Pivot - The Pandora Papers, Facebook’s Whistleblower and Friend of Pivot, Andrea Elliott

Episode Date: October 5, 2021

Kara and Scott talk about the Facebook whistleblower’s debut, the release of the “Pandora Papers,” and Ozy Media’s demise. They also discuss the U.S. passing yet another grim milestone in the COVID-19 pandemic, and their reaction to Alex Jones losing two defamation lawsuits. Plus, Friend of Pivot Andrea Elliott on her book, Invisible Child: Poverty, Survival and Hope in an American City. You can find Andrea on Twitter at @andreafelliott. Send us your Listener Mail questions, via Yappa, at nymag.com/pivot. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Scott Galloway. And I'm Kara Swisher. How you doing, Scott? I feel really good that you sound much better. Thank you. I've been resting my voice. Yeah, I've been good. Now it's just sexy, is what it is. Now it's just fantastically sexy. It is fantastically. And by the way, I saw you on Meet the Press yesterday.

Yeah, with Chuck Todd. I thought you were very good. Thank you. I'm kind of sick and tired of this. I With Chuck Todd. I thought you were very good. Thank you. I'm kind of sick and tired of this. I've had it. I've had it, Scott. Really? There's a lot of people interested in this Facebook thing we've been talking about for, I don't know, years.

Yeah. I wonder who's been saying it. Did you feel, first off, you saw the 60 Minutes thing on Sunday? Yeah. We're going to talk about it in depth later. Yes. Yes. I know, but did you just,

was it like, okay, haven't we been saying this shit for five years? Yes, she had documents. And then she goes on 60 Minutes and the world is shocked. It's like, well, okay. Has anyone met Kara Swisher or Scott Galloway? I know, we'll get back to that. But we're glad she brought the receipts.

But we should start with other things, like Alex Jones. Speaking of Facebook, why don't you explain what happened? So Alex Jones lost two defamation lawsuits filed against him by the parents of Children Killed at Sandy Hook. In 2012, Jones claimed that the Sandy Hook shooting was an elaborate hoax. And in 2015, he aired the personal details of a Sandy Hook parent who later received death threats. Jones also lost a defamation case to a Sandy Hook parent in 2019. He also choked on a donut and ended up slowly asphyxiating and then slipped in gasoline and lit himself on fire. Everything but the last part is

true. Everything but the last part is true. So here's the deal. This is something I talked to with Mark Zuckerberg about many years ago. And he was arguing with me why Alex Jones should stay on the platform. I don't know if you remember that interview. Yeah. And basically, we want to give voice to the unheard, that whole thing. If we were taking down people's accounts when they got a few things wrong, then that would be a hard world for giving people a voice and saying that you care about that. Yeah, it was ridiculous. I was like, you're going to be taking him off. He's actually lying and gaming you and how many times he can break your rules. And they had, you know, a shifting number of times you could fuck up on that platform. And he continued to

game them. And I literally had one of the biggest arguments I've had with Mark Zuckerberg. But he then tried to shift the attention over to Holocaust deniers, which he also screwed up on. Yeah. Yeah, I think that was – actually, I think that interview – I mean, there's been several moments where I think Facebook has burnt its ninth life. And that was one of them where he said, well, lying is wrong. And as a Jew, I somehow have credibility around letting Holocaust deniers on the platform. And the whole tautology or strategy, it just made absolutely— And then he took it back two years later, two years of damage later. When he finally figured it out, the penny dropped in his very smart head. That's when they changed the rules.

That's astonishing. That's an astonishing moment. I will never forget it. Well, I do believe that America, I was actually quite hopeful when I read about this lawsuit and the fact that Alex Jones lost. And what I'd like to see is more of this because I think America gets it right over the long term. And I think the immunities are starting to kick in and sometimes it takes too long. But when you have someone as depraved as an individual who is taking advantage of what is probably the most profound tragedy that any parent can imagine for money and for fame, and then what's even worse is you have huge organizations wrapping themselves in a flag as they burn it around the misery of parents. They deserve to get squarely kicked in the gut over and over. And I've never understood this whole bullshit, this guy a platform. And by the way, so did Joe Rogan. They've decided to give these claims legitimacy. They decided to ping these parents with that same misery over and over.

So they should be sued. That's all. That's all. 100%. By the way, it's not like a big company trying to sue someone into submission of not talking. These are parents suing big companies. They're not able to sue Facebook because of Section 230, but they can sue Alex Jones, and they can sue Rudy Giuliani, this company Dominion, and the people in it.

If you've read some of the stories of individuals who worked there who did nothing, and have, like, Rudy Giuliani and Sidney Powell spew endless lies, which then they've said they're lying about. It's just like they should be able to be sued. It is not about First Amendment. It is not about censorship. They say things that are wrong and dangerous and defamatory. They should be sued. It's as simple as that. It all comes down to incentives. And there's an algebra of deterrence that is a very powerful cop, and that is the likelihood of getting caught times the penalty has to be greater than the upside.

And when the likelihood of being outed as someone who is promoting conspiracy theories or being the platform that promotes these heinous conspiracy theories because of the results of more Nissan ads, when those incentives and that economic benefit is greater than any downside, you will continue to have Mark Zuckerberg and Sheryl Sandberg wallpaper over the fact that their platform is spreading this sort of really hateful content because the downside is just much less than the potential upside. And one of the things about finally when you hear about these lawsuits is, okay, maybe the algebra of deterrence is starting to kick in again. This is important. Algebra of deterrence, I like it. Well, we talked about this at Code.

If you got a call right now, I mean, you can see, remember the whole Varsity Blue scandal, you can see how, maybe you can, but I can empathize with parents who get a call that says, hey, does your son row crew? Yeah, he's rowed. Well, I'm the crew coach at Stanford,

and if you were to make a $100,000 gift to the crew team, I might be able to find a way to promote him or present his application as a scholar athlete. I can see the road to hell that that is paved in. Never. When you see Aunt Becky doing a perp walk, boom, no one's taking that call. Yep. The algebra deterrence works.

It really does work when it's implemented. And that's what we lack here around these defamatory. By the way, may I point out, Aunt Becky is taking a perp walk. None of these people are. Well, that's the point. I don't think any of this stops until someone does a perp walk. Yeah, we keep saying that. It's delay and obfuscation.

I don't think it stops until there's a perp walk. That's the only thing these people are scared of. Alex Jones can go to hell, and I'm glad he lost. And I hope Rudy Giuliani loses. And it doesn't chill speech. It chills people who lie continually and in an effemmatory way. And they should be chilled, and they should be put in the freezer, and the door should be closed. Thank you. I like it. Another sad COVID statistic. Last Friday, the U.S. passed 700,000 COVID deaths. As we've been discussing, and as Andy Slavitt

discussed, and as every legitimate scientist will highlight, the overwhelming majority of deaths this summer are from the unvaccinated. The CDC says unvaccinated Americans were 10 times more likely to be hospitalized and die from COVID than vaccinated Americans. About 56% of the U.S. is fully vaccinated. Meanwhile, in much of the world, the vaccination rate is below 10%. That's the case of more than 55 nations, including Iraq, Afghanistan, and much of sub-Saharan Africa. And I also want to take a moment to correct something I said the last time. I said that between 100 and 250 million doses of vaccine would expire in the U.S. That's actually a global number among what you'd call wealthy nations that have an excess supply. In the U.S., it's about a third of that, but that data was incorrect. That's

the number that will be wasted globally. But still, we're blessed with this miracle product. This is the most important, the most impressive product in the last hundred years. We are blessed with a supply chain that can produce the best vaccines. We're not producing these mediocre vaccines like Sputnik or the one coming out of China, and we've decided not to take them. Yeah. In any case, it's a ridiculous amount of people that die when they don't have to, especially now. They don't have to die. They can be sick. People get sick from COVID after the vaccine, but they mostly don't die. I think it's very rare.

It's extraordinarily rare. And so everybody should be taking it. And look, these numbers are going down again. But when the holidays come and when people go inside, they expect them to rise again. So take your vaccine. Thank you. There you go.

That's my ad. And then the big question is going to be, if Americans aren't going to take your vaccine. Thank you. There you go. There you go. That's my ad. And then the big question is going to be if Americans aren't going to take the vaccine, should we send it to nations that actually want it? I worry that the people listening, we're kind of preaching to the choir in terms of the people who listen to this. I think the next question has to be, how do we reach people that are prone to watching, getting their misinformation from different, you know, that's the question. And I just, anyways, very, a solemn day, 700,000 people, a very upsetting number. I remember when we talked about it going over 100,000.

But anyways, should we talk about Aussie media? Yes, of course. Get on it. Come on, I'm waiting. Okay, let's talk about Aussie media story that's been making the headlines. Explain. The company.

Ben Smith, whoa. Ben Smith is putting a lot of this reporting. The company collapsed almost overnight after the New York Times revealed shady business practices, including what appears to be fraud. It was a fake call. On a conference call with Goldman Sachs, an Aussie co-founder posed as a YouTube executive exaggerated Aussie's audience. Aussie's star producer resigned following the Times reporting. The company shut down shortly after. Ozzy was in business for eight years. It had events, a magazine,

and major advertisers, including Walmart and Facebook. And so the question is, what does this say about advertising and digital media that no one noticed the fraud? And I'm going to go, I'll give some thoughts here. I'd love to get your thoughts. But what people don't realize, and this is true of social media, social media is nicotine. It's addictive, but it's not the shit that gives you cancer. It's not tobacco. And when people, I don't think it fully acknowledged is the advertising industrial complex. Don Draper is really the Satan here. And that is when you're totally focused on an advertising business model, the objective becomes attention, whether it's spreading conspiracy theory or novelty versus truth, which is much more interesting, or whether it's fraudulently claiming monthly active users,

including what, quite frankly, how many bullshit statistics have Facebook rolled out about video viewership or Twitter constantly is saying, oh, no, we fucked up. It's actually not that number of MAUs. Do you realize it is projected? It is estimated that now two-thirds of quote-unquote viewership metrics around many of these digital marketing platforms are basically bullshit, that they're bots? That two-thirds of the quote-unquote numbers going into these metrics they report to advertisers are being generated not by humans, but by bots. So the advertising model- Yeah, the all kinds of tricks. That was a little side note in one of the stories of what they were doing to make it look like these sites were better. And let me try and bring this back to big tech.

There's been a lot of stories around concerns around Amazon and privacy. And we talked about this, about a robot called Astro going around your house, keeping it safe. And it's like Astro from the Jets. It's like, well, I think it's weird. Like, it'd be one thing if George and Judy Jetson had a hit on them from the cartel. I find it strange that anyone is that paranoid. They have a robot roaming their house. But here's the thing, and we always criticize big tech.

I actually don't think you need to be as worried about Amazon violating your privacy because Amazon has the right incentives in place. I don't know. They're not trying to capture your attention in any way possible to sell your data to advertisers. They're trying to invest in the relationship between the end consumer. So you find that Netflix, which doesn't have an ad model, has a subscription model, is not weaponized by the GRU. And I don't think Amazon is as great a threat around our privacy as people think. I think the threats around privacy come from an attention economy. We'll have to discuss this more. They're using it for their own purposes and their own,

who knows what they're going to do with it. I don't like anyone having this much information about me. It's very uncovering, but let's get back to Ozzy. Okay, sorry. I knew almost nothing about Ozzy other than I got invited to a couple of Ozzy parties. Say more. Tell us about Ozzy. Well, you know, it was interesting because got invited to a couple of Aussie parties. Say more. Tell us about Aussie. Well, you know, it was interesting because they put an ad out that turned out to be a quote from one of its own executives saying he's the greatest interviewer ever. So, of course, I pay attention. I'm like, no, that is me who is the greatest interviewer ever. It's his eye.

His eye. I am the rightful heir to the Iron Throne. Yes, exactly. You know, I think there's a lot here. There's a lot of, you know, Lorraine Powell Jobs, Emerson Collective was in here, a lot of big investors, you know, a lot of big advertisers. They wanted, this was supposed to sort of be, and if you read these stories, a lot of the people who worked there really were hoping there was a lot of social justice stuff here. There was a lot of diversity, you know, trying to invest in businesses like this. So there's that issue. And at the same time, there's lots of businesses like this. You know, having run one not unlike it, like Ozzy, we were always like, God, we're still small.

You know what I mean? We were never bragging. And it was very difficult to get numbers up in terms of advertising. I never thought of cheating to do it. But it definitely is not an easy business to do events, to do. They had a magazine, we thought about doing a magazine, all kinds of things. We obviously moved it to podcasts. But it's an almost exact business to what I was doing at Recode. And before that, all things D. And I suppose there's a, And before that, all things D. And I suppose there's an impulse to who then they said was having mental problems when they did it.

But at the same time, others from Ozzy on the call knew that's who it was. It was a fake person. You know, and what's interesting is it was YouTube that started investigating this and then referred it to the FBI, which was amazing. Like, YouTube didn't want to be taken advantage of either. I mean, this story has layers and layers and layers of all kinds of things, but it comes down to it was a very small media company valued at too much money. And they were trying to sort of gloss it over with a very slick guy who ran it,

who was very appealing. He was on MSNBC, worked at Goldman Sachs. This is Carlos Watson. And just was just, you know, faking it before he made it. That's really, it's kind of an old tale as old as time kind of thing. You can see how it sort of happens because some people do fake it and then make it. And that is if they fake it long enough and acquire enough cheap capital, they can pull the future forward by making these huge investments that other companies can't keep up with. But if you look at a firm like Axios, I think Axios is making investments and doing the hard work and building a nice brand slowly but surely.

And whether it was, quite frankly, I think Vice suffers a little bit from this. Yeah, same thing. We're a new type of media company, and we're going to be big, and we deserve a billion-dollar valuation. And then they wake up and realize, okay, media, when you're talking about people, generally speaking, is a very difficult business. Events are difficult, curating, editing. It's kind of a slow grind. And the reason why these firms over decades might become worth hundreds of millions of billions is it's just really, quite frankly, it's just really hard and there's a lot of friction involved.

And then you have this gestalt where get big fast, you know, create, you know, build kind of make aggressive big statements. And also, to be fair, it's worked for some people. For some companies, it says it pays for the CEO to go. We're going to have a million self-driving Teslas on the road. And the problem is the example that's been kind of held up. I quite frankly wonder, would Elizabeth Holmes still be on the cover of Forbes if she'd gotten another round done and then shown some progress with Edison or whatever it was called? But we have raised a generation of entrepreneurs to believe that faking it is part of making it. And where does fake turn into fraud? And we're starting to cross that line more and more.

Well, I could see that. I mean, I remember thinking when they were all bragging, I was like, huh, I run these businesses. It's big. I'm not reading anything from there. By the way, they had some very good journalists. That's the thing. Unfortunately, they lost their jobs.

And they had some good stories. But I remember when they were doing events, I was like, huh, I don't believe that. Like, just like the way they were bragging on it, having run one for 20 years. I mean, just had one, obviously, we were at. I was always like, wow, how'd they get so fast? And of course, you get like, what am I doing wrong? And then you realize nothing, actually. They're just lying about it, essentially. Yeah, they're using the- I remember when they did events, I was like, mm-mm, mm-mm, mm-mm. They got big names, though.

I'll tell you that. The storytelling, I'll grant them. Storytelling and spin is important. What I don't get is that these people actually think that we aren't going to figure out that that guy isn't from YouTube. Then we're not going to figure out, oh, you don't actually have any consultants working for you, so your consulting business isn't a $50 million business. You're relabeling revenue. It strikes me that they think we're this fucking stupid. Or maybe we are. Are we?

No, because I tended to downplay success. Like one time when we were starting podcasting, everyone's like, Gary, you can't make money in podcasting. I'm like, oh, yeah, no, it's real hard. We were making a lot of money, right? But I was always like, no, you're right. Our events business, please don't get in the briar batch. We don't overstate our success. But here's the thing. We live in a capitalist economy. America becomes more like itself every day. And that true self is that to have money in America makes it a better and better America, and not to have money makes it a worse and worse America. And the market, the pivot here in nomenclature and spin is that the market used to reward underpromising and overdelivering. The market used to like CEOs and companies that would say we're going to do 40 cents next quarter, and they show up and they did 42.

Now, the market likes over-promising. And even if you want to deliver, come up with new metrics and call it community-based EBITDA or change your metric to monthly active Twitter users versus monthly active users or something, and come up with bigger and bigger over-promising. I don't want to say it's the market's fault, but when investors have cash in hand and they like the story, the market is, to a certain extent, is just responding to what the market wants.

And it's also PR. This guy did a lot of PR. By the way, I keep getting contacted by people who want to do profiles of you. I'm just not saying anything. Hello. They're just leaving. Can you make it clear?

You're not leaving. Oh, yeah, that's right. No, you're stuck with me. Yeah, I know. I'm They're just leaving. Can you make it clear? You're not leaving. Oh, yeah, that's right. No, you're stuck with me. Yeah, I know. I'm riding this shit out. I am riding this shit out. I'm Daniel Craig. I'm not leaving this franchise. No, not at all. There's no way. Wheel me out. I know, exactly. I'm Adam West from Batman. I don't want to leave. They didn't even call me for the Batman movie, said Adam West. They didn't even call me. Death before divorce for the cat and the dog. Let's get to the big story. Big story gets us there. We know the name of the Facebook whistleblower. It's Frances Haugen. She was the product manager at Facebook working on election interference. Told you. On 60 Minutes, Haugen said that Facebook

relaxed its standards on misinformation after the 2020 election shortly before the January 6 insurrection. Let's play a clip. They told us, we're dissolving civic integrity. They basically said, oh, good. We made it through the election. There wasn't riots. We can get rid of civic integrity now.

Fast forward a couple of months, we got the insurrection. Haugen has filed complaints with the SEC claiming that Facebook misled its investors. Nick Clegg of Facebook sent an internal memo ahead of the 60 Minutes episode calling the claims misleading. Misleading. He said it in British. Haugen is expected to testify before Congress today. So, what's your take here? What's your take? What the living hell fuck is what you want me to say, right? Right. So she was, they dissolved her team. This is what they did. They had this civic integrity team, which a lot of people thought was great. And she thought they dissolved it too quickly after the

election while Trump was still disputing the election. They shut that down. She's very well-spoken. She's very clear. She also doesn't seem crazy. I know it sounds hard to attack her. She's very angry. She seems like, hey, I just want the world to be a better place. She's very reasonable. She says she's not in favor of breaking up Facebook. So it'll be interesting to see what happens. I think nothing's going to happen from this. I think it's going to be the same thing that happened on the last six things. What do you think, Scott? I'm famous for predicting, you know, Facebook's ninth life,

but I think this is big because she's Edward Snowden, but more attractive and more likable. She's the daughter of two professors from, I think, Iowa, who also ended up at Harvard Business School. There's obviously pro-tech, worked at Google. She does not come across as having an ax to burn here. And also, and give me a minute here, but we couldn't get a bunch of our children, our teenagers were dying in auto accidents because of drunk drivers, them being drunk. And then basically basically moms banded

together to start this organization called Mothers Against Drunk Driving, MADD, and it basically put pressure on Washington to withhold federal highway funds such that every state raised its legal drinking limit to 21, despite the alcohol lobbying a lot of powerful people. And I think this may be big because quite frankly, I think that the cohort here that is going to save us from Facebook is moms. Yeah. And I think when mothers have heard about anorexia and depression being caused by Instagram and they read this research, they're like, you fucked with the wrong sheriff. I think there's going to be a group called MAMS, Mothers Against Mark and Cheryl, that is going to go after this mendacious fuck organization called Facebook.

Did you just say MAMS? MAMS, Mothers Against, I'm starting it now, Mothers Against Mark and Cheryl, MAMS. Okay. But I'm serious. Do I have to do it? Yeah, okay, I will. I think parents, and specifically moms, are probably horrified by this content, and I predicted this a few weeks ago.

I think there is now the cloud cover. There is now the cloud cover to go after someone at Facebook with criminal charges. In addition, talking about incentives, the Whistleblower Act from the SEC now creates financial incentive for people to start dropping dimes.

I think you're going to have a half a dozen people. That's what's going to happen. Is it more people? I know a lot of people in research, and they were horrified by Nick Clegg and what he was saying, throwing them under the bus. I have a lot of people I know there, and they do great work, and they just do their work. And they're very civic-minded people who do this work.

And so is she. She went there because she thought she could help, right? And so they're very disappointed. And then when they get thrown under the bus by this British guy, it's not good. Now, what's interesting here is that she's being represented by the same people who represented a lot of Trump whistleblowers, which is interesting. But she's not raising the same amount of money because anyone will contribute to Trump whistleblowers, but not to – very scared in Silicon Valley to contribute to saying anything about her or supporting her. Someone who I know very well, a pretty high profile person who supported her online said, have you noticed no one's saying anything about her? She's worked at Google, at Pinterest, at Yelp, and at Facebook.

Very interesting to me, the lack of noise from Silicon Valley on this. So we'll see if the more people from internal to Facebook or any of these tech companies start really starting to toss documents because you know everybody's got documents. And that's what's going to matter. If that happens, yes, I think you're right. The other thing, the second thing is whether they can find anything in these documents that show that Mark Zuckerberg or Sheryl Sandberg lied to Congress, that is something that could be interesting. There's all sorts of, did they have disclosure requirements around some of this research

to investors? That's an SEC violation. I'm telling you, Kara, somebody, and it might be a mid-level person. They might go after a mid-level person. But the algebra disincentive here, we talked about this, or the algebra deterrence doesn't kick in until someone shows up on a perp walk. And I think it's coming. I really do.

And people, I talked to Preet about this and he said he doesn't see it. Yeah, he did. And a lot of people say they think it's just another, you can almost see what the story is. They're like, look guys, we've been through this before. Thank you to Ms. Haugen for highlighting where we need to do better.

We're doing the following things. You can almost hear them, what they're saying internally. I wonder if it's different this time. I think they've pissed off moms. I think they've pissed off moms, Kara. Yeah. Well, we'll see. We'll see where it goes. First of all, if there's documents that are incriminating. And second of all, if people start to release them. And then if the board acts, and of course it won't. They've been licking Mark up and down for years. There's no one on this board that's going to move against Mark Zuckerberg. So don't expect that to happen.

That would be very weird. Well, I just want to put your email address out there in case anyone is looking to put out emails. Yeah. Kara, what email can they reach you at? Cara.Swisher at NYTimes.com is the best one. Cara.Swisher at NYTimes.com. I would like to see Facebook do what the Democratic Party is doing to itself, and that is eating their own young and going after each other.

You can feel it happening at Facebook. There are a lot of good people at Facebook who've said, well, if Nick Clegg, okay, he's getting paid $50 million a year to ruin his reputation and lie, but I don't make enough money, and also I do have a little bit more of a conscience. I think that you're going to see a lot of this.

Yeah, there's more people than you think. This is a moment for sure. Let's see if Facebook wiggles out of it. I've heard some Wall Street people talk about it, and they're like, yeah, we think helping teens is a great idea, but Facebook is making all this money. They could give three fucks. You know what I mean? They just don't. As long as they're making money, that's what they care about. Anyway, all right, we need to get to our next- Our next big story.

Yes. So let's go on a break, and when we come back, we'll talk about the Pandora Papers and chat with our friend of Pivot, Andrea Elliott. Fox Creative. This is advertiser content from Zelle. When you picture an online scammer, what do you see? For the longest time, we have these images of somebody sitting crouched over their computer with a hoodie on, just kind of typing away in the middle of the night. And honestly, that's not what it is anymore.

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Learn more at www.nissanusa.com slash 2025 dash kicks. Available feature. Bose is a registered trademark of the Bose Corporation. Okay, Kara, we're back with our second big story. We now know where some of the world's wealthiest tax dodgers stashed their fortunes thanks to a massive trove of leaked financial records known as the Pandora Papers. By the way, I had ad-supported Pandora for a while, which outed me as the lamest person in the world. The papers detail how wealthy elites use offshore accounts and trusts to avoid paying taxes, among those named the King of Jordan, the President of Kenya, and the Czech Prime Minister. And Scott Galloway.

No, I'm sorry. If I could, I would. I'm not disarming unilaterally. I engage in tax avoidance legally. The documents also show that U.S. states with financial secrecy laws, including South Dakota and Nevada, have become popular places to hide money. This is next level hiding. You're going to South Dakota to hide money? Yeah.

Okay, so the good news is only a few Americans appeared in here. Are we surprised there aren't more Americans? Kara, what do you think? I don't know. Holy Christy Noem. That's all I have to say. I didn't know she was an international banker. That's the governor of South Dakota who's always acting like she's one of the gals. And of course, it turns out that was the most interesting part. I just think rich people find ways to hide their money. Like this was like the old, the last one, I can't remember the name of it, where they revealed all these offshore accounts and trusts. You know, even here in this country, if you have some money, you get offered all kinds of ways to avoid taxes via trusts. You know, you move money

around and no one really owns it. And you put it away to different places. So, you know, I don't know if they're, I'm surprised that there weren't more Americans, but I do think the U.S. has an obligation to let governments know if the head of Texas Abaqui has money in South Dakota. I don't know. I feel like that's kind of a gimme. It's an interesting, there's a lot here. So first off, nations, including the United Kingdom, basically have these very strong private property laws, which sounds great as a headline. But what it basically means is you can be a war criminal or hiding money. And if you buy property in the UK or even if you buy property in Florida, you can homestead it and nobody can come after it. buy property in Florida. You can homestead it and nobody can come after it. Or that your bank accounts are private or that you can basically shelter or dodge taxes and no one can come for you. You're sort of out of the reach of their local tax domain. Complexity is nothing but a tax

on the poor because it's rich people that can navigate these complex tax laws. But there are now so many, and in the real estate business, my God, these rollover, there are so many, you can depreciate your assets. There are some very basic, simple tax dodges. And I've always thought the argument is the wrong argument around tax rates. It's not. Tax rates are important, but it's more than that. It's about tax code because it doesn't matter. You asked the question to Elon Musk. He kept saying over and over on stage, my tax rate is 53%. It's like, well, Elon, but you borrow against your holdings at 1% and you never actually sell stock, meaning you never pay that 53% tax rate. So of the $160 billion in wealth you've accreted, you've probably paid an effective tax rate of 2% or 3%.

It's the tax code. It's not the tax rate. Yep, yep. What's interesting, you talked about real estate, because a lot of this, if you read it, they were buying homes. Like the King of Jordan had bought two homes next to each other in Malibu, I think it was. And that's where they hide it. Now, a lot of the stuff, just like in the ProPublica stuff, which the internet guys

were doing, or a lot of the really wealthy people who happen to be internet guys, is all legal. That's the thing, is this ability to put things like what Peter Thiel was doing in a Roth IRA, or just to not take salary and then borrow off your stock. This is all legal. So that's the problem. And of course, you know, Elon addressed it on stage saying, you know, he wasn't paying taxes, but he would. You know, who's to say maybe he wants, you know, he has to sell it, but maybe there's a trick he can use to avoid taxes. Eventually, someone was telling me there's something he could do where he didn't have to pay 53%. But it's all legal. You know, this is the thing. Even someone like me, my accountant offered me something on some money I was getting.

And I was like, that sounds sketchy. She's like, it's totally legal. And I'm like, yeah, it sounds sketchy, and I don't think I want to do it. But then you feel like a chump if you're not, you know what I mean? Like, it's kind of a weird thing. That's exactly right. A lot of people, it's like, do you want to disarm unilaterally? Yeah.

And the reality is, of course you don't. You want to be as tax efficient as possible because no one's going to stand up and clap for you when you have less wealth than the person next to you who decided to take advantage of that loophole. It has to be, you describe it, the word is systemic. And the other key component that we have to decide as a society is the difference between us and Europe is that we've decided we don't like dynasties. We believe in churn. Churn is a wonderful thing. And that is, should you be able to build a dynasty or when you pass on extreme wealth to your kids, and there's a lot of research showing, by the way, that might not be the best thing for them. Do we want more churn?

Do we want higher estate taxes such that we can reinvest in the future generations of not only rich kids, but kids who aren't rich? We need churn. We need people not only moving up the income ladder, but quite frankly, we need them moving down. And a lot of this is about moving to a more inert society where we have this dynastic gestalt where we're creating pockets of wealth that are impenetrable. And a lot of this comes down to, you know, Biden's trying to limit, my estate attorney called me and said, you should fund your estate with assets right now because the limit might come down.

And I really had this conversation around, I mean, I've always said, if I had what my kids have, I wouldn't have what I have. And that is- A lot of rich people say that, are you doing your kids a favor creating that sort of asset base for them? And then you start thinking, well, but it's my money. Do I just want to give it to the government? We need massive tax reform because here's the thing, 23% of the GDP is always kind of government spending, which logically means our effective

tax rate should be somewhere around 23%, which shouldn't be that onerous to get to. But everybody's got to pay, including the biggest payers. I think tax policy is going to be a big topic. It also fuels a lot of the anger that someone's getting there. I mean, it's just this weird tricks. And especially when the U.S. doesn't follow international laws either, because a lot of this, in the stories, a lot of them were like the king of Jordan, right? And the U.S., as Evan, our producer, pointed out, has forced other countries to open up about Americans hiding wealth abroad.

But successive administrations have refused to sign international agreements that would make it do the same. I mean, listen, South Dakota, Kristi Noem, shouldn't be doing this stuff. Shouldn't be, just to attract finance to the state. It's bullshit. And you know what cohort gets screwed the worst? What? And people don't talk about this because it doesn't fit the narrative. The people who get screwed the worst in this current tax code are the rich, just not the super rich, or what I refer to as the workhorses. And that is a doctor, you know, a woman who's a dermatologist making $600,000 a year, and her husband, who's a lawyer,

making $300,000 a year, so $900,000. Hard to feel sorry for them. They're paying 53% tax rate. But because they're not super rich, they don't have access to the stuff. Granted, there's a lot of taxes on the poor and middle class through consumption taxes. But the group that really gets screwed, the group that pays over half their income to taxes, are people who are rich enough to make amazing livings and get to the highest tax rate, but they're not rich enough to engage in this sort of massive tax avoidance. It's also incomprehensible, right? Like, they were explaining it to me, my accountant.

I was like, I don't even understand what you're doing. No, I can't do something I don't even understand. Right? Like, I was just like, it was perplexing. And I think one of the things that has to happen is these international agreements on taxes have got to be done. That's happening. A hundred percent. A hundred percent. Capital is very fluid All right. All right, Cara, let's bring in our friend of Pivot. Andrea Elliott is a Pulitzer Prize-winning investigative reporter for The New York Times and the author of Invisible Child, Poverty, Survival, and Hope in an American City. Since 2013, Andrea has chronicled the life of Dasani Coates, a homeless child in Brooklyn, as her family navigated poverty, shelters, boarding schools, and more.

She's written about Dasani's journey in her new book, Welcome, Andrea. Let's bust right into it. Tell us about how your project began. Yeah, so it all began on a sunny day in October 2012 when I was standing in front of a homeless shelter. I was there as a reporter for the New York Times, and I was looking for a way into what was a really big story, which was the city's homeless crisis. At that time, and this is a crisis that continues, there were more than 22,000 children in the city's shelter system, living with their families, their parents and their siblings. To give you a visual of how big a population that is, it would fill Madison

Square Garden. So what I wanted to do was write about child poverty in America. And I was very focused on New York City because that's where I live. And I felt that that's where I could most productively and meaningfully immerse in the lives of whoever it was I was going to follow. And so the first day that I remember really talking to Dasani, and in my notes I see this, she introduced herself to me as Dasani like the water. She was 11 years old. She was really feisty. Typical New York kid, right? And I think that she also represents a lot of kids like her.

She's a gifted and amazing girl, but she's quite representative of the problems that she was surviving at the time that I met her. When the story came out about her, she got very well known and everyone started focusing in on homeless issues in the New York mayoral campaign, et cetera. A lot of impact. So did anything change as a result? And, you know, now it's again in the news, this thing. Talk about sort of the journey of Dasani and the topic to today would be really helpful. In the aftermath of this series, there was a tremendous amount of attention paid to homeless children and their well-being in New York City. And there were, I think that even in the prior administration

under Bloomberg, there were a lot of resources thrown at this problem. It's a bigger problem than any one solution can handle. It's not just about creating enough shelter or enough affordable housing. It's also about creating greater opportunities in the neighborhoods that the vast majority of New York's homeless come from, which is very much the neighborhoods that are in this book, places like Brownsville, East New York, Bed-Stuy. And these are places that people sort of imagine someone like Dasani quote-unquote escaping from, leaving, moving on from to something better. And I think what I'd love to be able to do with this book is have people begin to rethink that narrative of the escape from poverty, that that is the thing that we always celebrate is the one kid who got

out versus the many other kids, the vast majority of them, just as willing, just as capable, many of them just as gifted, Dasani among them, who could not make it out by virtue of these huge problems that no child should be expected to be able to surmount. huge problems that no child should be expected to be able to surmount. So one thing I've learned in writing this book is that, you know, I went into this thinking I was writing about a homeless girl, and that was the label that was assigned to her plate. She then, over the course of these eight years, and she or other part, members of her family, mostly her siblings, went from one system to another to another. So she went from being homeless to being a foster kid to her brother winding up in secure

detention facilities and eventually at Rikers. What that forces one to do is to think beyond the labels and to try to understand the sort of, the really clear racial underpinnings of this girl's trajectory and the things that have held her back. She's, most recently, I think she would say that she is not escaping poverty per se. She remains with her mom in Brooklyn and her sister and her brother. She doesn't want to escape the neighborhood that to her feels like home, even though she has been in and out of homelessness. The street and her roots in the street, especially in Fort Greene, Brooklyn, where she goes back four generations, that is home. And it's the people who are home. And so, to her mind,

it's not about escaping. It's about making her part of Brooklyn, her version of New York City life work. And she's been doing that on her own terms. And she's had big setbacks and big triumphs. And her life is filled with ups and downs. But she did reach a milestone recently, which is that she graduated high school. She was the first in her family to do that, in her immediate family. And she just started at LaGuardia Community College. And so, in a sense, she is making great strides, but on her own terms, I would say.

But you're right about the idea of celebrating and debating. There's been so many stories about here's these individual people that have broken through and left or just moved past what their history was. And it's an American trope, right? It doesn't necessarily have to be racial. But in this case, you're talking about generational inability to move upward was set in stone many years ago by the fact that they had to rent and not buy, that they couldn't accumulate wealth the way other families were able to at those moments in history. I know you're not a solutions-based reporter, you're just a reporter saying, this is what it looks like. But when you look at the enormous

amounts of money spent on these issues, and the politicization of homelessness, or the broader brush of homelessness, are there any things that seem to work better than other things or not? Or not at all? You don't have to have an answer necessarily. One thing I would say that this reporting got me to do is to constantly question every policy as I saw it playing out in the lives of Dasani and her siblings and parents. in the lives of Dasani and her siblings and parents. The thing that worked best was when they were given help securing an apartment and help with rent. And there were various city programs that did this and helped them move into these homes.

They've had two situations like that, and both fell through eventually for different reasons. In one case, they were evicted. Eviction is the number one cause of homelessness among New York City families. Right now, we've seen the shelter population go down. It's hovering at around, in the main shelter system, around 50,000. But the eviction moratorium will be lifted in January, and that will, I think, cause the numbers to go back up. You know, I have another answer to your question, though, when you said the enormous amounts of money. The story of Dasani's last eight years looks also very closely at a system that disproportionately separates children from their parents who are from Black families and Brown families, and that is the child protection system. The vast majority of cases in New York City that result in children being removed from their parents and put in foster care

involve charges of, or allegations of neglect findings i should say of neglect because once you're removed the judge has found so it's really important to understand the difference so if about two percent are abuse only charges that's parents who are intentionally inflicting harm and neglect is more about failure to provide right it's failure to provide adequate housing, adequate shelter. And in Desani's, in the case of her parents, the final straw in October 2015 was that the house was falling apart. It was a Section 8 rental. There were many repairs that had gone neglected.

At that point, child protection had already removed the mother from the home on the suspicion that she was using drugs, leaving the father overwhelmed with all these children. And he tried in many ways to fix. He called 311. He was at the welfare office constantly. They were just, like, so often is the case with poor families. It's one small problem snowballing into something bigger, into something bigger, and pretty soon it's overwhelming. and the smallest thing leads to disaster. So, I look at what happened there. What happened is that all eight children then went into the custody of Child Protection Administration for Children's Services

in New York, and they went into foster care. They were all placed in foster homes that if you do the math, about on average for the year, these families, these children wound up costing the system $400,000. Which they could have given to the family or part. So if you had just taken a fraction of that and not even given it to the family, although I would argue that would have helped, but just use it to give them the supports that they needed to stay together, a home health aid. And there are programs like this, and there are some models in other parts of the country, but it's expensive. So it requires a political willpower that may not be there. But I guess the question you have to ask is what is the cost of the alternative? Because we know that the way that foster care impacts

adult outcomes, we know that there is that foster care impacts adult outcomes. We know that there is a higher likelihood of things like teenage pregnancy, incarceration, unemployment, dropping out of high school. So the cost to society is huge, but people don't really think about it that way. It's always sort of in the short term. Split up families, don't they? They're good at that. So I want to get, I just have a quick question. Your title says poverty, survival, and hope.

What do you see as hopeful here? Is it the spending plan that supposedly is going to reduce child poverty by up to 60%? Where are you hopeful, Andrea? I think that Dasani has tremendous hope for her life. I think that this book is about the strength of family at the end of the day and the importance of family. That is her ultimate system of survival. There are all these other systems that have names suggesting help, public assistance, child welfare, criminal justice. And these are systems that Dasani learned from a very young age that she had to navigate, that she had to manage in order to keep her most important and vital system intact,

which was the system of her family. And I think that the hope is there. The hope is really a personal thing for this family. When it comes to policy prescriptions, my hope is that people read this book and can potentially get some kind of new window into seeing how these policies play out on the ground and also perhaps challenge their own notions of what it means to be successful, what it means to be happy. Also, what you mean when you say someone like Chanel, her mother, is unemployed. She is unemployed by the definition of the formal labor market. But the poor, if you spend any time with them, poor folks work. They work, they're working all the time.

And it just, it just doesn't look like work. It may be bartering. Her stepfather supreme is a barber. He might give a haircut in exchange for some food. There's constant, incredible amounts of work going into just the daily act of survival for a family like this, and a lot to learn from them. You've been working on this. You and I have talked about this for a long time. What kept

you working out as a reporter, obviously? You're a very successful reporter, investigative reporter. What kept your interest over this amount of time, and why did you feel it was important to take what is essentially 10 years to tell this story? So I would keep going if I could. I think these are some of the most remarkable people, the most riveting and interesting people I've ever met. It's incredibly interesting to be around them. But the truth of the matter also is that the longer I spent with them, the more time that passed, the less I felt I understood the story as I had originally understood it, that new layers continued to reveal themselves, and I felt called to stay the path and try my best to understand the deepest meaning of their poverty,

of their homelessness, of the fact that the children were taken. What are the historical explanations for each of these plates? Because when you try to understand Dasani absent that history, you're doing a disservice to yourself. Right. So, it became a huge education for me, and one that I feel incredibly grateful for. It flew by, to be honest. That's a long time. It did.

I know. Scott, last question. Yeah, I don't have a question. I just wanted to say, Andrea, thank you. My understanding is the article resulted in hundreds of children being moved from abysmal conditions, and that was directly attributed to your coverage

and bringing some of these issues to light. So thank you and well done. Thank you. Anyway, the book is called Invisible Child, Poverty, Survival, and Hope in an American City. Andrea Elliott, thank you so much for coming on. You can read the original stories in the New York Times. It's still quite something.

It's many, many years later. It's well worth a read, but also the book. Thank you so much for coming on. Thank you so much. Thank you. All right, Scott, one more quick break. Thank you so much. Thank you so much. Thank you. All right, Scott, one more quick break. We'll be back for wins and fails. Support for this show comes from Constant Contact. You know what's not easy? Marketing.

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Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. Okay, Scott, wins and fails? I just have one win, Kara, and I'm very excited about this. The University of California announced that it's going to put in place a program to add 20,000 seats for students by 2030, which is the equivalent of a new campus to help meet surging demand for UC education and college graduates to fill the state's growing need for highly skilled employees. I think this is wonderful and speaks to this

important notion that administrators and the boards of great public universities are recognizing that they're public servants, not luxury brands, and that exclusivity is not a good thing. And it hits home for me. When I applied to UCLA, the acceptance rate was 74%. Now it's 14%. not luxury brands, and that exclusivity is not a good thing. And it hits home for me. When I applied to UCLA, the acceptance rate was 74%. Now it's 14%. So they don't have the capacity to reach and find unremarkable kids. And I think that's what America is about. So I think this is wonderful.

This is all over the system? This is all over the UC system. Across the entire UC system, they've committed to increasing freshman seats by 20,000 seats. Or basically, they're going to add the equivalent of Harvard to their freshman entries at the University of California. And I hope that it's something that inspires a panic or a virus that breaks out amongst our great public universities that educate two-thirds of our kids. And that is people complain. And I don't like this narrative emerging that you don't need college and you shouldn't go to college. When someone tells you not to go to college, it's oftentimes someone with a Stanford

degree hanging over their desk, and it's usually worked out pretty well for them. It's like when someone tells you to follow their passion, it means they're already rich. College is a pretty good plan B. I'm not saying it's for everybody. I think you said that to me the other day, but go ahead. I'm not saying it's for everybody. I think you said that to me the other day, but go ahead. I'm not saying it's for everybody, and we need more on ramps into the American dream for people who decide they don't want to go to college. Or can't.

But the University of California is a gift, and public universities are arguably the foundation of our income mobility, and we have lost the script the last 30 years, and my win is the University of California and the reg And we have lost the script the last 30 years. And my win is the University of California and the Regents deciding to get the script back. Noice. What's your fail?

That's it. I just want it to stand on its own. I was really inspired by this. I think it's wonderful. I'm going to get involved in this effort with my time, my treasure, and whatever talent that I can muster for it. But I'm very excited.

I want to commend the Regents of the University of California for continuing to be the greatest upward lubricant in mobility. I think you need to work for the University of California, Scott Galloway. I want to someday. Change my life, Kara. That's why I'm here with you. You need to work for them. All right.

My win was obviously Frances Haugen. Really, really tough to do. She stood up, like lots of people say. The fail is going to be, if you fall for the kind of sliming that Facebook will start on this woman, they will say she wasn't a very good product. I've already gotten them. She was just an okay product manager, someone said to me. I was like, uh-huh, okay.

How do you judge that? It's not going to work. They're not going to be able to discredit her. They're going to do it in that way. She wasn't important. She was a whiner. That's how it's going to get out. When I heard that first one, she was just a, you know, she was an okay. Okay, that's a word. She wasn't a very good product manager. That's what they're going to do. They're going to slime her that way. They can't attack her outright. They'll start to question how important she was, whether she was good at her job, if she really had an impact, or she was just a whiner. Believe none of it.

Nobody's a perfect worker. Just so you know, everyone has problems at work, and that's how they will make you question. She wasn't a star, you know, that kind of stuff. So don't listen to them. That's my... Don't listen. Don't listen. You're not buying it.

They did that with Susan Fowler. They did that to me with Susan Fowler. Oh, she wasn't very good at her job, Kara. Whisper, whisper, whisper. It was just crap. All of it. Anyway. We'll take a listener question on our next show.

Last week, we got one about libraries. I wonder what we'll talk about this week. If you have a question, submit it to nymag.com slash pivot. Good. Good stuff. All right. That's our show, Cara. We're going to be back Friday for more.

Yep. Today's show was produced by Lara Naiman, Evan Engel, and Taylor Griffin. Ernie Intertot engineered this episode. Make sure you're subscribed to the show on Apple Podcasts. Or if you're an Android user, check us out on Spotify or frankly, wherever you listen to podcasts. If you liked our show, please recommend it to a friend. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back later this week for another breakdown of all things tech and business. Are you under the impression that you're a good person? Are you under the impression

you're a citizen that cares about our Commonwealth? Do you work at Facebook? Cara.Swisher at NewYorkTimes.com. NYTimes.com. Oops. Support for this show is brought to you by Nissan Kicks. It's never too late to try new things, and it's never too late to reinvent yourself. The all-new reimagined Nissan Kicks is the city-sized crossover vehicle that's been completely revamped for urban adventure.

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