Pivot - SoftBank's Investment, ABC's Trump Settlement, and Guest Co-Host Paul Krugman

Episode Date: December 17, 2024

Kara is joined by Nobel Prize-winning economist, and recently retired New York Times columnist, Paul Krugman. They discuss SoftBank's $100 billion investment in U.S. projects, ABC News settling with Donald Trump, and TikTok's latest legal setback. Then, OpenAI fires back at Elon Musk, and Apple's foldable future. Plus, Paul gets a little wonky, and weighs in on crypto's actual value, and what Trump doesn't understand about tariffs. Check out Paul's Substack: Krugman Wonks Out. Follow us on Instagram and Threads at @pivotpodcastofficial. Follow us on Bluesky at @pivotpod.bsky.social. Follow us on TikTok at @pivotpodcast. Send us your questions by calling us at 855-51-PIVOT, or at nymag.com/pivot. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher. Scott is off today. So to fill his shoes, his tiny shoes, I brought in someone with big shoes. I brought in a Nobel Prize winner and a famed economist Paul Krugman who recently announced he was going off on his own from the New York

Times after a long and illustrious career there. Hi Paul, how you doing? I'm good. Can you tell us a little bit about what you're doing? Well basically at the moment I'm trying to build an audience for a sub stack. Okay. And yeah, one of the things that I couldn't do at the times was, you know, have an independent newsletter. I used to have an independent blog, but they eliminated those a long time ago. And so now I'm off there able to weigh in on whatever seems appropriate and even have charts and funny pictures and whatever else.

So that's what I'm doing for now. Whatever you feel like. So you were 25 years a columnist there, correct? Yeah. How do you assess those years? You're still writing your sub stack by the way, I love the name is, Krogman wonks out. You said it's going to be wonkier and snarkier.

You've got music recommendations. Everybody wants through the world. You had Tears for Fears this week. So I'm going to ask you about those in a second, but about the specific pieces that you've written, because I'm really interested in them. But what are you going to do different? Talk about your 25 years at The Times just briefly.

I mean, what a run you've had. Yeah, what a strange thing. I mean, I was hired at the beginning of 2000. Literally, Halloranians who recruited me at the time said, we have five guys writing about the Middle East and nobody writing about the economy, and the Middle East just isn't interesting anymore, which turned out to be a pretty bad call,

but it was also the economy. And it was just a very different time. And we were all having fun with dot coms and stuff looked silly, but interesting. And then, you know, it turned into a much grimmer world. But you know, there was a period, the best years of my life were the worst years for the world economy, which was the aftermath of the financial crisis when there was a perfect convergence between my job as a journalist and my own academic research.

Not only was I an economist, but I had literally spent a lot of time on the Asian financial crisis in the 90s and had warned that something like that could happen here and it did. So when you decided to break it, why now? Was it, you said 25 years, you know, I quit my conference 20 years. I was like, I did a great job for 20 years. I want to do something else.

Oh, yeah, there's a lot of stuff I think I probably shouldn't talk about. Okay. But the one thing was exactly to be able to do this. I mean, there was no, the Times had actually canceled my newsletter, even at the Times. And look, I'm still a wonk. I want to do stuff where I can have lots of charts, maybe even an occasional equation, and also the flow. Rather weirdly, I felt like I wanted to write more than I was able to at the time,

because I was limited to two columns a week. There's so much going on right now. I've got subjects and topics stacked up in a holding pattern waiting for a chance to write about them. Right. Isn't it cool? It is cool. I can do whatever I want. I always used to say,

someone asked me why I leave various places, not just the times because I also left the times too, which was, I don't want mama telling me what to do. I don't know what else to say. Nothing's wrong with mama, but I was like, if I want to do this today, I want to do that. It's very creative. I think someone like you will find it really

creative to be able to wake up every morning and just decide what you want to do, which is a very different thing. Yeah. Among other things, it gives me a chance to be silly. Yeah. Silly does not pop to mind when I think of Paul Krugman. Well, but that is, I was able to start. The most recent, just before we recorded this, with Mike Myers as Dr. Evil saying, $100 million, you know, I'm not sure

that that would have been beneath the dignity of the times, but not beneath mine. No beneath your dignity anymore. No dignity, Paul. No dignity at all. No dignity, but first let's talk about your talk about one of your latest posts on Substack. Oh, by the way, you're not supposed to say you're on Substack since the Substack. You're supposed to just say it's Paul. In my own newsletter. Yeah, you're wonky, Paul. But crypto is for criming. I love this piece. Talk about this one,

and you've talked about whether it, then the next one was about whether Trump is ignorant on trade and whether it matters. So talk about those two, those two that you just wrote. So crypto has been, you know, I've been following the crypto thing. I've actually made money in crypto by going to conferences as a paid speaker as a designated enemy. I'm there for people to yell at and they pay me a fee in actual money. But it's a remarkable phenomenon and a lot of people, what makes it remarkable aside

from the fact that they are credible price gains, but those of us who think we know something about monetary economics have asked, does this thing look like money? Does it fulfill at all the functions it's supposed to? Not just talking about academics, but also financial industry types. We have, I'm part of various groups that have informal meetings. I know some of them we've actually invited articulate crypto people. Question is always, what purpose does this serve? What can

you do with crypto that you can't do more cheaply and more easily with conventional stuff? Bitcoin and Venmo are roughly contemporaneous in terms of their creation and And then Mo is clearly useful and everybody uses it. Why would you want to go through all the summer salts and so on? And have never gotten an answer in terms of legitimate uses. Yet it's on the upswing, right? It's $107,000. It's crazy high, but still not in use for anything legal. That's the most amazing thing, even where they've tried.

I mean, El Salvador tried to make Bitcoin legal tender and actually subsidize people's crypto wallets on their phones and they still don't use it because it's awkward. It doesn't really, dollar linked digital payments are just a much easier tool. So, but it just occurred to me possible after a few stories, in particular after seeing some of the latest whining from Elon Musk, that the real trick here is that we were asking the wrong question.

We're asking what legitimate use case is there for this? And there still is none. Nobody has actually come up with one. But illegitimate use cases are a pretty big deal. And if you actually know anything about currency, you know that actually crime is big business. The vast bulk of the dollars in circulation by value are $100 bills.

And nobody uses $100 bills. Most people never see one. You can't actually go into a store with a $100 bill. But there's trillions of dollars. There's actually about $6,000, $6,200 bills in circulation for every man, woman, and child in the United States. Most of them, we think, and this is circulation for every man, woman, and child in the United States.

Most of them, we think, and this is all inferential, are outside the country, but we also are reasonably sure, although this is inherently impossible to prove, that they're mostly for illegal purposes. So when they say to you, well, it's up in a hundred and some, Trump's going to create a Bitcoin currency for everybody. It's still going up like crazy and that's what they'll point to. Krugman's an idiot, like Kara's an idiot. Well, I mean, we've been through that before. Now, this is a longer run than most,

but I've been around long enough to remember the dot-com bubble. When lots of people thought, it'd be just stupid for thinking that this is a bubble. Um, I remember the housing bubble where people, um, got extremely furious if you said, you know, the housing prices, uh, circa 2006 did not make sense. So, you know, it's the old line. The market can, uh, the market can stay irrational longer than you can stay solvent. Plus, there's also, and this is something I did write about in my last newsletter,

there's a strong element of kind of, it's not just speculation, there's gambling. We asked who, a lot of crypto is clearly being used by Putin and by drug lords, but a lot of small players buying crypto are basically young men. And at this, you know, contemporaneous with this big rise in crypto prices has been an explosion of sports gambling, also meme stocks stocks like Game Stock is also... So, it is probably a general phenomenon of people... They probably would say, oh, I'm being a forward looking investor, but the psychology is really that of gambling or... And so, put all these things together, it's still kind of astonishing that it's gone this high, but then the national

these things together, it's still kind of astonishing that it's gone this high. But then the national Bitcoin reserve amounts to a huge government bailout, which is, you know, for a libertarian invention, it's- Very fair point. That is actually, it is. They, well, they talk about free speech and then they try to censor everybody. But that's another issue. So one of the other ones you wrote about today was about trade as we tape. Two things, one is your piece about trade and whether Trump knows what he's doing around

tariffs, which you basically conclude no. But then at the same time, as we tape this news just broke, the Trump and SoftBank CEO Masayoshi Son will announce a $100 billion investment in the US over the next four years, which they say will create 100,000 jobs based on AI and related infrastructure. It's very thin on information. As you know, Masayoshi San has had his share of failures and wins. He's sort of one of these, you know, there's a book coming out about him basically, you know, that he just goes up and down. Like it's just, he's really quite a risk taker.

So talk a little bit about this idea of Trump pushing the trade issues at the same time saying, I'm going to bring, I'm going to give free anyone who invest more than a billion dollars in this country is going to get like right through the regulatory ticket without a problem. Yeah. So first of all, you know, the fact that somebody's bringing money to the United States, you know, the regulations are there for a reason. Now, if you want to fix the regulations, fine, but to say, well, you know, bring a billion dollars to the US, it'll, and I'm not sure what that we won't we won't care if you're polluting the air.

We won't care if you're poisoning the water. But what's really funny for somebody certainly with my background is what's really funny for somebody certainly with my background is there's a I'm trying to figure out if there's a way to say this and that it doesn't totally put people off but you know it is a fact it's an accounting identity that the trade balance plus net capital flows into the United States equals zero the balance of payments always balances. If we can persuade foreigners to invest more in the United States, then arithmetic says that we have to have a bigger trade deficit. You have Trump on the one hand saying,

we're subsidizing Canada and Mexico because we run trade deficits with them, and the other hand saying, it's great I'm bringing in all this foreign money, which guarantees one way or another, an even bigger trade deficit. And I have no question in my mind that he has no idea that that's how it works. People say they're going to try to stop him in this or move him off him, but they don't seem to be able to. There's a lot of people saying he's going to do a more lukewarm version of it that has

a lot of jazz hands and not a lot of push behind it, and that you were noting that other countries have a lot of things at their disposal to make it hurt here. I have no way of reading Trump's mind, but lots of stuff he makes. On crypto, he was, it's total nonsense. Oh, and also, I'm going to throw hundreds of billions of taxpayer money at it. So he changes his minds on lots of things. But tariffs have been an obsession of his for a very, very long time, long before he really entered politics. Trade deficits are bad as a long obsession of his. So I would be surprised if he's willing to water it down too much.

But if he doesn't, then he has a very 19th century, if you like view, which makes sense. He loves William McKinley, but of trade as countries trade, food and manufactured goods for each other. And that's kind of the end of the story. That's not the world we live in. Now, we live in a world of these highly interdependent economies as supply chains. Trump thinks that because we run a trade deficit, because we buy more from other

countries than they buy from us, that we have all the leverage. But the fact of the matter is that some of the most effective forms of retaliation that other countries can do are not levying tariffs on US exports, but putting taxes or restrictions on things that we import. And I thought it was striking to see that even the Canadians are talking about putting export taxes on oil to get the Canadians mad and seeking revenge is take special talent. But the fact of the matter is that we could be very much in a world of mutual punishment over trade, escalating trade war. And the trade war will not look the way I think Trump imagines. He imagines the US puts on tariffs,

everybody says, oh my God, we need access to the US market. What can we do? They surrender, although it's not even clear what they surrender, because I'm not sure he has coherent demands. But what would actually happen is a mixture of retaliatory tariffs but also retaliatory export restrictions and just a big global

economic mess. Is there any way that what he's saying is that he's going to, he sort of sees it as a, as a, as a boxing match or something that it seems like that. That's right. He thinks of it as a zero sum, uh, that basically if we sell more to foreigners and then they buy from us, then we buy from them, then we win and if we buy more than we sell, then we lose and that's never made any sense as a story and it's pretty clear. I mean, I have to

be even I was shocked when he said I'm gonna have 25% tariffs on Canada and Mexico. I mean, if you know anything about modern manufacturing, you know, there is no U.S. manufacturing sector. There's a North American manufacturing complex in which things like auto parts may cross the border six or eight times in the course of putting a car together. So that's completely crazy, but he doesn't know that. And who's going to tell him? No, he lives back in the McKinley Times. You're absolutely right where we used to have all these big factories. Speaking of retaliatory, OpenAI has fired back in its ongoing lawsuit with co-founder Elon Musk who had left the company in a blog post.

OpenAI said, you can't sue your way to AGI and said Musk wanted to transform the company into a for-profit six years ago. The post also claims Musk demanded majority equity, which I think he said he had. And he said he needed $80 billion to, he needed that because he needed $80 billion to build a city on Mars. Now, Metta, of course, no surprise, is siding with Musk. The company is urging California's AG to block OpenAI's planned conversion to a for-profit company. They're trying to slow this company down, which doesn't seem to be slowing. Talk to me about this because one of the things that's really astonishing, and you were talking about this, is people that talk about competition really just want to stop

each other using all kinds of regulatory or legal means. Oh, yeah. I mean, this is, we have a remarkably, the tech sector is remarkably oligarchic. There are a handful of players that have strong market positions. It's called a brolegarch. Well, I like the brolegarch too, and that's good. But they do their best to prevent competition. The nature to some extent of tech is that once you've committed to a platform,

it's very hard to get out of it, which gives them a lot. Again, something I'm sure I would never be able to write for the Times, but I'm a big fan of Corey Dockers' instantification. Instantification. You can do that. You build a platform that could get a lot of people locked in through network externalities, and then degrade the experience step-by-step to extract the maximum amount of money from it. So these guys, and of course,

they're using the courts as well to try and prevent competition. So but really, is anybody surprised? What does that look like? Do you think that it'll work or when people do this, what stage are we at with tech when they're doing this? Because this is obviously the next great race is to dominate AI, and open AI is way ahead by a lot compared to even despite the money being spent. Thirty billion dollars at Meadow,

80 billion dollars at I think Microsoft, and 50 at Google. These are, and of course, whatever Elon's spending at Groa, $80 billion at, I think, Microsoft, and $50 billion at Google. These are, and of course, whatever Elon's spending at Grok in trying to keep up by both, you know, these kind of things or any other means he can to get ahead. Yeah. I mean, I don't know where we are on this. First of all, the ultimate value of AI is very much up in the air. We still don't know what it's worth. I mean, I actually had someone who works with us on the text. Now I have a textbook, but he also teaches students and they're all totally into AI. And he said one of my sub stack posts into chat GPT for a summary.

And my God, it bore no resemblance at all to what I said and it's fantasized it somehow had me talking about Brexit which wasn't in there at all so I mean that's just an example and they say there are some things that is really useful for but we don't know there's a real question whether the amount of money that's being thrown at it will ever make sense right it's a little like the beginning of the internet, may I point out? Remember, it was like we didn't know and then of course, it would have been good to have been there with the right players.

With the right players, although it's a little bit, what we used to call the Sierra Madre effect where somebody said, the reason gold costs so much because of all the people who went out looking for it and didn't find it. Tech is a lot like that. It's the but yeah, and the question is, are we it turns out that a lot of established tech has turned into kind of, you know, one day old days we were to call natural monopolies, it settles into a handful of big players and that happens really fast actually with internet-based stuff. I suspect it may happen with AI. Now

whether it's, I mean, open AI does look like it's got a big lead but maybe that's, maybe there's still room for for somebody to jostle the side but I very much doubt that we're gonna to have 10 years from now, multiple competing LLMs. It's commodification of them. That seems unlikely. What's more likely is that we'll have a network effect where everybody is using something.

I mean, the general LLMs, the big ones, that they can't all be competing at once. What's really interesting is OpenAI could have become like Netscape, if you remember. Netscape had the far and away, or maybe it's Google, right? That's the issue is which one it, which one. That's right. And we have no idea really. Right. Or what it's going to be. And I think further we can say that nobody has any idea. We just don't know how the place is. What do you say to students who are like, I got to get into AI? How do you advise them? You know, just generally, you know, how about learning a lot of basics, What do you say to students who are like, I got to get into AI? How do you advise them?

Just generally, how about learning a lot of basics, particularly grad students, actually all students, they want to learn a lot of tools for analysis. And if you start using AI for every question, first of all, you're not going to get those other skills. And secondly, apparently again, there are some things it does, but on anything I happen to work on, the Mochao is an effect that it fabulates. It just makes up stuff.

I think it's improved. Having used it since the beginning, it's certainly improved and you can see how it's doing that, but you're right. It's hard to figure out what the best use cases are. And eventually someone will. Who would have thought of Uber back when the iPhone was created or even before that? It's actually, it was funny.

I was head of the Kirk because they already had digital ride hailing for taxis in the UK years before they came to the US. Oh, yeah. So I was spending time over there and I got accustomed to it. But it's true. Look, it's something that's actually is useful to me as, and it's fundamentally the same kind of big data thing is translation. I remember when translation or, or, or speech recognition, um, were both,

you know, total jokes and, uh, and are now, you know, not, they're completely usable now. Have you looked at their Sora? I haven't looked at it. Yeah, a lot of what I'm getting a lot recently is a bunch of CEOs going, I'm going from 6,000 engineers to 2,000. That's my goal. Like that's, they're all they're looking for is efficiencies. And I think that's, that's where I see a lot of the opportunity efficiency. By the way, in terms of giving students advice, it's not very

long ago, like maybe two years ago, that you would have been telling your students learn to code. Right. And that turns out that's exactly one of the jobs that Learn to do plumbing. Plumbing is a big plumbing. It's gonna be a long time before we have robot plumbers. No, yeah, there's not gonna be digital plumbing anytime soon. All right, Paul, let's go on a quick break. We come back, ABC settles with Trump and Apple's votable vision for the future. Fox Creative.

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Paul, we're back with more news to discuss. Let's start with TikTok is facing it. And I want to get into China because it's looking like you've written extensively about China over the years. But let me go through a couple of things. They're facing this legal setback after DC Court of Appeals rejected a temporary freeze on the upcoming law requiring the parent company ByteDance to divest or face a ban. TikTok is expected to ask the Supreme Court to take the case, though it's unclear if anything will happen before the law goes into effect next month, which means they've got to act. The leaders of the House China Committee sent letters to Google and Apple on Friday telling them to be ready to remove TikTok from their app stores on January 19th, a day before Donald Trump goes into office. Donald Trump was against TikTok before he was for it, especially because one of his big funders, Jeff Yass, was a bite dance for people who don't know, is owned by a lot of big US billionaires, just so you know.

It's running out of time and options. And let me just say, you've written extensively about China. What you see is their move because China's economy continues to struggle. It's in a period of deflation with prices falling in six consecutive quarters. And of course, these Trump terrorists we just discussed. So what do you see as their move at repercussions here? I love your thought. Do you want to go backwards any way you want to go through it? Yeah, on TikTok, you know, that is one social media platform that I have never

visited in my life and don't really expect to. In many ways, the social media are media. We wouldn't want a largely product-controlled entity to own the New York Times. We wouldn't want to own one of our major cable news networks. And the same logic really does apply to social media. So I'm fine with the idea that we really need to force divestiture. Now, I mean, you could say the general principle is you shouldn't have people who are fundamentally hostile to American values owning social media platforms. And so, uh, of course, Elon Musk did divest Twitter, but anyway, the, uh, the China story, let me talk about stuff I actually know something about China. It's a really interesting case because China, uh, has moved very quickly, uh,

from incredible, roaring economic success story towards something that looks a lot like Japan circa 1990. And of course, Japan was a huge... I'm old enough to remember when airport stores were full of books with samurai warriors on their covers promising to teach you the secrets of Japanese management. But what's happened with China is we go to the fundamentals. Their working age population has been declining now for almost a decade. So they're in a kind of a real Japanese style demographic slowdown. It's interesting, they are still doing really impressive stuff on some advanced technologies, but as best we can measure the overall technological level of the economy. You know what economic economics jargon calls total factor productivity. But anyway, the overall efficiency of the Chinese economy is not growing very fast.

The big convergence on Western economies that they were experiencing in the 80s, 90s, even the first decade of the 21st century appears to have largely stalled, which means that China has gone from an economy that's capable of doing 8% growth not that long ago to something where 3% or 4% would be really a lot. But their whole economy is set up to be an 8% growth economy. They have very, very low consumption relative to income. The government kind of suppresses distribution of income that comes from production to the public as a complicated story, but basically lots of

their growth does not filter down to consumers. And they maintain investment of 40% of GDP, which is like triple what we do. And there's no place for that money to go. So they were able to mask it for about a decade with a gigantic housing bubble, with all those ghost cities and all of that. But they run out of room. They can't do that really anymore. But they seem to be weirdly incapable of accepting that they need to kind of grow up and accept that they are going

to be a middle income, moderate growth economy from here on in. Right. So what do they do with these bands coming with this TikTok thing with the tariffs? That just adds to the pressure because one way that you contemporarily try to deal with that kind of stagnation is to run, you have this productive capacity and not enough domestic demands, you want to export stuff. I'm not sure exactly how TikTok plays into that, but the reality is the world is not going to accept all those exports.

The world is not going to see BYD destroy their auto industry. BYD for people who don't know is their car, which is quite a good car, but they're not going to let it in this country. There's no way. Yeah, it's just not. I mean, even if you can make an intellectual argument that we should accept it, it's not going to happen. I used to spend a lot of time in and studying Japan.

So I was one of the relative handful of Western economists who looked at Japan's problems in the 90s and instead of saying, oh, those stupid Japanese said, gee, this is a big advanced country with policymakers who are not ideal but are not idiots. If this could happen to them, it could happen to us. And sure enough, it did. But a lot of us were very, very critical of the Japanese for not being more forceful. And I've often argued that those of us who were critical, was a group that included among other people, Ben Bernanke, that we should all go to Tokyo and apologize to the emperor because they

actually did a better job. First of all, they did a better job of dealing with their financial crisis than we did, but also that they in the end handled it pretty gracefully. You know, Japan is no longer going to rule the world, but they never had mass unemployment, they haven't had mass social unrest. There's every indication that the Chinese are not managing that kind of graceful downshifting in their growth rate. And so that could be really ugly. How can they with the population, Would they've got the expectations?

Oh, but they know, but they just need to let more income get through to consumers. They need to shift from 40% of GDP invested to 25 and then 20%, which means increasing the consumption share by the same amount. And now it's true they took the Japanese about 15 years to make that kind of shift and the Chinese are have delayed this so long that it's a much more violent thing but still they don't have a choice. Basically live it up. Yeah. What will the tariffs do if these tariffs go into place at one point is a hundred percent I guess on those cars? Yeah well and it's I mean during the campaign Trump was saying 60% on China, that may now

escalate and yeah, this is rough. I mean, particularly you could say, well, all right, they can just export to someplace else, but where a fair bit of stuff was probably in effect, you know, rerouted through Vietnam, but that won't be that will be cracked down on. So is Trump putting the squeeze on them a good thing for the United States? No, cause we, you know, we do not want the world's, uh, biggest country, um, by some measure of the world's biggest economy, we do not want to see them descend into chaos and other things.

You know, uh, autocracies that are failing at economic management have this habit of trying to distract people by launching wars. I found myself thinking about the RGT, junta on the Falkland Islands. I've been around for a long time here. Yeah, so Taiwan's going to be a little different than the Falkland Islands, I suspect. Yeah, a lot tougher, although that didn't work out too well for us. But that would be a disaster for all of us. Right, right, because of our chips and everything else.

Speaking of that, I'm just curious, with Apple, Apple is looking to kickstart sales growth with a series of major design changes. They have a big market in China, by the way. They would love to see China put more money in the hands of consumers, because that's one of their... Same thing with Elon Musk, by the way, with Tesla. The company plans to introduce an iPhone next year that will be thinner and cheaper than current models according to the Wall Street Journal.

Apple is working on two foldable devices. Foldable devices are very hot now. They're going to do a smaller one and a giant iPad-like one. They're pushing for quick release. Now, you've been skeptical and somewhat contrarian about tech product hype in the past. Talk a little bit about that because iPhone sales, which account for about half of Apple's overall revenue, are in the slump with fiscal 2024 revenue growing less than 1%.

They were on a bit of a tear in the last few years, but people don't upgrade anymore. And you talked about this. So talk a little bit about it. And China is a critical part of their business, right? Where they make stuff and they also sell stuff. Yeah. So a trade war would be bad for just about everybody, but it would be especially bad for Apple. And Tesla.

And Tesla. But one of the things that is extremely makes me very unpopular when I do talk to tech types is saying that you know for practical purposes in terms of the lived experience technology has really slowed down a lot I remember when people were enormously excited at the latest iPhone or you know I remember when smartphones first became available and now it's okay it's going to be thinner and foldable. Well, that's fine. I had nothing against that in fact, I'm a I'm pretty much in the Apple ecosystem in terms of my own phone and computing and all of that, but the but it's not

World changing by a long shot and So yeah, they're they're gonna And so yeah, they're going to, in a way, Apple is kind of in the position that China is in, a very high growth past and a kind of, if they do it right, an okay but not spectacular future. Could they fix that by some spectac- you know, Jobs did that many times.

He was in one business and then suddenly the iPhone, then suddenly the blank. Yeah, maybe there's something out there that will do it, although at this point everybody's into AI as the, and that's where all this tension comes from. But hard to know. I mean, new technologies are by their nature really hard to predict what might be coming down the pike, what might be transformational. But as they are, Stan, now it's hard to see it. Like China, Apple's like China. That's a really interesting insight that they've got to sort of manage their decline.

That's on my, not even decline, it's just downshifting. It's sort of you've been driving along the highway at 70 miles an hour and now you're on local streets where you really shouldn't be going above 30. And how do you, how do you, can you make the adjustment to driving safely under these conditions? No Paul, foldable phones! Foldable phones. Will you get one? I wait until the last, you know, I only have my current phone because my last one was viciously attacked by a tile floor. So-

Okay. I'm getting one right away. You know that. I'm getting a phone. Yeah, well, different business. I have wanted the photo book for a long time. I've been bugging them about it. When I saw Cook recently, I was like, you know, the app economy is over.

You get that, right? Because it's all going to be... And by the way, they're getting, to be fair, they're getting very good reviews for their integration of chat GPT into the iPhone right now. So some of the things will be services, which have been growing like crazy at Apple comparatively. I've actually invested in one of those poor pay search engines that doesn't do AI. Oh, okay. Because I, anything I actually really need to research.

Yeah. I have a much better idea than chat GPT of what's actually a relevant result. For now, Paul. It just gets in the way. For now. No, eventually. I'm teasing. Lots of things can be replaced and then me as well. But the-

Would you put all your stuff up and become, I was talking to Martha Stewart, she was going to do Martha AI. She has so much content she's created and has been affiliated with. She was going to load it all up and find out what happens. Let's just say watch this space. Paul Krugman is AI. Yeah. Robot me.

Robot you. I love when you keep saying watch this space. I love it's such a- Well, firstly, I'm talking with various people, there are various things and I also have some constraints because, you know, I'm- and just in general, I'm still on the payroll at the times through the end of this month and also I don't want to be one of those people who trashes their place on the way out. Yeah.

Yeah, that's for later. But, no, I'm kidding. But you're going to do merch, obviously, Paul Krugman merch. There's going to be t-shirts- Well, let's try. I don't know. I haven't quite figured that's for later. But no, I'm kidding. But you're going to do merch, obviously, Paul Krugman merch. There's going to be t-shirts. Well, let's try. I don't know. I haven't quite figured that one out yet. Skims. You're going to do a deal with Kim Kardashian for skims or something like that? Look, I'm 72 and fighting it, but I don't think fashion is going to be my thing. Paul, don't. The world is your oyster now. So speaking of lack of oysters, ABC News has agreed to pay $15 million to settle a defamation lawsuit

brought by Donald Trump. The suit centered around comments that ABC's George Stephanopoulos made in a civil suit against Trump brought by Eugen Carroll. He said he was found liable for rape when he actually had been found liable for sexually assaulting and defaming Carroll. The judge had mentioned that it was in most terms that would be considered that, and that's I think why he said it. But in fact, the jury had found liable for sexual assault and defamation. Under the terms of the settlement, ABC News will donate the money, $15 million, to a future presidential foundation, a museum, and Stephanopoulos and ABC also issued a statement of regret for the mistake.

Many experts thought, I've talked to a dozen lawyers, they thought ABC would have won and Trump is typically does this a lot. So does speaking of Elon Musk, we just talked about them. They use legal threats as a means of having people acquiesce. So talk a little bit about this. From a business point of view, again, it's using censorship, it's using Censorship it's using legal means it's using anything but actual competition or just like things work out it's more than that what we're seeing is that I mean some of us had warned that a

Trump in the second Trump administration would be one in which the Coercive power of the government against business would become huge. That it means a mixed economy, the government plays a big role, private sector plays a big role. A lots of things in the private sector depend upon government decisions that are reasonably favorable. As long as you have rules,

nor rule of law, then that kind of works okay. But if you start to have arbitrary exercise, and one of the things we worry about on tariffs, it happens to be the case that the way that our trade laws are written, the president has enormous discretion in tariff setting. And in some ways, one of the worst things about Trump terrorists will be not the terrorists he applies, but the ones he doesn't because he can play favorites with who gets to get exempted from a terrorist. There is some evidence he did even on the relatively small terrorists he imposed in the first term. So if you were ABC and you're looking at all the ways that Trump can hurt you if he wants to,

then you pay protection money. That's what just happened. This is a much bigger thing than just competition. This is basically big business already acknowledging that we've become a protection racket. Pay for play. Yeah. That's scarier than anything. I mean it's uh that's uh it's one of those reasons to wonder whether

you know 2024 was maybe the last real election. So talk a little bit of because from a business, from an economy point of view, you can have a very robust economy even with this cooperation or does it ultimately end this oligarchy and in lack of innovation, which has been the hallmark of the US, really, dominance and innovation and new fresh ideas. It's really been a remarkable run for the United States over the last 40 years. Yeah, for the last 25 years.

In 2000, roughly all the vast countries seem to be about on the same level, technologically, the US has now pulled well ahead. And there are one of the pieces I've written recently says a lot of that is actually just geography, there's probably room for only one Silicon Valley anywhere in the world. But a lot of it is also, yeah, openness, rule of law, success depends upon actually producing stuff that people want and can use, on being able to attract the best and brightest from around the world to work. And all of that is at risk.

You're in a situation where we know that there are people with influence on Trump who think of tech jobs as being goodies to be handed out. Don't let foreigners have those. We know that we may well be heading for a situation in which success in business depends upon poll with the administration, depends on whether you're in or out of favor. We even have, for what it's worth, regimes like that, according to an IMF study,

it subtracts about 1% from growth. How do you look at with all these billionaires around him? And they certainly are just one, it's mostly tech that's going there, but Disney just did this, right? This is Bob Iger doing this, making, he had had to approve of this settlement. And he is not, you haven't seen him at Mar-a-Lago, but this is his version of that, right? What is that, what, were you surprised that it's been the tech people who had mostly stayed out of government, right?

And until they realized there was, there was an interview that Marc Andreessen did, who I've known for a long time, I find him largely a despicable character. But one of the things he said, he was terrified by what Biden was going to do and he was scared. That's what drove him into Trump's arm, which I think is unlikely on some level. I am actually not surprised, but I'm a cynic. The thing about tactic, by the way, is these are no longer upstart innovators that we're talking about now.

No, they're not. We're talking about people who made their billions very, very young, but they're now middle-aged and they're sitting in many ways on these monopoly positions created by their past efforts. Of course, they're going to try and curry favor with the government. The libertarian ideology was never more than skin deep. But I also think that some of the backing Trump, you know, this is the classic error. Oligarchs, it's funny, in a democratic rule of law nation, great wealth brings a lot of power with it. And it's natural to think, well, if I help elect an autocrat who will,

is sympathetic to my interest that I'll have even more power, but you very quickly find out that actually all of the power is on the other side. I don't think analogies with Putin, I mean, I'm hoping that we're not going to go full Putin, but the analogies are really clearly there. And the oligarchs who helped put Putin in power thought that they had bought themselves a government and they found out that they were working for him, not the other way around.

And if they didn't work for him, their fortunes can disappear quite quickly. Yes, windows started to look- Fall, and that falling out of windows, I hope we don't get to the falling out of windows stage, but it could. And so, no, this is a, and that's going to happen very, very fast. I mean, I'm, I think there's a reasonably strong case to that, that Elon Musk and Trump will have a falling out

and Musk will not be the winner. And I don't know that for sure, but I'm actually kind of looking forward to be honest. I'm not a saint. Okay. What's the counter to that? Where does that break? Because rich people have always been quietly running the country, right?

The whole idea of whoever happened to be- It all agrees and agrees. Yes, but is this unprecedented? I don't think so, right? It's totally precedent. Right, so talk about the precedent for it. This is the story of Putin's Russia. This is the story of-

Right, what about in our country? That there have been wealthy people behind the scenes, they just aren't as performative, they don't jump down at a rally and show off their belly and stuff like that. How is this different? I actually have been wondering about that and planning to do a little,

I'm not a historian, but I think it really is an interesting question. We had a Gilded Age in which there were enormous fortunes and a lot of raw corruption, and yet democratic institutions were not corrupted too much. I mean, a lot of purchase votes and all of that. But in the end, when people voted for something different, those votes were honored.

We didn't lose, in some ways, the essence of what America is about despite all of that. It's an interesting question to ask why didn't the JD Rockefellers and the JP Morgans go to the limit? Why were they willing to allow Teddy Roosevelt to be elected? Right. Often a wealthy person. FDR, wealthy person. JFK, wealthy person. Billionaires were- Well, FDR brought us closer to cool than we like to think. But yeah, but the, you know, how did the progressive movement manage to flourish in a time when the wealthy also had that? And I don't quite

know the answer, although it's possible, hard to believe, but it's possible that people actually had at least some values and ideals, enough to say that, okay, I will go this far, but not beyond that point. I'm not so sure with this crew. I'm not so sure either. We'll see. I know them. I'm certain they will go as far as they take because they are perpetually aggrieved. They're aggrieved, Paul, because they're very, they're the victims, just so you know. Oh, yeah. That's one thing I mean, you would know better than me.

But my really strong sense is that particularly the tech bros, I mean, everybody loved and admired them 10, 15 years ago. And now they're not loved and admired universally. And I think that really, you know, I do spend enough time in meetings with people of various, people at the top of multiple status hierarchies and everybody wants to be what they aren't. And, and these, these are people who can buy anything except love and adulation. That's correct. It was funny you say that because one of them was in touch with me and they're like,

see, we won. And I said, you're still an asshole. I still think you're an asshole. I'm sorry, can I say this? Apparently somebody used gro for the most, the word most used to characterize Elon Musk. And it was asshole. Yeah. Yeah. Well, that wasn't the one who called me, but nonetheless, same difference. I want to say the same thing. I often say to many of them, you're so poor, all you have is money.

Anyway, we're going to go on a quick break when we will be back for wins and fails. Support for PIVOT comes from BetterHelp. What does it mean to lean into coziness? We'll be back for wins and fails. Support for PIVOT comes from BetterHelp. What does it mean to lean into coziness? We all have our own vision of a perfectly cozy December night. For some of you, it might involve a crackling fire or a really great cup of coffee or the softest slippers imaginable.

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That's LinkedIn.com slash Pivotpivot pod to claim your credit. That's linkedin.com.pivot pod. Terms and conditions apply. LinkedIn, the place to be. Okay, Paul, let's hear some wins and fails. Would you like me to go first or would you like to go first? Why don't you go first? Okay. I think a fail is HBO is no longer airing episodes of Sesame Street on Macs.

They've opted not to renew the output deal which brought new episodes. The library, the existing Sesame Street library, which my kids watch a lot, I have two younger kids, remain on the platform till at least 2027. The new season will be there, but they're moving on. And so I just, I don't know, they're wonderful.

It's not like some things get old and you shouldn't keep airing them, but Sesame Street remains fantastic. It had been in a five-year deal and it's sad. I mean, they're trying to save costs. It probably doesn't do very well for them, but to me, Sesame Street's been around since 1969, if you can believe it. They're often at the whim of

politicians and defunding and everything else. But so you can see them till 2027, but the control over something like this is really sad to me by people who are just looking for, obviously David Zaslav just did a whole machination about spinning things into pieces at the company. By the way, I have a contract scene and nonetheless, I think it's horrible, David, bad job. My plus is I just did a whole on with Kara Swisher about books.

I had two amazing book critics come on, Dwight Garner from the New York Times, who's amazing, and Becca Rothfeld who writes for the Washington Post. We had a great time talking about books that will be appearing, I think next week. But she did a review of Jordan Peterson's new book, We Who Wrestled with God. I recommend that you read this review.

I think Jordan Peterson is just a dimwit, which she writes about. And she says, let me just read this. It takes a special kind of spiritual dimwit to cast a text as fierce and mysterious as the Old Testament, as a banal and scolding exhortation to make your bed, but Peterson, as it happens, is just this kind. I just loved her writing. I think she's a wonderful writer. And I just, I laughed and cackled throughout the review. And it's a wonderful review of a terrible book and that's always a pleasure for me.

You know, I think it's just, I just love, I love really great. As you said, there's no Paul Gorgman, there's no, you can't replace any of this with anybody else but the person writing it. So I justorgman, there's no, you can't replace any of this with anybody else but the person writing it. So I just love, Becca, what a great review you did. And I'm excited for people to listen to her thoughts on books along with Dwight's.

All you, Paul. Okay. Wow. So, Phelous, you know, I live in New York, although it's not where I am at the moment. But and I have to say this whole business with congestion pricing, which was on and then off and is now down on a, you know, this is completely insane. Driving into lower Manhattan, you, the cost you impose on everybody else by making that, you know, this is insane.

If there was ever, and not only that ever, and not only was it something that we should be doing just plain to discourage people from doing this, but it was also a revenue source for really badly needed. So that has been a, I thought we've finally gotten to the point of doing the right thing there. And it's, you know, I mostly take the subway, but this does get at the quality of my life. So you think there should be congestion pricing? Oh, yeah. To limit people.

If you try to estimate, you know, what the true cost that you impose on other people by driving into lower Manhattan during the workday, it's on the order of $100. Just by slowing up other people. So the congestion pricing should be really strong. That's a big fail. New York is still my, I sometimes even when I'm elsewhere, I say something, well, I'll be in the city tomorrow.

The city means New York. There's only one city. There's only one city. Yeah. But this is really anyway. Wins. I have lots of questions about Apple and Tim Cook. City and but this is really anyway wins so I have lots of questions about Apple and Tim Cook but Apple TV. I'm a science fiction fan and The first one just in general

That's film science fiction We are in a golden age for that the two Dune movies. I grew up with that book and that, my god, Villeneuve was incredible. And now I just saw, just about an hour before we got online with each other, that Tim Cook has extended Silo for two seasons. And I'm a total, both a total Silo freak and a total Rebecca Ferguson fan. So two more seasons of silo. That's a significant improvement in the quality of life. Oh, good. Severance is coming. Did you like that one? Yeah. It's funny.

I have good friends on Wall Street who are absolutely into Severance. And I, not quite, maybe because I've never actually worked in a cubicle. It doesn't quite work the same way for me, but I sort of see it. Have you tried Dark Matter? What about Dark Matter? Dark Matter, I've been working through. It's stressful for some reason.

It makes it a little too stressful for these times. You would think that Silo with everybody buried underground would be worse. It's a great show. I have a cluster of civilized Wall Street friends. They were constantly going back. I was the one that turned them on. This is already old stuff, but orphaned black once upon a time.

Yeah. Amazing. Anyway, I'm reading a little bit less news now because it is painful, and so better streaming entertainment. Good. That's a great. Silo is wonderful. I think you should watch Nobody Wants This on Netflix. Oh, I should look at it. It's very delightful. It's not Syfy at all.

It's about a hot rabbi, Paul. Oh, gosh. All right. Well, yeah. I don't think you seem like the hot rabbi type. Anyway, Silo is wonderful. You're right, Rebecca Ferguson, who was also in Mission Impossible, a whole bunch of things is just, and she was also in Dune, astonishing, astonishing person.

Is there any movie you like right now? Is there any movie that is your favorite? I mean, still absorbing Dune too. And not a real, nothing has really, really grabbed me since then. You don't seem like a wicked kind of guy. You and Scott. I should go to it.

Although I did actually see, Oppenheimer was a little bit back, but it was- Wonk. Wonk. Wonk. Wonk. Wonk. But that's the name of your crook, Wonk. If I might say, I thought I caught it in

a historical error there and it's too much to explain, but then I checked and it wasn't. I.I. Raba was actually at the Trinity test. I thought he couldn't have been because he was working at the MIT's radiation lab. But he was there for that. Oh, amazing. Wow, that's amazing. That is a great film. That's a good film to go back and watch. He's working, Chris, the director,

Nolan is working on a couple of new things that I think you'll like. By the way, I'm always a little bit shocked in general in pop culture at what I like. I've been totally, the musical stuff is showing up now again at the end of my newsletter, but I'm absolutely shocked to find out I really enjoyed Folat. Who knew? The new Paul Krugman. He's a Paul. Not really. He's the same Paul Krugman, now unleashed.

Unbound. Unbound, Paul Krugman Unbound, which I love. I'm really enjoying this episode. We want to hear from you, by the way, listeners. Send us your questions about business tech or whatever's on your mind. Go to nymag.com. It's a question of the show or call 85551 pivot. I also want to mention that I recently sat down with Democratic Congressman Ro Khanna for On with

Kara Swisher. Speaking Paul, he talked about how billionaires funding the left are just as problematic as Elon and his minions on the right. Let's listen. Our side will say, well, Elon's a problem. Yeah, sure. It's a problem that he's pouring in hundreds of millions. But how about the billionaires on our side? I mean, how about the fact that Kamala Harris had more billionaire money than Trump did and more wealthy money that Larry Lessig and I had an op-ed on that, that I think that was part of the reason we weren't talking about transformative change on Medicare for all or standing up for unions.

How often did Kamala Harris talk about inequality? And so, yes, let's get the super PAC funding out. Let's be a party that says no super PAC funding in primaries. But, you know, voters respected more. It's not that I'm not going to call out Elon. I'm just dead. Don't, you know, that it's terrible to have that kind of spending. But voters respect you more if you're also willing to call out your own side. So it doesn't just come off as hypocrisy. What do you think about that, Paul? I thought it

was a little two sides of his mouth. I think that's a little bit, certainly a little distressing that billionaires are so important to the finances of both parties. But you know, I watched the campaign a lot and I didn't see any real evidence that Paris was being more centrist than would have been warranted by the politics. In general, I think there are times when it's clearly billionaires are buying their interests, but I didn't see a lot of that in this campaign. I'm going to have a newsletter on that very quite soon about, given the assassination in New York about healthcare. But the reason we can't have Medicare for all just now is not because billionaires are in the way.

It's actually much more just that most people are reasonably happy with their private insurance. And even if you tell them, look, this government provided insurance will be better and people who have Medicare actually are happier than you are, that's just not, people won't believe it. And that, you know, so it's not the billionaires that are stopping this. Yeah, they're in a rage and the polls also show they like it. It's a really weird situation. I think it's all these cases of denials.

But the polls actually show us that people really like their private insurance unless they get sick. That was exactly, unless they get sick. One of the things that I will note, that Elon invested $250 million in the Trump campaign and he is now $200 billion richer. What an investment. Best investment of all time, I think, correct?

Oh yeah, buying political influence is still an incredible bargain. And look how much richer he is. Despite the fact that Tesla's share of the market is down considerably. Just amazing. And I mean, as a New Yorker watching the current mayor and the scandal of the bribes that he was receiving from the Turks. So little. It was tiny. I know, I was a sneak jerk.

It's like two days in a luxury hotel in Istanbul. My God. What the heck? That you can buy the mayor of New York for that little money? I know. Who should we buy, Paul? No, I'm kidding. Let's not do that.

Anyway, Paul, you're wonderful. I'm so excited that you're out and about. I love these columns. And everybody should go to his sub stack, Krugman Wonks Out. For all of your analysis and musings, it's very varied and you have the musical thing at the end. I like Slightly Unleashed and I look forward to all the different things you're going to write about in the economy and more and more. Thank you so much. We'll be back on Friday for more. I'll read this out, but Paul again, really I'm a huge fan and I'm thrilled that you're doing this.

You'll have so much fun. You will not regret it. I'm definitely going to have a good time. Good. You deserve it. Today's show was produced by Lara Neyman, Zoe Marcus, and Taylor Griffin. Ernie Enderdott engineered this episode. Thanks also to Drew Burroughs, Mia Silverio, and Dan Shulan. Nishat Kurwa is Vox Media's executive producer of audio. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for

listening to Pivot from New York Magazine and Vox Media. You can subscribe to the magazine at nymag.com slash pod. We'll be back later this week for another breakdown of all things tech and business. Scott, I hope you're having a great time in Africa.