1 00:00:15,604 --> 00:00:28,644 Speaker 1: Pushkin. Welcome back to Risky Business, a show about making 2 00:00:28,684 --> 00:00:31,284 Speaker 1: better decisions. I'm Maria Kanakova and. 3 00:00:31,124 --> 00:00:35,764 Speaker 2: I'm Nate Silver. On October twenty first, the NBA season 4 00:00:35,884 --> 00:00:38,484 Speaker 2: will be back. One team will end the year with 5 00:00:38,644 --> 00:00:43,724 Speaker 2: a dark cloud hanging over it, The Clippers. Have you 6 00:00:43,764 --> 00:00:45,124 Speaker 2: heard of the company aspiration? 7 00:00:45,684 --> 00:00:49,284 Speaker 1: I heard of it when preparing for this segment. So 8 00:00:49,324 --> 00:00:50,884 Speaker 1: that's what we're going to start the show off with. 9 00:00:51,364 --> 00:00:54,004 Speaker 1: And then we're going to talk about a very important question, 10 00:00:54,084 --> 00:00:58,924 Speaker 1: which is does New York City need more millionaires. 11 00:00:58,484 --> 00:01:00,084 Speaker 2: Millionaires or billionaires? 12 00:01:00,484 --> 00:01:03,604 Speaker 1: Millionaires millionaires but billionaires too. I think does New York 13 00:01:03,604 --> 00:01:07,124 Speaker 1: City need more very wealthy people? All right, Nate, let 14 00:01:07,204 --> 00:01:12,524 Speaker 1: us start with your house, which is the NBA and 15 00:01:12,844 --> 00:01:17,084 Speaker 1: the Clippers. So do you want to get us set 16 00:01:17,164 --> 00:01:19,964 Speaker 1: up here since this is something that you know a 17 00:01:20,004 --> 00:01:22,204 Speaker 1: lot more about, at least background wise. Yeah. 18 00:01:22,324 --> 00:01:26,444 Speaker 2: Yeah, So the NBA has a salary cap. It's kind 19 00:01:26,484 --> 00:01:29,644 Speaker 2: of an attempt to prevent owners, many of whom are 20 00:01:29,644 --> 00:01:32,564 Speaker 2: extremely rich. In fact, one of whom is the principal here, 21 00:01:32,604 --> 00:01:36,444 Speaker 2: Steve Ballmer, owner of the Clippers, Microsoft guy, one of 22 00:01:36,484 --> 00:01:40,124 Speaker 2: the I think six to ten richest people in the world. 23 00:01:40,164 --> 00:01:43,084 Speaker 2: But it's a way important to protect these guys who 24 00:01:43,084 --> 00:01:45,924 Speaker 2: are very competitive and basically have infinite amounts of money 25 00:01:46,484 --> 00:01:52,564 Speaker 2: from spending irrational amounts to have their toys be cooler 26 00:01:52,604 --> 00:01:55,244 Speaker 2: when they're in the box and their team makes a 27 00:01:55,244 --> 00:01:57,244 Speaker 2: deep run in the finals or wins a championship. So 28 00:01:57,244 --> 00:02:00,524 Speaker 2: the league set the rules, and increasingly in the NBA, 29 00:02:00,844 --> 00:02:04,724 Speaker 2: these rules are getting pretty strict and the idea of 30 00:02:04,764 --> 00:02:09,284 Speaker 2: circumventing the rules is taken very seriously. Several weeks ago, 31 00:02:09,764 --> 00:02:14,284 Speaker 2: the journalist Pablo Tory journalists kind of people might call 32 00:02:14,364 --> 00:02:15,924 Speaker 2: him a talking head, but he did. He also has 33 00:02:15,924 --> 00:02:19,684 Speaker 2: a show where he does at times very serious journalism, 34 00:02:20,004 --> 00:02:25,284 Speaker 2: discover that this fraudulent carbon credit company, allegedly fraudulent carbon 35 00:02:25,324 --> 00:02:28,324 Speaker 2: credit company called Aspiration, which had been a sponsor for 36 00:02:28,364 --> 00:02:28,844 Speaker 2: the Clippers. 37 00:02:28,844 --> 00:02:31,164 Speaker 1: It's a great name for a fraudulent company, by the way, 38 00:02:31,244 --> 00:02:32,324 Speaker 1: Nate Aspiration. 39 00:02:33,004 --> 00:02:40,044 Speaker 2: But basically it turns out that this fake tree planting company, Aspiration, 40 00:02:40,964 --> 00:02:44,844 Speaker 2: was paying the Clippers Kawhi Leonard of probably their best 41 00:02:44,844 --> 00:02:48,004 Speaker 2: player if Ka Zubach stands might disagree, but their most 42 00:02:48,324 --> 00:02:52,804 Speaker 2: famous player, right multiple time NBA champion, was paying him 43 00:02:53,404 --> 00:02:59,164 Speaker 2: seven million dollars a year to do literally nothing for them, right. 44 00:02:59,724 --> 00:03:02,324 Speaker 2: The fact is that for anybody who scoured this right, 45 00:03:02,884 --> 00:03:06,404 Speaker 2: you know, he could have tweeted something or done one 46 00:03:06,444 --> 00:03:09,604 Speaker 2: little ad that got one hundred views on YouTube showed 47 00:03:09,644 --> 00:03:12,484 Speaker 2: him like planting trees or something. He did not do 48 00:03:12,844 --> 00:03:16,644 Speaker 2: any of that. Right. There's also been disclosures by other 49 00:03:16,684 --> 00:03:20,444 Speaker 2: news outlets that Kawhi Lenary received twenty million dollars in 50 00:03:20,724 --> 00:03:23,724 Speaker 2: equity in Aspiration, which is now worth precisely zero, to 51 00:03:23,764 --> 00:03:26,724 Speaker 2: be fair, but a total package of like forty eight 52 00:03:26,884 --> 00:03:31,684 Speaker 2: million dollars in cash inequity. And it also turns out 53 00:03:31,764 --> 00:03:35,084 Speaker 2: that Seve Balmer, the owner of the Clippers, made a 54 00:03:35,164 --> 00:03:38,604 Speaker 2: fifty million dollar investment in Aspiration, or the official sponsor 55 00:03:39,004 --> 00:03:42,444 Speaker 2: of the Clippers, right, So that set of circumstances alone 56 00:03:43,204 --> 00:03:49,684 Speaker 2: is pretty suspicious. Pablo Torri also had an anonymized source, 57 00:03:49,724 --> 00:03:52,524 Speaker 2: somebody he went through the kind of vocal processing that 58 00:03:52,524 --> 00:03:56,364 Speaker 2: gave him like a very millennial vocal fry. Right, say 59 00:03:56,484 --> 00:04:00,084 Speaker 2: that this company's going bankrupt, right, and they actually hire 60 00:04:00,164 --> 00:04:03,524 Speaker 2: legitimately famous people, and the famous people getting paid way 61 00:04:03,564 --> 00:04:06,364 Speaker 2: too much to actually do something for the company. Robert 62 00:04:06,364 --> 00:04:10,604 Speaker 2: Downey Junior was one, for example, gravelly voiced adr Kawhi 63 00:04:10,684 --> 00:04:15,284 Speaker 2: was getting paid seven million dollars to totally ghosts this company. Right, 64 00:04:15,724 --> 00:04:19,724 Speaker 2: And when people ask why is this bankrupt company paying 65 00:04:19,764 --> 00:04:21,964 Speaker 2: this guy who has done nothing good offer us? Nobody 66 00:04:22,004 --> 00:04:24,684 Speaker 2: even knows he's in a relationship with US seven million 67 00:04:24,724 --> 00:04:28,204 Speaker 2: dollars a year, people would say things like it's CAPSIR 68 00:04:28,244 --> 00:04:32,404 Speaker 2: convention loll in text messages. Right. So yeah, the theory. 69 00:04:33,124 --> 00:04:37,724 Speaker 2: The theory is that Seve Balmer, I'll be vaguer. The 70 00:04:37,804 --> 00:04:42,604 Speaker 2: claim is that the Clippers found a way through this 71 00:04:42,924 --> 00:04:47,564 Speaker 2: company aspiration that their owner is also an equity investor 72 00:04:47,604 --> 00:04:50,524 Speaker 2: in to pay Kawhi Leonner a bunch of extra money 73 00:04:50,564 --> 00:04:52,604 Speaker 2: so he'd sign in LA with the Clippers and not 74 00:04:52,684 --> 00:04:55,324 Speaker 2: the Lakers, or not stayed in Toronto or back to 75 00:04:55,364 --> 00:04:59,884 Speaker 2: San Antonio or the Houston Rockets or whatever else. And 76 00:04:59,964 --> 00:05:02,924 Speaker 2: if you're into NBA gossip, Maria, this story at what's 77 00:05:02,964 --> 00:05:05,324 Speaker 2: normally a slow time for the league has been has been. 78 00:05:05,724 --> 00:05:09,404 Speaker 2: The hot dish? Is that a real thing? I don't use. 79 00:05:09,604 --> 00:05:11,764 Speaker 2: Hot dish is like a Minnesota thing. And I think 80 00:05:11,804 --> 00:05:13,524 Speaker 2: it's a real term. I think I picked that up. 81 00:05:15,244 --> 00:05:15,884 Speaker 2: The hot dish. 82 00:05:16,044 --> 00:05:18,564 Speaker 1: It's okay, it's okay, we'll pretend well, we'll make. 83 00:05:18,444 --> 00:05:20,804 Speaker 2: It a thing like Amy Kloba Sharp brings the Minnesota 84 00:05:20,844 --> 00:05:22,924 Speaker 2: State Fair. I don't think that's. 85 00:05:25,684 --> 00:05:28,044 Speaker 1: That's a very funny visual, you know, it's so funny. 86 00:05:28,164 --> 00:05:31,164 Speaker 1: So when I started researching this, because you know, this 87 00:05:31,284 --> 00:05:33,804 Speaker 1: is not in my wheelhouse, the first thing I thought 88 00:05:33,844 --> 00:05:39,004 Speaker 1: about was mob stuff, and specifically on the Sopranos, where 89 00:05:39,044 --> 00:05:41,924 Speaker 1: they had these contracts where they had no show jobs, 90 00:05:42,204 --> 00:05:44,244 Speaker 1: right and you were guaranteed a certain number of no 91 00:05:44,324 --> 00:05:47,044 Speaker 1: show jobs, where like that was just a way of 92 00:05:47,084 --> 00:05:50,164 Speaker 1: getting kicked back, getting money around. And when I was 93 00:05:50,204 --> 00:05:53,164 Speaker 1: reading this, I was like, wait, they're taking they're taking 94 00:05:53,204 --> 00:05:56,324 Speaker 1: a page out of the mob playbook to try to 95 00:05:56,364 --> 00:05:59,844 Speaker 1: circumvent caps and get money to the right person in 96 00:05:59,924 --> 00:06:04,564 Speaker 1: a kind of kickbacky way without actually having a paper 97 00:06:04,604 --> 00:06:07,164 Speaker 1: trail all aught. This time they did have a paper trail, 98 00:06:07,324 --> 00:06:09,404 Speaker 1: but that's the first thing I thought about. I was like, wow, 99 00:06:09,524 --> 00:06:13,404 Speaker 1: this is like a very mobby type of thing. And 100 00:06:13,444 --> 00:06:17,804 Speaker 1: then it also reminded me, do you remember back this 101 00:06:18,084 --> 00:06:22,084 Speaker 1: summer or maybe even earlier, and we mentioned it, I 102 00:06:22,084 --> 00:06:24,924 Speaker 1: think briefly on the show there was a probe in 103 00:06:25,004 --> 00:06:27,884 Speaker 1: Las Vegas, which you know, when you think mom and 104 00:06:27,964 --> 00:06:30,964 Speaker 1: no show jobs, Vegas, Vegas is certainly a top of 105 00:06:30,964 --> 00:06:35,044 Speaker 1: mind as well when the Aces were getting one hundred 106 00:06:35,044 --> 00:06:39,604 Speaker 1: thousand dollars sponsorships from the Las Vegas Convention and Visitors Authority. 107 00:06:40,244 --> 00:06:42,044 Speaker 1: I think we talked about that right to try to 108 00:06:42,204 --> 00:06:47,164 Speaker 1: get around those salary caps. So it seems like this 109 00:06:47,244 --> 00:06:51,604 Speaker 1: is a tactic that's been gaining steam, and so to me, 110 00:06:52,044 --> 00:06:56,764 Speaker 1: it's just very interesting if we talk about it from 111 00:06:56,884 --> 00:07:00,604 Speaker 1: kind of a risky business game theory angle, is this 112 00:07:00,804 --> 00:07:08,044 Speaker 1: the natural devolution of evolution, devolution of salary caps and 113 00:07:08,124 --> 00:07:10,884 Speaker 1: of trying to curve some sort of behavior where people 114 00:07:10,964 --> 00:07:13,684 Speaker 1: end up going around it, right and trying to figure out, well, 115 00:07:13,684 --> 00:07:15,724 Speaker 1: I still really want this player, or I really want 116 00:07:15,764 --> 00:07:17,844 Speaker 1: this person to come, you know, to the Clippers. I 117 00:07:17,884 --> 00:07:19,884 Speaker 1: really want this person on the Aces. Whatever it is, 118 00:07:19,924 --> 00:07:23,244 Speaker 1: So let's figure out how we make it happen and 119 00:07:23,724 --> 00:07:27,084 Speaker 1: try not to run a foul of the letter of 120 00:07:27,124 --> 00:07:30,604 Speaker 1: the law while just totally disregarding the spirit of the law. 121 00:07:30,804 --> 00:07:33,604 Speaker 2: Well, accept it clearly violates. I mean, you know, the 122 00:07:33,684 --> 00:07:37,964 Speaker 2: NBA Constitution is not the US Constitution, but like the 123 00:07:38,084 --> 00:07:41,084 Speaker 2: NBA Constitution says that, like. 124 00:07:42,084 --> 00:07:44,284 Speaker 1: Yeah, I know nothing about this, so please tell me 125 00:07:44,324 --> 00:07:45,084 Speaker 1: what is what it's there? 126 00:07:45,084 --> 00:07:48,124 Speaker 2: Are quite a lot of provisions that pertain to the 127 00:07:48,124 --> 00:07:51,364 Speaker 2: anticipation of this type of activity. Right, if you've watched 128 00:07:51,364 --> 00:07:54,724 Speaker 2: the Problatory Show, he has thousands of pages of documents 129 00:07:54,724 --> 00:07:56,684 Speaker 2: printed out, and it gave me flashback to when I 130 00:07:56,764 --> 00:08:00,524 Speaker 2: was on debate team going to copy shit at Kinko's 131 00:08:01,084 --> 00:08:04,484 Speaker 2: late at night. But like, you know, but. 132 00:08:04,404 --> 00:08:05,444 Speaker 1: The good old Kinkos. 133 00:08:05,604 --> 00:08:11,324 Speaker 2: The consution basically says that, like, we can rely on 134 00:08:11,404 --> 00:08:16,404 Speaker 2: sufficiently compelling circumstantial evidence if there is, I think it 135 00:08:16,484 --> 00:08:18,924 Speaker 2: might actually use the term circumstantial, because it's not a 136 00:08:19,004 --> 00:08:21,884 Speaker 2: legal standard, right, And you know, if there is no 137 00:08:22,044 --> 00:08:25,164 Speaker 2: rational explanation for what happened apart from the fact that 138 00:08:25,204 --> 00:08:28,204 Speaker 2: it was cap circumvention, right, there's like no rational explanation 139 00:08:29,324 --> 00:08:33,324 Speaker 2: that I've seen offered. Well, let me take that back slightly, right, 140 00:08:34,724 --> 00:08:37,684 Speaker 2: you know, there's not really a rational reason for the 141 00:08:37,764 --> 00:08:41,364 Speaker 2: value produced to aspiration to pay Kawi million twenty eight 142 00:08:41,364 --> 00:08:43,844 Speaker 2: million dollars or four years and twenty million dollars in 143 00:08:43,844 --> 00:08:46,404 Speaker 2: equity to do nothing. Right. I'm sure he's a smart guy. 144 00:08:46,724 --> 00:08:48,644 Speaker 2: I don't think he was like providing good advice to 145 00:08:48,684 --> 00:08:50,804 Speaker 2: the board or anything either. And if he was on 146 00:08:50,844 --> 00:08:53,124 Speaker 2: the board, you know, not a very successful venture by 147 00:08:53,604 --> 00:08:58,604 Speaker 2: by Kawhi right now, that however, goes to an arbitrator. Right, 148 00:08:58,644 --> 00:09:00,644 Speaker 2: so the league is going to have its findings. They 149 00:09:00,724 --> 00:09:04,444 Speaker 2: hired some three or four name white Shoe law firm. 150 00:09:05,124 --> 00:09:07,444 Speaker 2: They will come back with a report, not anytime soon, 151 00:09:08,004 --> 00:09:10,884 Speaker 2: by the way, probably in six months, if not longer. 152 00:09:11,004 --> 00:09:12,164 Speaker 2: And then it goes to arbitration. 153 00:09:13,004 --> 00:09:15,604 Speaker 1: And by the way, and what happens in the meantime 154 00:09:16,684 --> 00:09:21,844 Speaker 1: while it's being deliberated and arbitrated? Are there any consequences? 155 00:09:21,844 --> 00:09:24,724 Speaker 1: Are there any suspensions? Is there anything like that? Or 156 00:09:24,764 --> 00:09:26,884 Speaker 1: does life just go on as usual while all of 157 00:09:26,884 --> 00:09:27,604 Speaker 1: this is happening. 158 00:09:27,724 --> 00:09:29,724 Speaker 2: Well, the Clippers are a team that is kind of 159 00:09:29,724 --> 00:09:32,284 Speaker 2: at a crossroads, right. They were pretty good last year, 160 00:09:32,564 --> 00:09:35,004 Speaker 2: lost in seven games to the Denver Nuggets, who were 161 00:09:35,044 --> 00:09:38,484 Speaker 2: a better team. But like, but they're in the upper 162 00:09:38,524 --> 00:09:41,244 Speaker 2: half of NBA teams. They're also older, spent a lot 163 00:09:41,244 --> 00:09:45,444 Speaker 2: of money this year on veteran players, right, don't have 164 00:09:45,524 --> 00:09:48,044 Speaker 2: that many draft picks going forward, but like, you know, 165 00:09:48,884 --> 00:09:52,364 Speaker 2: one punishment. So Joe Smith was a Minnesota Timberwolves player 166 00:09:53,204 --> 00:09:55,684 Speaker 2: back in the day that the team had a sweetheart 167 00:09:55,684 --> 00:09:58,644 Speaker 2: deal with to say, hey, look, we can only afford 168 00:09:58,684 --> 00:10:00,044 Speaker 2: to give you this much now, but we'll take care 169 00:10:00,084 --> 00:10:03,844 Speaker 2: of you on the back end. Right, And this somehow 170 00:10:03,884 --> 00:10:06,164 Speaker 2: came out I think in like where there was vankrupcy 171 00:10:06,244 --> 00:10:07,524 Speaker 2: proceedings or so like. By the way, a lot of 172 00:10:07,524 --> 00:10:09,484 Speaker 2: the stuff that comes out it comes out because so 173 00:10:09,484 --> 00:10:11,844 Speaker 2: many fucks up in there's discovery and a lot of 174 00:10:11,884 --> 00:10:13,924 Speaker 2: things were like you get in legal trouble all of sudden, 175 00:10:13,924 --> 00:10:15,564 Speaker 2: the things said no one ever believed me be public 176 00:10:15,804 --> 00:10:20,924 Speaker 2: become public. But the Timberwolves were fined five draft picks, 177 00:10:20,964 --> 00:10:23,724 Speaker 2: people were suspended, ownership were suspended for like a year. Right. 178 00:10:24,084 --> 00:10:26,564 Speaker 2: The Clippers barely even have five draft picks. But if 179 00:10:26,604 --> 00:10:29,044 Speaker 2: I were them, I would fucking trade my draft picks 180 00:10:29,404 --> 00:10:34,724 Speaker 2: before I still could you want to take my draft picks? Sorry, 181 00:10:35,004 --> 00:10:37,564 Speaker 2: we don't have them anymore. We traded them for player talent. 182 00:10:40,404 --> 00:10:43,124 Speaker 1: So so thinking ahead in this game, if you think 183 00:10:43,164 --> 00:10:46,764 Speaker 1: you're gonna get fined and you're gonna be putalized, that 184 00:10:46,804 --> 00:10:48,044 Speaker 1: would definitely be the thing to do. 185 00:10:52,284 --> 00:10:53,644 Speaker 2: And we'll be back right after this. 186 00:11:01,884 --> 00:11:04,284 Speaker 1: The funny thing is, you know, in the case of 187 00:11:04,404 --> 00:11:07,684 Speaker 1: the Aces, like, there's a good case to be made 188 00:11:07,924 --> 00:11:10,524 Speaker 1: that there was good reason for the Las Vegas convention 189 00:11:10,684 --> 00:11:14,004 Speaker 1: and visitors authority to give them to give them money 190 00:11:14,084 --> 00:11:17,524 Speaker 1: because they're bringing people to Vegas, right, and they're bringing visitors, 191 00:11:17,724 --> 00:11:22,084 Speaker 1: and it's actually something that's mutually beneficial. And as you say, Nate, 192 00:11:22,244 --> 00:11:25,604 Speaker 1: like the dude could have tweeted once or made one 193 00:11:25,684 --> 00:11:28,324 Speaker 1: statement that went out to a few hundred people to 194 00:11:28,524 --> 00:11:32,044 Speaker 1: at least pretend. I think even on the Sopranos, the 195 00:11:32,124 --> 00:11:35,804 Speaker 1: No show guys sometimes came to work to just wave 196 00:11:35,924 --> 00:11:38,804 Speaker 1: and say, hey, yes here I am just to make 197 00:11:38,964 --> 00:11:42,724 Speaker 1: big a show of it, and here we had none 198 00:11:42,764 --> 00:11:45,844 Speaker 1: of that. Right. I think rules exist for a reason 199 00:11:45,884 --> 00:11:49,804 Speaker 1: and people should face the consequences if they if they 200 00:11:49,884 --> 00:11:53,924 Speaker 1: try to do something underhanded. What do we think is 201 00:11:54,084 --> 00:11:58,724 Speaker 1: the probability of the Clippers actually getting fined in a 202 00:11:58,804 --> 00:12:01,564 Speaker 1: significant way, in a way that's not a risk slap, 203 00:12:01,644 --> 00:12:04,844 Speaker 1: but something that is actually deter deter's future behavior like 204 00:12:04,924 --> 00:12:07,084 Speaker 1: this on the part of the Clippers and other teams. 205 00:12:07,404 --> 00:12:12,124 Speaker 2: Yeah, let me say I would give of an eighty 206 00:12:12,164 --> 00:12:15,364 Speaker 2: to ninety percent probability that the Clippers, that's somebody with 207 00:12:15,444 --> 00:12:20,084 Speaker 2: the Clippers, maybe not Steve Balmer. Maybe Seve Balmer didn't 208 00:12:20,124 --> 00:12:23,324 Speaker 2: know that much. Right, My basim prior, is an eighty 209 00:12:23,444 --> 00:12:26,644 Speaker 2: nine percent chance that like this was intended by somebody 210 00:12:26,644 --> 00:12:29,364 Speaker 2: who works at Los Angeles Clippers working with someone or 211 00:12:29,444 --> 00:12:32,644 Speaker 2: some things who are working for Aspiration to circument the 212 00:12:32,684 --> 00:12:37,244 Speaker 2: salary cap. Right that might include snaries where Kawai himself 213 00:12:37,284 --> 00:12:39,684 Speaker 2: doesn't know about it. You know, he was known, his 214 00:12:39,884 --> 00:12:42,844 Speaker 2: representation was known to be asking around for all types 215 00:12:42,844 --> 00:12:45,684 Speaker 2: of things that are against the league charter, that are 216 00:12:45,924 --> 00:12:49,284 Speaker 2: way outside the lines, right, so you know they have 217 00:12:49,364 --> 00:12:51,724 Speaker 2: been investigated for that before, you know. I think the 218 00:12:51,804 --> 00:12:54,524 Speaker 2: true chance that, like you know, the other explanations would 219 00:12:54,524 --> 00:12:58,724 Speaker 2: be like maybe somehow that if you give money to 220 00:13:00,604 --> 00:13:05,084 Speaker 2: Kawhi that's kind of just transferred to somebody else, then 221 00:13:05,284 --> 00:13:07,484 Speaker 2: you get money on your balance sheet, and having money 222 00:13:07,484 --> 00:13:09,764 Speaker 2: in your balance sheet makes a financial statement look better 223 00:13:09,804 --> 00:13:12,644 Speaker 2: if you're getting other investors. Right, So, ironically, because this 224 00:13:12,724 --> 00:13:17,564 Speaker 2: company was allegedly so shady, I just want to use 225 00:13:17,604 --> 00:13:21,564 Speaker 2: allegedly because they're so sketchy, we're drawing to a gut shot. 226 00:13:21,684 --> 00:13:27,084 Speaker 2: I think right now, will the NBA want to pursue 227 00:13:27,844 --> 00:13:32,684 Speaker 2: a death penalty five draft pick type of situation? Right? 228 00:13:32,764 --> 00:13:35,764 Speaker 2: Like that's kind of more of a political question, you know. 229 00:13:35,764 --> 00:13:39,844 Speaker 2: I think the league constitution gives the commissioner, Adam Silver, 230 00:13:39,964 --> 00:13:42,924 Speaker 2: in a relation a fair amount of wiggle broom. 231 00:13:43,044 --> 00:13:43,164 Speaker 1: Right. 232 00:13:43,284 --> 00:13:45,124 Speaker 2: The other owners aren't happy about this, in part because, 233 00:13:45,164 --> 00:13:46,684 Speaker 2: like the Clippers, already you spend as much money as 234 00:13:46,724 --> 00:13:48,324 Speaker 2: end up in the league. They built one of the 235 00:13:48,364 --> 00:13:51,964 Speaker 2: most expensive basketball areci Intuit dome ever built. And people 236 00:13:51,964 --> 00:13:54,364 Speaker 2: are already concerned about this, right, and so like they 237 00:13:54,484 --> 00:13:57,884 Speaker 2: might want punishment, but like, there are actually three things 238 00:13:58,004 --> 00:14:02,084 Speaker 2: the league could do. Adam Silver could say, uh, we 239 00:14:02,524 --> 00:14:07,084 Speaker 2: have found that we believe that, you know, salary cap 240 00:14:07,204 --> 00:14:09,284 Speaker 2: tri convention was committed, and now we're going to go 241 00:14:09,284 --> 00:14:11,124 Speaker 2: to arbitration for a bruling. 242 00:14:11,364 --> 00:14:11,524 Speaker 1: Right. 243 00:14:12,204 --> 00:14:17,924 Speaker 2: They could say this does not meet our threshold for punishment. 244 00:14:18,004 --> 00:14:20,644 Speaker 2: It was bad, does not mean a definition of capture 245 00:14:20,684 --> 00:14:23,324 Speaker 2: convention beyond an extent to which we can prove. We're 246 00:14:23,324 --> 00:14:26,884 Speaker 2: going to take away second round draft pick and find 247 00:14:27,004 --> 00:14:29,964 Speaker 2: Steve Balmer five million dollars, which to him is like 248 00:14:30,284 --> 00:14:32,164 Speaker 2: a parking ticket kind of literally if you do the 249 00:14:32,204 --> 00:14:36,404 Speaker 2: math right, yeah, and call it a day. Right. And 250 00:14:36,444 --> 00:14:38,444 Speaker 2: then the third snary is like a plea bargain where 251 00:14:38,484 --> 00:14:39,964 Speaker 2: they said we don't want to take to arbitration, we 252 00:14:39,964 --> 00:14:42,284 Speaker 2: want us to last another two years. Right, So we 253 00:14:42,404 --> 00:14:46,484 Speaker 2: think we could get three draft picks and avoiding Kawhai's 254 00:14:46,484 --> 00:14:51,684 Speaker 2: contract and suspending Steve Balmer for a year, but instead sorry, Steve, 255 00:14:52,124 --> 00:14:56,164 Speaker 2: six month suspension, two draft picks, maybe one of which 256 00:14:56,204 --> 00:14:58,884 Speaker 2: you can get back for good behavior, the largest fines 257 00:14:58,884 --> 00:15:00,804 Speaker 2: because you'll pay the money. That's good for both of us, 258 00:15:00,804 --> 00:15:02,724 Speaker 2: because you don't care about the money, and the other 259 00:15:02,764 --> 00:15:05,804 Speaker 2: owners we pacified. Right, Like if I to if I 260 00:15:06,044 --> 00:15:09,964 Speaker 2: to guess right, I'd say that like twenty per chance 261 00:15:10,604 --> 00:15:15,564 Speaker 2: slap on the wrists forty percent chance, plea bargain forty 262 00:15:15,604 --> 00:15:18,684 Speaker 2: percent chance that the league wants to come down pretty 263 00:15:18,684 --> 00:15:21,484 Speaker 2: hard and it goes to arbitration conditional on that eighty 264 00:15:21,484 --> 00:15:24,164 Speaker 2: percent chance the arbitrators agree. So the odds of like 265 00:15:26,404 --> 00:15:29,244 Speaker 2: the nuclear option happening, I think are lower than the 266 00:15:29,284 --> 00:15:32,244 Speaker 2: odds of something happening, which in turn now lower than 267 00:15:32,564 --> 00:15:35,724 Speaker 2: something actually happened having happened, because like you know, if 268 00:15:35,764 --> 00:15:39,084 Speaker 2: it's borderline, then I think you're get to slap on 269 00:15:39,084 --> 00:15:39,764 Speaker 2: the risk territory. 270 00:15:39,924 --> 00:15:45,124 Speaker 1: Yeah, And I think that the the other part of 271 00:15:45,204 --> 00:15:50,524 Speaker 1: this is what do they want, Like, if they're looking 272 00:15:50,604 --> 00:15:52,924 Speaker 1: in the future, right, what do they want to see 273 00:15:53,044 --> 00:15:58,164 Speaker 1: happen because all of those different scenarios reward. You know, 274 00:15:58,244 --> 00:16:01,324 Speaker 1: we talk a lot on the show about how game 275 00:16:01,404 --> 00:16:05,084 Speaker 1: theory is all about, you know, incentivizing different types of behaviors, right, 276 00:16:05,164 --> 00:16:08,604 Speaker 1: and that happens both with rewards and with punishments. And 277 00:16:08,804 --> 00:16:13,404 Speaker 1: so the three scenarios that you've laid out spell out 278 00:16:13,764 --> 00:16:19,604 Speaker 1: very different kind of futures that the league might might 279 00:16:19,724 --> 00:16:22,924 Speaker 1: see and might be signaling that they want to see. Right, 280 00:16:22,964 --> 00:16:24,724 Speaker 1: Because if you get like a slap on the wrist, 281 00:16:24,804 --> 00:16:27,644 Speaker 1: they're saying, we don't actually care that much about this 282 00:16:27,804 --> 00:16:29,844 Speaker 1: kind of stuff. Keep on doing it. 283 00:16:30,524 --> 00:16:33,124 Speaker 2: And this is why like you or I right, who 284 00:16:33,284 --> 00:16:39,364 Speaker 2: play competitive games or follow competitive sports, right, we have 285 00:16:39,404 --> 00:16:43,844 Speaker 2: a very efficient market. Right. If you do not enforce 286 00:16:43,964 --> 00:16:48,324 Speaker 2: your rules, I guarantee you that there's not going to 287 00:16:48,364 --> 00:16:50,524 Speaker 2: be some gentlemen's agreement not to highlight them that you 288 00:16:50,644 --> 00:16:53,564 Speaker 2: will have. You know, you will have a bigger problem, right, 289 00:16:54,564 --> 00:16:57,764 Speaker 2: It's just fucking it's guaranteed. That's how an equilibrium works 290 00:16:57,804 --> 00:17:00,044 Speaker 2: in an efficient market in the NBA is a regional 291 00:17:00,044 --> 00:17:03,484 Speaker 2: approximation of an efficient market run by players that are 292 00:17:03,604 --> 00:17:06,644 Speaker 2: very smart and agents that are very smart, and owners 293 00:17:06,724 --> 00:17:08,284 Speaker 2: that will talk about their intelligence in the moment, but 294 00:17:08,364 --> 00:17:12,364 Speaker 2: certainly owners who are very, very competitive and accomplished and 295 00:17:12,764 --> 00:17:15,884 Speaker 2: have the financial means of social connections to accomplish what 296 00:17:15,964 --> 00:17:19,244 Speaker 2: they want the large majority of the time. And I 297 00:17:19,524 --> 00:17:22,324 Speaker 2: think Adam Silver is smart enough to know that, right. 298 00:17:22,404 --> 00:17:25,084 Speaker 2: I mean, like the other defense I've heard prominently by 299 00:17:26,004 --> 00:17:30,844 Speaker 2: by Mark Cuban, former Dallas Mavericks owner, another smart, accomplished guy, 300 00:17:30,924 --> 00:17:34,084 Speaker 2: has been a big defender of Balmer. His defense is 301 00:17:34,164 --> 00:17:38,404 Speaker 2: Steve Balmer couldn't do something this stupid, to which I say, 302 00:17:38,404 --> 00:17:42,364 Speaker 2: have you ever fucking met a billionaire before? Like the 303 00:17:42,444 --> 00:17:44,724 Speaker 2: billionaire I haven't met Elon Musk, right, who was until 304 00:17:44,724 --> 00:17:46,324 Speaker 2: recently advising the President of the United States. And I 305 00:17:46,364 --> 00:17:49,124 Speaker 2: think I have a high opinion about some aspects of 306 00:17:49,204 --> 00:17:51,564 Speaker 2: Elon Musk, but like, but you know, I also have 307 00:17:51,604 --> 00:17:53,404 Speaker 2: the opinion that Elon Musk would be one example of 308 00:17:53,444 --> 00:17:57,724 Speaker 2: how billionaires can can believe in wrong and things and 309 00:17:57,924 --> 00:18:00,924 Speaker 2: be sloppy and be very arrogant, and like I think 310 00:18:01,044 --> 00:18:04,004 Speaker 2: arguably also like you know, maybe it's like rational for 311 00:18:04,244 --> 00:18:07,444 Speaker 2: him to say, Okay, we didn't expect this company to 312 00:18:07,804 --> 00:18:11,564 Speaker 2: be fraudulent and to have all this discovery that uncover 313 00:18:11,724 --> 00:18:16,644 Speaker 2: these under the table relationships, and Okay, we know what's 314 00:18:16,644 --> 00:18:18,204 Speaker 2: the worst case. You're not going to take away the team. 315 00:18:18,404 --> 00:18:19,804 Speaker 2: They're not gonna take away the team. So maybe you 316 00:18:19,884 --> 00:18:22,884 Speaker 2: have a twenty percent chance of discovery times a fifty 317 00:18:22,884 --> 00:18:26,684 Speaker 2: percent chance conditionally that you get punished for it, right, 318 00:18:26,804 --> 00:18:29,364 Speaker 2: so like a ten percent chance you get suspended for 319 00:18:29,404 --> 00:18:31,564 Speaker 2: a year. And yeah, there's some draft picks. The Clippers 320 00:18:31,564 --> 00:18:33,444 Speaker 2: are pretty fucked anyway, right, you know, when you don't 321 00:18:33,484 --> 00:18:35,644 Speaker 2: have many of good draft picks, removing the remaining few, 322 00:18:35,724 --> 00:18:37,204 Speaker 2: I mean, he can just sell them and go buy 323 00:18:37,724 --> 00:18:41,524 Speaker 2: a soccer team or WNBA team or whatever else. Right, 324 00:18:41,924 --> 00:18:45,444 Speaker 2: So it might be quite rational even given the possibility, 325 00:18:45,484 --> 00:18:47,964 Speaker 2: but not the certainty of this harsh punishment. I mean, 326 00:18:48,044 --> 00:18:51,364 Speaker 2: isn't all the literature that like, it's the certainty of punishment, 327 00:18:51,444 --> 00:18:53,764 Speaker 2: not the severity that actually deters crime. Maybe it's yeah, 328 00:18:53,884 --> 00:18:54,964 Speaker 2: maybe it's actually wrong. 329 00:18:54,804 --> 00:18:58,364 Speaker 1: And it's both, it's both, but the certainty is definitely 330 00:18:58,724 --> 00:19:01,804 Speaker 1: quite important. And I think, I mean, the hilarious thing 331 00:19:01,884 --> 00:19:04,564 Speaker 1: of the calculus that you've just laid out is it's 332 00:19:04,604 --> 00:19:07,884 Speaker 1: one of these like ah shit, Like I didn't realize 333 00:19:07,924 --> 00:19:10,564 Speaker 1: that microoked dealings would come out because the company that 334 00:19:10,604 --> 00:19:14,444 Speaker 1: I'm using it has even bigger crooked dealings. Right, we 335 00:19:14,804 --> 00:19:17,764 Speaker 1: didn't realize that that wasn't part of the calculus. We 336 00:19:17,844 --> 00:19:21,964 Speaker 1: thought the company was more legit, which which is quite amusing, 337 00:19:22,204 --> 00:19:24,324 Speaker 1: Right when you're doing something wrong and it turns out 338 00:19:24,404 --> 00:19:29,364 Speaker 1: that you get punished because the entity that you're partnering 339 00:19:29,484 --> 00:19:31,964 Speaker 1: with did something even more wrong. 340 00:19:32,004 --> 00:19:35,564 Speaker 2: And there are other like Kawhi Leonard always gets hurt 341 00:19:36,124 --> 00:19:38,844 Speaker 2: in the playoffs, right, Like if you removed his salary 342 00:19:38,884 --> 00:19:41,204 Speaker 2: from their books, they might not mind that so much, 343 00:19:41,244 --> 00:19:43,244 Speaker 2: you know what I mean. It's so there's all types 344 00:19:43,244 --> 00:19:45,604 Speaker 2: of perversion centers. And like arguably, if you're not willing 345 00:19:45,644 --> 00:19:47,684 Speaker 2: to like say, see Bomber, you have to sell the team. 346 00:19:48,124 --> 00:19:50,644 Speaker 2: We're moving the team to Seattle, even though he just 347 00:19:50,644 --> 00:19:52,884 Speaker 2: built this new arena, the Lakers can move in there instead. 348 00:19:53,164 --> 00:19:56,284 Speaker 2: How pissed would he be then, right, you know, I 349 00:19:56,364 --> 00:19:59,284 Speaker 2: mean that would create a real deterrent. 350 00:19:59,404 --> 00:20:04,644 Speaker 1: But like yeah, yeah, no, no, people need real to terms. 351 00:20:04,964 --> 00:20:07,404 Speaker 2: I think the NBA understands although Adam Silver is not 352 00:20:08,244 --> 00:20:11,924 Speaker 2: the draconian ruler that former commissioner David Stern was, necessarily 353 00:20:13,444 --> 00:20:15,124 Speaker 2: you know the other thing about billionaires, they could just 354 00:20:15,164 --> 00:20:22,644 Speaker 2: be sloppy, right, they they they delegate to know that, Like, 355 00:20:23,324 --> 00:20:25,404 Speaker 2: you know, this is partly why the League, spartly in 356 00:20:25,404 --> 00:20:27,524 Speaker 2: the constitution says that, like we have to look at 357 00:20:27,564 --> 00:20:30,084 Speaker 2: circumstantial evidence because, like you know, you don't do this 358 00:20:30,204 --> 00:20:32,884 Speaker 2: in an email. You do this in a phone call, 359 00:20:33,244 --> 00:20:34,684 Speaker 2: or better than a phone call, you do it in 360 00:20:34,724 --> 00:20:39,364 Speaker 2: a meeting over coffee at some lemonade at the country club, 361 00:20:40,884 --> 00:20:43,644 Speaker 2: and you have the conversations there, and then you hire 362 00:20:43,884 --> 00:20:46,804 Speaker 2: like a middle man who might have a slightly more 363 00:20:46,844 --> 00:20:50,724 Speaker 2: fingerprints on it, right, or you're kind of informed, you know, 364 00:20:50,804 --> 00:20:55,724 Speaker 2: you tell somebody, hey, do you haven't you don't know 365 00:20:55,844 --> 00:21:01,524 Speaker 2: anybody who could maybe help Kawhi get some sponsorships, right, 366 00:21:01,604 --> 00:21:03,484 Speaker 2: maybe a little step further and say, you know what, 367 00:21:04,044 --> 00:21:10,204 Speaker 2: anything within you know, within the higher end of market value, 368 00:21:10,404 --> 00:21:12,044 Speaker 2: you know what I mean, Like if you instructed somebody 369 00:21:12,044 --> 00:21:14,524 Speaker 2: to do that, they would kind of get the right impression. 370 00:21:14,564 --> 00:21:17,524 Speaker 2: If you're a billionaire caterer, I imagine you're quite good 371 00:21:17,884 --> 00:21:21,764 Speaker 2: like taking the implicit instructions from your billionaire So is 372 00:21:22,244 --> 00:21:24,524 Speaker 2: not to create legal liability for them? 373 00:21:26,124 --> 00:21:28,484 Speaker 1: Yeah, no, I mean I think this is the one 374 00:21:28,564 --> 00:21:31,204 Speaker 1: thing that they did not take from the mob playbook. 375 00:21:31,204 --> 00:21:33,604 Speaker 1: They got the no shows correct. But the one thing 376 00:21:33,684 --> 00:21:36,084 Speaker 1: the mob always knew is that someone is always listening. 377 00:21:36,164 --> 00:21:38,884 Speaker 1: Someone's always watching, right, watch it, watch it, and don't 378 00:21:38,924 --> 00:21:42,484 Speaker 1: leave a paper trail, and never communicate things on you know, 379 00:21:42,684 --> 00:21:46,084 Speaker 1: landlines or things that might be tapped, and try to 380 00:21:46,204 --> 00:21:49,844 Speaker 1: hold meetings while walking outside, you know, et cetera, et cetera, 381 00:21:49,924 --> 00:21:53,004 Speaker 1: et cetera. But I think that billionaires forget that and 382 00:21:53,124 --> 00:21:55,284 Speaker 1: do get sloppy because they think they can afford to 383 00:21:55,324 --> 00:21:57,804 Speaker 1: be And so you do need to have punishments that 384 00:21:58,044 --> 00:22:01,604 Speaker 1: are larger, kind of a magnitude larger, in order to 385 00:22:01,764 --> 00:22:05,164 Speaker 1: deter that kind of behavior. And it's very interesting to 386 00:22:05,244 --> 00:22:07,044 Speaker 1: me to see, yeah, to see this playing out in 387 00:22:07,164 --> 00:22:10,484 Speaker 1: a realm that I know very little about, and it 388 00:22:10,604 --> 00:22:12,964 Speaker 1: turns out that it has all these parallels with realms 389 00:22:13,004 --> 00:22:16,124 Speaker 1: I know a lot about, because billionaire behavior turns out 390 00:22:16,164 --> 00:22:20,164 Speaker 1: to be pretty similar. Across the board. We're thinking, you 391 00:22:20,284 --> 00:22:22,564 Speaker 1: going to get away with shit and skirt the rules, 392 00:22:22,644 --> 00:22:26,244 Speaker 1: and you know what, usually you can. So on that note, Nate, 393 00:22:26,284 --> 00:22:28,204 Speaker 1: do you want to take a break and talk about 394 00:22:28,244 --> 00:22:30,244 Speaker 1: whether New York needs more of them? Do we need 395 00:22:30,284 --> 00:22:45,804 Speaker 1: more millionaires? Do we need more billionaires? In the state. So, Nate, 396 00:22:46,004 --> 00:22:51,044 Speaker 1: there has been a report that recently came out by 397 00:22:51,524 --> 00:22:57,684 Speaker 1: the Citizens' Budget Commission that argues that New York needs 398 00:22:58,164 --> 00:23:03,004 Speaker 1: more millionaires because it's been adding millionaires at a lower 399 00:23:03,404 --> 00:23:06,804 Speaker 1: rate than that of other larger states. And what that 400 00:23:07,004 --> 00:23:10,764 Speaker 1: means is that the state is not getting as much 401 00:23:11,164 --> 00:23:16,404 Speaker 1: in tax revenue. So there's this, you know, theoretical unrealized 402 00:23:16,764 --> 00:23:19,964 Speaker 1: potential revenue that it could be getting if millionaires were 403 00:23:20,004 --> 00:23:23,084 Speaker 1: coming to New York at comparable rates to other states, 404 00:23:23,164 --> 00:23:27,924 Speaker 1: and instead it is not. And we see increases in Florida, 405 00:23:28,004 --> 00:23:32,244 Speaker 1: we see increases in Texas. We even are seeing increases 406 00:23:32,284 --> 00:23:37,204 Speaker 1: in California, which has someone say, even more punitive kind 407 00:23:37,204 --> 00:23:41,644 Speaker 1: of tax rules than New York does. But for some reason, 408 00:23:41,964 --> 00:23:44,404 Speaker 1: you know, they're adding millionaires at a much faster rate 409 00:23:44,484 --> 00:23:48,524 Speaker 1: than New York is. So in between twenty ten and 410 00:23:48,684 --> 00:23:55,284 Speaker 1: twenty twenty two, the New York millionaire population has almost doubled, 411 00:23:55,564 --> 00:23:59,084 Speaker 1: but in the other states it's more than tripled. And 412 00:23:59,204 --> 00:24:03,044 Speaker 1: so the argument of this report is that, you know, 413 00:24:03,364 --> 00:24:06,684 Speaker 1: we should have more rich people so that they can 414 00:24:06,804 --> 00:24:11,724 Speaker 1: pay more taxes. Of all, Nate, you know, this is 415 00:24:11,764 --> 00:24:17,604 Speaker 1: obviously where we've talked about Mom, Donnie affordability. You know, 416 00:24:17,644 --> 00:24:20,764 Speaker 1: we're getting to elections. It's interesting timing for the report 417 00:24:20,844 --> 00:24:21,324 Speaker 1: to come out. 418 00:24:21,404 --> 00:24:23,724 Speaker 2: But what do we what do we think? 419 00:24:23,844 --> 00:24:26,764 Speaker 1: What do you just think in general about this argument that, 420 00:24:27,404 --> 00:24:30,364 Speaker 1: oh shit, you're not keeping up with the Joneses, Right, 421 00:24:30,404 --> 00:24:32,884 Speaker 1: you're not keeping up with other states in terms of 422 00:24:32,964 --> 00:24:36,804 Speaker 1: the rate of millionaire acquisition as a metric. 423 00:24:37,204 --> 00:24:39,964 Speaker 2: Oh, it's it's only it's only doubled. I guess it's 424 00:24:39,964 --> 00:24:41,284 Speaker 2: a little surprise, you know, I know. 425 00:24:41,444 --> 00:24:43,484 Speaker 1: A little less than doubled in over twelve years. 426 00:24:43,604 --> 00:24:45,084 Speaker 2: Do you know where they're going? Are they going to 427 00:24:45,164 --> 00:24:46,724 Speaker 2: Florida or New Jersey? 428 00:24:47,524 --> 00:24:50,564 Speaker 1: So so they're going. I don't know where the where 429 00:24:50,604 --> 00:24:53,484 Speaker 1: the New York ones are going. What we know is 430 00:24:53,564 --> 00:24:56,604 Speaker 1: that so the three states that are having larger increases 431 00:24:56,644 --> 00:24:58,364 Speaker 1: are Florida, Texas, and California. 432 00:24:59,684 --> 00:25:05,244 Speaker 2: Look, the New York tax code is fairly pinitive to 433 00:25:05,444 --> 00:25:07,324 Speaker 2: high earners, and there's a New York City tax on 434 00:25:07,724 --> 00:25:11,244 Speaker 2: top of that. So you know, you're you're effective tax 435 00:25:11,364 --> 00:25:16,204 Speaker 2: rate is over fifty percent if you're earning ordinary income 436 00:25:16,244 --> 00:25:19,204 Speaker 2: as a high earner in New York City, right, I mean, 437 00:25:19,964 --> 00:25:22,404 Speaker 2: you know, are used to there with like the the 438 00:25:23,244 --> 00:25:26,644 Speaker 2: Laugher curve. This is kind of Reaganomics, right. 439 00:25:26,684 --> 00:25:28,084 Speaker 1: Yeah, talk about the Laffer curves. 440 00:25:28,804 --> 00:25:31,364 Speaker 2: So Art Laugher was a Reagan economist who drew a 441 00:25:31,484 --> 00:25:35,084 Speaker 2: curve and said, well, you know, there is some optimal 442 00:25:35,404 --> 00:25:38,564 Speaker 2: tax rate where you maximize government revenue. But it hasn't 443 00:25:38,604 --> 00:25:41,924 Speaker 2: inverted you because at some point, like if you tax 444 00:25:42,084 --> 00:25:47,484 Speaker 2: every dollar one hundred percent, then nobody works because there's 445 00:25:47,484 --> 00:25:48,924 Speaker 2: no one sentive to work because the government gets all 446 00:25:48,924 --> 00:25:52,364 Speaker 2: the money anyway. So there are some optimal tax rate, 447 00:25:52,484 --> 00:25:55,684 Speaker 2: and there are all these debates about how to quantify 448 00:25:55,844 --> 00:25:59,884 Speaker 2: like where that optimal tax rate might be, you know, 449 00:26:00,204 --> 00:26:02,804 Speaker 2: I mean it's possible. And by the way, you know, 450 00:26:03,164 --> 00:26:04,684 Speaker 2: even as if you're not on the other side, So 451 00:26:04,724 --> 00:26:06,844 Speaker 2: if you're on the wrong side of Laffer curve, then 452 00:26:06,884 --> 00:26:09,044 Speaker 2: you actually make less money by tax people more because 453 00:26:09,084 --> 00:26:12,324 Speaker 2: people less and or relocate. You know, even if you're 454 00:26:12,444 --> 00:26:16,804 Speaker 2: not in in the upper part of the Laffer curve 455 00:26:17,004 --> 00:26:19,804 Speaker 2: right then or at the peak, then you do still 456 00:26:19,884 --> 00:26:23,604 Speaker 2: encounter diminishing returns. You can imagine like a parabola. Right. 457 00:26:24,764 --> 00:26:30,044 Speaker 2: I think New York City still offers a pretty unique 458 00:26:30,924 --> 00:26:34,164 Speaker 2: I mean, I'll be frank, like, I choose to live 459 00:26:34,244 --> 00:26:36,044 Speaker 2: here and pay I pay a lot of taxes, and 460 00:26:36,124 --> 00:26:38,484 Speaker 2: I also have a home in Westchester County where I 461 00:26:38,524 --> 00:26:40,804 Speaker 2: pay a lot of taxes. Right, because, like, I really 462 00:26:40,924 --> 00:26:44,204 Speaker 2: like New York and there's not any particularly close second. 463 00:26:44,284 --> 00:26:46,764 Speaker 2: Maybe if maybe if Iroba be like Las Vegas better, 464 00:26:46,804 --> 00:26:49,444 Speaker 2: it's been half the year out there with you or something. 465 00:26:49,484 --> 00:26:55,564 Speaker 2: But like, I think progressives need to understand that, like 466 00:26:55,964 --> 00:26:58,044 Speaker 2: you do encounter diminishing returns when you just tax rich 467 00:26:58,084 --> 00:27:00,084 Speaker 2: people more and more. They can decide to work less. 468 00:27:00,084 --> 00:27:03,204 Speaker 2: They can decide to especially with Trump having good at 469 00:27:03,204 --> 00:27:08,724 Speaker 2: the irs, right, they can decide to legally hide income 470 00:27:09,484 --> 00:27:13,004 Speaker 2: were illegally high income. Right, they can decide to move 471 00:27:13,364 --> 00:27:16,364 Speaker 2: and like when you start to have you know, if 472 00:27:16,404 --> 00:27:18,804 Speaker 2: they feel as though that they're not getting their money's worth, 473 00:27:18,804 --> 00:27:20,484 Speaker 2: if they feel like the quality of New York City 474 00:27:20,604 --> 00:27:23,244 Speaker 2: is declining, right, Like I don't know, Like, you know, 475 00:27:23,564 --> 00:27:28,884 Speaker 2: if we had the crime problems in New York City 476 00:27:29,004 --> 00:27:32,044 Speaker 2: that they have in some other cities, then I'm not 477 00:27:32,084 --> 00:27:34,084 Speaker 2: super sensitive to crime, but then I might leave right then, 478 00:27:34,164 --> 00:27:37,004 Speaker 2: you know, if if if they hadn't really built sure 479 00:27:37,364 --> 00:27:40,044 Speaker 2: La Guardia Airport, if the subway weren't I think still 480 00:27:40,084 --> 00:27:43,364 Speaker 2: one of the best transportation systems in the world, if 481 00:27:43,364 --> 00:27:47,044 Speaker 2: we didn't have so many you know, beautiful we. 482 00:27:47,124 --> 00:27:49,404 Speaker 1: Have the best rats. Nay, we have the best rats. 483 00:27:49,444 --> 00:27:51,444 Speaker 2: We have a lot of trash cans. We figure that out, right, 484 00:27:51,604 --> 00:27:53,884 Speaker 2: if we didn't have these beautiful parks and all five 485 00:27:54,444 --> 00:27:57,844 Speaker 2: burrows and and things like that, Right, if you didn't 486 00:27:57,884 --> 00:28:00,804 Speaker 2: have those things, then I might say fuck it. And 487 00:28:01,004 --> 00:28:02,804 Speaker 2: you know, you do have to worry potentially about like 488 00:28:03,964 --> 00:28:07,764 Speaker 2: downward spiralles where But like I again, I'm kind of 489 00:28:07,804 --> 00:28:10,324 Speaker 2: a free market guy, right, I also recognize that, as 490 00:28:10,324 --> 00:28:13,564 Speaker 2: an empirical fact, wealthy people have a disproportionate amount of 491 00:28:13,604 --> 00:28:16,364 Speaker 2: influence in politics, so it's hard to you know, I 492 00:28:16,364 --> 00:28:19,284 Speaker 2: think it'd be great at New York hadbar billionaires. My 493 00:28:19,404 --> 00:28:23,764 Speaker 2: guess is that the current tax co is probably something 494 00:28:23,844 --> 00:28:29,164 Speaker 2: close to two optimal for the overall welfare of the city. 495 00:28:29,404 --> 00:28:31,084 Speaker 2: If you tried to increase it more, I could see 496 00:28:31,364 --> 00:28:32,884 Speaker 2: I could see them being problems. I mean, I think, 497 00:28:33,004 --> 00:28:35,084 Speaker 2: you know, I have friends who are who are wealthy. 498 00:28:35,244 --> 00:28:38,044 Speaker 2: I should say, you know, I'm pretty wealthy myself relative 499 00:28:38,084 --> 00:28:41,604 Speaker 2: to a lot of people, and some of them I 500 00:28:41,644 --> 00:28:44,764 Speaker 2: think seem irrationally concerned about Zarron because like tax policy 501 00:28:45,244 --> 00:28:47,604 Speaker 2: in New York is art addictated by New York State anyway, 502 00:28:47,684 --> 00:28:50,964 Speaker 2: and there are lots of political and practical constraints and 503 00:28:51,004 --> 00:28:53,044 Speaker 2: other things like it's not I'll put it like this, 504 00:28:53,364 --> 00:28:55,924 Speaker 2: it's even as a free market guy and a guy 505 00:28:55,964 --> 00:28:58,404 Speaker 2: who pays a lot of taxes in New York, maybe 506 00:28:58,404 --> 00:29:00,444 Speaker 2: a member of the class, even this is not the 507 00:29:00,484 --> 00:29:02,324 Speaker 2: most sympathetic cause I don't think. 508 00:29:02,684 --> 00:29:06,324 Speaker 1: Yeah, no, I agree with you that it's definitely not 509 00:29:06,444 --> 00:29:08,844 Speaker 1: the most sympathetic cause. By the way, I'm just looking 510 00:29:08,884 --> 00:29:13,404 Speaker 1: at more from this report and their contention is that 511 00:29:13,684 --> 00:29:18,484 Speaker 1: if New York City's rate of growth rate of millionaires 512 00:29:19,364 --> 00:29:24,324 Speaker 1: had kept up, that would have been thirteen billion in 513 00:29:24,444 --> 00:29:27,324 Speaker 1: additional taxes in twenty twenty two, which is the most 514 00:29:27,444 --> 00:29:30,724 Speaker 1: recent year of data. So that's kind of where where 515 00:29:30,724 --> 00:29:34,084 Speaker 1: they're coming from numbers wise. But you know, it is 516 00:29:34,324 --> 00:29:38,164 Speaker 1: it is like it's not a zero sum game necessarily. 517 00:29:38,364 --> 00:29:41,364 Speaker 1: As you say, a lot of the migration, because this 518 00:29:41,524 --> 00:29:44,524 Speaker 1: is something that you just asked about, Nate, like, well, 519 00:29:44,684 --> 00:29:46,364 Speaker 1: you know where are they going? That a lot of 520 00:29:46,444 --> 00:29:50,244 Speaker 1: the families that are leaving are actually not millionaires. They're 521 00:29:50,404 --> 00:29:54,284 Speaker 1: kind of the middle at least for New York middle 522 00:29:54,324 --> 00:29:56,604 Speaker 1: class families. For other parts of the country, they would 523 00:29:56,604 --> 00:30:00,084 Speaker 1: be considered I think upper middle class that make two 524 00:30:00,204 --> 00:30:03,604 Speaker 1: hundred three hundred thousand, those are actually that's the demographic 525 00:30:03,684 --> 00:30:07,444 Speaker 1: that's leaving the fastest, that's the biggest outflow. A lot 526 00:30:07,524 --> 00:30:09,964 Speaker 1: of millionaires are not that sun sort of to like 527 00:30:10,044 --> 00:30:14,924 Speaker 1: a marginal few percent tax, right if they're living where 528 00:30:14,964 --> 00:30:16,924 Speaker 1: they want to live, because they want to live where 529 00:30:16,964 --> 00:30:18,644 Speaker 1: they want to live, right, Like, that's part of the 530 00:30:18,684 --> 00:30:21,924 Speaker 1: point of having of being a millionaire, that you want 531 00:30:22,004 --> 00:30:23,244 Speaker 1: to live in a place where. 532 00:30:23,124 --> 00:30:27,484 Speaker 2: You're where you're having. Economist call superstar effects, right, And 533 00:30:27,524 --> 00:30:30,124 Speaker 2: it originally pertains to entertainers. I think there probably are 534 00:30:30,204 --> 00:30:32,364 Speaker 2: some cases where it can apply to something like a 535 00:30:33,924 --> 00:30:37,564 Speaker 2: hedge fund manager to write where they attract the most 536 00:30:37,604 --> 00:30:40,444 Speaker 2: talent and they get more lot your funds to invest with, 537 00:30:40,604 --> 00:30:42,644 Speaker 2: right or an AI researcher. This are more in California 538 00:30:42,724 --> 00:30:46,364 Speaker 2: than in New York. But you know, New York is 539 00:30:46,484 --> 00:30:49,524 Speaker 2: kind of irreplaceable. I think, you know, in fact, I 540 00:30:49,604 --> 00:30:53,684 Speaker 2: think kind of, yeah, California is struggling more in some ways. 541 00:30:53,684 --> 00:30:55,404 Speaker 2: I think you hear that San Francisco is like rebounding 542 00:30:55,724 --> 00:30:58,804 Speaker 2: a little bit, but like you know, since COVID, I 543 00:30:59,004 --> 00:31:02,724 Speaker 2: haven't heard nearly as much La West Coast jealousy from 544 00:31:03,404 --> 00:31:06,244 Speaker 2: from New Yorkers. Right, I'd like to see more more 545 00:31:06,284 --> 00:31:10,884 Speaker 2: housing at all levels of the ecosystem. Right, I'd like 546 00:31:10,924 --> 00:31:11,604 Speaker 2: to see more of that. 547 00:31:11,884 --> 00:31:12,004 Speaker 1: Right. 548 00:31:12,324 --> 00:31:14,444 Speaker 2: But like you know, if you don't like it, then 549 00:31:15,484 --> 00:31:18,364 Speaker 2: then leave, and they don't buy and large leave because 550 00:31:18,404 --> 00:31:22,404 Speaker 2: New York still offers, you know, a high and improving 551 00:31:23,164 --> 00:31:24,764 Speaker 2: I feel like value preposition. 552 00:31:25,204 --> 00:31:28,604 Speaker 1: Yeah, I agree with you that New York is still, 553 00:31:29,564 --> 00:31:32,764 Speaker 1: despite everything, a good value proposition, and for a certain 554 00:31:32,804 --> 00:31:35,484 Speaker 1: type of person there is no other replacement. So I 555 00:31:35,604 --> 00:31:40,484 Speaker 1: think that, you know, my takeaway is that this is misplaced, right, saying, oh, 556 00:31:40,564 --> 00:31:43,844 Speaker 1: we don't have enough millionaires. I think that we'd be 557 00:31:44,004 --> 00:31:47,124 Speaker 1: better served looking at some other areas where we can 558 00:31:47,204 --> 00:31:50,364 Speaker 1: improve in order to kind of just get a better 559 00:31:50,444 --> 00:31:53,204 Speaker 1: experience for everyone in the city. And that the millionaires 560 00:31:53,204 --> 00:31:55,044 Speaker 1: are not going anywhere, at least for now, I mean 561 00:31:55,124 --> 00:31:56,364 Speaker 1: that we're not. We're not at that point. 562 00:31:56,484 --> 00:31:58,244 Speaker 2: The one thing I'll say is these things can have 563 00:31:59,324 --> 00:32:02,764 Speaker 2: cascading effects, at least at least in principle. So, like 564 00:32:02,924 --> 00:32:06,204 Speaker 2: you know, I said, I would never need leave New 565 00:32:06,284 --> 00:32:07,964 Speaker 2: York in the near future. Have like lots of social 566 00:32:08,044 --> 00:32:14,404 Speaker 2: ties here. If half my friends left New York for Denver, right, 567 00:32:14,444 --> 00:32:16,164 Speaker 2: that might be a different story, you know what I mean. 568 00:32:17,524 --> 00:32:22,044 Speaker 2: And likewise, if you have a vicious circle where there's 569 00:32:22,124 --> 00:32:24,324 Speaker 2: lux tax revenue coming in, so things I like about 570 00:32:24,364 --> 00:32:27,364 Speaker 2: New York, the parks and the overly expensive but now 571 00:32:27,484 --> 00:32:31,124 Speaker 2: quite nice airports, and the slightly dirty but very efficient 572 00:32:31,644 --> 00:32:38,444 Speaker 2: subway and everything else, right, if those things deteriorated, then 573 00:32:39,764 --> 00:32:41,444 Speaker 2: you know, that can create a vicious cycle. And we 574 00:32:41,524 --> 00:32:43,324 Speaker 2: have seen the city into. 575 00:32:43,164 --> 00:32:45,324 Speaker 1: Yeah, absolutely, which is why I think it's important to 576 00:32:45,364 --> 00:32:47,004 Speaker 1: try to focus on that kind of stuff, you know, 577 00:32:47,084 --> 00:32:49,884 Speaker 1: focus on the infrastructure, focus on making the experience good. 578 00:32:49,924 --> 00:32:52,564 Speaker 1: Obviously you need tax revenue for that tax revenue. New 579 00:32:52,644 --> 00:32:55,244 Speaker 1: York has still been going up, you know, so it's 580 00:32:55,324 --> 00:32:59,604 Speaker 1: not like we're not yet that in that place. But 581 00:32:59,684 --> 00:33:01,964 Speaker 1: I do think it's very important to keep that in 582 00:33:02,124 --> 00:33:05,684 Speaker 1: mind and to understand that cities have gone through periods 583 00:33:05,804 --> 00:33:08,644 Speaker 1: like that, right, even New York. New York has recovered, 584 00:33:08,684 --> 00:33:12,204 Speaker 1: but there have been some pretty nasty points in New 585 00:33:12,284 --> 00:33:14,604 Speaker 1: York City's history. But yeah, with that said, I think 586 00:33:14,644 --> 00:33:16,004 Speaker 1: you and I are on the same page that we 587 00:33:16,084 --> 00:33:18,444 Speaker 1: don't think that the millionaire port is the number one 588 00:33:18,564 --> 00:33:22,964 Speaker 1: problem facing New York City right now, and so yeah, 589 00:33:23,044 --> 00:33:27,044 Speaker 1: we appreciate that this report is coming out, but billionaires, 590 00:33:27,044 --> 00:33:29,204 Speaker 1: there are lots of millionaire related problems, and I don't 591 00:33:29,244 --> 00:33:31,924 Speaker 1: think this is one of them. On that note, Nate, 592 00:33:32,004 --> 00:33:34,084 Speaker 1: I'm going to enjoy the fact that I'm in New 593 00:33:34,164 --> 00:33:43,164 Speaker 1: York right now and go enjoy this fantastic city. Let 594 00:33:43,284 --> 00:33:45,044 Speaker 1: us know what you think of the show. Reach out 595 00:33:45,084 --> 00:33:49,684 Speaker 1: to us at Risky Business at pushkin dot FM. Risky 596 00:33:49,764 --> 00:33:52,404 Speaker 1: Business is hosted by me Maria Kanakova. 597 00:33:52,204 --> 00:33:54,924 Speaker 2: And by me Nate Silver. The show was a whole 598 00:33:54,964 --> 00:33:58,924 Speaker 2: production of Pushing Industries and iHeartMedia. This episode was produced 599 00:33:58,964 --> 00:34:03,244 Speaker 2: by Isaac Carter. Our associate producer is Sonya gerwit Lydia, 600 00:34:03,404 --> 00:34:06,284 Speaker 2: Jean Kott and Daphney Chen are our editors, and our 601 00:34:06,324 --> 00:34:10,084 Speaker 2: executive producer is Jacob Goldstein. Mixing by Sarah Bruguer. 602 00:34:10,364 --> 00:34:12,524 Speaker 1: If you like the show, please rate and review us 603 00:34:12,564 --> 00:34:15,204 Speaker 1: so other people can find us too, But once again, 604 00:34:15,364 --> 00:34:17,164 Speaker 1: only if you like us. We don't want those bad 605 00:34:17,204 --> 00:34:19,324 Speaker 1: reviews out there. Thanks for tuning in.