Jason Furman and as all these other, you know, multimillion dollar economists. Yeah. Whose interests couldn't be any more different than anyone else's acting like, oh, we're all in this. You know, we've got to tighten our belts and, you know, we're going to have to accept, you know, a lower living standard.

It's like, well, that's not going to affect you at all, you know? And I wish they would be a little bit more candid about these things. Yeah, you're right. I mean, this has been a great labor market for people who normally do not experience a great labor market, for people with low wages, less education, you know, non-white people, young people, you know, non-white people, young people. Those are the people who are really benefiting from the current tight labor market. And I think we should be more candid about when you say, those are the people I want to bear the costs for my belief that inflation ought to be lower. I think there's not a lot of honesty about that right now.

All right, Professor. I'm very grateful for your joining me and for sharing your insights. Thank you for having me. All right, thanks, everyone, for joining us as well. This is another edition of Breaking Points Intercept Edition. I'm Matt Stoller, author of Monopoly-focused newsletter, Big, and an antitrust policy analyst. I have a great segment for you today on this big breakdown. So it's kind

of like, normally I try to make a big sort of a big argument about what's going on in the economy, but today's just kind of like a fun little segment about Amazon. And it's less about law and more about the culture of modern commerce and law. Okay, so take it from the top. A lot of the big executives at Amazon have left since Jeff Bezos, who was the founder, stepped down as CEO of Amazon last year. So their top lobbyist, Jay Carney, the head of their retail division, Dave Clark, Dave Bozeman, who's the vice president of Amazon Transportation Services, and so on and so forth. So it's like a lot of the top guys and then sort of their subordinates have gone to other places because Amazon's a giant company that's maybe not as fun to be at anymore. Now, it's always interesting to keep an eye on Amazon's internal personnel moves because they speak to the general culture of what is the pace-setting firm in American retail and commerce. Like, everybody copies Amazon. So, for example,

when Jake Harney joined Amazon in 2015 after serving as White House press secretary, it spoke to the close relationship that big tech monopolies had with the Obama administration and Democrats generally. It's not surprising that Bezos has subsequently given $100 million to Obama's presidential library. That relationship has turned around, but at the time, that was kind of what Jay Carney's move to Amazon said. Now, this latest slate of departures, of course, means that there will also be promotions because people have to take the place of those who are leaving. And a contact pointed out to me that last week, Amazon shuffled its management teams across its warehouse divisions. Actually, it was two weeks ago.

And it revealed that Amazon had promoted the company's head of loss prevention in the Americas, loss prevention being stopping people from stealing stuff. Dana Howard is her name. She was promoted to be the head of training for all warehouse workers in North America. Now, what's interesting about Howard is that she's a former analyst at a private prison company. That's where she kind of got her start as a career. Now, nothing wrong with hiring her, of course, for many different security positions. But the thing is that she's not in security anymore. She's running training for just warehouse workers, generally. Now,

following Howard's career path is interesting for what it says about Amazon. So, she started her career at the private prison giant known as the Correction Corporations of America. That has since been renamed CoreCivic because it had such a lovely brand, right? So some of the fun controversies involved letting private gangs run an Indiana prison to save costs, stock manipulation, prisoners dying, all sorts of like fun stuff like that. Now at CCA, according to her LinkedIn page, Howard, quote, revamped inmate admission processes and revised all processing documentation, which resulted in a 20% reduction in inmate processing time and a reduced error rate. So basically Howard was apparently good at designing systems to herd prisoners. Naturally, now she's at Amazon.

Okay, so at Amazon, she came to head their global security group and then their loss prevention team, which is to say that she is running their efforts to stop employees and contractors and so on and so forth from taking stuff, from stealing. Now, all of this is reasonable. You got to do it. It's distasteful.

But theft in retail, especially at a giant firm like Amazon, is a problem. And having internal security is clearly a need for a company like that. But what is surprising is that she is now running their learning and development team, which is Amazon's internal training program for all warehouse workers. And there's nothing illegal about any of this, but Howard's career path does give us some perspective on how Amazon executives understand those who basically didn't go to college and what they are good for. It's a real class split. Now, I think the last point and kind of the broad point of the segment is that Howard also ran – I watched a bunch of videos about what Howard was involved in and how Amazon does security. And she ran what are called lean-in circles for women at Amazon, as this video shows. Now, lean-in named for, you know,

Sheryl Sandberg's kind of brand of feminism. But, you know, it's also sort of a tell on kind of diversity initiatives among elites in general. So Amazon spends a lot of money emphasizing its various diversity initiatives. And of course, there's nothing wrong with diversity. Generally speaking, I admire it. I mean, I am a left-wing Democrat. And I think that diversity is really critical for, you know, tolerating it and encouraging it and fostering it. This is really important for America, for making it a place that all of us can work in, that all of us can feel comfortable in. It's always been a strength of our country.

But there's also something really cynical happening in corporate America. And Howard is a good example and illustration of the contradiction. Nothing personal about her. I'm sure she's very good at her job. But what she does and how she thinks about the world and how Amazon thinks about the world is a good illustration of a contradiction. So you have someone who started her career as a private jailer and then moved to stopping theft and then kept that by training warehouse workers in general.

And of course as we've seen, Amazon focuses aggressively on ensuring that those workers can't unionize. So this dynamic says a lot about how Amazon thinks about power in the workplace, who has it and who doesn't. And justice, at least for people like Howard, for the top tier at Amazon, has nothing to do with the warehouse workers being trained by someone like Howard, but has to do whether the jailers themselves are sufficiently diverse. It's diversity for elites in a system where the sort of the rabble have no power. Now, to pull this away from Howard and Amazon for a second, we see this kind of thing all over the place. Like, I track antitrust, and I see it everywhere. So here is a big

corporate law firm, Latham & Watkins, bragging about how an quote-unquote all-woman team helped a poultry firm get off scot-free from a price-fixing charge from the government. So making your chicken prices higher illegally by colluding with competitors. They helped, you know, DOJ brought up criminal case, and it was an all-woman team, celebrate the all-woman team, who helped those poultry executives get off scot-free for allegedly stealing from you and me. Now, like, they deserve a defense, but that is a very interesting way of portraying the defense. Or in a recent merger trial, a corporate executive of a large book publishing house that was trying to be acquired by another large book publishing house, a very consolidated industry that controls free expression. So he said that referring to the five

dominant firms as the big five, which is kind of what everybody in the industry calls it, he was trying to push back on the idea they had market power. And he said, oh, well, just calling us the big five is parochial and ethnocentric, right? Okay, so that's another example of sort of the weaponization of what is well-meaning diversity rhetoric for capital. Okay, so I'm a left-wing populist, and I'm not arguing against diversity. There's obvious racial and gender disparities in America. But diversifying the elites without changing the ultimate power structure is not about redressing those. It's about creating an aristocracy. It lets our elites tell themselves a story in which

they are the heroes, even as they act as jailers or bullies or union busters. And this messed up vision of justice even gets into policy discourse. So here's a clip of a hearing last week of two of corporate power's key foes in government. So this is left-wing antitrust enforcer, Lena Kahn, who runs the Federal Trade Commission, and right-wing senator, Josh Hawley, who is an anti-monopolist. Now, they are doing something very unusual, which is agreeing across party linesopolist. Now, they are doing something very unusual, which is agreeing across party lines that diversity and environmental, social, and corporate governance choices do not justify the consolidation of corporate power. Now, let's take a look.

There have been reports that your office has conditioned merger approval, if only implicitly, on whether companies have adopted what I would characterize as leftist liberal environmental, social, and governance policies, ESG policies. In other words, the claim is that these companies are more likely to have their merger requests blocked if they aren't pushing things like, say, critical race theory in the workforce. Can you address that? That's incorrect. Candidly, something that we do see sometimes is firms come to us and say, hey, we're proposing this merger. We know you'll probably identify it as unlawful, but we'll make all of these ESG commitments and you should take those as a reason to bless the

merger. I personally never find that compelling. I don't think those types of ESG commitments or anything in that vein can ever rescue an illegal deal. Okay. And you would not in any way condition merger approval on the adoption of a particular set of ESG policies, just to be clear. That's not happening, wouldn't happen. Absolutely not. I think, in fact, the merger laws prohibit us from doing that. Depending on who you are, both of these figures are pretty polarizing. A lot of people in sort of the business world don't like Lena Kahn. Josh Hawley, I don't need to go into. He is a very polarizing figure. But put feelings about those two aside, right? And just think about the substance. Look at the substance here. There are a number of interesting things about this exchange. First, a Republican, a conservative

right-wing Republican, and a populist Democrat are agreeing that concentrated corporate power is dangerous. So that's one thing. Two, Khan is saying that corporations regularly offer environmental, social, and corporate governance commitments in the hopes that they can get permission to engage in unlawful mergers to consolidate power. So this strategy clearly works on regulators, or they wouldn't offer it. It doesn't work on Khan, but it works in probably in other areas, and it has worked in the past. But third, and I think this is most important, the game, I think, is up. Most voters were never really fooled by this garbage. They think about power. They don't think about, you know, this sort of fantasy among elites. In fact, I think elites,

we were fooling ourselves. It's why Amazon trains its warehouse workers as potential thieves. But anger at the great imbalances of political power embodied by firms like Amazon is actually leading to political changes. So Chris Smalls, for example, helped unionize a warehouse in Long Island, as you guys know. And there's a lot of unionization activity all over the economy. And I don't mean to say that unionization is the only thing, only way that this reaction is happening. It's just one way it's happening. It's happening in lots of different ways, but that's a very obvious example where it's happening in Amazon. But also, and I'm going to oversimplify for a second, Lena Kahn, who started her sort of scholarship career and sort of rocketed to fame in 2017 with a law review article about Amazon,

is now as close as you can come to being Amazon's regulator. And hopefully, she'll set in motion the lawsuits to break up or constrain the company. There are reasons to think that that's already happening. There are reasons to think that it won't happen. But that's the kind of hope that people like me have for somebody like Khan. And frankly, these kinds of changes, these redresses of imbalances of power are long overdue. So thanks for watching this big breakdown on the Breaking Points channel. And if you'd like to know more about big business and how our economy really works, how our policymakers really think and operate, you can sign up below for my market

power focus newsletter, Big, in the description. Thanks and have a good one. This is an iHeart podcast.