We made it through another election year where the economy was the top issue for voters. So which business stories grabbed you the most this year?
We know you came to Straight Arrow News for the unbiased, straight facts. Here are the top five business stories you watched and read at SAN.com.
Point phone camera here
#5: Progress or poverty? Patience running out for Argentina’s Milei 1 year in
We had enough to worry about here with the U.S. economy, but what really grabbed your attention was an economic experiment happening in South America. Voters in Argentina had just elected a brash, unconventional choice for president in Javier Milei.
He’s the guy who promised to take a chainsaw to the economy and carried a chainsaw at rallies. He has a friendship with President-elect Donald Trump and has been called a “mini Trump” in the past.
A year following his election, SAN checked in with economists to grade Milei’s year. Despite the poverty rate under his policies spiking to include more than half the population, he’s made serious progress on inflation and the economy is starting to grow. There’s real hope he can turn things around there if the people of Argentina don’t run out of patience.
#4: Warren Buffett keeps selling Apple stock to hoard cash. But why?
When Warren Buffett makes money moves, the world pays attention. So when financial disclosures showed he was regularly selling Apple stock and hoarding cash, you wanted to know why — or rather, what he knew.
“We will have Apple as our largest investment,” the Berkshire Hathaway CEO said in May. “But I don’t mind at all, under current conditions, building the cash position. I think when I look at the alternative of what’s available in the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive.”
There it is from the horse’s mouth. However, an analyst quoted in our story speculated the Apple sale might have more to do with the death of Buffett’s right-hand man, Charlie Munger, who may have always been more comfortable with the company.
So far in 2024, Apple’s share price is up 36%.
#3: Conservatives want to give Dunkin’ Donuts the ‘Bud Light treatment’
The boycott of Bud Light was a huge business story in 2023, and by 2024, the beer still hadn’t recovered. But this year, conservatives found a new target in Dunkin’ Donuts and set out to give it the “Bud Light Treatment.”
The hashtag #BoycottDunkinDonuts splattered across social media after the CEO of Rumble said Dunkin’s parent company refused to advertise on the site because of its “right wing culture.” Rumble is a conservative counterpart to YouTube.
The boycott proved to be no Bud Light. Former Anheuser-Busch executive Anson Frericks correctly predicted in our story that the momentum would fizzle out because Dunkin is a privately-held company. Unlike with Bud Light, there’s no public data and regular industry reports to reinforce the success of the boycott.
#2: The US breached $34 trillion in national debt. Here’s who owns every dime.
Your No. 2 story is a topic I could talk about every day of every year and never run out of things to say. In fact, there are a lot of reasons to talk about it right now. We’re talking about the U.S. national debt, which is at $36 trillion
We started the year by breaching $34 trillion in debt and set out to tell you who holds it all.
We knew you had a serious interest in which foreign countries hold the bag. Japan has the biggest purse, followed by China, then the U.K. But foreign governments account for less than a quarter of the whole pie. Private investors hold the biggest share, followed by foreign countries, U.S. government accounts and the Federal Reserve.
#1: Boeing strike strategy ‘baffles’ top aviation analyst. Where do talks go next?
When Boeing machinists walked off the job for the first time in 16 years, many thought the strike would be a quick one. But weeks in, management completely botched negotiations by releasing details of an offer to the media before the union had responded.
“I thought the arrival of new management with a lot of experience and understanding in the industry would make things different, but that doesn’t appear to be the case at all, I’m afraid,” said Richard Aboulafia, a top aviation analyst and managing director of Aerodynamic Advisory.
The story “Boeing strike strategy ‘baffles’ top aviation analyst” is at the top of our list. It would be nearly another month after this interview before machinists voted to return to work.
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
In the end, workers got Boeing up from a 25% raise to 38% over four years. It was new CEO Kelly Ortberg’s first test in a long line of challenges we’ll be talking about for years to come.
Tags: Anson Frericks, apple, Argentina, Berkshire Hathaway, Boeing, Boeing strike, Bud Light, Business, Debt ceiling, Dunkin Donuts, Economy, Javier Milei, National Debt, Stock Market, Strike, U.S. Economy, Warren Buffett
[Simone Del Rosario]
We made it through another election year where the economy was the top issue for voters. So which business stories grabbed you the most this year? We know you came to Straight Arrow News for the unbiased, straight facts. I decided to pull together the business stories you watched the most in 2024. These are your top 5.
We had enough to worry about here with the U.S. economy, but what really grabbed your attention is an economic experiment happening in South America. See, voters in Argentina had just elected a brash, unconventional choice for president in Javier Milei. He’s the guy who promised to take a chainsaw to the economy. He has a friendship with President-elect Donald Trump and has been called a “mini Trump” in the past.
A year following his election, we checked in with economists to grade Milei’s year. Despite the poverty rate under his policies spiking to include more than half the population, he’s made serious progress on inflation and the economy is starting to grow. There’s real hope he can turn things around there if the people of Argentina don’t run out of patience.
When this man makes money moves, the world pays attention. So when Warren Buffett kept selling Apple stock and hoarding cash, you wanted to know why – or rather, what he knew. The Oracle of Omaha said, Don’t worry, Apple is still Berkshire Hathaway’s largest investment.
Warren Buffett: But I don’t mind at all, under current conditions, building the cash position. I think when I look at the alternative of what’s available in the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive.
Simone Del Rosario: There it is from the horse’s mouth. But an analyst quoted in our story speculated the Apple sell might have more to do with the death of Buffett’s right-hand man, Charlie Munger, who may have always been more comfortable with the company.
So far in 2024, Apple’s share price is up 36%.
The boycott of Bud Light was a huge business story in 2023, and by 2024 the beer still hadn’t recovered. But this year conservatives found a new target in Dunkin’ Donuts and set out to give it the “Bud Light Treatment.”
The hashtag Boycott Dunkin Donuts splattered across social media after the CEO of Rumble said Dunkin’s parent company refused to advertise on the site because of its “right wing culture.” Rumble is essentially the conservative counterpart to YouTube.
Was the boycott successful? It’s no Bud Light. The momentum fizzled out because Dunkin is a privately-held company and there’s no public data to reinforce the success of the boycott like there was with Bud Light.
Your No. 2 story is a topic I could talk about every day, every week of every year and never run out of things to say. In fact, there are a lot of reasons to talk about it right now. I’m talking about the U.S. national debt, which is at $36 trillion dollars.
We started the year by breaching $34 trillion in debt and set out to tell you who holds it all.
We knew you had a serious interest in which foreign countries hold the bag. Japan has the biggest purse, followed by China, then the U.K. But foreign governments account for less than a quarter of the whole pie. Private investors hold the biggest share, followed by foreign countries, U.S. government accounts, and the Federal Reserve.
Drumroll please – for the top business story of 2024.
When Boeing machinists walked off the job for the first time in 16 years, many thought the strike would be a quick one. But weeks in, management completely botched negotiations by releasing details of an offer to the media before the union had responded.
Richard Aboulafia: I thought the arrival of new management with a lot of experience and understanding in the industry would make things different, but that doesn’t appear to be the case at all, I’m afraid.
Simone Del Rosario: The story “Boeing strike strategy ‘baffles’ top aviation analyst” is the top of our list. It would be nearly another month before machinists would come back to work.
In the end, workers got Boeing up from a 25% raise to 38% over four years. It was new CEO Kelly Ortberg’s first test in a long line of challenges we’ll be talking about for years to come.
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
Experts say President-elect Donald Trump’s vow to put 25% tariffs on Mexico and Canada violates the trade agreement he negotiated during his first term. The U.S.-Mexico-Canada Agreement, or USMCA for short, fulfilled Trump’s 2015 campaign promise to terminate and replace NAFTA, America’s longstanding free-trade agreement with its neighbors.
Media Landscape
See who else is reporting on this story and which side of the political spectrum they lean. To read other sources, click on the plus signs below. Learn more about this data
Left 31%
Center 39%
Right 31%
Bias Distribution Powered by Ground News™
Trump announced in a Truth Social post that on his first day as president, he’ll sign an executive order charging Mexico and Canada a 25% tariff on all products coming into the United States.
Point phone camera here
“This tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” he posted.
“It is a violation of the USMCA. The U.S. just basically said, ‘Oops, we are going to impose these tariffs no matter what our treaty says,” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics specializing in U.S. trade flows and U.S.-China trade.
Lovely said Trump could try to unilaterally impose these proposed tariffs using the Emergency Powers Act.
“This would be a very unusual and certainly provocative application of that Emergency Powers Act,” she told Straight Arrow News. “Surely, it will go to the courts, but that seems to be the only route that he could do it given U.S. trade law in general and in particular, the promises we made under USMCA.”
Trump has no problem busting up trade agreements. It was a cornerstone of his candidacy that led to his first term, just as tariffs are for his second.
“It’s a disaster,” Trump said of NAFTA on “60 Minutes” in 2015. “We will renegotiate it or we will break it, because every agreement has an end.”
Is this the end of USMCA? Some are speculating that there is more behind Trump’s day-one tariff threat than meets the eye.
This constant threatening has a cost. It’s not a freebie.
Mary Lovely, Peterson Institute for International Economics
Trump supporter and hedge fund manager Bill Ackman cast doubt in an X post that Trump would even implement the threatened tariffs.
“@realdonaldtrump is going to use tariffs as a weapon to achieve economic and political outcomes which are in the best interest of America, fulfilling his America first policy,” Ackman posted.
“Trump sees an opening to push China further out of America’s backyard,” international relations expert Andrew Law wrote in his publication, The Mexico Brief. “This is less a policy declaration than a move to stir up more trouble amongst bickering allies. The goal? To extract even more concessions from Mexico and Canada on China. He’s throwing a cat amongst the pigeons to watch what happens. It’ll probably work.”
“It is a threat, obviously, and threats do get people to do things sometimes,” Lovely said. “The problem is that every time he threatens a trading partner, particularly free-trade-agreement partners, the rest of the world loses trust in the U.S. as a partner.
“Supply chains start to go around the U.S. rather than through the U.S., and that makes it more difficult for the companies in the U.S. that export,” she continued. “It also makes it more difficult for global companies that are trying to arrange supply chains to serve the United States. So this constant threatening has a cost. It’s not a freebie.”
In conjunction with tariffs on America’s neighbors, Trump also announced an additional 10% tariff on China related to the fentanyl crisis.
If the 25% tariffs on Mexico and Canada do go through, the question is, what will be impacted the most?
“Autos has to be number one,” Lovely said. “The U.S. auto industry is fully integrated with the industries in Mexico and Canada, so much that we don’t think about it as three industries; it’s one integrated platform. Some vehicles are said to go back and cross the border more than seven times before they hit car lots.”
On news of the threat, Detroit’s Big Three automakers traded down on Tuesday morning, Nov. 26. Ford started the day trading down 3%, GM went as far as 8% down, and Chrysler-owner Stellantis went down about 5%.
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
Food could also be set for a huge sticker shock. The guacamole is always extra, but the U.S. Department of Agriculture says Mexico provides about 90% of the avocados eaten in the U.S. More than half of all U.S. fresh fruit imports come from Mexico. On the northern border, oil is the top import from Canada.
The U.S. is the largest importer of goods in the world, with China, Mexico and Canada as its top suppliers, according to the U.S. Trade Representative. The U.S. is also the second-largest goods exporter after China. The top three recipients of U.S. exports are Canada, Mexico and China.
While the USMCA is not set to expire until 2036, there is a six-year review coming up in 2026. And China has more to do with North American trade than the acronym suggests.
“Many of us expect that the role of China in supply chains that serve the U.S. from Canada, but in particular, Mexico, would be on the table, would be an issue,” Lovely said. “Whether it is in this case I think is just speculation, since President-elect Trump said nothing about that in the social media post he made last night.”
For how world trade leaders reacted to Trump’s social media post, check out Tuesday’s Unbiased Updates.
Tags: Auto industry, Bill Ackman, Canada, China, Detroit, Donald Trump, Drugs, Fentanyl, food, Ford, General Motors, Immigration, Mexico, migrants, NAFTA, Stellantis, Tariff, Trafficking, U.S.-Mexico Border, USMCA
Simone Del Rosario: Experts say President-elect Donald Trump’s vow to put 25% tariffs on Mexico and Canada violates the trade agreement he negotiated during his first term.
President Donald Trump: It’s my great honor to announce that we have successfully completed negotiations on a brand new deal to terminate and replace NAFTA and the NAFTA trade agreements with an incredible new U.S.-Mexico-Canada Agreement called USMCA, sort of just works, MCA.
Simone Del Rosario: Trump announced in a Truth Social post that on his first day as president, he’ll sign an executive order charging Mexico and Canada a 25% tariff on all products coming into the United States. He says the tariff will remain in effect until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country.
Mary Lovely: It is a violation of the USMCA. The US just basically said, oops, you know, we are going to impose these tariffs no matter what our treaty says. My name is Mary Lovely. I’m a senior fellow at the Peterson Institute for International Economics. I specialize in the study of US trade flows, US-China trade and the Chinese economy.
Simone Del Rosario: Mary Lovely says Trump could theoretically, unilaterally impose these tariffs using the Emergency Powers Act.
Mary Lovely: This would be a very unusual and certainly provocative application of that Emergency Powers Act. Surely it will go to the courts, but that seems to be the only route that he could do it given US trade law in general and in particular the promises we made under USMCA.
Simone Del Rosario: Trump has no problem busting up trade agreements. It was a cornerstone of his candidacy that led to his first term, just as tariffs are for his second.
Scott Pelley: But there’s a North American Free Trade Agreement.
Trump: And there shouldn’t be. It’s a disaster.
Pelley: But it is there. If you’re president, you’re going to have to live with it.
Trump: We will renegotiate it or we will break it because you know, every agreement has an end.
Pelley: You can’t just break the law.
Trump: Excuse me, every agreement has an end.
Simone Del Rosario: Is this the end of the USMCA? Some are speculating there’s more behind this tariff threat than meets the eye.
Trump supporter and hedge fund manager Bill Ackman tweeted that “@realdonaldtrump is going to use tariffs as a weapon to achieve economic and political outcomes which are in the best interest of America, fulfilling his America first policy.”
International relations expert and founder of “The Mexico Brief,” Andrew Law, wrote, “Trump sees an opening to push China further out of America’s backyard. This is less a policy declaration than a move to stir up more trouble amongst bickering allies. The goal? To extract even more concessions from Mexico and Canada on China. He’s throwing a cat amongst the pigeons to watch what happens. It’ll probably work.”
Mary Lovely: It is a threat, obviously, and threats do get people to do things. Sometimes. The problem is, is that every time he threatens a trading partner, particularly FTA partners, Free Trade Agreement partners, the rest of the world loses trust in the US as a partner. So supply chains start to go around the US rather than through the US, and that is makes it more difficult for the companies in the US that export it also makes it more difficult for global companies that are trying to arrange supply chains to serve the United States. So this constant threatening has a cost. It’s not a freebie.
Simone Del Rosario: In conjunction with tariffs on America’s neighbors, Trump also announced an additional 10% tariff on China related to the fentanyl crisis. If the 25% tariffs on Mexico and Canada do go through, the question is, what will be impacted the most?
Mary Lovely: Autos has to be number one. The US auto industry is fully integrated with the industries in Mexico and Canada, so much that we don’t think about it as three industries. It’s one integrated platform. You know, some vehicles are said to go back and cross the border more than seven times, you know, before they hit car lots.
Simone Del Rosario: On news of the threat, Detroit’s Big Three automakers traded down on Tuesday. Ford started the day trading down 3%, GM went as far as 8% down, and Chrysler-owner Stellantis went down about 5%. And food could be set ford a huge sticker shock.
Social media clip: Double corn, sour cream and guac. Guac is extra. I know. It’s $45. For the guac? Yeah.
Simone Del Rosario: The guac is always extra, but the U.S. Department of Agriculture says Mexico does provide about 90% of the avocados eaten here in the U.S. And more than half of all U.S. fresh fruit imports come from Mexico. On the northern border, oil is the top import from Canada.
The U.S. is the largest importer of goods in the world. And who are the top suppliers? China, Mexico and Canada. The U.S. is also the second-largest goods exporter after China. And where does the U.S. send its goods? Canada, Mexico and China.
While the USMCA is not set to expire until 2036, there is a six-year review coming up in 2026. And China has more to do with North American trade than the acronym suggests.
Mary Lovely: Many of us expect that the role of China in supply chains that serve the US from Canada, but in particular, Mexico, would be on the table, would be an issue. Whether it is in this case, I think is just speculation, since President-elect Trump said nothing about that in the social media post he made last night.
Simone Del Rosario: For how world trade leaders reacted to that social media post, check out Tuesday’s Unbiased Updates by searching “Trump Tariffs” at SAN.com or the Straight Arrow News app.
Media Landscape
See who else is reporting on this story and which side of the political spectrum they lean. To read other sources, click on the plus signs below. Learn more about this data
Left 31%
Center 39%
Right 31%
Bias Distribution
928 other sources covering this story
Total News Sources
928
Leaning Left
111
Center
140
Leaning Right
112
Last Updated
4 weeks ago
Bias Distribution Powered by Ground News™
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
Javier Milei promised pain for the people of Argentina, and they elected him president anyway, with the highest share of votes since Argentina’s return to democracy. One year removed from his resounding victory, are Argentines already running out of patience with Milei?
He’s still the most popular political leader in the inflation-ravaged nation, but popularity is fleeting. Now, more than half the country disapproves of how Milei is running Argentina, up from 48% in January.
More than half the country also lives in poverty. In Milei’s first six months in office, the poverty rate has spiked from 42% to 53%.
“It’s one long Groundhog Day over there,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics and expert on Argentina. “I’m a bit of an outlier, opinion-wise, in terms of what Milei has done. I know that most economists, or at least a lot of economists, think that he’s doing a great job, but my grading for him would be a four [out of 10] at best.”
“I would put maybe seven or eight,” said Martin Castellano, head of Latin America research at the Institute of International Finance. “They have done significant progress in terms of stabilizing the economy.”
Point phone camera here
Milei inherited a terrible economy: hyperinflation in the triple digits, the poverty rate double what it was six years before, and a country on the brink of another economic crisis. Milei promised shock therapy and Argentina signed up.
“The shock therapy approach that Milei implemented was in large part because of the failure of the gradualist approach,” de Bolle said. “But the risk with the shock therapy approach is always that you know things are going to get very bad, and it’s still going to take a very long time for them to improve if they do improve.”
When Milei first took office, he devalued the country’s currency while at the same time removing price controls and federal subsidies his people had come to rely on. That led to a surge in inflation while, at the same time, taking away safety nets.
“You’re playing with fire in a sense because you’re doing all of these things at once,” de Bolle said. “They’re all going to hit the population in one go. That, I think, was correctly communicated to people, and I think they understood it, which is why they’ve been able to hold on to these policies for as long as they have, but now patience is running out.”
“Given that his support in Congress is quite limited, it’s important for him to keep the popular support,” Castellano pointed out.
“If things do not improve very quickly, we are going to be seeing people out in the streets protesting again, and we’re going to see social upheaval, and we’re going to see political upheaval,” de Bolle said. “That is how it usually plays out, and there’s no reason why this time will be any different from what it has been in the past.”
The protests have already begun. In October, hundreds of thousands of students took to the streets against budget cuts at public universities, where the salaries of most teachers now fall below the poverty line.
“We are losing a lot of people that we cannot replace because they do not get enough to make a living,” University of Buenos Aires professor Nicolas Sirolli told Reuters.
State workers went on strike the same month, demanding better wages and denouncing Milei’s economic policies. The walkout coincided with a transportation worker strike, which ground the country to a halt.
“The perception is one where, ‘No, there’s no improvement here. They keep telling us that things are improving, but things are really not improving because I look at my purchasing power, and it’s going down,'” de Bolle said.
For the most part, wages in Argentina aren’t budging while inflation continues to soar. Spurred by Milei’s shock therapy, annual inflation reached nearly 300% in April. But for six straight months, that annual rate has worked its way down, though it’s still nearly 200% and higher than when Milei was elected. But in October, monthly inflation dipped below 3%, the lowest monthly price increase in the country in nearly three years.
“I think that the progress on the inflation front has been quite, quite remarkable, and we will see inflation declining further in the coming months as particularly those high readings from last year are out of the picture,” Castellano said.
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
On top of it all, the economy is still in a recession and pushing deeper than expected. Estimates now have the economy contracting about 4% this year. But BBVA Research expects a 6% rebound next year, driven by investments, exports and private consumption. Milei’s budget projects a 5% expansion with inflation a little over 18% by the end of 2025. It hasn’t been that low since the mid-2010s.
From the outside, there are many bright spots in what Milei has achieved so far. And his friendship with President-elect Donald Trump gives him an important international ally. But the view is mixed within the country’s borders.
“People are starting to do the mental calculation of what these policies have effectively cost them to date from the time that they were adopted, and then they’re looking ahead and doing the calculation of, ‘Well, when can I expect an improvement? I just can’t see it,'” de Bolle said. “And therefore, you get this turning point from relative optimism or cautionary optimism into pessimism.”
While Argentines voted for change, patience is wearing thin. But experts say measurable change is around the corner.
“The worst of the adjustment is behind,” Castellano said. “But I think fine-tuning and improving, particularly on the political front, is going to be more important, increasingly important, in the coming months.”
Simply put, Milei doesn’t have a lot of support in Congress, especially for his unpopular policies. His party holds a minority in both chambers, and the 2025 midterms will serve as a referendum on his progress.
“That is why I ask you to move forward with faith and confidence,” Milei told a crowd of supporters. “Because from now on, we will only have good news, and in 2025, we will give an electoral blow.”
His austerity experiment may depend on it.
Tags: Argentina, Austerity, Donald Trump, Economy, Inflation, Javier Milei, La Libertad Avanza, Protests
[Simone Del Rosario]
He promised pain for his people, and they elected him president anyway. And with the highest share of votes since Argentina’s return to democracy.
One year removed from his resounding victory, are Argentines already running out of patience with Javier Milei?
He’s still the most popular political leader in the inflation-ravaged nation, but popularity is fleeting. Now, more than half the country (51%) disapproves of how Milei is running Argentina, up from 48% in January.
More than half the country also lives in poverty. In Milei’s first six months in office, the poverty rate has spiked from 42% to 53%.
Monica De Bolle: It’s one long Groundhog Day over there. I‘m Monica de Bolle, senior fellow at the Peterson Institute for International Economics, macro economist and an expert on Argentina, given a long history looking at the country, including when I was working at the IMF. I’m a bit of an outlier, opinion wise, in terms of what Milei has done. I know that most economists, or at least a lot of economists, think that he’s doing a great job, but my grading for him would be a four at best.
Martin Castellano: I would put maybe seven or eight, they have done significant progress in terms of stabilizing the economy. Hi. I’m Martin Castellano. I’m the head of Latin America research at the Institute of International Finance, and I’m focused more mostly on macroeconomic policies in Latin America.
Simone Del Rosario: Javier Milei inherited a terrible economy: hyperinflation in the triple digits, the poverty rate double what it was six years before, a country on the brink of another economic crisis. Milei promised shock therapy and Argentina signed up.
Monica De Bolle: The shock therapy approach that Milei implemented was in large part because of the failure of the gradualist approach. But the risk with the shock therapy approach is always that you know things are going to get very bad, and it’s still going to take a very long time for them to improve if they do improve.
Simone Del Rosario: When Milei first took office, he devalued the country’s currency while at the same time removing price controls and federal subsidies his people had come to rely on. That led to a surge in inflation while at the same time, taking away safety nets people had come to expect.
Monica De Bolle: You’re playing with fire in a sense, because you’re doing all of these things at once, they’re all going to hit the population in one go. That I think was correctly communicated to people, and I think they understood it, which is why, you know, they’ve been able to hold on to these policies for as long as they have, but now patience is running out.
Martin Castellano: Given that his support in Congress is quite limited, It’s important for him to keep the popular support.
Monica De Bolle: If things do not improve very quickly, we are going to be seeing people out in the streets protesting again, and we’re going to see social upheaval, and we’re going to see political upheaval, and you know that that is how it usually plays out, and there’s no reason why this time will be any different from what it has been in the past.
Simone Del Rosario: The protests have already begun. In October, hundreds of thousands of students took to the streets against budget cuts at public universities, where the salaries of most teachers now fall below the poverty line.
Nicolas Sirolli: We are losing a lot of people that we cannot replace because they do not get enough to make a living.
Simone Del Rosario: State workers striked the same month, demanding better wages and denouncing Milei’s economic policies. The walkout coincided with a transportation worker strike, which ground the country to a halt.
Monica De Bolle: The perception is one where, no, you know, there’s no improvement. Here, they keep telling us that things are improving, but things are really not improving, because I look at my purchasing power and it’s going down.
Simone Del Rosario: See, wages aren’t budging while inflation continues to soar. Spurred by Milei’s shock therapy, annual inflation reached nearly 300% in April. But for six straight months, that annual rate has worked its way down, though it’s still nearly 200% and higher than when Milei was elected. But in October, monthly inflation dipped below 3%, the lowest monthly price increase in the country in nearly three years.
Martin Castellano: I think that the progress on the inflation front has been quite, quite remarkable, and we will see inflation declining further in the coming months as particularly those high readings from last year are out of the picture.
Simone Del Rosario: On top of it all, the economy is still in a recession and pushing deeper than expected. Estimates now have the economy contracting about 4% this year. But BBVA Research expects a 6% rebound next year, driven by investments, exports and private consumption. Milei’s budget projects a 5% expansion, with inflation a little over 18% by the end of 2025. It hasn’t been that low since the mid-2010s.
From the outside, there are many bright spots to what Milei has achieved so far. And his friendship with President-elect Donald Trump gives him an important international ally. But from the inside…
Monica De Bolle: People are starting to sort of do the mental calculation of what these policies have effectively cost them to date from the time that they were adopted, and then they’re looking ahead and doing the calculation of, well, when, when can I expect an improvement? Well, I just can’t see it. And therefore, you know, you get this, this sort of turning point from relative optimism or cautionary optimism into pessimism.
Simone Del Rosario: Wanting change, but wearing thin…
Martin Castellano: The worst of the adjustment is behind. But I think fine tuning and improving, particularly on the on the political front, is going to be more important, increasingly important in the coming months.
Simone Del Rosario: Simply put, Milei doesn’t have a ton of support in Congress, especially for his unpopular policies. His party holds a minority in both chambers, and the 2025 midterms will serve as a referendum on his progress.
Javier Milei: That is why I ask you to move forward with faith and confidence. Because from now on, we will only have good news, and in 2025, we will give an electoral blow.
Simone Del Rosario: His austerity experiment may depend on it.
Javier Milei: Viva la libertad, carajo.
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
Elon Musk dropped more than $100 million to help get Donald Trump back in the White House. Big-time surrogates are often rewarded with prominent cabinet positions. But Musk stands to lose a lot more if he enters government life.
Media Landscape
See who else is reporting on this story and which side of the political spectrum they lean. To read other sources, click on the plus signs below. Learn more about this data
Left 34%
Center 29%
Right 37%
Bias Distribution Powered by Ground News™
“If Elon Musk comes into the cabinet or into any government position, he will have to either recuse from matters that affect his financial holdings or he will have to sell off those financial holdings,” said Richard Painter, a law professor and former chief White House ethics lawyer under President George W. Bush.
Unlike the president and vice president, Painter says cabinet members are subject to a criminal conflict of interest statute. As Tesla’s CEO and largest shareholder, SpaceX’s CEO and X’s owner, Musk has a lot of conflicts.
Point phone camera here
“I will create a government efficiency commission tasked with conducting a complete financial and performance audit of the entire federal government and making recommendations for drastic reforms,” Trump said during a speech in September. “And Elon, because he’s not very busy, has agreed to head that task force.”
When Trump made this declaration, Musk posted to X that he looks forward to serving America, “no pay, no title, no recognition is needed.” Painter said not getting paid is not a workaround when it comes to conflicts of interest.
Elon Musk would have to decide whether to recuse from any and all of those matters or divest his financial interest. And if he doesn’t want to do that, he’s going to have to stay out of the government.
Richard Painter, former chief White House ethics lawyer
“It doesn’t matter whether you get paid or not,” Painter said. “If you are working for the government and you’re appointed by the president or by anyone else in the government, to a government position, you are bound by the criminal conflict of interest statute whether or not you get paid.”
Wealthy cabinet members in history have had to unwind significant financial holdings in the past, like Trump’s former Secretary of State Rex Tillerson and Commerce Secretary Wilbur Ross. But nothing is as significant as the holdings of the richest person in the world.
“The only way for him to avoid that would be to be a government contractor,” Painter said. “That is a loophole, and we have a lot of financial conflict or conflicts of interest embedded in our government contractors, whether the military contracting companies or others.
“Perhaps Elon Musk may choose to take advantage of that loophole and simply become a contractor, but if he starts to have an office in the White House or in an agency, or he’s given a title that implies that he’s an appointee of the president, then he’s inside the government and he would be bound by that criminal conflict of interest statute,” he continued. “Whether it is matters that pertain to social media and his ownership of X or electric vehicles, transportation, and his ownership interest in Tesla, Elon Musk would have to decide whether to recuse from any and all of those matters or divest his financial interest. And if he doesn’t want to do that, he’s going to have to stay out of the government.”
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
Musk has already benefited from his investment in Trump. Tesla’s stock price is up nearly 30% since Trump won the election, as of Friday, Nov. 8.
“Clearly there is a perception that this benefits Tesla and hence the stock rally, which I’m not sad about as I still own a lot,” notable Tesla investor Ross Gerber told Straight Arrow News over email. “Unfortunately, the reality is Tesla is a business, not a vote on Elon. That business has many issues, starting with [full self-driving, which] doesn’t work and doesn’t look like it will anytime soon.”
Musk’s place in Trump’s White House will surely be dictated by his financial conflicts. But Musk isn’t wasting any time as an unofficial adviser to the president-elect. The Washington Post reports he joined a call between Trump and Ukrainian President Volodymyr Zelenskyy on Wednesday, Nov. 6. The call reportedly began with a discussion about one of Musk’s other ventures, Starlink.
Tags: Donald Trump, Economy, Electric vehicles, Elon Musk, SpaceX, Starlink, Stock Market, Stocks, Tariff, Tesla, White House, X
[Simone Del Rosario]
Elon Musk dropped more than $100 million to help get Donald Trump back in the White House.
Usually, big-time surrogates could get rewarded with prominent cabinet positions.
But Musk stands to lose a lot more if he enters government life.
Richard Painter: If Elon Musk comes into the cabinet or into any government position, he will have to either recuse from matters that affect his financial holdings, or he will have to sell off those financial holdings. This is Richard painter. I’m a law professor at the University of Minnesota, and I am in St Paul, Minnesota. I was formerly the chief White House Ethics lawyer for President George W Bush.
Simone Del Rosario: Unlike the president and vice president, Painter says cabinet members are subject to a criminal conflict of interest statute.
As Tesla’s CEO and largest shareholder, SpaceX’s CEO, and X’s owner, Musk has a lot of conflicts.
Donald Trump: I will create a government efficiency commission tasked with conducting a complete financial and performance audit of the entire federal government and making recommendations for drastic reforms. And Elon, because he’s not very busy, has agreed to head that task force.
Simone Del Rosario: When Trump made this declaration, Musk posted that he looks forward to serving America, no pay, no title, no recognition is needed.
Can he work for the government for free? Is that a way around?
Richard Painter: No. It doesn’t matter whether you get paid or not. If you are working for the government and you’re pointed by the by the president or by anyone else in the government to government position, you are bound by the criminal conflict of interest statute whether or not you get paid.
Simone Del Rosario: Wealthy cabinet members in history have had to unwind significant financial holdings in the past. But nothing is as significant as the holdings of the richest person in the world.
Richard Painter: The only way for him to avoid that would be to be a government contractor, like with the defense companies or contractors, and have a consulting firm that was a contractor for the government. That is a loophole, and we have a lot of financial conflict or conflicts of interest embedded in our government contractors, whether the military contracting companies or others, and perhaps Elon Musk may choose to take advantage of that loophole and simply become a contractor, but if he. He starts to have an office in the in the White House or in an agency, or he’s given a title that implies that he’s an appointee of the President. Well, then he’s inside the government, and he would be bound by that criminal conflict of interest statute, whether it is matters that pertain to social media and his ownership and X or electric vehicles transportation and his ownership interest in Tesla Elon Musk would have to decide whether to recuse from any and all those matters or divest his financial interest. And if he doesn’t want to do that, he’s going to have to stay out of the government.
Simone Del Rosario: Musk has already benefited from his investment in Trump. Tesla’s stock price is up nearly 30% since Trump won the election.
Notable Tesla investor Ross Gerber told Straight Arrow News over email, “Clearly there is a perception that this benefits Tesla and hence the stock rally, which I’m not sad about as I still own a lot. Unfortunately, the reality is Tesla is a business, not a vote on Elon. That business has many issues, starting with [full self-driving, which] doesn’t work and doesn’t look like it will anytime soon.”
Musk’s place in Trump’s White House will surely be dictated by his financial conflicts. But Musk isn’t wasting any time as an unofficial adviser to the president-elect. The Washington Post reports he joined a call between Trump and Ukrainian President Volodymyr Zelenski on Wednesday. The call reportedly began with a discussion about one of Musk’s other ventures, Starlink.
Media Landscape
See who else is reporting on this story and which side of the political spectrum they lean. To read other sources, click on the plus signs below. Learn more about this data
Left 34%
Center 29%
Right 37%
Bias Distribution
239 other sources covering this story
Total News Sources
239
Leaning Left
39
Center
34
Leaning Right
43
Last Updated
1 month ago
Bias Distribution Powered by Ground News™
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
In a presidential campaign cycle filled with tax cut proposals, one is loftier than all the rest. Former President Donald Trump has repeatedly floated the idea of getting rid of individual income tax and replacing it with revenue from tariffs.
Individual income tax currently provides 49% of the federal government’s annual revenue.
“Were you serious about that?” Joe Rogan asked Trump of replacing income taxes with tariffs.
“Yeah, sure. But why not?” Trump replied.
This country can become rich with the proper use of tariffs.
Former President Donald Trump
In a Bronx barbershop, Trump expanded on the proposal.
“When we were a smart country, in the 1890s and all, this is when the country was, relatively, the richest it ever was,” he said. “It had all tariffs. It didn’t have an income tax.”
A time before income tax
While income tax has been around for thousands of years, the United States has not. When the Constitution granted Congress authority to impose taxes, most of them were excise taxes, which are taxes placed on specific goods, like alcohol and tobacco.
The country’s first income tax came in 1861 to raise money for the Civil War. It was a flat tax and later repealed in 1872.
In 1890, the McKinley Tariff, named after then-Rep. William McKinley, raised the average duty on imports to around 50%.
From 1868 until 1913, 90% of all federal revenue came from taxes on liquor, beer, wine and tobacco, according to the Internal Revenue Service.
“And then around in the early 1900s, they switched over, stupidly, to frankly, an income tax,” Trump said.
Point phone camera here
This was the result of a years-long push by progressives to lower tariffs. The income tax became a fixture of U.S. tax policy via constitutional amendment in 1913.
“The country had grown too big and our industries were stable enough that it wasn’t realistic, nor was it necessary, for us to be able to continue to raise most of our revenues through tariffs,” David M. Walker, former Comptroller General of the United States and chair of the Federal Fiscal Sustainability Foundation, said.
An all-tariff policy today not ‘realistic’
“I don’t think it’s feasible to go from our current system to where we’re totally relying on tariffs. It is possible to go from our current system to where we’re relying primarily, not exclusively, on a progressive consumption tax,” Walker told Straight Arrow News. “But it would be a dramatic change from where we are right now, and government doesn’t tend to do things dramatically all at once.”
Walker served under Presidents Bill Clinton and George W. Bush. He has also run for office in Connecticut as a Republican. He told SAN Trump’s proposal to replace income taxes with tariffs is not realistic today.
“I think it’s important to understand that in 1912, right before the income tax came in the U.S., federal government was only 2.5% of the economy, 2.5%. And now we’re approaching 25% of the economy and growing,” Walker said.
The federal government today is a lot bigger than in the 1800s. And for better or worse, federal spending plays a much more critical role in U.S. economic growth.
The debate around ‘who pays for tariffs’
A lot has changed in the U.S. since the turn of the 20th century. But what is remarkably similar is the debate around tariffs.
A New York Times article from 1890 reads:
“The Republican campaign orators and pamphleteers say that the various import duties levied by Congress are paid by the foreigners who send goods to America, and they deny point blank that the price of any article which may be called a necessary expense will be increased to Americans by the operation of the new tariff law … It is no longer necessary to meet theories with theories. Let the facts, which are multiplying every day, tell who it is that pays the onerous tariff taxes. They will answer that the American people pay these taxes and that the burden of them rests most heavily on the poor.”
The article then went paragraph by paragraph detailing how merchants are marking up everything from clothing to crockery to groceries to horse clippers, all within weeks of the McKinley Tariff passing.
The tariffs proved pretty unpopular and Republicans lost dozens of House seats that election, including Rep. McKinley himself. But McKinley didn’t stay knocked down for long. He later became governor of Ohio and then president.
“A president who was assassinated named McKinley, he was the tariff king,” Trump told Rogan. “He spoke beautifully of tariffs. His language was really beautiful.”
Today, Trump makes the same claim of tariffs as Republicans in 1890. It is the same claim he made in his first term as president.
“So we’re taking in many billions of dollars, there’s been absolutely no inflation, and frankly, it hasn’t cost our consumer anything, it costs China,” Trump said of his China tariffs in 2019.
But by 2020, thousands of American companies sued the Trump administration, demanding a reversal of the tariff policy and refunds on tariff payments made by the companies. Among those thousands of companies was Tesla, the company that made current Trump surrogate Elon Musk rich.
Tesla had argued in its lawsuit that the tariffs were “arbitrary and capricious,” and said the administration “failed to consider relevant factors when making its decision, and failed to draw a rational connection between the facts found and the choices made.”
Analyzing Trump’s other tariff proposals
Economists and analysts across the board continue to say that Americans pay for tariffs.
“The truth of it is that it is a tax,” said Preston Brashers from the conservative think tank The Heritage Foundation. “It is something that gets passed along to consumers, and in some cases, it’s going to be something that’s passed along to producers here in the United States when they’re buying products from overseas.”
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
Trump said his tariff plans will “be bringing in billions and billions of dollars, which will directly reduce our deficits.”
Estimates consistently project the revenue Trump’s tariff proposals would raise will not pay for Trump’s tax cut proposals. These estimates do not consider the loftier “get rid of income tax” idea.
“The important thing with these tariffs is, if they work as intended, they will reduce trade, and so they don’t raise as much revenue as you might think,” Marc Goldwein from the Committee for a Responsible Federal Budget said.
The bipartisan CRFB says campaign plans from Vice President Kamala Harris will increase debt by an estimated $3.5 trillion over the next decade, whereas Trump’s plans add $7.5 trillion to the debt.
You’re not going to see a fundamental shift away from our historical revenue sources because the gap is just too great.
David M. Walker, former Comptroller General
“Let me give you the bottom line,” Walker said. “Neither major candidate for president has taken our deteriorating financial condition seriously. Both of them are making promises that will make our situation worse rather than better. But one also has to consider that this is what I call the silly season. Lots of promises are made and you have to assess what is the political feasibility of those promises happen[ing], and in some cases even what is the constitutionality of some of those things happening.”
“I think what’s more realistic is you could see selected imposition of tariffs on certain goods from certain countries in order to try to help level the playing field and in order to try to help promote more domestic jobs,” Walker added. “But you’re not going to see, I think, across-the-board approaches, and you’re not going to see a fundamental shift away from our historical revenue sources because the gap is just too great.”
Even history shows where tariff-driven revenue fell short: times of war. The United States had to temporarily turn to an income tax to fund the Civil War. The threat of war pushed remaining states to ratify the 16th Amendment, allowing Congress to tax incomes. And during World Wars I and II, Congress dug deep into the income tax coffer to pay for it.
Famous New York lawyer Amos Pinchot led the charge pushing Congress to raise income tax rates on the wealthy ahead of American involvement in World War I.
He correctly predicted, “If we ever get a big income tax on in wartime, some of it – a lot of it – is going to stick.”
Tags: 2024 Elections, Civil War, Committee for a Responsible Federal Budget, Donald Trump, Economy, Election, Elon Musk, GDP, Heritage Foundation, Income tax, IRS, Joe Rogan Experience, Kamala Harris, National Debt, Republicans, revenue, Tariff, Taxes, Tesla, Trade, U.S. Economy, World War II
[Simone Del Rosario]
How does paying no federal income tax sound? Now how would that work when individual income tax makes up half of the federal government’s annual revenue?
Donald Trump: This country can become rich with the use, the proper use of tariffs.
Joe Rogan: Did you just float out the idea of getting rid of income taxes and replacing it with tariffs? Were you serious about that?
Donald Trump: Yeah, sure. But why not?
Simone Del Rosario: It’s a prospect former President Donald Trump has proposed multiple times on the campaign trail.
Donald Trump: When we were smart, when we were a smart country, in the 1890s and all. This is when the country was relatively the richest it ever was. It had all tariffs. It didn’t have an income tax.
Simone Del Rosario: While income tax has been around for thousands of years, the United States has not. And when the Constitution granted Congress authority to impose taxes, most of them were excise taxes, taxes placed on specific goods, like alcohol and tobacco.
The country’s first income tax came in 1861 to raise money for the Civil War. It was a flat tax and later repealed in 1872. In 1890, the McKinley Tariff, named after then-Congressman William McKinley, raised the average duty on imports to around 50%.
Donald Trump: And then around in the early 1900s they switched over, stupidly, to frankly, an income tax.
Simone Del Rosario: This was the result of a years-long push by progressives to lower tariffs. The income tax became a fixture of U.S. tax policy via constitutional amendment in 1913.
David Walker: The country had grown too big and our industries were stable enough that it wasn’t realistic, nor was it necessary for us to be able to continue to raise most of our revenues through tariffs. Hello. I’m David M Walker, the immediate former Comptroller General of the United States, also a former trustee of social security and medicare, professor at the Naval Academy, and I am chairman of the Federal Fiscal Sustainability Foundation. I don’t think it’s feasible to go from from our current system to where we’re totally relying on tariffs. You know, it is possible to go from our current system to where we’re relying primarily, not exclusively, on a progressive consumption tax. But it would be a dramatic change from where we are right now, and government doesn’t tend to do things dramatically all at once.
Simone Del Rosario: For the record, David M. Walker served under Presidents Bill Clinton and George W. Bush. He has also run for office in Connecticut as a Republican. He tells me Trump’s proposal to replace income taxes with tariffs is not realistic today.
]David Walker: I think it’s important to understand that in 1912, right before the income tax came in the US, federal government was only 2.5% of the economy, 2.5% and now we’re approaching 25% of the economy and growing.
Simone Del Rosario: Ok, so the federal government today is a lot bigger. And for better or worse, federal spending plays a much more critical role in U.S. economic growth.
A lot has changed in this country since the turn of the 20th century. But what is remarkably similar is the debate around tariffs.
Let’s turn to the archives when that McKinley Tariff came about.
A New York Times article from 1890 reads: The Republican campaign orators and pamphlateers say that the various import duties levied by Congress are paid by the foreigners who send goods to America, and they deny point blank that the price of any article which may be called a necessary expense will be increased to Americans by the operation of the new tariff law … It is no longer necessary to meet theories with theories. Let the facts, which are multiplying every day, tell who it is that pays the onerous tariff taxes. They will answer that the American people pay these taxes and that the burden of them rests most heavily on the poor.
They then went paragraph by paragraph detailing how merchants are marking up everything from clothing to crockery (that’s tableware for those who don’t speak 1890s English), to groceries to horse clippers, all within weeks of the McKinley Tariff passing.
The tariffs proved pretty unpopular and Republicans lost dozens of House seats that election, including Congressman McKinley himself.
McKinley didn’t stay knocked down for long. He later became governor of Ohio and then president.
Donald Trump: A president who was assassinated named McKinley, he was the tariff king. He spoke beautifully of tariffs. His language was really beautiful.
Simone Del Rosario: Today Donald Trump makes the same claim of tariffs as Republicans in 1890. The same claim he made his first term as president.
Donald Trump: So we’re taking in many billions of dollars, there’s been absolutely no inflation and frankly, it hasn’t cost our consumer anything, it costs China.
CNBC report: A growing number of companies are filing lawsuits against the Trump administration demanding a reversal of the China tariff policy and refunds for tariff payments that these companies have already made.
Simone Del Rosario: Among the thousands of companies to sue was Tesla, the company that made current Trump surrogate Elon Musk rich.
Tesla had argued the tariffs were “arbitrary and capricious,” and said the administration “failed to consider relevant factors when making its decision, and failed to draw a rational connection between the facts found and the choices made.”
Economists and analysts across the board continue to say that Americans pay for tariffs.
Preston Brashers: The truth of it is that it is a tax. It is something that gets passed along to consumers, and in some cases, it’s going to be something that’s passed along to producers here in the United States when they’re buying products from overseas.
Donald Trump: It will be a certain tariff percentage, which will be higher than people had heard in the past, and we will be bringing in billions and billions of dollars, which will directly reduce our deficits.
Simone Del Rosario: And estimates consistently project the revenue tariffs would raise will not pay for Trump’s tax cut proposals. And they’re not talking about the lofty “get rid of income tax” idea.
Marc Goldwein: But the important thing with these tariffs is, if they work as intended, they will reduce trade, and so they don’t raise as much revenue as you might think.
Simone Del Rosario: The bipartisan Committee for a Responsible Federal Budget says campaign plans from Vice President Kamala Harris will increase debt by $3.5 trillion over the next decade, whereas Trump’s plans add $7.5 trillion to the debt.
David Walker: Let me give you the bottom line, Simone, okay. Neither major candidate for president has taken our deteriorating financial condition seriously. Both of them are making promises that will make our situation worse rather than better. But one also has to consider that this is what I call the silly season. Lots of promises are made and you have to assess what is the political feasibility of those promises happen[ing], and in some cases even what is the constitutionality of some of those things happening. I think what’s more realistic is you could see selected imposition of tariffs on certain goods from certain countries in order to try to help level the playing field and in order to try to help promote more domestic jobs. But you’re not going to see, I think, across the board approaches, and you’re not going to see, you know, a fundamental shift away from our historical revenue sources, because the gap is just too great.
Simone Del Rosario: Even history shows where tariff-driven revenue fell short. Times of war.
The United States had to temporarily turn to an income tax to fund the Civil War.
The threat of war pushed remaining states to ratify the 16th Amendment, allowing Congress to tax incomes.
And during World War I and World War II, Congress dug deep into the income tax coffer to pay for it.
Famous New York lawyer Amos Pinchot led the charge pushing Congress to raise income tax rates on the wealthy ahead of American involvement in World War I.
He correctly predicted, “If we ever get a big income tax on in wartime, some of it – a lot of it – is going to stick.”
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
A prominent short seller claimed the popular video game platform Roblox is an “X-rated pedophile hellscape” and said the company is lying to investors about its numbers. Last week’s report from Hindenburg Research prompted a suicide prevention campaign to call on British regulators to do more to protect kids from harmful online content.
Hindenburg Research is a short seller that publishes reports on companies it thinks are overvalued or have bad business practices. It notably called out electric trucking startup Nikola for using “lies and deceptions” to secure a partnership with General Motors.
Point phone camera here
The allegations included pretending a truck prototype was powered and fully functional while deceptively showing it rolling down a hill. Nikola’s founder, Trevor Milton, was sentenced to four years in prison for deceiving investors who lost hundreds of thousands of dollars.
What is Roblox
Roblox launched in 2006 as a new type of educational software platform. Kids could make their own games using the provided assets and learn to code. It doesn’t use the normal video game business model to make money. It’s not a one-time purchase or a game that relies on a subscription model like “World of Warcraft.”
“Think of it like iOS as a platform, and anybody can build a game for that platform,” Wedbush Securities Analyst Michael Pachter told Straight Arrow News.
“And while you’re on the platform, you can wander from game to game,” Pachter added. “You can play the games. You can customize your appearance. And you can interact with your friends. You can interact with brands, so you can go into the Nike portal or the Burberry portal.”
Roblox’s popularity surged during the COVID-19 pandemic, and it went public in 2021. The company now boasts 79.5 million daily active users. It’s available pretty much anywhere you can play games.
In 2023, Roblox reported $3.5 billion dollars in bookings. And in the first 6 months of this year, it’s grown 20%, on track for $4.2 billion in bookings.
“The developers who build games for the Roblox experience publish their games on that platform. Roblox helps the developer to promote the game,” Pachter explained. “And while in the experience, there’s stuff to spend money on. The currency in the game is called Robux.”
“You might play the game, ‘Adopt Me.’ If you want a leash, you have to buy it to take your pet out. Or if you need food to feed your pet, you’ll buy it with Robux,” Pachter said.
“So the model for Roblox is, ‘We will allow you to put your game on the platform, and we will allow you to monetize. And if people spend Robux in your game, you get your share of those dollars spent. We’ll collect the dollars and we’ll keep somewhere between 30% and 70% of the revenue generated [that] goes to Roblox,’ depending on who drives traffic to the game,” Pachter added.
More than half of Roblox users are under the age of 17. Kids under 13 account for 42% of the user base. That’s why the child safety part of Hindenburg’s report is so important.
Hindenburg’s claims
Hindenburg claims Roblox is “lying to investors, regulators, and advertisers about the number of ‘people’ on its platform, inflating the key metric by 25-42%+.”
They also claim Roblox lied about engagement. Roblox says the average player spends 2.4 hours on the platform each day. Hindenburg says, “Engagement hours, another key metric, is inflated by an estimated 100%+.” But Pachter says there’s a big flaw in Hindenburg’s calculations.
“They concluded that the gameplay is 22 minutes a day, and they tracked across all games,” Pachter said of the report. “And then [as a] footnote, ‘We did not track time spent in other activities like customizing avatars or talking to friends.'”
“It’s idiotic not to measure that,” Pachter said.
“They never questioned bookings,” Pachter added. “Bookings are going up. Cash is going up. [Hindenburg] did question the number of users. And if we were to restate what Roblox reported last year, $3.5 billion from 68 million users, and use what Hindenburg says the right number is, then the average user, instead of generating $50 a year, generated $70. Do we care?”
In a statement, Roblox said, “The financial claims made by Hindenburg are misleading. The authors are short sellers and have an agenda irrespective of the substance of Roblox’s business model and results.”
“What matters to investors is revenue and cash flows and the revenue growth, whether or not you have as many users as you claim, or 20% fewer, is to me a little bit of noise,” Edwin Dorsey, the author of The Bear Cave Newsletter, told Straight Arrow News.
“I have mixed feelings about the inflated metrics,” Dorsey continued. “I personally don’t feel it’s as big a deal as maybe some people in the market think. And I don’t think it’s as big of a deal for the business as the child safety.”
Roblox and child safety
Hindenburg’s report claims Roblox, “is compromising child safety in order to report growth to investors.” Their research recounted nine situations where police caught predators using the platform. Meanwhile, Dorsey, who has been covering these Roblox issues since 2022, said he has detailed 14 instances.
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
“Unfortunately, [Hindenburg is] right, and they’re late, and they didn’t say anything that hasn’t been reported before,” Pachter said.
In July of this year, Bloomberg published a lengthy feature with the headline, “Roblox’s Pedophile Problem.” The piece detailed situations where prominent creators in the community used their influence to groom children.
“The Bloomberg article is thoughtful, well written, super well documented, and concludes that Roblox is spending $878 million per year, 25% of their $3.5 billion in bookings last year, and is generating 13,000 reported incidents in 2023,” Pachter said.
“Most of those incidents, the predators who reported, didn’t actually solicit sex or pornography from the kid,” he continued. “They tried to get the kid to go over to Discord or Snapchat because those aren’t monitored as well.”
Roblox says they’ve spent nearly two decades making it one of the safest online environments for its users, mostly kids. One mitigation technique Roblox uses is not allowing images in the chat feed. But a simple Google search provides a lot of videos showing you how to make images into emojis that can be used in chat.
When Bloomberg spoke with current and former employees, they detailed the gargantuan task of trying to moderate such a massive space.
“It just seems repeatedly like if Roblox moderation takes a step, it’s always the bare minimum step,” Dorsey said. “So before banning a game, they might just blur out the title. Before banning an account posting inappropriate stuff, they’ll just take down the inappropriate items. I think if you had a stricter enforcement mechanism against bad accounts and bad actors, that would help.”
Roblox also rejected these safety claims in the Hindenburg report.
“Roblox takes any content or behavior on the platform that doesn’t abide by its standards extremely seriously, and Roblox has a robust set of proactive and preventative safety measures designed to catch and prevent malicious or harmful activity on the platform,” the company’s statement reads.
The fallout
The Bear Cave has also detailed inappropriate nonsexual content on Roblox, including the reenactment of school shootings and the Holocaust. The Verge has also reported past reenactments of other mass shootings and Wired reported on Nazi role-plays on Roblox.
In the end, Dorsey thinks there are several ways the company can shore up these issues and make it safer for children.
“Unlike Instagram, Facebook and all these other social networks, you don’t need an email or phone number to sign up,” he said. “You can just sign up with a username and password. If you get banned, they have no way of enforcing that ban, because you can just make a new username and password.”
“I think the big underlying issue here is you can’t have it so 8-year-olds can chat freely with the rest of the internet,” Dorsey continued. “It’s fun, it’s cool if you’re a young kid, to be able to chat with all the strangers in the world. But as long as you have that, that is just an insurmountable huge risk that is always going to pose issues.”
While the legitimacy of Hindenburg’s allegations is still up for debate, its report is already being used to push for change. The Molly Rose Foundation was formed by the parents of British teenager Molly Russell, who took her life after viewing harmful online content.
“This report underscores the growing evidence that child safety shortcomings aren’t a glitch but rather a systemic failure in how online platforms are designed and run,” the organization’s CEO Andy Burrows said. “The Online Safety Act remains the most effective route to keep children safe, but such preventable safety lapses will only be addressed if Ofcom delivers a step-change in its ambition and determination to act.”
The Online Safety Act passed in 2023, but the U.K.’s Office of Communications, or Ofcom, is still tasked with creating codes to guide the law. That’s in the draft phase now.
“Platforms – such as Roblox – will be required to protect children from pornography and violence, take action to prevent grooming, remove child abuse images, and introduce robust age-checks,” Ofcom told the Guardian. “We have set out clear recommended measures for how they can comply with these requirements in our draft codes.”
A similar “Kids Online Safety Act” in the U.S. passed the Senate this summer, but free speech advocates worry it does too much to restrict legal speech. It’s a challenge the U.K. version also faced. Recently, the U.S. and U.K. announced a joint working group to tackle child online safety.
A Roblox spokesperson told Straight Arrow News the company fully intends to comply with the Online Safety Act.
Despite his skepticism about the subjects brought up in the Hindenburg report, Pachter says there could be a case to be made that Roblox is overvalued.
“I don’t think so, but there’s a case to be made,” Pachter said. “I understand why someone would say, ‘It’s trading at $40. It should be trading at $30.’ And so they thought, ‘If we expose them and people agree with us, then they’ll think it’s worth $30, it’ll go to $30, and we’ll make money on our short, we’ll make $10.’ But they picked the wrong things to criticize it for.”
News Reel:
“Short seller Hindenburg Research has a new target, the company announcing a short position in the popular children’s video game roblox.”
“According to Hindenburg they are inflating some of those metrics to appease investors.”
“They allege inflated metrics, they question the platform’s safety, they say it compromises child safety.”
[Simone Del Rosario]
Last week short seller Hindenburg Research disclosed its position in Roblox, claiming the kid’s video game company is doctoring the numbers. But Hindenburg’s even more disturbing accusation is that the platform is an “X-rated pedophile hellscape.”
Edwin Dorsey:
It’s literally, to me, one of the most dangerous places on the internet for kids, and it’s advertised as one of the safest.
Simone Del Rosario:
This has long been a criticism of the game mostly played by people under age 17. Now a suicide prevention campaign is using the Hindenburg report to call on UK regulators to up their game on protecting kids from harmful online content.
Is the platform rampant with predators while at the same time, lying about its success? Let’s first look at the source.
Hindenburg Research is a short seller that publishes reports on companies that it thinks are overvalued or have bad business practices. When you publish bad news, share prices tend to fall. And who benefits when that happens? Hindenburg.
Like when Hindenburg called out electric trucking startup Nikola for using “lies and deceptions” to secure a partnership with General Motors.
The allegations included pretending a truck prototype was powered and fully functional while deceptively showing it rolling down a hill. Put this under times Hindenburg was right. Nikola’s founder Trevor Milton was sentenced to four years in prison for deceiving investors who lost hundreds of thousands of dollars.
On the day Hindenburg published its report, Roblox stock opened down 9% from the previous close. The share price bounced back by the next day.
Michael Pachter:
Hindenburg, who has had tremendous success and been right at least half a dozen times.
And I am not suggesting that they’re wrong
and I can just say Roblox is not a fraud.
Simone Del Rosario:
Roblox doesn’t fit into a normal video game bucket. It’s not a one-time purchase like a Triple-A game and it’s not a subscription for playtime like World of Warcraft.
Michael Pachter:
So they have a software platform. Think of it like iOS as a platform, and anybody can build a game for that platform.
I’m Michael Pachter, I’m a research analyst at wedbush securities, and I cover the broader media and entertainment space. So among my coverage is video games and movie streaming and some other interesting entertainment stuff.
Simone Del Rosario:
ROBLOX launched back in 2006 as a new type of educational software platform. Kids could make their own games using provided assets and even learn to code.
Michael Pachter:
And while you’re on the platform, you can wander from game to game. You can play the games. You can customize your appearance.
And you can interact with your friends. You can interact with brands, so you can go into the Nike portal or the Burberry portal, or you can play games.
Simone Del Rosario:
Roblox exploded in popularity during the COVID-19 pandemic and went public in 2021. The company boasts 79.5 million daily active users. And it’s available pretty much everywhere you play games, from consoles to mobile devices.
Here’s how they make money.
Michael Pachter:
the developers who build games for the Roblox experience publish their games on that platform. ROBLOX helps the developer to promote the game
And while in the experience, there’s stuff to spend money on. The currency in the game is called robux. So like B, U, C, K, s, but it’s B u x, you buy robux to buy stuff in the games.
you might like say, play the game, adopt me. If you want a leash, you have to buy it. You know, to take your pet out. Or if you need food to feed your pet, you’ll buy it with robux.
So the model for Roblox is we will allow you to put your game on the platform, and we will allow you to monetize. And if people spend robux in your game, you get your share of those dollars spent. We’ll collect the dollars and we’ll keep somewhere between 30 and 70% of the revenue generated goes to Roblox, depending on who drives traffic to the game.
Simone Del Rosario:
And it’s generated a lot of money. In 2023, Roblox reported $3.5 billion dollars in bookings. And in the first 6 months of this year, they’ve grown 20%, on track for $4.2 billion this year.
As we’ve said, more than half of Roblox users are under the age of 17. Kids under 13 account for 42% of the user base. That’s why the child safety part of Hindenburg’s report is so important. We’re going to get there.
But first, the numbers. Hindenburg claims Roblox is “lying to investors, regulators, and advertisers about the number of ‘people’ on its platform, inflating the key metric by 25-42%+.”
Not only that, they also say Roblox is lying about engagement. Roblox says the average player spends 2.4 hours on the platform each day. Hindenburg says “engagement hours, another key metric, is inflated by an estimated 100%+.” But Pachter says there’s a big flaw in Hindenburg’s calculations.
Michael Pachter:
Roblox says 60 billion hours, 68 million da use, 2.4 hours a day. So Hindenburg goes, we’re going to hire a technical consultant who’s going to test this. 30 million accounts, God bless them, like valid and they concluded that the game play is 22 minutes a day, and they tracked across all games. They did, they did it right? And so they went, 22 minutes is not 2.4 hours. 2.4 hours is 144 minutes, right, which is like six plus times as much. And then footnote, we did not track time spent in in other activities like customizing avatars or talking to friends.
It’s just idiotic, like when you’re in Roblox, the first thing that happens is your friends list loads, and you see all the messages from your friends, and they’re like, Hey, we’re playing this game. Come over and play with us or whatever, right? It’s idiotic not to measure that.
Simone Del Rosario:
They also get into the weeds on what a Daily Active User truly is, claiming they are measuring people simply visiting the platform, which could include alt accounts and dreaded bots.
Michael Pachter:
they never questioned bookings, which is cash, revenue, cash receipts. They’ve never questioned that. It was 2.8 billion, then 3.5 billion, and it’s tracking to 4.2 this year. So bookings are going up. Cash is going up. They did question the number of users. And if we were to restate what Roblox reported last year, 3.5 billion from 68 million users and used what Hindenburg says the right number is, then the average user, instead of generating $50 a year, generated 70 do we care?
So I think Hindenberg is making a mountain out of a molehill on users.
Simone Del Rosario:
In its defense, Roblox pointed to the elephant in the room when it comes to Hindenburg’s report.
In a statement, the company said, “The financial claims made by Hindenburg are misleading. The authors are short sellers and have an agenda irrespective of the substance of Roblox’s business model and results.”
Edwin Dorsey:
What matters to investors is revenue and cash flows and the revenue growth, and you know, whether or not you have as many users you claim, or 20% fewer is kind of, to me, a little bit of noise.
I’m Edwin Dorsey. I’m author of the bear cave newsletter, a newsletter focused on exposing corporate misconduct,
I have mixed feelings about the inflated metrics. I personally don’t feel it’s as big a deal as maybe some people in the market think. And I don’t think it’s as big of a deal for the business as the child safety.
News reel:
“The victim in this case, a 14 year old girl found crying, alone, in the bathroom of a Kroger. Allegedly picked up from her school in Ohio.”
“Police say this man used a popular gaming app to track her down and start an inappropriate relationship.”
“A clayton County man in custody tonight, accused of raping a child he met online. Police say Howard Graham traveled 800 miles to pick up the little girl.”
Simone Del Rosario:
Hindenburg’s report claims Roblox “is compromising child safety in order to report growth to investors.” Their research recounted 9 situations where predators were caught by police.
Edwin Dorsey:
In my own article, I highlight 14 cases. Hindenburg found nine in the US, so there’s been a few dozen where you can just find from the media.
My strong belief is, so much of this either is unreported in the media and it might be even unnoticed by the police, one reason, I believe that is there’s this vigilante group called predator poachers that effectively does sting operations to try to catch like sex offenders and engage people engaged in these inappropriate conversations with children, and they’ve repeatedly found that Roblox is a preferred way for predators and sex offenders to try to meet kids.
Simone Del Rosario:
The allegations of it being a playground for abusers of children are nothing new.
Michael Pachter:
They are right. Unfortunately, they’re right, and they’re late, and they didn’t say anything that hasn’t been reported before.
Simone Del Rosario:
In July of this year, Bloomberg published a lengthy feature with the headline “Roblox’s Pedophile Problem.” The piece detailed situations where prominent creators in the community used their influence to groom children.
Michael Pachter:
the Bloomberg article is thoughtful, well written, super well documented, so I used it as my source, and concludes that Roblox is spending of $878 million per year. 25% of their 3.5 billion in bookings last year is is generating 13,000 reported incidents in 2023 now that those numbers sound giant, right, 13,000 sexual predator incidents reported bad.
Most of those incidents, the predators who reported didn’t actually solicit sex or or pornography from the kid. They tried to get the kid to go over to discord or Snapchat, because those aren’t monitored as well.
Do you know what the Instagram number in ‘22 was? Because I went to the National Center for Missing exploded children website, and I found this, 3.5 million reports in 2022 5 million photographs on Instagram that were child pornography, self reported. So Instagram, 5 million. ROBLOX, 13,000 like, it’s crazy.
Simone Del Rosario:
Roblox says they’ve spent nearly two decades making it one of the safest online environments for its users, mostly kids. One mitigation technique Roblox uses is not allowing images in the chat feed. But a simple google search provides a lot of videos showing you how to make images into emojis that can be used in chat.
Roblox may be spending big money to protect children on the platform. But when Bloomberg spoke with current and former employees, they detailed the gargantuan task of trying to moderate such a massive space.
Edwin Dorsey:
It just seems repeatedly like if Roblox moderation takes a step, it’s always the bare minimum step. So before banning a game, they might just blur out the title. Before game banning an account posting inappropriate stuff, they’ll just take down the inappropriate items. I think if you had like, a stricter enforcer, enforcement mechanism against bad accounts and bad actors, that would help.
Simone Del Rosario:
Hindenburg detailed a number of its own concerns, writing:
“As a test, we attempted to set up an account under the name ‘Jeffrey Epstein’ . . . only to see the name was taken, along with 900+ variations.”
Michael Pachter:
Do you know how many Jeffrey Epstein’s I know? I know three.”
Simone Del Rosario:
Along with the financial claims, Roblox rejected these safety claims in the Hindenburg report, saying:
“Roblox takes any content or behavior on the platform that doesn’t abide by its standards extremely seriously, and Roblox has a robust set of proactive and preventative safety measures designed to catch and prevent malicious or harmful activity on the platform.”
In a world of user generated content, people will undoubtedly push past the boundary of what’s acceptable in society or good sense.
The Bear Cave has detailed inappropriate nonsexual content, including the reenactment of school shootings and the Holocaust. The Verge has also reported past reenactments of other mass shootings and Wired reported on Nazi roleplays on Roblox.
Dorsey thinks there are a lot of ways they can shore up these issues.
Edwin Dorsey:
unlike Instagram, Facebook and all these other social networks, you don’t need an email or phone number to sign up. You can just sign up with a username and password.
if you get banned, they have no way of, like enforcing that ban, because you can just make a new username and password.
I think the kind of big underlying issue here, is you can’t have it so eight year olds can Track, track freely with the rest of the internet. It’s fun. It’s cool, if you’re a young kid, to be able to chat with all the strangers in the world. But as long as you have that, that is just like an insurmountable to me, huge risk that is always going to pose issues.
Roblox shouldn’t allow you to even have an open chat if you’re under 13, if you kids can just claim they’re over 14. So to me, you need to do some sort of age verification.
Simone Del Rosario:
While the Hindenburg accusations are still subject to debate, the report is already being used by activists in the UK.
The Molly Rose Foundation was formed by the parents of British teenager Molly Russell, who took her life after viewing harmful online content. The foundation’s executive director says:
“This report underscores the growing evidence that child safety shortcomings aren’t a glitch but rather a systemic failure in how online platforms are designed and run.
“The Online Safety Act remains the most effective route to keep children safe, but such preventable safety lapses will only be addressed if Ofcom delivers a step-change in its ambition and determination to act.”
While the Online Safety Act passed in 2023, UK’s Office of Communications, or Ofcom, is tasked with creating codes to guide the law. That’s in the draft phase now.
A spokesperson for Ofcom told the Guardian:
“Platforms – such as Roblox – will be required to protect children from pornography and violence, take action to prevent grooming, remove child abuse images, and introduce robust age-checks. We have set out clear recommended measures for how they can comply with these requirements in our draft codes.”
In a statement to Straight Arrow News, Roblox says they fully intend on complying with the Act.
A similar “Kids Online Safety Act” in the US passed the Senate this summer. But free speech advocates worry it does too much to restrict legal speech. It’s a challenge the UK version also faced.
Recently, the U.S. and UK announced a joint working group to tackle child online safety.
Aside from some immediate fluctuation, the Hindenburg report has yet to have a longlasting impact on Roblox stock, which would be the goal for a short seller.
Michael Pachter:
Look, in fairness to them, there’s a case to be made that Roblox is overvalued. I don’t think so, but there’s a case to be made. I understand why someone would say it’s trading at 40. It should be trading at 30. And so they they thought, if we expose them, and people agree with us, then they’ll think it’s worth 30, it’ll go to 30, and we’ll make money on our short we’ll make $10
but they picked the wrong things to criticize it for.
Simone Del Rosario:
Still, Dorsey believes there are systemic problems that could affect Roblox’s bottom line in the future.
Edwin Dorsey:
I think the cutting corners goes to every aspect of the business. So it’s not just child safety, it’s not just inflating user metrics. It is billing. It is buying items. It’s the type of games you allow. It is the internal culture and how you treat people. It’s suppressing criticism by suing your critics.
Simone Del Rosario:
Meanwhile, Dorsey’s The Bear Cave is fleshing out some beef with Hindenburg. On Monday, he published a post saying they pretty much plagiarized his work without credit, using a lot of the details he himself has presented since getting on Roblox’s trail in February 2022.
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
In Virginia, a pair of Republican election officials are threatening not to certify the November general election results, claiming the process goes against the state’s constitution. Two members of Waynesboro’s Board of Elections filed a lawsuit alleging the machine that tallies ballots does so in “secret,” which they argue is prohibited by Virginia’s Constitution.
Waynesboro City Board of Elections Chair Curtis Lilly and Vice Chair Scott Mares sued Virginia Elections Commissioner Susan Beals and State Board of Elections Chair John O’Bannon.
Point phone camera here
Lilly and Mares said they cannot verify:
- The voting machine program being used to count the ballots is keeping a true and accurate count.
- The voting machine program being used to count the ballots is recording the true and accurate count.
- The voting machine record tape accurately represents the ballots cast.
They argued that because neither the program counting the votes nor the ballots can be examined, the count is being done in secret, which they say violates the state constitution.
Article Two, Section Three of Virginia’s Constitution states: “Secrecy in casting votes shall be maintained, except as provision may be made for assistance to handicapped voters, but the ballot box or voting machine shall be kept in public view and shall not be opened, nor the ballots canvassed nor the votes counted, in secret.”
Lilly and Mares also allege that because they are prohibited from evaluating the voting machines, there’s no way to ensure it is not hooked up to the internet, which could allow someone to alter the results.
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
They say in their suit certifying the election “under the current legal and administrative regime, therefore, would be a violation of their oaths of office, and, absent court intervention, shall refuse to certify the 2024 election.”
Straight Arrow News reached out to Virginia’s Department of Elections for comment on the lawsuit. “The Virginia Department of Elections does not comment on pending litigation,” a media relations specialist with the Virginia Department of Elections said.
IN VIRGINIA, A PAIR OF REPUBLICAN ELECTION OFFICIALS ARE THREATENING NOT TO CERTIFY THE NOVEMBER FIFTH ELECTION RESULTS – CLAIMING THE PROCESS GOES AGAINST THE STATE’S CONSTITUTION.
TWO MEMBERS OF WAYNESBORO’S BOARD OF ELECTIONS FILED A LAWSUIT – ALLEGING THE MACHINE THAT TALLIES BALLOTS DOES SO IN “SECRET” WHICH THEY ARGUE IS PROHIBITED BY VIRGINIA’S CONSTITUTION.
WAYNESBORO CITY BOARD OF ELECTIONS CHAIR CURTIS LILLY AND VICE CHAIR SCOTT MARES ARE SUING VIRGINIA ELECTIONS COMMISSIONER SUSAN BEALS AND STATE BOARD OF ELECTIONS CHAIR JOHN O’BANNON.
LILLY AND MARES SAY THEY CANNOT VERIFY:
- THE VOTING MACHINE PROGRAM BEING USED TO COUNT THE BALLOTS IS KEEPING A TRUE AND ACCURATE COUNT.
- OR THAT THE VOTING MACHINE PROGRAM BEING USED TO COUNT THE BALLOTS IS RECORDING THE TRUE AND ACCURATE COUNT.
- OR THAT THE VOTING MACHINE RECORD TAPE ACCURATELY REPRESENTS THE BALLOTS CAST.
THEY ARGUE BECAUSE NEITHER THE PROGRAM COUNTING THE VOTES NOR THE BALLOTS CAN BE EXAMINED, THE COUNT IS BEING DONE IN SECRET. WHICH THEY SAY VIOLATES THE STATE CONSTITUTION.
ARTICLE TWO, SECTION THREE OF VIRGINIA’S CONSTITUTION STATES: “SECRECY IN CASTING VOTES SHALL BE MAINTAINED, EXCEPT AS PROVISION MAY BE MADE FOR ASSISTANCE TO HANDICAPPED VOTERS, BUT THE BALLOT BOX OR VOTING MACHINE SHALL BE KEPT IN PUBLIC VIEW AND SHALL NOT BE OPENED, NOR THE BALLOTS CANVASSED NOR THE VOTES COUNTED, IN SECRET.”
LILLY AND MARES ALSO ALLEGE THAT BECAUSE THEY ARE PROHIBITED FROM EVALUATING THE VOTING MACHINES, THERE’S NO WAY TO ENSURE IT’S NOT HOOKED UP TO THE INTERNET WHICH COULD ALLOW SOMEONE TO ALTER THE RESULTS.
THEY SAY IN THEIR SUIT CERTIFYING THE ELECTION “UNDER THE CURRENT LEGAL AND ADMINISTRATIVE REGIME, THEREFORE, WOULD BE A VIOLATION OF THEIR OATHS OF OFFICE, AND, ABSENT COURT INTERVENTION, SHALL REFUSE TO CERTIFY THE 2024 ELECTION.”
WE HAVE REACHED OUT TO VIRGINIA’S DEPARTMENT OF ELECTIONS FOR COMMENT ON THE LAWSUIT.
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
It was meant to be the insurance of last resort. But along the way, Florida’s government-backed Citizens Property Insurance Corporation became the largest insurance provider in the state.
“Citizens Property Insurance, which was created decades ago, it is not solvent, and we can’t have millions of people on that, because if a storm hits, it’s going to cause problems for the state,” Florida Gov. Ron DeSantis said in February 2024.
Point phone camera here
Then came two storms back to back. Together, Hurricanes Helene and Milton caused tens of billions of dollars in insured losses. Is Citizens up to the task?
“They are actually very financially secure this year,” Proffesor Charles “Chuck” Nyce, who serves as department chair of Florida State University’s Risk Management and Insurance, said. “I believe what Gov. DeSantis was trying to say is that we don’t want Citizens having this type of exposure and having the need to do assessments.”
Assessments happen when Citizens does not have enough money to pay its claims. First, it applies a surcharge to its own policyholders. But if that is not enough, the state requires Citizens to charge a premium to insurance holders statewide, whether with Citizens or not. Citizens will have to do this for as many years as it takes to plug the deficit.
They were designed to be the market of last resort…For 2021, 2022, 2023, Citizens was becoming the option of first resort.
Chuck Nyce, expert in risk management and insurance
Citizens told Straight Arrow News it “has the financial capability to handle a 1-in-82-year storm without having to levy assessments on non-Citizens policyholders.” For context, Citizens says 1992’s Hurricane Andrew was a 1-in-43-year event.
“Hurricane Andrew is what we kind of describe as a wake-up call,” Nyce said. “It was really the first experience for the insurance industry of what a large-scale catastrophe could look like in the United States. I started graduate school the year after Hurricane Andrew. So my entire academic career has been trying to figure out how to pay for catastrophes that can occur.”
Hurricane Andrew bankrupted several insurance companies, leaving hundreds of thousands in Florida without insurance. Other major insurance providers dramatically mitigated their risk in the state by shifting their focus more inland.
“Now the problem is, for the state of Florida, we have a lot of coastal exposure, so we had to find a way to still insure those properties that were out there,” Nyce said.
If we can solve it in Florida, it’ll be a great lesson to take to other states.
Chuck Nyce, expert in risk management and insurance
Local companies popped up to fill the gaps, while the state created two insurers of last resort that later merged in 2002 to become Citizens Property Insurance Corporation. Nyce said the system worked well until 2004 and 2005, when storms repeatedly hit the Sunshine State, causing tens of billions in losses.
For Florida’s insurance landscape, it was Groundhog Day. Insurance companies dried up and more left the state. But this time, they had a backstop in Citizens, and Citizens’ policies ballooned.
“They were designed to be the market of last resort,” Nyce said. “By 2010, 2011, there were 1.4 million policyholders in Citizens. The good news for the state is from 2005 through 2016 we didn’t have any landfalling storms.”
Citizens successfully shed policies back into the private market until it was down to a little more than 400,000 by 2019. But more storms and litigation costs again broke the private market.
“For 2021, 2022, 2023, Citizens was becoming the option of first resort,” Nyce said. “There was a number of areas where insurance was not available and not available at a fair price. So Citizens became the option.”
Policies swelled back to over 1 million in 2022 and now sit at 1.265 million as of Oct. 4, 2024.
In order to get customers off the state-backed Citizens and back into the private market, a private insurance provider must be willing to underwrite the client at a price that is no more than 20% higher than what they pay at Citizens. At that point, Citizens can “depopulate” that customer.
Depopulation is “trying to push Citizens back to a market of last resort rather than a first choice,” Nyce explained.
“I think it’s more attractive today to offer policies than it was over the last 20 years,” DeSantis said in February. “But, you know, Rome wasn’t built in a day.”
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
Citizens told SAN that before Hurricanes Helene and Milton, it expected to dip below 1 million policies by the end of 2024. These storms could put that goal in jeopardy.
“When losses get really bad, that’s when the state should come in,” Nyce said. “When they get really, really bad, that’s when the federal government should come in. But for the storms like Helene, that should be private market stuff that’s handling those types of things. But it’s an issue we have.”
Nyce said from an insurance perspective, homeowner policies used to be considered low-risk and relatively stable. But that’s no longer the case in much of the United States, andnd that’s when states see the private market disintegrate.
“If we can solve it in Florida, it’ll be a great lesson to take to other states,” Nyce said.
When it comes to insurance risks, it’s not just hurricanes in Florida and Louisiana. It’s wildfires in California, tornadoes in the Midwest and severe convective storms hitting everywhere in between. Florida may be the tip of the spear for storm exposure, but it does not stand alone.
Tags: Bankruptcy, Florida, Florida State University, Home insurance, hurricane, Hurricane Helene, Hurricane Ian, Hurricane Milton, Hurricane season, Insurance, insurance premium, Ron DeSantis, State Farm
Simone Del Rosario: It was meant to be the insurance of last resort. But along the way, Florida’s government-backed Citizens Property Insurance Corporation became the largest insurance provider in the state.
Ron DeSantis: Citizen’s property insurance, which was created decades ago, it is not solvent, and we can’t have millions of people on that, because if a storm hits, it’s going to cause problems for the state.
Simone Del Rosario: Then came two storms back to back. Together, Hurricanes Helene and Milton caused tens of billions of dollars in insured losses. Is Citizens up to the task?
Chuck Nyce: They are actually very financially secure this year. I believe what Governor DeSantis was trying to say is that, you know, we don’t want Citizens having this type of exposure and having the need to do assessments.
Simone Del Rosario: Assessments happen when Citizens doesn’t have enough money to pay its claims. First, it applies a surcharge to its own policyholders. But if that’s not enough, the state requires Citizens to charge a premium to insurance holders statewide, whether with Citizens or not. And it does this for as many years as it takes to plug the deficit.
Citizens told Straight Arrow News it “has the financial capability to handle a 1-in-82-year storm without having to levy assessments on non-Citizens policyholders.” For context, Citizens says 1992’s Hurricane Andrew was a 1-in-43-year event.
Chuck Nyce: Hurricane Andrew is what we kind of describe as a wake-up call. It was really the first experience for the insurance industry of what a large-scale catastrophe could look like in the United States. My name is Chuck Nyce. I am a full professor at Florida State University. My expertise is catastrophic risk financing. I started graduate school the year after Hurricane Andrew. So my entire academic career has been trying to figure out how to pay for catastrophes that can occur.
Simone Del Rosario: Hurricane Andrew bankrupted several insurance companies, leaving hundreds of thousands without insurance. Other major insurance providers…
Chuck Nyce: I’m not going to mention company names, but these are the companies that advertised during the Super Bowl
Simone Del Rosario: …dramatically mitigated their risk in the state by shifting their focus more inland.
Chuck Nyce: Now the problem is, for the state of Florida, we have a lot of coastal exposure, so we had to find a way to still insure those properties that were out there.
Simone Del Rosario: Local companies popped up to fill the gaps, while the state created two insurers of last resort that later merged in 2002 to become Citizens Property Insurance Corporation.
Chuck Nyce: That worked for a number of years, up until 2004, 2005, when we had, again, a combined, at the time, $35 billion in losses.
Simone Del Rosario: For Florida’s insurance landscape, it was Groundhog Day. Insurance companies dried up, more left the state, but this time, they had a backstop, and Citizens’ policies ballooned.
Chuck Nyce: They were designed to be the market of last resort. By 2010, 2011, there were 1.4 million policyholders in Citizens. The good news for the state is from 2005 through 2016 we didn’t have any landfalling storms.
Simone Del Rosario: Citizens successfully shed policies back into the private market until it was down to around 400,000 by 2019. But more storms and litigation costs again broke the private market.
Chuck Nyce: For 2021, 2022, 2023, Citizens was becoming the option of first resort. There was a number of areas where insurance was not available and not available at a fair price. So Citizens became the option.
Simone Del Rosario: Policies swelled back to over a million and now sit at more than one and a quarter.
In order to get customers off the state-backed Citizens and back into the private market, a private insurance provider must be willing to underwrite the client at a price that is no more than 20% higher than what they pay at Citizens. At that point, Citizens can “depopulate” that customer.
Chuck Nyce: Trying to push citizens back to a market of last resort rather than a first choice.
Ron DeSantis: I think it’s more attractive today to offer policies than it was over the last 20 years. But, you know, Rome wasn’t built in a day.
Simone Del Rosario: Citizens told SAN that before Hurricanes Helene and Milton, it expected to dip below 1 million policies by the end of 2024. These storms could put that goal in jeopardy.
Chuck Nyce: When losses get really bad, that’s when the state should come in. When they get really, really bad, that’s when the federal government should come in. But for the storms like Helene, that should be private market stuff that’s handling those types of things. But it’s an issue we have, yeah.
Simone Del Rosario: Nyce says from an insurance perspective, homeowner policies used to be considered low-risk and relatively stable. But that’s no longer the case in much of the United States. And that’s when we see the private market disintegrate.
Chuck Nyce: If we can solve it in Florida, it’ll be a great lesson to take to other states.
Simone Del Rosario: Because it’s not just hurricanes in Florida and Louisiana. It’s wildfires in California. It’s tornadoes in the Midwest. It’s severe convective storms hitting everywhere in between. Florida may be the tip of the spear for storm exposure, but it doesn’t stand alone.
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
The state of Florida is bracing for Hurricane Milton’s wrath less than two weeks after Hurricane Helene battered the Gulf Coast. The back-to-back hurricanes are a devastating reminder that 1 in 3 Florida homes is susceptible to storm surge flooding from hurricanes, according to Guidewire.
As homeowners pick up the pieces of their lives, another storm rears its head, one that is set to ravage a much larger portion of the state. Because of storms like these, Florida is the most expensive state in the country for home insurance.
Point phone camera here
“We’ve always pitched ourselves as an affordable place to live, and from a tax perspective, it is,” Chuck Nyce, a professor of risk management and insurance at Florida State University, said. “But I would argue today in Florida that this is something that people need to be aware of: insurance costs are high.“
The average annual cost of home insurance in Florida neared $11,000 in 2023. Insurify projects it will climb to $11,759 by the end of the year. That cost does not include flood insurance, which typically requires a separate policy.
“When you’re talking about spending $10,000 or $15,000 a year for homeowners insurance coverage, $1,000 a month or more, that is part of your mortgage payment,” Nyce said. “And that has to be a cost that’s factored into the cost of living here.”
While property insurance’s share of the average mortgage payment is going up nationwide, in places like Miami, that burden is twice as big.
For single-family homes that include insurance in escrow, ICE Mortgage Monitor said the national average share is around 9.4%, while the property insurance share in Miami is 19%. That is second only to New Orleans, Louisiana, at 25%.
“A lot of research is suggesting that both the risk and the rising insurance premiums are depressing home prices compared to what it would be,” said Shan Ge, an assistant professor of finance at NYU Stern School of Business.
Ge has been researching insurance trends for years. Her published research shows when insurance rates go up, two things happen: homeowners buy less coverage and home values go down.
“And this drop in home values is pretty dramatic,” Ge said. “Buyers are going to be willing to pay less for property compared to a world where Florida does not face climate risk, does not face all these disasters, and does not face these increasing insurance premiums.”
Ge told Straight Arrow News she hopes developers will take her research into account in Florida and elsewhere.
“When they see these prices not as high as they would be in this counterfactual world, we’re hoping that will slow down the development and discourage more people from moving into risky places,” Ge said.
In August 2024, the median sales price of a single-family home in Florida dropped from a year ago for the first time in at least five years, according to data from Florida Realtors. For condos, which face not only higher insurance costs but mandatory maintenance needs, August marked the second month of annual price declines.
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
So far, insurance premiums at a premium have not deterred the rampant migration to the Sunshine State, but it may influence who can afford to come in and who may be forced to leave.
“Insurance prices risk, and if you can’t afford to live there, you shouldn’t move there,” Nyce said. “So it’s a really difficult problem. I always tell people, ‘I can’t afford to live in Monaco, and I can’t afford to drive a Bugatti, but I know that.’ It’s much more difficult to tell someone who’s maybe lived somewhere for generations that you can’t afford to live there anymore.”
Tags: Climate Change, Economy, Florida, Florida State University, Gulf Coast, Home insurance, Housing Market, Hurricane Helene, Hurricane Milton, Insurance, insurance premium, Mortgage, New Orleans
Simone Del Rosario: The state of Florida is bracing for Hurricane Milton’s wrath less than two weeks after Hurricane Helene battered the Gulf Coast.
The back-to-back hurricane attacks are a devastating reminder that one in three Florida homes is susceptible to storm surge flooding from hurricanes, according to Guidewire.
As homeowners pick up the pieces of their lives, another storm rears its head, one that is set to ravage a much larger portion of the state.
Because of storms like these, Florida is the most expensive state in the country for home insurance.
Chuck Nyce: We’ve always pitched ourselves as an affordable place to live, and from a tax perspective, it is. But I would argue today in Florida that this is something that people need to be aware of: insurance costs are high.
Simone Del Rosario: The average annual cost of home insurance in Florida neared $11,000 in 2023, and Insurify projects this year’s average will get closer to $12,000.
That doesn’t include flood insurance, which typically requires a separate policy.
Chuck Nyce: When you’re talking about spending $10[,000] or $15,000 a year for homeowners insurance coverage, $1,000 a month or more, that is part of your mortgage payment. And that has to be a cost that’s factored in to the cost of living here.
Simone Del Rosario: While property insurance’s share of the average mortgage payment is going up nationwide, in places like Miami, that burden is twice as big.
Shan Ge: A lot of research is suggesting that both the risk and the rising insurance premiums are depressing home prices compared to what it would be. My name is Shang Ge I am an assistant professor of finance at NYU Stern School of Business. I’ve been researching the insurance industry for a few years.
Simone Del Rosario: Ge’s research shows when insurance rates go up, two things happen: Homeowners buy less coverage and home values go down.
Shan Ge: And this, this drop of home values is pretty dramatic. Buyers are going to be willing to pay less for property compared to a world where Florida does not face climate risk, does not face all these disasters, and does not face these increasing insurance premiums.
Simone Del Rosario: Ge says she hopes developers will take her research into account, in Florida and elsewhere.
Shan Ge: When they see these prices not as high as they would be in this counterfactual world, we’re hoping that that will kind of slow down the development and deter discourage more people from moving into risky places.
Simone Del Rosario: In August, the median sales price of a single family home in Florida dropped for the first time in at least five years, according to data from Florida Realtors.
For condos, which face not only higher insurance costs but mandatory maintenance needs, August marked the second month of annual price declines.
So far, insurance premiums at a premium have not deterred the rampant migration to the sunshine state.
But it may influence who can afford to come in and who may be forced to leave.
Chuck Nyce: Insurance prices risk, and if you can’t afford to live there, you shouldn’t move there. So it’s a really difficult problem. I always tell people like, I can’t afford to live in Monaco and I can’t afford to drive a Bugatti. But I know that. It’s much more difficult to tell someone who’s maybe lived somewhere for generations that you can’t afford to live there anymore.
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
It’s tough to identify if the economy is in a recession. Economists toil over economic data to try to find the most accurate indicators. Gross domestic product and unemployment numbers are great data points, but what does the state of pop music tell us about economic conditions?
Traditionally, two consecutive quarters of negative growth is the preferred method to tell a recession took place. When it comes to unemployment, the Sahm Rule is triggered when the three-month moving average of the unemployment rate is half a percentage point above the 12-month low. The McKelvey Rule is essentially the same but is triggered when the unemployment rate is 0.3 percentage points above the 12-month low. The inverted yield curve, when short-term Treasury yields exceed long-term yields, is also a recession indicator.
Point phone camera here
There are less-scientific recession indicators as well. If men’s underwear sales decline, it can point to an economic downturn. The same can be said for an uptick in unclaimed corpses at morgues. And then there is the idea of a “vibecession,” a term coined by Kyla Scanlon. That is when economic conditions feel bad even though indicators point to stability.
But then there is the notion that “pop music is brilliant” when the economy is about to face serious problems. That is where the idea of “recession pop” comes into play.
What is recession pop?
In short, recession pop is seen as the Top 40 hits that are released during an economic downturn. The most clear example was during the Great Recession.
“I would define recession pop from the years just leading up to the recession, so the end of 2007 probably at least through 2012,” Charlie Harding, an NYU Professor and co-host of the podcast “Switched on Pop,” said.
Meanwhile, Joe Bennett, a musicologist and professor at Berklee College of Music, said it’s a label that applies “to a particular body of work, which I would broadly describe as super cheerful dance floor bangers that came out sometime between 2008 and 2011.”
Super cheerful dance floor bangers that came out sometime between 2008 and 2011.
Musicologist Joe Bennett describing recession pop
Since it is not a particularly scientific indicator, Harding said the recession pop label could even go all the way into 2014 because “lots of people were still really feeling that recession well into the early 2010s.”
Is recession pop a real thing?
It’s hard to officially quantify whether pop music really reflects the economic times, but both Harding and Bennett said the interpretation is often up to the listener.
“You can find what we might say are reflective songs, where the dark times people are experiencing are indeed dealt with within the song lyric,” Bennett said. “And we might also find what you might call escapist songs. ‘What the heck, let’s party.'”
“So songwriters are not necessarily social commenters, but like all of us, everyone who creates popular culture, they are living in that culture at the time they are making the object and the market that is the pop music fans who are buying or streaming the single are also in that social context and liking what they like in the context that they’re in,” he continued.
“As much intention as a songwriter might have, whatever they might intend, the listener is going to take it and do what they want with it,” Harding added. “A great example of listeners completely misusing a song would be ‘Hey Ya’ by OutKast, which is one of the most requested songs at weddings, and yet the song is about relationships that never last.”
“The recession affected different people very differently,” Harding said. “If you lost your home, you’re gonna remember what that song is on the radio when you had to pack up and leave. It’s really different than maybe someone for whom their family got through it okay, and they’re just like, ‘I just love my recession pop bops.'”
The history of popular music is littered with songs known as “party anthems.” But the recession pop era may have had less economic-based reasons for those hits.
“I think there’s ways in which the music was great, and I think there’s other ways in which it feels a little bit reductive,” Harding told Straight Arrow News. “We’re talking about a period in which the digitization of music was fully taking over.”
Despite the idea that recession pop is specific to the Great Recession, Bennett points to music that came out amid the Great Depression to illustrate how music reflects the times.
“Bing Crosby’s ‘Brother Can You Spare a Dime?’: it was a big hit in the early ’30s, and that’s a song about a returning war veteran who’s homeless and looking for money,” he said. “In 1933, Ginger Rogers has a hit with ‘We’re in the Money.’ Is that sort of an ironic title? It’s certainly a very cheerful lyric. Maybe it’s a fantasy about having money, because a lot of people wouldn’t have in the U.S. in the early 30s.”
Nostalgia effect
With all the evidence to support the idea of recession pop, it’s hard to say one era’s music is better than another, which can make it a particularly difficult economic indicator to nail down.
“If recession pop is a nostalgic way of looking back and trying to make sense of this period of total dislocation and fragmentation, all the power to listeners to call this stuff recession pop, even if it just happened to be the upbeat, fun thing that was occurring at that time,” Harding said. “People are trying to make this connection to music that happened 10 to 15 years ago.”
There is good reason for music dubbed recession pop to be resonating with people in their 30s that may have nothing to do with the quality of the tunes or state of the economy.
“It fits with the general cycle of popular music nostalgia,” Bennett said.
Bennet added most people believe the best music was released when they were 17 years old.
“A lot of the psychology research into nostalgia suggests that it works on something like a 15-year cycle,” Bennet continued.
There is a ton of research on nostalgia and when it really kicks in. Some say it takes 12-15 years; others suggest it is a 20-year cycle; some call it the golden 40-year rule.
“It’s more of an after-the-fact analysis, which is a fun and useful way of creating playlists: being nostalgic, digging into our memory, perhaps making sense of an era that was really dark and challenging for people and making light of it after the fact,” Harding said.
Pop music today
While recession pop is likely just a label put on music after the fact, it gives us an opportunity to look at what makes a hit song and how that has changed in the last 15 years.
“I think what makes a great pop song is accessibility,” Bennett said. “Particularly if you’re releasing a single, you want it to appeal to millions of people.”
“It has to have an amazing concept,” Harding added. “[It] has to have a memorable hook, and it has to capture the zeitgeist.”
Harding likens making a great pop song to winning the lottery. Many wonder how some artists have been able to hit the jackpot over and over again. But what makes a great pop song has changed over time. Today, more and more records are being discovered on short-form video apps like TikTok and Instagram.
“TikTok is a much faster-moving medium so people need to grab their audience’s attention to stop them from vertically scrolling onto the next thing,” Bennett said of the app that broke artists like Lil’ Nas X. “As we know from TikTok, that sort of meme community will often seize on a particular part of the song, a particular audio excerpt, and use that to make its meme, its dance routine, whatever it is.”
But even though artists need to get to the hook quicker than ever before, Harding said they have more to say than ever before.
“There is this expectation that we are more giving of ourselves in our lyrics today,” Harding said. “And so I think of an artist like Charlie XCX, who, on ‘Brat,’ talked about how she wanted to write lyrics that were as if she was just texting a friend. And this is the album that has broken through for her, because some of these lyrics, they don’t have these perfect rhymes. They have the perfect imperfections.”
And there’s no bigger artist giving themselves to their music than Taylor Swift.
“I think on a lot of metrics, Taylor Swift is the biggest artist to have ever lived, in terms of the longevity of her career; the fact that she is what should be a late-stage career artist, and yet she is at her peak,” Harding said. “She has had multiple peaks that just keep getting bigger and bigger and bigger.”
Get up to speed on the stories leading the day every weekday morning. Sign up for the newsletter today!
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
Meanwhile, Bennett pointed out that Swift herself was not immune to the recession pop movement.
“Her two significant albums at that time would have been ‘Fearless,’ which came out in 2008 and then ‘Speak Now,’ which originally came out in 2010,” Bennett said. “And of course, both of those contain a whole bunch of songs in that vein: ‘Love Story,’ ‘You Belong with Me,’ ‘White Horse,’ ‘The Story of Us.'”
In the end, while there may not be a deliberate intention to make music that makes listeners feel good or sad during tough economic times, it’s clear music resonates with people and reminds them of those snapshots in time.
Tags: Economy, GDP, Great Recession, Jobs, Music, Recession, Sahm Rule, Taylor Swift, TikTok, Unemployment, Unemployment rate
SIMONE DEL ROSARIO:
Are we headed toward a recession or already in one? Well, there are a lot of ways to tell…
Traditionally two consecutive quarters of negative growth say we’re in it.
You can look at unemployment. The Sahm Rule triggers when the three-month moving average of the unemployment rate is half a percentage point above the 12-month low. Or the McKelvey Rule, which says basically the same thing but with 0.3 percentage points.
There’s also the dreaded inverted yield curve when short-term Treasury yields exceed long-term Treasury yields.
Still with me?
Here’s where it gets interesting. The less scientific indicators.
Like when the vibes are all wrong even though economic indicators are doing alright. That’s what Kyla Scanlon calls a Vibecession.
Slowing men’s underwear sales can also point to economic concerns, apparently, you guys wear tattered boxers when times are tough? And, more morbidly, the number of unclaimed corpses at morgues goes up in tough times.
I promise, I’m not going to count that today. We’re going to go in a more “lively” direction.
JOE E FOSTER:
“A wise man once told me that two signs that we are headed into financial ruin is No. 1, all of the strip clubs are empty No. 2, the pop music is brilliant.”
SIMONE DEL ROSARIO:
So, we should start getting familiar with the Perry rule, the Gaga rule or even the Peas rule?
BLACK EYED PEAS:
“Gotta get that-that-that-that boom boom boom.”
SIMONE DEL ROSARIO:
This is where “recession pop” comes in. Can music tell us where the country’s economy is headed?
CHARLIE HARDING:
I would define recession pop probably from, like, the years just leading up to the recession. So, like, you know, end of 2007 probably at least through 2012
JOE BENNETT:
so it’s a retrospective label that we’re using today in 2024 to apply to a particular body of work, which I would broadly describe as super cheerful dance floor bangers that came out some time between 2008 and 2011.
CHARLIE HARDING:
if not all the way to like 2014 because I think of the euro crisis that was happening in 2012 as part of that recession era, and lots of people were still really feeling that recession well into the early 2010s.
SIMONE DEL ROSARIO:
OK so in short, “recession pop” is Top 40 bangers that come out during an economic downturn. The most clear example happened leading into the Great Recession: a pop music soundtrack that stands out above the rest.
So is it really a thing? And more importantly, do today’s hits slap enough that you have to worry about another financial crisis?
To dig into whether there is any credence to the phenomenon, we didn’t interview some economists, we went to the real experts.
CHARLIE HARDING:
I’m Charlie Harding. I’m the co-host of the podcast, switched on pop and a professor of music at NYU.
JOE BENNETT:
My name is Joe Bennett. I’m a forensic musicologist and a professor at Berklee College of Music, and my particular area of specialism is popular song analysis.
SIMONE DEL ROSARIO:
Every music fan can identify the songs that scored their core memories.
I can feel it. Summer of ‘07, windows down, diesel truck purring, open road, and RiRi on the radio.
RIHANNA:
“You can stand under my Umbrella. Ella Ella eh eh.”
CHARLIE HARDING:
The recession affected different people very differently, like if you lost your home, you’re gonna remember what that song is on the radio when you had to pack up and leave is really different than maybe someone for whom their family got through it okay, and they’re just like, I just love my recession pop bops.
JOE BENNETT:
You can find what we might say are reflective songs where the dark times people are experiencing are indeed dealt within the song lyric. And we might also find what you might call escapist songs. What the heck, let’s party.
SHOP BOYZ:
“Party like a rock, party like a rockstar”
SIMONE DEL ROSARIO:
While recession pop is generally seen as exclusive to the Great Recession, music often reflects the times.
JOE BENNETT:
Bing Crosby’s brother. Can you spare a dime? It was a big hit in the early 30s, and that’s a song about a returning war veteran who’s homeless and looking for money.
In 1933 Ginger Rogers has a hit with we’re in the money. Is that a sort of an ironic title?
It’s certainly a very cheerful lyric. Maybe it’s a fantasy about having money, because a lot of people wouldn’t have in the US in the early 30s.
SIMONE DEL ROSARIO:
So, there could be something here…
CHARLIE HARDING:
If recession Pop is a nostalgic way of looking back and trying to make sense of this period of total dislocation and fragmentation, like all the power to listeners to call this stuff recession pop, even if it just happened to be the upbeat, fun thing that was occurring at that time.
LADY GAGA:
“Can’t read my… Can’t read my, no you can’t read my Poker Face.”
CHARLIE HARDING:
People are trying to make this connection to music that happened 10 to 15 years ago as a almost like detective with their red wire behind the board. And they’re trying to, like, make all of these connections that are probably a little bit forced, right?
SIMONE DEL ROSARIO:
And you know what… There are a lot of good reasons the term recession pop is resonating with 30-somethings today that may have less to do with the quality of the music or economic conditions.
JOE BENNETT:
it fits with the general cycle of popular music, nostalgia. A lot of the psychology research into nostalgia suggests that it works on something like a 15-year cycle.
there’s a phenomenon in pop music that suggests that all the best pop music was released in the same year, and it was the year you were 17.
SIMONE DEL ROSARIO:
It’s not just Bennett’s opinion. There is a ton of research on nostalgia and when it really kicks in. Some say it takes 12-15 years, others suggest it is a 20-year cycle. Some call it the golden 40-year rule.
The only thing you can be sure of is that eventually, at some point, you will think fondly of your younger days. Did we really know at the time how good the pop was in 2007?
CHARLIE HARDING:
It’s more of an after-the-fact analysis, which is a fun and useful way of creating playlists, being nostalgic, digging into our memory, perhaps making sense of an era that was really dark and challenging for people, and making light of it after the fact.
JOE BENNETT:
So songwriters are not necessarily social commenters, but like all of us, everyone who creates popular culture, they are living in that culture at the time they are making the object and the market that is the pop music fans who are buying or streaming the single are also in that social context and liking what they like in the context that they’re in.
CHARLIE HARDING:
As much intention as a songwriter might have, whatever they might intend the listener is going to take it and do what they want with it.
Like, a great example of listeners completely misusing a song would be like, hey, ya, by OutKast,
OUTKAST:
“Thank god for mom and dad for sticking two together cause we don’t know how. Hey ya!”
CHARLIE HARDING:
which is one of the most requested songs at weddings, and yet the song is about relationships that never last.
SIMONE DEL ROSARIO:
In many ways, the look back at so-called recession pop allows us to look at what makes a great pop song and why it sticks with us.
JOE BENNETT:
I think what makes a great pop song is accessibility. You know, particularly if you’re releasing a single, you want it to appeal to millions of people.
CHARLIE HARDING:
Well, It has to have an amazing concept. Has to have a memorable hook, and it has to capture the zeitgeist.
CARLY RAE JEPSEN:
“Hey, I just met you. And this is crazy. But here’s my number. Call me maybe.
JOE BENNETT:
people talk about songs, as, you know, being instantly exciting.
Immediacy in a song is one of the most important characteristics.
CHARLIE HARDING:
A pop song, [a] great pop song is elusive, right? It’s like trying to play the Powerball
SIMONE DEL ROSARIO:
And what makes a great song has changed over the years. Today, more and more tracks are being discovered on short-form video apps like TikTok and Instagram.
JOE BENNETT:
TikTok is a much faster-moving medium, so people need to grab their audience’s attention to stop them from vertically scrolling onto the next thing.
LIL NAS X:
“I’m gonna take my horse to the old town road. I’m gonna ride (Kio, Kio) ’til I can’t no more. I got the horses in the back. Horse tack is attached.”
JOE BENNETT:
As we know from TikTok, that sort of meme community will often seize on a particular part of the song, a particular audio excerpt, and use that to make its meme, its dance routine, whatever it did, whatever it is.
SIMONE DEL ROSARIO:
While TikTok users need musicians to get to the meat early, pop songs have more to say in 2024 than ever before.
CHARLIE HARDING:
there is this expectation that we are more giving of ourselves in our lyrics today. And so I think of an artist like Charlie XCX, who, on brat, talked about how she wanted to write lyrics that were as if she was just texting a friend
CHARLIE XCX:
Yeah, 360. When you’re in the mirror, do you like what you see? When you’re in the mirror, you’re just looking at me.
CHARLIE HARDING:
and this is the album that has broken through for her. Because some of these lyrics, they don’t have these perfect rhymes. They have the perfect imperfections.
JOE BENNETT:
So it’s an introspective form a lot of the time, but still, a lot of singer-songwriter material deals with the classic themes of songwriting that is romantic relationships and dancing. Most pop songs are about one of those two things.
ED SHEERAN:
Well, come on now, follow my lead. Come, come on now, follow my lead, mm. I’m in love with the shape of you
[JOE BENNETT:
Singer-songwriters in contemporary pop are having big mainstream hits, often with similar themes. You know, a lot of Ed Sheeran song themes are simply about getting together romantically or dancing.
SIMONE DEL ROSARIO:
Look… I know you didn’t see a story about recession indicators turning into a commentary on the state of pop music but here we are. And we can’t end the conversation without the biggest name in music, let alone pop culture today.
JOE BENNETT:
Of course, even the great Taylor Swift was not immune to the cheerfulness of recession pop. Her two significant albums at that time would have been Fearless, which came out in 2008 and then Speak Now, which originally came out in 2010 and of course, both of those contain a whole bunch of songs in that vein, Love Story, you belong with me, white horse, the story of us.
TAYLOR SWIFT:
“You’ll be the prince and I’ll be the princess. It’s a love story, baby, just say, “Yes”
CHARLIE HARDING:
I think on a lot of metrics, Taylor Swift is the biggest artist to have ever lived, in terms of the longevity of her career, the fact that she is what should be a late-stage career artist, and yet she is at her peak. She has had multiple peaks that just keep getting bigger and bigger and bigger.
SIMONE DEL ROSARIO:
Will we look back on The Tortured Poets Department as a recession anthem?
TAYLOR SWIFT:
“I’m so depressed I act like it’s my birthday every day.”
SIMONE DEL ROSARIO:
For Straight Arrow News, I’m Simone Del Rosario. If you liked this story, search the Straight Arrow News app for our story on the death of music journalism.
Straight to your inbox.
By entering your email, you agree to the Terms & Conditions and acknowledge the Privacy Policy.
MOST POPULAR
-
Getty Images
Biden considers commuting death row: Report
-
Reuters
Driver kills at least two in Germany Christmas market attack
-
Getty Images
ICE deportations hit highest level since 2014: Report
-
Paramount Pictures and Sega of America, Inc.
Holiday box office showdown kicks off with ‘Sonic 3’ and ‘Mufasa: The Lion King’
