Slate Money - DiscoDance

Hello and welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Ammon of Bloomberg, I'm here with Elizabeth Spires, New York Times, Hello. I'm here with Emily Peck of Axios, Hello, hello. and we are going to talk about Skydance, which is a big new company in Hollywood. As of this week, we are going to talk about protests in France and Spain and other places, and what they tell us about the state of people in this AI-dominated world.

We are going to talk about the way the AI is dominating mathematics and education, and what is happening there and whether we are all just getting dumb. Emily is going to ask whether we've all forgotten how to make fires, and the answer to that is, yes, we have. We have a Slate Plus segment on Trump accounts and whether it's bad that you can put stock into them, like individual stocks. It's all coming up on Slate Money. Hey folks, this is Freddy. I'm Will. I'm Anthony from the hit Dungeons and Dragons podcast Dungeons and Daddies.

That's us. What does it feel like to have a better laptop like the Dell XPS powered by Intel Core? With a premium design that's thin and light, it feels smooth. Very smooth. What a responsive touch to me, it feels fast and precise.

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Our teams have true end-to-end product ownership, shipping distributed systems at scale, right here in downtown Toronto. That's technology at Capital One. Search technology at Capital One Canada. Okay, so the merger has happened, the biggest media merger that I can remember, much bigger than Disney buying, Puneus Century Fox. One of the Ellison's, or both of the Ellison's, or some Ellison entity, is a founder buying Warner Brothers. The Ellison entity was actually called Paramount Skydance.

And so people were talking about what this combined entity was going to be called, and in the press it was often called Warner Mount. Some people thought it should be called Para Brothers, or Max-A-Mount. I was very keen that it'd be called Disco Dance, because it's Discovery and Skydance. Put them together, you get Disco Dance. And I thought that was very clever and wonderful, and Emily is shaking her head.

She's like, no. No, no. No, no. The Elsens are no fun. They would never go for it.

It's a bit like when Penguin managed with Random House. I was like, you can either call it Random Penguin, or you can call it Penguin House. And either would be wonderful, and they chose neither. They call it Penguin Random House, right? Yeah, which is so boring. Anyway, so now, Elizabeth, you can tell us what the final actual official name for this merged beast is, which is...

I actually don't know. Now you're confused me. Skydance. Skydance. Skydance. Which is the name of the first little production company that David Ellison set up a million years ago to finance his acting career, which wound up going nowhere.

And so it's named after basically the smallest and least-roftable bit of the combined company, but hey, it's his company. He can do what he likes. This feels like a succession move. I didn't explain the reasons in the 1200 word memo that they sent out when the deal was finalized to all the employees, which the memo's like, now the real work begins and also says, we're going to do layoffs. And it's like they explained it because this is the mashup of Paramount, basically this very storied Hollywood movie studio that did like the godfather and stuff with Warner Brothers and other storied Hollywood studio that did like, I don't know, Batman, Bugs Bunny, whatever.

And in the memo, he says it would be a disservice to do like a mashup kind of name to both of those storied iconic brands. So instead of messing with their names by doing a mashup, along the lines of disco dance or whatever, they're just calling it this other name and leaving those names also there. Does that make sense? It's a bit like alphabet and meta. You just give the holdco some meaningless name and then the brands remain.

Yeah, exactly. They did that at member of when I worked at Verizon, you guys do remember? Oh, yes, we had Verizon media had bought Yahoo AOL, Huffington Post, and so they decided to call it, oh, for like a hot minute, for like a year. And we were like, okay. Creepy sort of holding up in your name.

It's better than trunk. trunk. That's another one. So this is like very, yeah, there's a story in history of weird holdco names and it doesn't often go well. But at least Skydance was a name that they didn't just pluck out of thin air from marketing executives. It's just this NAPO baby's brand name thingy that he did.

I prefer what Elizabeth was saying about it all being very succession. It really does strike me as a case of congratulations, you said the highest number. Yeah, that's it. There was this bidding war between David Ellison and Netflix for Warner Brothers and Netflix put in its bid and David Ellison put in his counteroffer and Netflix was like, okay, it's yours. Congratulations. You said the highest number and his bid, by the way, for Warner Brothers ended up being, I think, 68% higher than his original bid.

Like it was a massive premium. So in a little weird way, you could say that David Sastler who sold Warner Brothers earned the $606 million that he got paid for selling it. But yeah, so he not only does he wind up spending 68% more in nominal terms to the company, which he clearly didn't particularly want to do, but also most of that was in the form of debt. And as we all know, debt prices have skyrocketed, that yields have skyrocketed since the takeover was finalized until now. So now he just issued the big debt package to pay for all this. He wound up paying much higher yields, I think, than any of his bankers would have anticipated back when he put in the bid.

So what that means is we have extremely large, but also very, very debt-laden company that has to service billions of dollars of debt service every year. And Hollywood is worried about this, and this is a standard worry whenever anyone does a big takeover which is funded by debt. This is a standard thing in private equity or LBOs as they're known, which is basically you're going to have to cut everything just to try and reduce expenses and be able to make the debt service and there'll be no money left to actually invest. Do we buy this? So I think there's also another concern, which is that I don't know if the debt is collateralized with Oracle stock, but there is some perception in the market that the risk is kind of intertwined because the Ellison family is backstopping some of the debt.

So no, it's definitely well. So it is true that the Ellison family is standing behind this and is generally under one of the reasons why the debt actually wound up selling very easily is this idea that this is a Ellison family hobby, even though it hasn't enterprise value of $110 billion. Apparently when you're that rich. Thousands of people's jobs at stake. But yeah, the idea is a little bit like Elon Musk wasn't going to default on the Twitter debt because he wanted Twitter more than he wanted to lose the company.

The Ellison's probably aren't going to default on the Paramount or the Skydance debt, unless of course they lose all their money, which is also possible because Oracle is also borrowing insane amounts of money and is becoming a very... It is by far the most levered big tech company. It's not just come down a lot recently partly because of worries about Oracle's debt service. And so yeah, like if you are a fixed income investor worrying about Skydance debt performance, you might be worried about how is Oracle stock doing and that kind of stuff. But for the employees and for the people who watch movies and watch TV shows and that kind of stuff, the capital stack is not that important in terms of who owns what's what's important is like how much debt services there and is that all of that money that they're spending on debt services, that money that they could have otherwise been spending on making quality movies.

Yeah, I think it's going to be a big problem. I think it already is. Axios is Sarah Fisher had some reporting that we're talking about in a meeting recently. Basically, the whole challenge for a company like this is you have a profitable TV business. It throws off a lot of cash, but it's in rapid decline.

That's the disco part of this guitar. Yeah, you have these old Discovery channel, whatever CBS... Yeah, they sell them to be. So yeah, that's all like making money and everything, but it's a declining business. And at the same time, you're getting all the cash from that while it's in decline, you want to build up your streaming business, maybe your movie business also, so that one day when the switcheroo happens, you're going to be okay.

But now because it has to, it has all this debt that's more expensive, these loans that are cost more now than even before. It's like $80 billion of debt. It's a lot. It's like one day of OpenAI revenue, but we'll talk about that later. I don't know. Anywho, they're more dependent on that TV revenue than ever before, and that's not kind of what you want.

You don't want to be dependent on the dying part. You want to have the resources to invest in the growing part. But now it's just harder for them to maneuver. Everybody knows this when you have a big credit card bill and you only have so much money coming in. You're like, oh crap, you got to juggle around. You're not free to do weird experiments and stuff like that.

And then they have the monkey on their back also now of Oracle, which I mean, this is kind of cuckoo bananas. Like, obviously, I think that David Ellison just doesn't know what he's doing, or is there some like 3D chess thing happening here? I just don't understand. No, I think he knows what he's doing, which is that he merged Skydance, which is his company, bought Paramount, which is a much bigger company. And he's like, I am going to become a real major player in Hollywood.

And then he realized that even Skydance and Paramount together, which I guess is about 1.05 times the size of Paramount on its own, is not enough to compete in Hollywood. Paramount plus, the streaming network that he had, was always going to be an also-ran and he wasn't going to be able to compete. And there was a very strong belief in Hollywood and rumor in Hollywood going around that basically after buying Paramount, he was already putting it on the block and trying to sell it because he was like, I just don't have to sell it. I need to make this work. And he kind of reached this go-big-or-go-home moment and he was just about to go home when Warner Brothers put itself up for sale.

And he was like, oh, I don't have to go home. I can go big. And like, if I combine myself with Warner Brothers, then maybe then I will be big enough to be able to compete with Disney and Netflix. But that's not who he's competing with. What's the point of doing that though, if he's put the company in a position where he can't really invest in the businesses that are growing and is highly dependent on the ones that are dying for revenue to service the debt?

Well, we don't know that, right? Like the whole point about being an Alice in this, you always have a few extra billions of dollars if you need them. So if he needs to invest in something that is growing, he could like, unlike most CEOs, he is not constrained by the cash flows of the company. He can always phone up Dad and say, hey, I need another $10 billion. And if Dad is game, he'll like write a check.

You know, so there is a case to be made that he has the sort of financial wherewithal to be able to invest. If Skydance doesn't succeed like compete with Disney and Netflix, maybe it'll be partly because of financial constraints. But I think it will partly be for other sort of more quotidian reasons about like how it's managed and stuff. Right now, they have two streaming services, they're Paramount Plus and they have HBO Max. They need to work out how they're going to rationalize that, make it into maybe one which is bigger and sexier.

I don't think they've announced what their plan is on streaming, but ultimately the way they win and his stated plan is, I am going to be at least as successful in streaming as Netflix, which of course is worth a $1 trillion. And if he becomes as successful as Netflix, then he's won. I think also it's cool that he wants to be big enough to compete with Netflix or other media companies, but the real competition is the tech companies, it's Apple, it's YouTube and it's Amazon. And none of those little companies can like Paramount Plus Warner Brothers plus Skydance equals like a crumb of Amazon or Apple. I mean, you're right, the YouTube has a massive media.

You know, there's really a lot of ads and even subscription revenue on YouTube. YouTube is a huge media player. Apple and Amazon, I don't think a big player is a media. Amazon has a medium sized media business, most of which is brands paying for placement on the Amazon search results. Apple has like a hobby, which is Apple TV where they get like 12 people to pay money to watch low horses.

That is not a media business at all. I don't see how Apple is even a competitive space. I'll explain to you. Apple and Amazon buy content and have hit shows and they compete for content and hit shows with all the other companies that want to make a splash in streaming. Like the way to make a splash in streaming is to have really good content that gets people to sign up for your thing.

And when Apple and Amazon as their hobbies are going after like, I don't know, whatever, Widows Bay or the Ted Lassos or the young adult weird shows on Amazon that they have that people watch, maybe they're not as price sensitive when they're buying the content. So they're driving up the price of content for everyone playing in the space and making it harder for a cost conscious streaming company that actually needs that streaming revenue and needs those subscribers way more than the Amazon and Apple makes it harder for them to operate. So that competition doesn't matter. I think your East Coast media elite is showing Emily. Like the fact is that severance and slow horses and Widows Bay and all of these like prestige TV shows, yeah, they probably compete with HBO.

But HBO is a tiny little sliver of the Skydance Empire and that little corner of like prestige TV, you're absolutely right. There is like competition there between Amazon and Apple and HBO and even Netflix and even Disney with Hulu, whatever it's called. They all do some of that. But that's not where the real money is. That's not where the real audience is. That's like, that's the media classes watch those shows. It's not a mass thing.

I don't know. I think having, they're also, Amazon and Netflix are also buying like rights to NFL games, Netflix has reality TV. Like they are important in the competitive space of creating content, driving up prices for everyone. They are important. You're right. But I, all I'm going to say is that right now Skydance is bigger than either of them in terms of just the breadth and the number of people watching their stuff.

Yes, definitely if it falls down to being smaller than either of them, then that would be moving in the wrong direction. I feel like I won this fight. But I think it's also worth pointing out that the tech companies can, if they wanted to crush Skydance, you know, if they really wanted to spend that kind of money. Like they view the prestige TV as brand building and so on to feel like this point. But also they do have the cash flows where if they wanted to come in and do more innovative things or whatever they could. And because of the structure of the company now, Allison is cash constrained.

Hollywood is littered with people coming in with money and saying I can turn money into success. It almost never works. But they already have. Like Amazon does make money on their streaming business and Apple's streaming businesses. No, they don't. Wait, wait, wait, Elizabeth, explain to me how Amazon makes money on their streaming business. I don't think it does. What revenues does it have from their streaming business?

Well, first of all, I think a lot of Prime subscribers subscribe specifically for video, not for free shipping and everything they order. So that's important for them. The Prime subscription business is huge for Amazon. It's not AWS, but when they're doing it. Prime is huge. I will agree that Prime is huge and I will agree that at the margin people are maybe slightly more reluctant to cancel Prime if they have a couple of Amazon shows that they like to watch.

I'm not sure that that marginal reluctance turns Amazon Prime video into a profitable business. I don't think it is. Here's how I know that the tech companies are the real competition for a company like Skydance. It's one anecdote. The Emmys. Do you know where the Emmys will be broadcasting for the next five years exclusively on Amazon Prime? They will not be on TV. The TV award show is no longer broadcast on TV. It is broadcast on Amazon Prime.

Case closed. These are the competitors. These are the competitors. Mike Dreminds, Emily one. I don't know if I won. I'm just saying I think they're important competitors for Skydance.

And yet, if you look at who wins the Emmys, Amazon never wins Emmys. Look at what it was. That's what Emmys only mattered to the people like me, apparently the Northeast elite of the world. See, I doesn't win Emmys. The interesting thing to me about what you're saying, Emmys, it's like Prime time Emmys.

It's the opposite of the standard belly-aking that we have whenever there's a big merger. And it's the opposite of what all of the unions in Hollywood were complaining about, which is basically this merger is going to reduce competition and create this oligopoly of movie studios just like no one making movies anymore or whatever. The idea that mergers are inherently anti-competitive and therefore bad is very intuitive and often true. But what you're saying in this case is, well, actually the competition is so strong. We kind of like the only way that we'll ever be able to save one of brothers or paramount is by merging them.

You're kind of buying into that. That's an argument. I guess I am a little unlike these industries are dying. What does it matter? I don't know. I think I'm in the media industry, right?

So I don't know. I don't know if that's the right argument or not. Because you see smaller entertainment companies. I mean, A24 is a great example. So I don't know if it's right to say like it doesn't matter if the little companies become bigger.

I think it probably isn't good for competitive reasons. For the reasons we already talked about that they have too much debt, and that's going to hamper their ability to create stuff that is interesting and compete. So I'm just a jumble right now. It's very complicated. So the question is, you know, David's ass level here was running one of brothers.

You know, he ran Discovery. He bought one of us did the same thing, basically, that David Ellison did, had a small company bought a bigger company, merged it to try to make it work, had a huge amount of debt, struggled, wasn't really big enough, and then sort of threw his hands up and said, oh, fuck it, I'll just sell it. And made an absolute fortune. Like that is a win for him. But David Ellison doesn't really have that option.

Like it's, I guess, maybe in some weird parallel universe, if he just winds up slowly imploding and struggling under debt load, and his dad says, I'm not going to fund you anymore, and he winds up going, oh shit, now I need to sell it. Maybe, you know, at that point Netflix takes another bite to the cherry, but I kind of don't think they would. I think that would be like an antitrust violation too far. I think he doesn't have the same sort of exit option that says that, you know, he owns this now. And whatever happens to Skydance is, you know, on his watch.

He's dancing on his own. Just go dancing on his own. Hey, it's Adam Wild and Jacks, hosts of the Adam Wild and Jacks Show. What does it feel like to have a better laptop like the Dell XBS powered by Intel Core? With a premium design that's thin and light, it feels smooth. Very smooth.

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Oh, consumer confidence. Well, let's start in the US because we just had a couple of very, very bad consumer confidence figures. The conference board just put one out, which is like the lowest in living memory. University of Michigan is also really low. This is not news, but it is getting worse.

Generally speaking, the confidence that Americans have in the economy and in their own finances is lower than it was during the pandemic and sometimes supporting to the survey, even lower than during the Great Recession. There is a malaise in the country, which is one of the reasons why the Republicans are so worried about the midterms. Turns out, however, that this general sort of malaise about things are terrible is by no means confined to the United States. We just had the German elections, which the same kind of misery with the incumbents. And now there are massive riots. Well, not massive riots. There are protests in France.

The French will protest anything always. It's just like a French national pastime to protest. But this time it's not the truckers. This time it's the students and student protests are always done. Elizabeth, I guess you're saying that there are also protests in Spain?

Yes, and they're protesting partly immigration. There's a Spanish territory that sat a lot of Moroccan immigrants and they're right-wing people are mad about that. They're angry about housing. And there was an 87-year-old woman who was evicted in Spain. And she was literally carried out on a stretcher when they evicted her.

And this became like a big national story. She'd been living in her rental place for 70 years. And she was 87 and this corporate landlord thing was like, you know, they had some face with bureaucrats. I was like, oh, no, we can kick you out. And they did. And then, yeah, that caused a whole bunch of...

She also died this week, by the way. The quotes were like, this was preventable. I'm like, okay, but she was 87. The corporate landlord did obviously agree to let her in, but she died before she could go back to her apartment. The whole story was terrible.

Just a pause reading about this 87-year-old woman who was evicted, carried out on a stretcher, sparking sparking massive protests in Spain. Is this ever going to happen in the US? I feel like in the US this is happening probably every day. No one cares. Do you agree with this?

So the question is like, when you're saying is this ever going to happen? It's not like, is people being evicted and carried out on the stretcher going to happen? That happens all the time. I'm assuming it's happening all the time. The thing that isn't happening is like mass protests complaining about it.

No. Yeah, I assume in the US we'd be like, that's great. That's capitalism. That's the free market. This lady has everything.

I don't think we've ever seen like a mass protest around an economic issue. Everything that we've had in the last few years that are, you know, protests like... That was occupied Wall Street. Yeah. Yeah, I guess that, but that feels like it wasn't a national giant thing.

I mean, was it? No, it's not. The physical encampment in New York City was a physical encampment. But it wasn't nationwide. You couldn't agree.

And I guess like Martin Luther King, there was housing protests and things like that. But like overall, I'm saying old people probably getting evicted every day. No one seems to care in the United States in 2026. I do think that the protests in Madrid were in Madrid. Like they were in a specific square in Madrid, a bit like occupied was in a specific square in New York.

Okay. And the other thing I'll say is just that Madrid and New York are similar in that they are the... By far the highest proportion of rental housing in the country. You know, people don't protest renters getting evicted in places where like 80% of the housing is unoccupied. You know, so I think one of the reasons we don't see those protests in America is because rent is getting evicted from their rental units.

You know, precisely because America is so heavily weighted towards owning rather than renting. It's just not something that reaches the level of, you know, mass people caring about it. You know? There's a stigma associated with renting. And so I think people assume like if you got evicted from your place, like you kind of deserve it, you were being responsible on some level and because you're a renter, like you're not.

Oh yeah, you're not paying your rent and therefore, you know, that this is not paying your rent, get to work. But this is Europe, so no one's working, right? You know, and so in Spain, yeah, in Spain it's housing related. Prime Minister has called an election because he tried to do something with housing and was blocked by the right-wing parties and he's like, well, no, like I'm going to call the election, try and increase my majority to the point at which I can push through some housing stuff. We'll see whether that works.

Obviously, you know, it's not easy for incumbents anywhere right now, but he seems more popular than most incumbents. In France, it's not housing. It seems to be, interestingly, air conditioning. One of the main reasons that the students are protesting, one of their biggest complaints, is that they are being forced to study in like 100 degree classrooms and that none of the schools and not the colleges, the universities, the high schools, the middle schools, none of them are air conditions and they're like, we can't think in this heat. You've got to do something about it along with the standard complaints about class sizes and, you know.

What's interesting is that it seems to have metastasized into all these other issues that people are pissed off about. Like once they got the protest going, then they're mad about the debt and all these other things. It just became a magnet for other frustrations. Yeah, when was the G-Lé-Géon protest? French will always come out and protest it.

That was like 2018, the vests that postponed the raising of the retirement age, which is still an issue for France. The retirement age is still like 62 and people live to be as old as that one lady on the structure. Or even older. It costs a lot of money to support these people. France is a Mediterranean country. We know all about the Mediterranean diet and how long people live?

Of course, the science there. The wine and cheese really just kind of increases on JOB. Right. And there's that book from the 90s about French women. They never get fat or something.

You guys remember that book? Yep. I feel like if I was a listener, I'd be like, okay, he started out talking about consumer confidence in the US, then moved to protest in France and Spain over these specific issues to those countries. What's the connection? Where are you going here?

Emily, thank you for that question. I do like the softball teeing it up. All of this is happening at a time when the stock market is reaching new record highs. The way I see this is that there is a global swinging of that pendulum that we talk about so much on this show, between labor and capital. Whether it's people in America or people in France or people in Spain, are seeing the pendulum swing away from them.

They are seeing the wealth and the power move into big tech and AI and anyone who has a massive stock portfolio. And it's like, well, that's not me. I'm struggling here. Elon Musk is a trillionaire. What the fuck?

And I think this is a global phenomenon. And, you know, this is like money we like to talk about stocks, but now more than ever, I think probably in my very long, multi-decade career as a financial journalist. Now more than ever, I think we have to just shout from the rooftops that the stock market is not the economy. There has never been, I can never remember a bigger disconnect between the stock market and the lived experience of living in an economy. I mean, the stock market has gotten really, really big since 2009.

I had an interview for Money Talks. I don't want to spoil it too much, but we talked about how, let's see if I have this right, the value of all outstanding equity shares, public and private together is like worth 250% of GDP right now. If you look at the chart, it's just like up into the right up up up. It's like a disturbingly bubbly looking situation. Like the stock market is just so big and it's sucking up so much money.

It's making just so few people rich. Well, it's making a lot of people rich in America. One of the interesting distinctions between Europe and the United States is that Americans broadly are invested in US stocks. Europeans broadly are not. The European stock market is not doing as well as the American stock market. It doesn't have the big hyperscalers and tech mega caps.

And in any case, Europeans are much less likely to be stock owners than Americans are. So you can kind of sympathize a little bit more with the Europeans than the Americans. But also one of the things that Alan Greenspan used to talk a lot about was the wealth effect of the rising stock market and that people still wind up spending money when they feel rich and they feel rich when stocks are doing well. And I'm struggling with the degree to which that wealth effect is happening and visible in America. On the one hand, everyone's moaning and complaining and saying that things are terrible and you don't see it in like survey results.

But you do kind of see it in consumer spending data. The consumers, for all that they're moaning and complaining, they're still spending. And we still have pretty healthily positive GDP growth, even if you strip out the data centers. I've covered some or read some reports, various showing that a lot of the spending growth is coming from the wealth effect when people are spending some of their equity down, spending stocks and stuff. Which is good for them, right? If we're going to have some massive crash, why not spend it when it's high?

And a lot of the spending is from old people who are starting to live off their stock, off their wealth also. So there's also that disconnect where the people doing the nice spending are the ones with the stock and the ones that are old and not the young people that are taking to the streets, well at least in France. We are living in a world, we are relatively new to this world, but we are definitely living in a world in the United States now where the bulk of retirees in the United States have defined contribution pensions rather than for pensions. Which means they are spending their own money, which is mostly in stocks rather than just being paid money by pension fund. And so if they are doing the standard back at the envelope, whatever it is, you can spend 4% of your wealth every year in retirement.

If the stock market doubles, that 4% doubles, and they spend twice as much in retirement. So on some level, that wealth effect is an obvious and real thing just when you're looking at the DC retirees. It's kind of like not what you want for your economy to be vibrant and growing. You want young people to be doing while moving up and succeeding. That's what the old people are spending their money on.

All that money that old people spend is on some level being spent on young people, spending their companies and the companies staffed by people who by definition have not retired. The people working on the cruise ship are young or at the hospital. So this is all fine. I think it works unless and until there's some big stock market crash. It does manage to keep on ticking along.

I was thinking about you Felix, because you look at all the stock charts right now as I do, because I have the exos markets, please subscribe, and they are insane. Things are so obviously in a bubble right now. I think about you because you are one of these people that are like, stocks always go up, and I'm like, do they though? I'm not a stock's always. It's a better degree.

I'm not a stocks always go up person because I am old enough to remember the decade of the 2000s when they went sideways for 10 years and they didn't go up. I actually don't believe the stocks always go up, but I struggle a little bit with the idea of a bubble. Because in my mind, a bubble is a speculative bubble. A bubble is like people buying because they think it's going up. That is AI right now.

There's a lot of speculation around AI. I don't think so. I mean, like for one thing, look at the hundreds of billions of dollars of debt capital is going into AI. Like debt capital is never speculative, right? By definition.

What? Ask Robin, what happens to the railroads in the late 1800s? Does anyone remember junk bonds? No, look, you can have that. The bonds they sold for those like weird countries that didn't exist.

Right. But clearly something is happening where it's very boomy and it's probably too hot. Things are getting a little too big. I don't think a bubble requires a certain intent. Right.

No, so that's exactly what I was saying. Like speculative bubble requires a certain intent. If you're saying this is a bubble, but it's not a speculative bubble, then you need to define what a bubble is. And I have yet to find a definition which is helpful of bubble and how you can tell the difference between a bubble and not a bubble beyond something very tautological about like it's when prices are high and before they go down. I think it's concentrated sector risk and overvaluation and some combination of the two.

I think it's people throwing money at stuff that is clearly dumb. It's happening way too much. Hey, it's Adam Wild and Jack's hosts of the Adam Wild and Jack's show. What does it feel like to have a better laptop like the Dell XBS powered by Intel Core? With a premium design that's been enlightened feels smooth.

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Thanks, Veth365. Must be 19 or older on Terri, only please clear responsibility. If you have questions or concerns about your gambling or gambling or someone close to you, please go to connectcentario.citec supply. That is our perfect segue, which is, is AI clearly dumb or did it just solve the Napier Stokes equation and like, dozens of other major unsolved mathematical problems and basically proved that it is the opposite of dumb. In fact, it's modern.

Any humans that have ever lived in the history of the world. Emily, are you in the clearly dumb camp? I don't think AI is dumb. I think AI, I mean, I don't know enough about math, you guys to be like, well, we always knew that the Napier problem was going to be solved. Now that it, I don't know.

So I'm going to do a politician thing of being like, well, a different question. I think AI is not dumb. My concern is that AI is making people dumb. I think like at the level of math where AI can solve a problem. And so that freaks people out because they're like, we don't need mathematicians anymore.

I think that's dumb. I think you're always going to need mathematicians to look at what the AI, I think you are. Maybe I'm wrong. You're always going to need a mathematician to sort of like look at what the AI did and try to make sense of it and see if it's valuable and monetize it or not monetize it or not monetize it. So there's a big controversy around that specific problem because now the researchers are saying actually the AI did not do the work that, you know, opening eyes suggesting that it did originally these researchers did it.

Right. So these are the humans to be like, to look at what happened. Like, you can't just have an AI be like, here's a new drug and like release it to the world. That would be crazy. Yeah, I mean, AI is trained on the corpus of everything that humanity has created.

So all advances in mathematics and in science, you know, are based on what came before. We are all standing on the shoulders of giants and all of that kind of stuff. So like, I don't think it's a criticism of the AI to say, well, you are basing what you did on what somebody else did. Like, that's what mathematicians do. That's not what they're saying though.

They're saying open AI took credit for new. All right. Yeah. I'm not going to start assigning credit here. But the fact is that open AI did solve a whole bunch of mathematical problems that were previously unsolved.

And it did so in an interesting way. If you look at the proofs, which is really, really hard to understand or to follow, it did not solve these problems in the way that mathematicians solve them. It was solved the problems by like throwing a whole bunch of formula and words into a page and like, say, look, this passes the clever little test that mathematicians have invented to determine whether it's a real proof or not. But other than just passing that test, which is great, congratulations, you've done it. No one at this point really understands those proofs.

And to Emily's point, you know, now comes kind of the real work, which is to go through those proofs, maybe with the help of a robot and say, so, okay, explain to me what you're doing. Explain to me what you're doing here. Explain to me how this works. Because right now, one of the metaphors that have been thrown out this week, right now, we're like, we have reached the top of the mountain, but we don't know how we got here. And it's very foggy.

And we don't know what it was. And so now, like, let's try and reverse engineer how we got here. And once we've reversed engineer how we got there, then that will be, that will feel like a meaningful advance in mathematics. But right now, it's like, yeah, technically it's a proof, but a proof without understanding is a very weird creature. I think like at that high level, like the Smith problem that we're talking about, AI can be a compliment to what sophisticated, smart, expert types already know.

Journalists can use it to organize their data and make new conclusions about whatever is already out there. My concern is more this Wall Street Journal story that I read this week that looked at a lot of studies and talked to kids using AI. And it's making them dumb, you guys. They're not taking what AI says and thinking about it, testing it, they're like, I have a math problem, AI can solve it. It's not complicated.

It's not an unsolved theorem that mathematicians have been struggling with. It's just like, it is just like, what is seven times 15? Yeah, whatever. They're doing basically what you used to be able to do with a calculator. But now they are doing it with more essay questions and that kind of thing.

Essay questions. What is the meaning of the Raven? There was like an example in the journal story where they read something. Maybe it was the Raven and everyone came in with the same essay because it's better than cliff notes, right? You just do it for me and then it pops out.

There's a great stat that I thought illustrated this perfectly. There was a study that looked at Chinese students and they saw an 18% increase in homework scores simultaneously, a 20% decline in exam scores. And so that's a sort of like being able to produce the work product without understanding it and then actually being asked to explain it. Yes. I think that is a real when the calculator came out.

You know, people were upset and they were like, kids won't be able to learn math anymore. But guess what? They still learn math. It's probably fine. So I don't want to like be alarmist at the same time.

I feel alarmist. When I read the journal story, I was like, this tracks with me. If I use like AI when I'm reporting and ask you questions, I don't think I'm like, I don't absorb the information. Like I do if I read a journal paper or if I do an interview with an expert or something. It's just like, it's not as good and you don't, kids aren't retaining anything.

You do need the thinking. I am very happy to. You need the thinking. I am very happy to do an interview with someone record the interview. Be thinking using my human brain while I'm talking.

Take the transcript, drop it into AI. I mean, like now I've done the thinking, I just, you know, for other sort of prose related reasons, I could use some quotes. Can you give me like the final quotes? Yes. The AI is good at that.

It's pretty good at that. But you still got one of the things that we know about kids. And this goes through undergrad at the very least. They're not at school with the intention of learning. They're at the school with the intention of like taking the various boxes that the schools and the parents have told them to take.

Like, you need to do this homework, you need to do this exam, you need to get these grades, you need to answer this question. And they're like, okay, I'll do this, I'll do this, I'll do this. And then like somehow magically like the magic of pedagogy is that if the kids do all of these things and they come out the end of the sausage machine having gained a certain amount of knowledge and sophistication. But AI does, you know, pedagogy needs, needs to sort of recalibrate itself to make sure that we're not just asking kids questions that they can answer with AI and not really gain any understanding of what they're saying. There's a conventional wisdom and education that the best way to learn something is to have to teach it to somebody else.

Yes. And I was thinking about that, Mike, it until this year was in a majority of minority public school that was mostly immigrants. So they had this extra layer of language programming on top of everything where they had to write out, like if they were solving a math problem, they had to explain their thinking in a way that wasn't just show your work. Like they had to write whole paragraphs about it. It had the effect of, you know, forcing the kids to kind of articulate their logic in a way that if you are just dumping something into AI or googling it and repeating whatever it's out, you can do that while bypassing every single part of your brain that does the heavy lifting when you do critical thinking.

Yeah. AI will happily give you paragraphs of why you are subtracting five from seven in a situation, but that doesn't mean you understand it. And I do think this is also showing up in what we were talking about in French protests. On some level, the kids are aware of the fact that they're not learning and they're upset about that. But on another level, they have a bunch of questions they need to answer and they also have a game of football they want to play and so they want to get those questions out the way as quickly as they can so they can go play football.

Yeah. Some of the kids quoted in the journal too where they were like, I realize that I didn't know anything or like they were upset about it. I mean, these are self selected group, obviously, but yeah, the kids are maybe not be learning, but they're not stupid. One of the things that I've been thinking about a lot about the Nicole Hannah Jones essay about her daughter was the way that her daughter went into like a math exam and came out to the university. And came out of it and was like, I fucking nailed it. I got every single question. Right? I did so well. I'm so happy. I'm so smart.

And then it turns out she got every question wrong. And like that disconnect between what you think you know and what you actually know. I think is new. I don't think kids had that like 20 years ago pre-AI. When standardized testing became the primary metric for whether school was successful or not, there's a lot of moving to things like multiple choice tests, which are a little bit easier to do than say an open-ended question.

When I'm in the college, I was a little unprepared for it because I grew up in multiple choice land and then I would get a question on an exam that would be like an international security class. I would be like, democracy, discuss. I'm saying has one nuclear ICBM explain all potential ramifications using every theory that you've learned. Like there's no way to cheat on that. You're writing in a blue book. It's not a take home.

And I think students are often already unprepared for that kind of thing, which is more similar to what you would face in the real world. You know, if you were working in national security. We've already sort of gone down this standardized testing route that's heavily not requiring them to do complex thinking where there is no right or wrong answer necessarily, but they need to show their work. And so giving them access to AI tools and letting them use it, like I very glad that New York City is banned now in public schools. But I need to ask though, like if we are entering a world where analysis of the ramifications of selling to say in S.I.C.B.M.

is always, you know, when you give it to professionals going to be done with the aid of AI, you're like a computer enhanced human. Then on some level, schools should and must be teaching. And when I'm saying schools here, I think I'm talking about tesular education on secondary. But once you get to university, they have to teach like, what is the way to use AI for you to get smarter? And what is the way to use AI for you to get dumberances to distinguish between the two and encourage the former and discouraged.

That's true. But I don't know if he's going to use AI to do all their analysis and make every decision. We've already seen their applications during that. No, I think they are. To a greater or lesser extent. Maybe it'll just be whatever the international relations equivalent is like pull out the good quotes is.

And maybe it'll be like, can you just work this out for me? But it'll be on the spectrum somewhere. Everyone is using AI all the time everywhere. But this is toothpaste that is not going back in the tube. I don't think it's going back in the tube. But I also, you know, I was in prep for the segment. I was looking at the stats.

And there's an MIT report from last year that says something like 95% of corporate AI investments have produced zero quantifiable returns. Right. Because it's really hard to quantify that stuff. Well, but also there's other studies that suggest that for whatever time it saves, you put 40% of time back into it because you have to do rework. You have to check the AI's work in a lot of cases. You know, this is what somebody, we talked about this a while ago, people call it Workslop.

We're just using AI creates more work for you. Because you have to. I would disagree. I mean, I agree empirically with what you're saying about how we have experienced AI in the recent past. But when I turn around and look in the other direction at the sort of medium term future, I do have probably a little bit more optimism than you do that many, if not all of those will will become addressed.

We will try and work out how to avoid the bad ways of using AI and start trying to get more comfortable with the good ways because it's so new to us right now. We don't really know what we're doing. It's hardly surprising that we're kind of flailing around and making a bunch of mistakes. You know, eventually we're going to some people at least, most of us perhaps are going to work it out. Yeah. And the question is, is it going to make us dumber or smarter? And I feel like we still don't know. And it's freaking me out. And I think for younger people, the question is particularly urgent because you're literally have to teach younger people how to think like ostensibly we know how already I don't know.

One of the things that have been true in chess for well over a decade now is the computers can be people, but a person using a computer can be a computer. If you combine a human intelligence with a computer assistant, that is the most powerful and best thing that you can have. Yeah. But I have a theory going with that. One of the things that I think we don't talk about enough with, you know, is AI making people dumber is just that when you outsource that kind of critical thinking to a computer, especially at a young age, kids also kind of lose their tolerance for doing tedious, difficult work, which makes it harder for them to do deep work or work on longer projects.

Yes. I agree. And I do think, and this is why I'm drawing the distinction between like undergrads and middle schoolers. I think there's a case for bringing the AI is in and what's the best way to really turbocharge your intelligence when you reach that undergrad level in a way that does not make sense in middle school when they don't really have much of an experience. But it's so interesting because it's like, like I was saying before, there are all these technologies that were introduced and people at first were saying the things that I'm saying, like, oh, no one's going to know how to think anymore because no one's going to do the we won't need any accounts or finance people anymore because we have spreadsheets now or we don't know where we're going because we have Google Maps or that's true.

We won't know how to add, but like, it turns out it doesn't matter. And this is actually, and this is also really important is that we have lost way finding abilities like the parts of our brains that understand where we physically are in the world have atrophy. They are smaller now than they used to be before Google Maps came along. We have we are relying on Google Maps to do things that we used to rely on our brains to do. And when it comes to wayfinding and knowing where you are on the planet, we absolutely as a population, as a country, as a planet have become dumber.

That's probably bad. Is that bad? But that's the question. That's the million dollar question. Is that bad because if you ever get lost and your phone is dead bad?

But the computer assisted humans are wayfinding is not zero, right? No. The combination of human and phone is much more sophisticated and much more able to know where they are and know how to get around than the human was on their own previously. So there is on one way, in one way, like we are now computer assisted humans and the computer assisted humans are smarter than the old humans. On another way, the humans sounds computer are dumber than the old humans. Which one is better? Let's have numbers around it.

You can just keep coming up with examples like when like ovens came out, people were like, but no one's going to know how to make fires anymore. It's like, it's true. It's true. We are so bad at making fires. Okay. Okay. Yeah. 20 billion is my number and that's a dollar amount. 20 billion dollars.

It's the difference between the revenue that OpenAI said it was making a few months ago and now the number it maybe is making now. It's a few months ago. It was 60 billion and now they're saying 40 billion. But the reason I'm bringing it up is because OpenAI is not a public company and for all going to be honest, we really don't know how much money they're making. They're just saying numbers. They're not audited by any kind of, they could say whatever they want.

And there's a whole debate going on right now between OpenAI and anthropic about how they calculate these numbers. Are they taking into account all the things they need to be taking account, etc. It's that are known really knows. And I think it's important because a lot of public companies, a lot of the stock market gains that Felix was talking about is all riding on the ability of this company to make these amounts of money, but we don't actually know how much they make. So it's kind of the OpenAI IPO can't come soon enough because then we'll know.

So what are you saying? We never can know? No, I'm saying we will know. Once we're a public company, they'll have the gap numbers and we'll know what the gap numbers are. Well, at least we'll have a number that we can agree is a number that is real and comparable to other numbers.

Yes. They might make up some like weird accounting. But they will also have the gap numbers. We'll have the gap numbers. My number is 41 billion, which is the number of dollars that Chipotle is worth.

Oh! And Chipotle, as we know, was, you know, there was this big run up in the share price thanks to this visionary CEO, Mr. Nickel, who then got poached by Starbucks. And guess what? Now there's all these rumors going around that Mr. Nickel is going to buy Chipotle.

And if he does that, he's going to buy it for 41 billion dollars or thereabouts, which would by far be the biggest restaurant acquisition in the history of humanity. And I just need to quote Elena Nissnoff on Twitter because bless her, she said, When the singularity comes, we will all subsist on Venti Chicken burrito chinos and there's nothing you can do about it. Yeah. I don't see a lot of synergy between Starbucks and Chipotle, but... No, because I was, yeah, you don't want to be drinking a pumpkin spice latte whilst eating a burrito bowl.

It sounds like a really disgusting mashup, right? Who tastes the just don't go together? They could do like a cafe deal, which is like a sort of Mexican coffee and they could make that like a fancy Starbucksy thing and then also put it in Chipotle. I kept thinking you guys know that song about the KFC Taco Bell. I'm at the KFC Taco Bell. I'm at the Taco Bell KFC, whatever, but then it would be I'm at the Starbucks Chipotle.

Pizza Hut Taco Bell. I'm at the Pizza Hut. I'm at the Taco Bell. I'm at the combination Pizza Hut Taco Bell. Yeah. Elizabeth, what's your number?

My number is 71% and that is the amount of increase in prices of Halloween candy over the last five years. So in five years ago, you could buy a hundred piece bag of candy for $9.91 and this was just like an average and a steady and now it's $16.96. I went down this rabbit hole and I was like, well, what's the worst Halloween candy? And for me, it's those peanut butter taffy's that come in like a orange and black wax paper. So you can still get those very cheaply because no one likes them.

You can get a bag of those for $11. Wait, wait, is this demand driven inflation that people are the prices are rising because the Halloween candy manufacturers are like, you love us so much, you will pay anything for it? Yes. I mean, some of it's also driven by the, and these are sort of averages. So the fact that chocolate prices have gone up precipitously is affecting it.

But I also need to tell you that the city of High Point, North Carolina is actually banned the peanut butter taffy's because nobody likes them. What? So they can't sell them there? You can't give them out on Halloween. You can't give them out on Halloween. I don't think they really enforce it, but if you do it, you're just being an asshole.

Wow, that's amazing. Can you give out like a granny Smith apple? They don't ban it. I think if you want children to hate you, you can definitely do that. Yeah, that's a terrible thing to do. Who would do that?

I may or may not have had parents who would be like, hey, have an apple. Oh, no. No, no. That explains so much about you. That really does. We were the house that ate all the Halloween candy before October 31st, and then on the 31st, we're like, oh my God, we have to buy candy, and then there's no good candy to buy.

That's what happens in my house. If you guys have struggled with rising Halloween candy prices, let us know. SlateMoney.com. Otherwise, thank you for listening. We are going to have a slate plus segment for you, lovely slate plus subscribers on...

Prop accounts. Prop accounts. Are they becoming problematic? What are they going to do? We will get into it. Otherwise, thank you for listening. Thank you to Jess and Molly of C-Plane Armada for producing.

And we will be back next week as every week with yet one more episode. Hey, it's Adam Wild and Jack's hosts of the Adam Wild and Jack's show. What does it feel like to have a better laptop like the Dell XPS powered by Intellcore? With a premium design that's thin and light, it feels smooth. Very smooth.

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