--:-- Ryan Hanley: In a crude laboratory in the basement of his home. Hello everyone and welcome back to the show. So absolutely tremendous, double tremendous episode for you today, and it is with Carol Roth. Carol Roth is a recovering investment banker. She's an advocate for big hair and small business, and it's that second part that is the reason I invited her on the show. She is the author of a couple of books, but the book that caught my attention was *The War on Small Business*.
--:-- Ryan Hanley: I heard Carol on Michael Malice's show, *You're Welcome*, which is a tremendous show and a podcast. Her take on small business, what was going on post-COVID, how our politicians and lawmakers had really let the small business community down with many decisions they made and many of the promises they didn't follow through on, and ultimately explaining what was happening to small business in this moment—that feeling that we have in our gut that we're not crazy, that it is actually happening—and then providing some potential solutions and things. We talk about all that. We talk about a whole bunch of stuff on this episode. I think you're going to absolutely love it.
--:-- Ryan Hanley: I highly recommend that if you're on Twitter, you follow Carol. It's Carol J. S. Roth. Carol J. S. Roth on Twitter. And her book, *The War on Small Business*, I'm going to have a special link—not a link that I get paid on or anything—but go to bookshop.org. They source all the books from local bookshops. So if you want to get her book, go to bookshop.org and search *The War on Small Business*. I also have it linked up in the show notes, but I want to make sure I get that out early because I think it's tremendous that she's pushing a resource that actually sources all the books from local bookshops when you purchase them.
--:-- Ryan Hanley: So today it's all about small business. You're going to love this episode. You're going to love Carol. I highly recommend that you connect with her, and you'll see her if you watch CNBC, Fox. You watch any of these business shows, you're going to see Carol on TV. Just grateful to have her on, and absolutely tremendous episode. So it's a double, double tremendous. All right. Before we get there, quick shout out to our sponsors.
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--:-- Ryan Hanley: Also want to give a big shout out to the team over at Donna for Agents. They just came out with Donna v3. It is a just wonderful upgrade. I mean, they're taking data to a whole other level. You get insights into your agency that you didn't even know were possible. And they continue to connect with all the most popular agency management systems. And I think soon we'll have a connection to Agency Zoom as well. And when that happens, you'll have a Triforce. You'll have Agency Zoom connected with your Donna, connected to your agency management system. And with all three of those systems talking to each other, you'll have the comms, you'll have the workflows, you'll have the pipelines, both service, sales, renewal, you have all the policy management, as well as all the analytics, and you just can't beat it.
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--:-- Ryan Hanley: All right. With that, let's get on. Carol Roth. Hi, Carol. How are you?
--:-- Carol Roth: Hey, Ryan. How are you?
--:-- Ryan Hanley: I'm very well. Thanks for coming on.
--:-- Carol Roth: Yeah, my pleasure. It's been a little bit of an insane day. I think I've got five different media hits.
--:-- Ryan Hanley: Well, I'll give you just a 10-cent tour of the audience. My show hits the independent insurance industry as a whole. So everything from carriers—I think the big guys, Hartford, Travelers, Liberty executives in that space—all the way down to single person shops that just started a week ago in West Des Moines. We hit across the spectrum. I'd say 80 to 90% of the people that are listening are actual small business owners, serving small business owners.
--:-- Ryan Hanley: When I heard your interview on Michael Malice's show, I had to reach out because it's the battle that so many of the listeners to my show—and I own an insurance agency as well—so many of them are both fighting this battle and share a lot of your viewpoints, and they're dealing with their clients who have these same situations. So it seemed like a really good fit and a story I wanted them to hear. I'm just glad you did it.
--:-- Carol Roth: Great. Well, I'm glad that we have the opportunity to connect and appreciate the opportunity to talk to as many small business owners as possible.
--:-- Ryan Hanley: Awesome. So I want to start with—I just need to get this part out, the ego stroking part. I really appreciate your candidness, humor, and the sarcasm that you use in general, because I think in what is a completely bananas time to be alive, and it almost feels like we're living through some sort of—like the gods put some sort of idiot test in place, and we're kind of living through it right now. I appreciate that very much. It's needed.
--:-- Ryan Hanley: My question there is, why? It feels like a lot of the things, especially the things that you talked about on the show—I'll have it linked up. I know you've done a ton of interviews. I thought that one was particularly awesome. But why is this topic of how beaten down small businesses have been, not just in this last iteration during the COVID time, which I do want to focus on—as I saw Pfizer stock now up 20 points since the COVID vaccine released—but why is this a topic that we all kind of whisper to each other, but so few people are actually advocating a lot of these viewpoints? It's like this thing that we all kind of wink, wink, nod, nod, like I wish this wasn't the case, but no one really wants to stand up. Does that make sense what I'm asking you?
--:-- Carol Roth: Yeah. So I think there are a number of dynamics in play, and I've been an advocate for small business for a very long time. I think the complexity of the small business landscape, the fact that it is so big—it is about half the economy, at least it was before COVID, GDP-wise and jobs-wise—and that's in the hands of a very decentralized group. 30.2 million small businesses before COVID, different geographies, different sizes, different focuses, anything that you can think of, different industries. And so they're all kind of lumped together in this category.
--:-- Carol Roth: But as you know, as a small business owner, you don't necessarily think of yourself even as a small business owner first. You think of yourself as owning an insurance agency or as an entrepreneur. It's kind of not the first place to go. So even though from an economic standpoint, policy-wise, everyone kind of gets lumped in together, it is decentralized, which is the great thing about it. It makes it very difficult for people to become experts on it. And as I talk to people who maybe understand parts of the industry, it's like, okay, that may work for the ones that have employees. But what about the ones that don't have employees or the people who use contractors? There's just so much nuance and differential around what small business is that it becomes problematic to even become an expert in.
--:-- Carol Roth: Then on top of that, it goes back to the bigger thesis of the book, which is this battle of decentralization versus central power. I just told you about the half of the economy in the hands of 30.2 million small businesses. Well, the other half is in the hands of 10 to 15,000 big businesses. And they have a lot of power and a lot of money and a lot of clout. So if you're trying to get anything done—whether it's a sponsor or a lobbyist or campaign contribution or someone to advertise on your website—it's so much easier to go to one big company or a handful of big companies than it is to try to navigate the small business space.
--:-- Carol Roth: Whether it is that they are too small to matter, whether it is that they are too difficult to control, what makes small businesses great and the symbol of economic freedom and an opportunity for wealth creation for any American and people who flock here from all over the globe is exactly what makes it so difficult and why not enough people take the opportunity, I think, to speak about that.
--:-- Ryan Hanley: Yeah, that was one of the really interesting points that you made that I had never actually considered. I think the way Michael had posed the question to you was, is there some sort of nefarious backing to the concept of skewing towards larger businesses? And maybe there is, maybe there isn't. But the point you made that I had just never wrapped my head around was what you just said: it's just easier to talk to three companies than 30,000.
--:-- Ryan Hanley: If you think about the insurance industry, there's a handful of mega agencies, the top 100. And then from there, there's this enormous gap to the 36,000 independent agencies that Rogue Risk, my agency, would be part of. And it's just easier to talk to and govern the hundred than it is the 36,000. And it's not even taking the nefarious aspect out of it, just that simple math. I had never really considered that idea before.
--:-- Carol Roth: Yeah. And I think also a lot of times we spend so much time in this country—and social media has exacerbated this—talking about intentions when intentions don't really matter. Outcomes matter. So there are a lot of people with a lot of really great intentions that have no economic experience and end up putting ridiculous things in place that create barriers to economic benefits and wealth creation. So even though they had a good intention, if the outcome is horrible, I don't really care. I care about the outcome.
--:-- Carol Roth: On the other side, whether you think there is this nefarious intention, whether you think it's incompetence, whether it's just easier—again, it doesn't matter. The outcome is still going to be the same when you have that imbalance of power. So I would love for people to spend more time—I like to call it separating the art from the artist, so to speak. Let's not focus so much on the people and the intentions and the parties, but let's focus on the principles and then the outcomes that those principles produce. If we did that, it would be a lot more productive. However, the people who have bad ideas or that generate bad outcomes know that, and so they always try to take it towards the former, which unfortunately sometimes it's easier to get people to buy into.
--:-- Ryan Hanley: Yeah. Everyone's read the copywriting books that just pull on the heartstrings and you get things done. It doesn't matter if the 10-step course actually works or not. I unfortunately saw an Elizabeth Warren tweet packaged right next to one of yours one day and I was like, "Oh my God, my nemesis." Talk about someone who—I don't know her personally, so I'd have to assume that I think it's probably more just she doesn't know what she's talking about, but outcomes not matching any kind of intention. It's like, oh my God.
--:-- Ryan Hanley: I think the hard part for so many people that I run with in our industry—they tend to be independent businesses. Independent insurance professionals give more back to their local communities than any other professional class in the country. Yet we're so often packaged in with these mega and super national carriers that—whether you believe in insurance as a concept or not—you read the reviews and it's very negative. So I think a lot of times the people in our space are stuck with almost being apologetic for being a small local business. And I hate that.
--:-- Ryan Hanley: One of the missions of this show has been to get people to feel better about what they represent. You represent a community. Own that. Be part of it. Drive it. Support it. Because otherwise, we're going to be driving down more streets with boarded up buildings and "For Sale" signs out in front of all these businesses that have been there for 20 years. I know New York, D.C., L.A., and Chicago want to pretend like that's not happening. But I live in upstate New York, Albany area. You drive through any community in this town and there are less small businesses in every one of our little local communities than there was a year ago or a year and a half ago. And it's very sad and it's a shame, yet we can still walk into Target or Walmart or Home Depot and those have never shut down for a day. And it drives me effing crazy.
--:-- Carol Roth: Well, and let's just call it what it is. They were murdered. People like to sugarcoat it—"Oh, you know, the casualty of COVID." COVID didn't do this. This was purely government mandate. Government reaction is what killed them. And so I think if we're more explicit about that, maybe people will understand how dire and important this conversation is. I don't say this lightly or with any sort of humor or to be hysterical. That is specifically what happened. We know as of June 2020 that it was 400,000 plus businesses deliberately murdered and millions more struggling to survive.
--:-- Carol Roth: I don't know what the outcome is going to be. I don't know that we actually ever get a good number because of all the stimulus. So many people started little side businesses and they're being counted as "oh look at all these business starts." But to kill a family-owned business or an insurance agency or a local bank or whatever it is, and then have that replaced with somebody's side hustle—that's not even Steven in my account.
--:-- Ryan Hanley: So what do we do? That was one of the things that I really wanted to ask about. I listened to your episode with Michael twice, one because I like his show and I thought you did a great job. But one of the things that I took out of that episode that I really didn't think you had enough time to describe was, what do we actually do about this? I think 95% of the people listening would say we 100% agree. We see it. We see it both just driving down our streets and our friends. And I know for a fact, there are agencies that literally went out of business because they served small business customers. That was the whole focus of their business. And all those businesses went out, just were toast.
--:-- Ryan Hanley: I look at the restaurant industry. I look at manufacturing spaces. There are $60,000 a year manufacturing jobs in Troy, New York, the town right across from where my agency sits, and they can't get people to come work. That's a $60,000 a year job in a town where cost of living is lower, and you can't get anyone to go to work. I look at this and I'm like, how can we possibly do? What is the actual—and I want to talk a little bit more about some of the things that actually happened—but I just, what do we do? How do we attack this?
--:-- Carol Roth: So this is a challenge for me because I consider myself a problem solver, and that's where I come from. I have some kind of macro answers and some small things and big things. But I don't have all the answers. I would like other people to weigh in. Because this is a challenging time, and this is a big, big task.
--:-- Carol Roth: I would say there are a few things that we can do on a very micro level. Everybody can vote with their dollars. As I'm out promoting *The War on Small Business*, my book, I've been promoting people to buy it from their local bookstore, or if you want to buy it online, to buy it from bookshop.org, which fulfills from a local bookstore instead of one of the big names. That's the way that you make sure that the side of the economy that is decentralized continues to exist—by supporting them with dollars.
--:-- Carol Roth: I think it's just become too easy for us to go to the default. "Oh, I'll go to this big guy or that big guy." Not that there's anything wrong with those companies. I'm a capitalist. But when you look at the imbalance that's been created, you do have a role to play in that. And it's a very powerful one. So if you're going to send something out for the holidays as a gift to all of your clients, think about having that fulfilled from a local small business or another small business that you know that you want to support. Small things: eat at a local restaurant instead of a chain restaurant.
--:-- Carol Roth: I will say, also be very patient right now. As you said, they're understaffed, they're dealing with incredible price hikes, and they're just struggling to survive. So it's very possible you go to that local restaurant, your salad now costs $23, and you're going to wait three hours for it because the owner is now busboy, cook, and waitstaff. Have that patience and that breathing room to say, "I understand what this small business owner is going through, and I'm going to support." I feel like that's the capitalism side.
--:-- Carol Roth: From a policy side, this is very hard. I consider myself an independent. I always say my political party is small business, small government, and big hair. So if you'd like to join, I'd be happy to have you.
--:-- Ryan Hanley: I can't get my hair much longer than this, but I'm in.
--:-- Carol Roth: As long as you're supportive, you don't actually have to even have any hair. We're open. But most of us—and this is the spirit of the independent small business owners—you just want to be left alone. That's the whole point. Just don't bother me and don't get in my way, and we'll be good. But we can't take that stance anymore. Unfortunately, for us to have the freedoms and the economic freedoms, we're going to have to be more active. We're going to have to call on our representatives.
--:-- Carol Roth: For those people who say it doesn't work, the more people who do it and the more people who do it in tandem, it does make them nervous, particularly at the state and local level. So we have to be more loud about the policies that are impacting and can impact small businesses, even if it doesn't impact our own. We have to stand shoulder to shoulder with other small business owners. Maybe a minimum wage hike doesn't affect you, but it's certainly going to affect a lot of small business owners. The PRO Act may not affect you. It's going to affect a lot of small business owners. You may not understand the Federal Reserve. Read my book. Read Chapter 5. We should all be calling to have the Federal Reserve reined in because that impacts your small business clients and whatnot.
--:-- Carol Roth: We need to be more active about the things that are being proposed. And frankly, we need to do a better job of getting some people in there to start tearing down this monster of government that we've created—in a peaceful way, in an appropriate way. But if we keep letting the government expand at the level and the rate that it's going, it's just going to kill all economic opportunities. And you won't have that. There will be those three insurance agencies, and that'll be it. And there'll be Amazon, there'll be Walmart, and there'll be Target. And that's what this country is going to be—a basically fully central planned economy. And we don't want any part of that.
--:-- Carol Roth: I do think we need to get more active in terms of that. There's probably a convention of the states solution in there. I'm not well versed enough to know how that all comes to be and pulling more power to the state level. But I think those are some small things that we should all be more active in really thinking about. Again, I'm very focused on trying to keep the conversation—as we're talking to people—just try to keep it about principles. People, politics, parties—none of that matters. We need to focus on the principles if we care about the outcomes. Because the reality is the situation we're in is at the fault of both parties.
--:-- Carol Roth: If you don't believe in monopolies or duopolies, the government's the biggest monopoly in the world. The Democratic and Republican Party unholy duopoly is the biggest duopoly in the world. And there are a bunch of special interests that kind of round that out. So if you really don't think that there should be that kind of concentration and power, and you believe in the ills of central planning and power consolidation are bad, and that free choice and transparency is good, then you want to be focused on ways that we can ensure that that happens.
--:-- Ryan Hanley: You said, where does this take us? It takes us to that movie *Idiocracy*. I don't know if you've ever seen it. That's like where we're headed. I love Mike Judge.
--:-- Carol Roth: I actually have never seen *Idiocracy*, and I know it gets referenced on my Twitter feed like 20 times a day. So I feel like I've got to put it in.
--:-- Ryan Hanley: It will not make you smarter, but it will give you a couple of cultural references that I've shown you on your way. Because it very much feels like that's where we're going.
--:-- Ryan Hanley: So this is maybe a slightly off tangent in general, but you were talking a little bit about the decentralization. What role do you think that cryptocurrency plays? Do you think it gives small businesses a chance? I'm a huge fan of it. I believe in the concept. Obviously, I have no idea who the winners and losers will be, but the idea of what is trying to happen—remove the symbol or the particular token—the concept feels like I can do business with the businesses that I want to do business with on our terms. And I don't have to worry about things like—you hear about everyone with an agenda seems to talk about transitory inflation, yet my Dunkin' Donuts in the last two years, that coffee has gone from $1.99 to $3.75 for the same large Dunkin' Donuts coffee. And it's hard for me to believe that inflation doesn't exist.
--:-- Ryan Hanley: Do you think that that could play a role for small businesses, some sort of decentralized currency? Do you think that that's part of the answer? Or is that this 20-year pipe dream, which sounds nice and could be, but in any kind of real terms right now is not an actual play?
--:-- Carol Roth: So I'm fascinated by cryptocurrency. If you think about it from why so many people have bought into it initially, obviously people are concerned about what the Federal Reserve and the US government are doing in terms of monetary policy, in terms of the devaluing of the US dollar. And I think there are very good reasons, as I lay out in the book, to be concerned about that and certainly don't like the central plan around that.
--:-- Carol Roth: Now, if you think about cryptocurrency as a currency, there are usually three components that determine a currency. One is a unit of account. We know that these currencies are not units of account. Everything is still going back to dollars. It's all about how much does this end up in dollars. A medium of exchange—still kind of clunky. There are some more people who are doing it, but I wouldn't say they've figured that piece of it out. So it's not a great medium of exchange today, but we could see a path to maybe where it could be.
--:-- Carol Roth: And then a store of value. The people who are big advocates of it will say, "Look, the value's gone through the roof, it's a great store of value." But that's actually not a good store of value. A good store of value is stable, like gold. We've got a long trajectory where we know that it retains a certain value. And yes, it goes up and it goes down, but it's not all over the place. Perhaps it's nascent. Perhaps it levels off at some point in time and becomes a store of value.
--:-- Carol Roth: My concerns on that also, as we're talking about things that are centralized, is that based on my research, it does seem like there are a handful of people who have a large stake and that really move the markets and have a centralized position in terms of the crypto. So I think for it to work via its intended plan, the decentralized piece of it needs to also be decentralized and not be so concentrated and have so many people move it. So I think it's got some ways to go in terms of currency.
--:-- Carol Roth: The other way to look at it is, is it sort of an alternative asset class? Is it almost like a collectible or art or wine? Everything that we have is just a social contract that has value. Whether it's gold—there is some usage for gold, but it's maybe a tenth of its overall market cap. There's no reason why Jackson Pollock's splatter paint on a piece of paper is any different in price than me spilling coffee on a piece of paper, other than a bunch of people have all decided and agreed that that's how much one thing is worth versus the other. So there's no reason to think that there couldn't be a social contract long term around a cryptocurrency, whether it's the ones that exist today or whether it's a new one that comes up that maybe deals with some of the centralization issues or has other aspects to it. It's possible.
--:-- Carol Roth: As somebody who is in the collectibles market and spent a lot of time thinking about that and markets in general, the one thing I would say that's odd about it is that usually when you have a collectible, like wine or art, the differentiating factor is the scarcity and the exclusivity of it. Crypto's whole proposition is the abundance and the inclusivity of it. So I haven't quite rectified all of this in my brain. This is all to say, it's very interesting. The reasons behind it make a lot of sense. We still have the contention that you have a stock market, an IRS, and a US government with a military that all wants to control a dollar, not cryptocurrency. So there are a lot of things at play.
--:-- Carol Roth: But I think it's worth everybody keeping an open mind to because it is nascent and we don't know how it's going to evolve. And there are these other things out there where it could become this collectible alternative asset class, or it could evolve into a currency. But we just have to keep those parameters in mind.
--:-- Ryan Hanley: To me, I swing between the believer and trying to be realistic about understanding. I've read *The Creature from Jekyll Island*. I understand where all this is coming from. To me, it seems like there's still that little brother or sister pat on the head. "Isn't this kind of cool, this little thing? Oh hey, look, you've created something." And I don't know that the federal government—mostly because I think most of the people there are dummies and care more about woke social issues than they do about what's actually happening in the world—I don't think they've quite woken up to what it is.
--:-- Ryan Hanley: To me, it very much feels like something like Flexa. They have a token that allows you to easily transmit real-time crypto transmissions with a touch, just like you could with Apple Pay, right?
--:-- Ryan Hanley: So boop, like your Bitcoin is immediately transferred into relevant dollars that pays them and you can pay it out of there. Okay, so it's still using US dollars, I get that point. But if the retailer wanted to take Bitcoin, they could do the same thing or Ethereum. And there's like a couple of different options. So you can literally do pay. And again, not widespread, still very new technology. But I look at that transaction and I say to myself, if the dollars keep having less value, and I do believe that the everyday consumer, as much as they may have absolutely no idea how the Federal Reserve works or monetary policy, it feels to me they're like... I kind of use my mom as an example of this. She just kind of operates, and she's the best—I don't mean this as a negative to her—she just kind of operates and doesn't read into these issues. But she's been starting to say to me, "Geez, it seems like things are getting more expensive." And in my mind, I'm like, "No, dummy, I just put 1.9 trillion in the market." Of course it's going to happen.
--:-- Ryan Hanley: It feels like the general population is at least starting to wake up. They may not understand why or what's happening, but they know things are getting more expensive and their dollars aren't going as far. What used to be fine is not fine anymore. They need a second job. They need to go do something else. And that's why a lot of the people I know that are in crypto are in crypto. They're like, "I have no idea what's going on in the stock market. It just feels like a game. And this feels like there might be something here." That's a weird thing to me—that people would be willing to put so much money, smart, regular people, into a freaking app on your phone for all intents and purposes.
--:-- [Ryan Hanley addresses the audience directly]
--:-- Ryan Hanley: What's up, guys? Sorry to take you away from the episode. But as you know, we do not run ads on this show. In exchange for that, I need your help. If you're loving this episode, if you enjoy this podcast, whether you're watching on YouTube or listening on your favorite podcast platform, I would love for you to subscribe, share, comment if you're on YouTube, leave a rating and review if you're on Spotify or Apple iTunes. This helps the show grow. It helps me bring more guests in. We have a tremendous lineup of people coming—men and women who've done incredible things, sharing their stories around peak performance, leadership, growth, sales—the things that are going to help you grow as a person and grow your business. But they all check out comments, ratings, and reviews before they come on. So as I reach out to more people and want to bring them in and share their stories with you, I need your help. Share the show, subscribe if you're not subscribed, and I'd love for you to leave a comment because I read all of them. Or if you're on Apple or Spotify, leave a rating and review. I love you for listening to this show and I hope you enjoy listening as much as I enjoy creating it for you. All right, I'm out of here. Peace. Let's get back to the episode.
--:-- Carol Roth: I mean, human nature, right? FOMO, things go up, people went in. Again, not to say that it won't succeed. It very well may. It's highly speculative. It's the type of thing I tell people—my approach to it is kind of like entertainment and gambling money, or an alternative asset in your portfolio. If you're going to invest in a startup and are willing to lose it all, if you're going to go blow some money on sneakers or a night out, if you're a gambler and you have a certain budget, then yeah, throw that into crypto. As long as you have that philosophy—this could be a huge home run or I could lose it—it's that kind of speculative play.
--:-- Carol Roth: We talked about all the reasons why it potentially could become a thing, but everything is a social contract. It all depends on whether everybody stays in and it becomes something, or whether these other forces tear it apart and something falls and the whole thing comes apart. We just don't know.
--:-- Ryan Hanley: Yeah. And this is the last thing I'll say, then I want to get back into the book more and into some of the COVID stuff. To me, the great awakener to this particular topic, to small business, to how important it is to reinvest in our communities, is inflation. Sometimes I feel over-informed, and I don't mean that in a braggy way—I just mean versus the average person. Ignorance is bliss. You just kind of operate, go through life, and say, "Oh, this thing costs this much. Okay, that's what it is today." And in my mind, I'm like, "He just put 1.9 trillion in. Trump did this, the guy before this did that much." I'm like, "Oh my, you can't just keep doing this." People are like, "Yeah, I just put 10 billion in there." You've got AOC down there saying, "I think we need 10 billion." I'm like, "Do you have any idea how this works? Have you taken a math class?" I know they say you went to college. I can't understand how these are the decisions we make. I mean, I can, because I know what's backing it.
--:-- Ryan Hanley: But it does feel to me like the awakener is inflation, because small businesses can fight that. They can. Where Dunkin' Donuts coffee is $3.75, Stewart's coffee—which is actually better if you're ever up here in upstate New York—is still $1.75. So they can fight some of that because it's local, it's here. They can fight some of that inflation. That's my hope—that some of that can happen.
--:-- Carol Roth: I mean, the reality is, we go back to the joke around transitory versus non-transitory inflation. If you don't know the phrase "transitory," it means short-term—it passes—versus something that lasts. The Fed's target inflation rate is 2%, right? They want inflation to be around 2% a year. The reality is that we're nowhere near that. And they're like, "Oh, well, it's transitory. It's going to come back down." I think even if you can get some of the other supply chain things settled down—I know if you're shipping from overseas, shipping containers are four times as expensive as they were. Clients dealing with this, product availability isn't there. Obviously, when you are getting it, it's higher. Maybe some of that settles down, although we're going in the wrong direction with stronger mask policies and all these kinds of things. It doesn't give me a lot of comfort that it's going to be solved soon.
--:-- Carol Roth: But even if that all comes back down, there's still the wage piece to this. We have 10 million job openings in this country. We have that because the government decided they were going to compete with businesses for labor. They made it so attractive to stay home that when you're making that tradeoff decision, even if you're not getting every dollar back, the gap is so small that you're kind of like, "Why am I going to do that?" Last year, they also made that money tax deductible, so you pay taxes on it, which changed the playing field. The reality is, if you are a business, any kind of business, small or large, you have to offer higher wages now. Some people are offering signing bonuses, whatnot. By the way, still can't find people.
--:-- Carol Roth: As people start coming back into the workforce, theoretically, eventually, that's not going to go back down. It's not like you offer the entry-level person $20 an hour to come in, and the people above them don't want that bump. You're not going to be able to offer the new guy $12. That's not going to happen. It's not going to go away. As that happens, what you're producing or your services become more expensive, and that flows through other people's supply chains. I feel like the wage piece is permanent. Even if we do come back down to three and a half percent or whatever, we're certainly not going back. You're not putting that toothpaste back in the tube once it's out. Unless something crazy happens that shifts everything else, but walking through a logical scenario, there are very few scenarios in which that would be a likely outcome. Not impossible, but not likely.
--:-- Ryan Hanley: No, that's a really good point. I feel like people need to plan that it's going to be more expensive. There are consequences to actions, even if they take a long time. As you said, the Fed now has more than $8 trillion on its balance sheet. We've got all the stimulus money. They're trying to pass more spending in the government. It looks like they'll pass that $1.2 trillion infrastructure, and then they've got a $3.5 trillion budget framework that they're putting out. There's going to be a lot of spending that adds into this as well.
--:-- Carol Roth: There could also be a bad scenario because of these new mandates and some of the policy decisions that stagnate, especially the half of the economy that is small business. We could end up with stagflation, which happened in the late '70s and early '80s. That's exactly what it sounds like—the economy stagnates, so you're not getting a lot of growth, but you still have inflation in terms of wages and prices. That's the worst-case scenario because you don't even have that growth to supplement the inflation. For the average American, the ability to live the way you want is becoming more difficult. Your dollar power is eroded. In terms of investing, because the Fed has disrupted risk in the market, you have to take on more risk in order to earn a return on your investment. You can't put your money in a CD and get 2% anymore—it's 0.01%. That means if you're a saver or a retiree, you're now out taking risk just to try to get a couple percentage points. It's a bad situation if you're not inside the club, which is kind of the thesis we're talking about.
--:-- Ryan Hanley: Yeah, it's scary on so many levels. I had like 15 comments, but I think it's okay. That's part of why I wanted to have this conversation. One of the beauties of the insurance industry is that we're kind of an inflation-adjusted business. Inflation goes up, premiums go up. Our commission percentage is a portion of premium. Granted, at the retail level, everyone listening to this show knows we're not the side of the business that makes all the money everyone talks about, but it is ingested. If last year your car insurance was $1,200 and overall inflation goes up, carriers just adjust the premium up to $1,400 and we're making more money. So this is a good business to be in.
--:-- Ryan Hanley: But what's happening—and I think this is an important part from the employment piece—there's a lot of talk in our space about how the automation conversation snapped forward 20 years. Now, instead of hiring an additional person, you're going to pay 30% of what you paid that person for an automation tool that allows you to not hire them. You're paying less for a tool, and now you don't have to add that extra body. Where you may have brought someone in to answer the phones for $10 an hour, now you've got to pay $17 an hour in New York, or $15.75. When you add in benefits and all that, you're just not going to do it. You're going to hire a VA in the Philippines, or put in a phone tree or a call routing system that's completely automated. In our space, at least, people would always hire people. The independent insurance space has always been a very people-driven business.
--:-- Ryan Hanley: To your point, I think a consequence that was unintended, though should have been foreseen, is that people just don't hire. It's not like everyone just makes more money. Those jobs just never get brought in. A $12 an hour job is a $12 an hour job. Just because you say it should be $15, it just means I don't hire the person. I can't afford it. Where does the money come from?
--:-- Carol Roth: Right. And it's not just the $12 to $15, it's all of the benefits that go along with that that increase the cost. And then it's whoever's above them on the food chain. If the entry-level person is getting $15, I need to get X so that we have that buffer. This is basic economics, folks. Unfortunately, the people who make these policies either don't think through them or frankly don't care. That was one of the things that really made me angry when Jerome Powell, I think it was back in June at a press conference, said, "Oh, we didn't realize turning off a third of the economy and turning it back on would disrupt the supply chain. We didn't put that in our models." I'm like, "You're running monetary policy. You put $8 trillion on your balance sheet and you didn't think there might be a disruption from turning off a third of the economy?" We all thought of that. Everyone in my Twitter feed was discussing that. I was discussing that on Fox Business and other media outlets. You didn't think of that?
--:-- Carol Roth: You can see it in the Fed's own projections. Last year for the end of '21, they were 1.6%. They moved that up to 1.8% at the end of last year. Middle of this year, 3.4%. Then the numbers came out for July and it was 5.4% with a run rate over six. So it's like, "Why are you in charge of anything? Why are we putting trillions of dollars at risk if this is the way you're projecting things?" This is why I think what you're advocating, the work you do talking about small businesses, is so important. When do you think the last time was that Jerome Powell breathed the same air as the people who operate small businesses every day? The comments I hear out of the people who make policy—and I don't mean this to be a political statement, I just mean I literally don't think they interact with the world the same way you and I do. They're not bumping into small communities, walking down the street, taking their kids to schools in communities where they drive by seven closed businesses or everyone having a help wanted sign that's been up for two years. I honestly think they don't interact with the rest of our world.
--:-- Ryan Hanley: They don't.
--:-- Carol Roth: And because the stock market has become a proxy for everything, but it's been so disrupted, the stock market doesn't represent the overall economy. Even the overall economic numbers don't represent the overall economy because there's always such a shift between the two. We've seen a huge transfer of wealth this last 18 months from Main Street to Wall Street. They can look on a macro basis and say, "Overall, we're fine." But that's because you've got five companies now worth $9 trillion based on your monetary policy. That doesn't help the 30.2 million small businesses that are out there.
--:-- Carol Roth: One of the things that was very eye-opening, although not surprising to me, was that the very first action taken in the pandemic was to support Wall Street. Before they did anything else, they came in. Even though it was disruptive at the time, it ended up being a big boon to the stock market. But that was the first thought: "If we're going to do something, we have to make sure Wall Street is okay." And then it was never, "Okay, now let's look at the rest of this." The reality is that monetary policy overall hurts rather than helps small businesses. It gives an unfair advantage, especially in a situation like this, where you're allowing these companies to get basically free money to go out and compete with small businesses with no consequences, inflating their stock prices and their opportunities and access to capital. If you're a big guy, it just makes them more powerful. The whole concept that this does anything for the average business is silly.
--:-- Ryan Hanley: One of the other things I wanted to talk to you about that you brought up on Michael Malice's show, but I believe is a straightforward ban or a shadow ban on your work, on your being picked up. You even mentioned that you felt the impact in your Twitter feed sometimes. I'd love for you to talk about that a little bit. That's something that a lot of the people who listen to this show, being small business owners, have probably never experienced—being shadow banned on Twitter. But it talks to the dissemination of information in general, which is such a huge topic today. Can you talk about that experience and your thoughts on it? I have some follow-up questions.
--:-- Carol Roth: Yeah, so I'm a free speech advocate. I feel like as long as you're not saying something that's directly calling for violence or harm against somebody, or doing something illegal, you should be able to say whatever you want. I understand that platforms have certain arenas. I operate a platform for one of my clients in a focused industry—you have to pay to be a part of it, so there are stricter rules because it's a small environment. But this is free, available to everyone. It's a news discourse kind of thing. I tend to err on the side of free speech and let people talk it out.
--:-- Carol Roth: They have algorithms that highlight certain people and certain types of work. Based on the things you're talking about, who you follow, what you like, they come up with assumptions about you. Unfortunately, I don't have a smoking gun proof of this other than the fact that I'm a data person. I'm a recovering investment banker. I know numbers. I track statistics like a crazy person because that's the information I have available to me. I can tell there are times when my account gets tamped down. People have reported to me, "We're not seeing your tweets as often." I've had my stuff that I've liked get unliked. I've been unfollowed from you even though I didn't unfollow you. It's not specific to me—there are whole swaths of people experiencing the same thing.
--:-- Carol Roth: At the same time, when you look at what trends on Twitter, a lot of times they have the data attached to that. Sometimes something's a trending topic and it's got a thousand or 1,200 tweets, so we're not talking about a huge conversation. They tend to accelerate things that have a slightly negative bent or things that will create controversy, usually against people with certain beliefs that may be in opposition to the people who work there. It's unfortunate. It really does change the discourse. I've been on Twitter for 11 years or so. I have a good following—six figures—but it's probably not as much as it would have been if I had been talking about slightly different things or from a slightly different perspective. That's frustrating because it impacts the ability to get your message out there.
--:-- Carol Roth: The other issue is that because we are so politicized and everybody wants things to be seen in black and white—which it's not, everything's heavily nuanced—a lot of the big media that I have relationships with, places where I've appeared regularly over the years, did not pick up my book. I believe it's because it didn't say "Biden's war on small business" or "Trump's war on small business." It's not blaming one person or one party. It's common sense oriented and talks about systemic issues. But that's not the sensationalism and politicization they want. What does that say about our discourse when the ideas that are more measured, well-researched, and more inclusive are being demoted versus the ideas that are inflammatory? I think it's something people should be aware of.
--:-- Ryan Hanley: I tried to let... I don't have nearly the following you have because I talk about insurance. But I do have a blue check. That affords you certain interesting things. I saw this with Jordan Peterson when he had his initial rise. I'm a huge Jordan Peterson fan and found his first book to be amazing. I would be supportive of it. I have a certain number of likes and responses because of my audience. You can see the pattern. Then all of a sudden, zero. You're just zero. You think, "That doesn't make sense because I know most of the people who follow me know that I'm a libertist—I call myself a libertist because libertarian means you're part of some wackos sometimes. Live and let live, all that stuff. But I'm also a big believer in personal responsibility."
--:-- Ryan Hanley: I was like, "Man, I'm so happy Jordan Peterson has brought this topic." Nothing. I looked at it and it was shown to like 17 people. I once had a negative number on the people it had been shown to. I'm like, "This is wacky." I talk about insurance 90% of the time. I had 15,000 followers or whatever it was. And this tweet, because it was about Jordan Peterson during his height, and because I've got that stupid blue check, they're like, "Nope, we're not showing this to anybody because he's some radical misogynistic whatever they thought he was." I was like, "This is amazing." Who am I that I would even show up on the shadow ban thing? But it didn't matter. This topic, this person, anyone associated with it—we're not spreading the message. That scared the crap out of me.
--:-- Ryan Hanley: I can tell when my account is in time-out. There are a couple of things that happen. First, I have a recurring issue where I can't access some of my personal lists, and people I have muted show up in my feed. This is a recurring thing. I can say, "Okay, we're back in this issue." Then I have to call support and go, "Hey, could you tell me why this keeps happening?" They never do, but then they take it off. I can also tell because I do a lot of animal posts. A couple of times a week, I like to throw in cute animal videos. That's where I can really tell if I'm in good with the algorithm. There's a certain amount of engagement you get from an average animal post. When it goes down and I'm only getting 100 or 200 hits on posts that were getting multiple thousands on a regular basis, you can go, "Okay, yeah, I'm in the doghouse." For some reason. It's frustrating. Then you find out the Taliban gets a Twitter account and it's okay for them to have one. You're like, "I don't know who's making the rules."
--:-- Ryan Hanley: The thing that I can see—which is probably obvious given my political persuasion—is why it's so intoxicating to be a crazy leftist on Twitter. I made this post, partially in jest though I was being honest. I said, "If I were the Democrats, I think the best ticket to beat Trump would have been Yang and Gabbard." How do you beat money? I don't love his monetary policy and I wouldn't actually want them to win, but I thought it would be a really interesting race. How does he come after this guy? And if he's got Tulsi Gabbard, who I do think is a badass—I don't always agree with everything she says, but I think she's honest, as much as a politician can be—I thought this would be a really tough ticket for him to beat. Obviously it didn't matter, but the like button... I got like 50,000 likes. I started showing people, "This is why people go so crazy." It got set into some trigger. I'm going, "Man, all my conservative friends are going to think I'm an asshole." It was a joke, but I can see why people get so crazy.
--:-- Ryan Hanley: I really worry because we're talking about small business, right? How to help them. And you're getting throttled. Think about all the craziness with COVID, all the craziness happening with Afghanistan. It really worries me going all the way back to: How do we solve this problem where we can't have honest, open discussions today unless you and I are yelling at each other? If I'm wearing a blue shirt and you're wearing a red shirt, or vice versa, and we're not yelling at each other, then no one cares. It's not going to get any run. That's sad to me. It makes me nervous.
--:-- Carol Roth: It's a challenge. It's also one of the reasons I was approached to write a book. I didn't know what it was going to be, but it was following the economy during COVID. This is what came out of it. This wasn't a thesis I had going in. This was a redux afterwards. By the way, I wrote three and a half different books and this was what we landed on. I'm really glad I had that opportunity. I hope your audience will take the time to read and educate themselves because the narrative is already being rewritten. A lot of the sources have already been pulled because people want to cover their tracks. Granted, you can find them somewhere else right now, but eventually the chain—they're going to make it harder. The direct source perhaps is now pulled. It's important to document these things as they really were and to not let the narrative and the gaslighting happen because there is a giant bias in terms of the reporting.
--:-- Carol Roth: I keep seeing people say, "There was no economic fallout from the shutdowns." I'm like, "Tell that to hundreds of thousands of small businesses, you giant a-hole." They'll use the stock market, they'll use this, they'll use enough things without actually addressing the issue. It's important for everyone to educate themselves about what happened, to educate themselves about the broader spectrum of what's happening in terms of our economic freedom, and to be able to use those tools and have something they can hold on to to say, "No, this is the reality of the history that happened." For all of my faults, the one thing I am well known for is being very commonsensical and very accurate. People may not like some of my opinions. They don't like the fact that I have a big mouth. They don't like the fact that I have a really messed up sense of humor sometimes. How did you like that?
--:-- Carol Roth: Because I thought it was funny. Okay. Whatever. You don't think it was funny. Go away. But when it comes to my work, it's meticulous. And it's sourced from Washington Post, NBC News, New York Times, CNBC. So it's not really particularly controversial. These are the things that happen. It's important to have that history and hold on to it. So I hope everyone will take the time to do that.
--:-- And by the way, to pick it up from that small business that we were talking about.
--:-- Ryan Hanley: Guys, we'll have the link, the bookshop.org link in the show notes. So either go to bookshop.org and just do the search or just hit the show notes page for this podcast episode. I highly recommend this book. I just, your work in general, the follow on Twitter, by the way, the flavor for Swedish fish is just Swedish fish. That is the flavor. Okay, we can talk to you. So specifically red is Swedish fish, which is, by the way, like if you're going to eat Swedish fish, you just eat the red ones. But I don't know why, but in the middle of the night last night, I woke up like I was like kind of like, you know, my mind was going and I was like, what the heck's the flavor of red Swedish fish? And you're right, it's just red. That's the flavor is Swedish fish. Green Swedish fish or any other Swedish fish is the color and Swedish fish, but red is just Swedish fish. Okay. And I only know this because that is my post Little League game treat for my children. So I'm a connoisseur of Swedish fish. and the red's flavor is just fish.
--:-- Carol Roth: I have to ask you as a connoisseur, do you eat the minis or the full size?
--:-- Ryan Hanley: No, the full size ones. The minis are for rookies, in my opinion. That's the rookie move. Go with the big ones. The ones where you can't actually speak while you're eating, which is a great trick with kids too, because then you shove the big one in their mouth. They can't talk to you while you're driving. So it's perfect. But I love my children. So thank you so much. This has been great. I highly recommend the book. Go to bookshop.org. I also guys, if you're on Twitter, follow Carol on Twitter, tremendous follow. I will also have the interview with that you did with Michael mouse, because that was the impetus for this. And he's a much better interview than me and it's way more funny. But I just appreciate you. I appreciate your work. I wish you nothing but the best. And from our side here in the independent insurance space, I'm sure you just gathered a whole bunch of new fans if they weren't your fans already.
--:-- Carol Roth: Well, I appreciate you being a small business owner, a small business warrior speaking up, and I appreciate insurance. I mean, I'm a risk adjusted return person. I talk about this, I think it's relevant to the COVID debate, and I keep telling people all the time, risk mitigation is a strategy, risk elimination is a fantasy, which I feel like this is what you guys live and breathe every single day. So if I can be helpful or supportive in any way, I am your fans right back.
--:-- Ryan Hanley: Just remember, you can't triple mask a double mask, Carol. You can't triple mask a double mask. All right, thank you so much.
--:-- Carol Roth: Fuck it. Bye.
--:-- Ryan Hanley: Bye. Bye.
--:-- [End of interview. Podcast advertisement begins.]
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