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

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Kara Swisher: Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.

Scott Galloway: And I'm Scott Galloway.

Kara Swisher: How you doing, Scott?

Scott Galloway: I feel really good. You sound much better.

Kara Swisher: Thank you. I've been resting my voice. I've been good.

Scott Galloway: Now it's just sexy is what it is. Now it's just fantastically sexy.

Kara Swisher: It is fantastically. And by the way, I saw you on Meet the Press yesterday.

Scott Galloway: Yeah, with Chuck Todd. I thought you were very good.

Kara Swisher: Thank you. I'm kind of sick and tired of this. Like, I've had it. I've had it, Scott. There's a lot of people interested in this Facebook thing we've been talking about for, I don't know, years?

Scott Galloway: Yeah.

Kara Swisher: I wonder who's been saying it.

Scott Galloway: I just did.

Kara Swisher: Did you feel—first off, you saw the 60 Minutes?

Scott Galloway: Yeah.

Kara Swisher: We're going to talk about it in depth later.

Scott Galloway: Yes. Yes. I know.

Kara Swisher: But did you just think, "OK, haven't we been saying this for five years?" She goes on 60 Minutes and the world is shocked. It's like, "OK, has anyone met Kara Swisher or Scott Galloway?"

Scott Galloway: I know. We'll get back to that. Well, we're glad she brought the receipts. But we should start with other things, like Alex Jones. Speaking of Facebook, why don't you explain what happened?

Kara Swisher: So Alex Jones lost two defamation lawsuits filed against him by the parents of children killed at Sandy Hook. In 2012, Jones claimed that the Sandy Hook shooting was an elaborate hoax. In 2015, he aired the personal details of a Sandy Hook parent who later received death threats. Jones also lost a defamation case to a Sandy Hook parent in 2019. He also choked on a donut and ended up slowly asphyxiating, and then slipped in gasoline and lit himself on fire.

Scott Galloway: Everything but the last part is true. Everything but the last part is true.

Kara Swisher: So here's the deal. This is something I talked to with Mark Zuckerberg many years ago. He was arguing with me why Alex Jones should stay on the platform. I don't know if you remember that interview.

Scott Galloway: Yeah.

Kara Swisher: And basically, "We want to give voice to the unheard." That whole thing. "If we were taking down people's accounts when they got a few things wrong, then that would be a hard world for giving people a voice and saying that you care about that." It was ridiculous. I was like, "You're going to be taking him off. He's actually lying and gaming you, and how many times he can break your rules." They had a shifting number of times you could mess up on that platform, and he continued to game them. I literally had one of the biggest arguments I've had with Mark Zuckerberg. But he then tried to shift the attention over to Holocaust deniers, which he also screwed up on.

Scott Galloway: Yeah. I think that was—there's been several moments where I think Facebook has burnt its ninth life. That was one of them, where he said, "Well, lying is wrong. And as a Jew, I somehow have credibility around letting Holocaust deniers on the platform." The whole tautology or strategy made absolutely no sense.

Kara Swisher: And then he took it back two years later. Two years of damage later, when he finally figured it out, the penny dropped in his very smart head.

Scott Galloway: That's astonishing. I will never forget it.

Kara Swisher: Well, I do believe that America—I was actually quite hopeful when I read about this lawsuit and the fact that Alex Jones lost. What I'd like to see is more of this, because I think America gets it right over the long term. The immunities are starting to kick in, and sometimes it takes too long. But when you have someone as depraved as an individual who is taking advantage of what is probably the most profound tragedy that any parent can imagine, for money and for fame, and then what's even worse is you have huge organizations wrapping themselves in a flag as they burn it around the misery of parents—they deserve to get squarely kicked in the gut over and over. I've never understood this whole idea where a platform—not a media company, let's be clear—decided to give this guy a platform. And by the way, so did Joe Rogan. They decided to give these claims legitimacy. They decided to ping these parents with that same misery over and over. So they should be sued. That's all.

Scott Galloway: 100%. By the way, it's not like a big company trying to sue someone into submission of not talking. These are parents suing big companies. They're not able to sue Facebook because of Section 230, but they can sue Alex Jones. And they can sue Rudy Giuliani, this company Dominion, and the people in it. If you've read some of the stories of individuals who worked there who did nothing, and Rudy Giuliani and Sidney Powell spew endless lies, which then they've said they're lying about—it's just like they should be able to be sued. It is not about First Amendment. It is not about censorship. They say things that are wrong and dangerous and defamatory. They should be sued. It's as simple as that.

Kara Swisher: It all comes down to incentives. There's an algebra of deterrence that is a very powerful cop. The likelihood of getting caught times the penalty has to be greater than the upside. When the likelihood of being outed as someone who is promoting conspiracy theories, or being the platform that promotes these heinous conspiracy theories because it results in more Nissan ads—when those incentives and that economic benefit is greater than any downside, you will continue to have Mark Zuckerberg and Sheryl Sandberg wallpaper over the fact that their platform is spreading this sort of really hateful content, because the downside is just much less than the potential upside. One of the things about finally hearing about these lawsuits is, maybe the algebra of deterrence is starting to kick in again.

Scott Galloway: This is important. Algebra of deterrence. I like it.

Kara Swisher: Well, we talked about this at Code.

Scott Galloway: Yeah. If you got a call right now—you can see, remember the whole Varsity Blues scandal. You can see how—maybe you can't, but I can empathize with parents who get a call that says, "Hey, does your son row crew?" "Yeah, he rows." "Well, I'm the crew coach at Stanford. If you were to make a $100,000 gift to the crew team, I might be able to find a way to promote him or present his application as a scholar athlete." I can see the road to hell that is paved in. Never. When you see Aunt Becky doing a perp walk, boom, no one's taking that call.

Kara Swisher: Yep. The algebra of deterrence works. It really does work when it's implemented. That's what we lack here around these defamatory—

Scott Galloway: By the way, may I point out, Aunt Becky is taking a perp walk. None of these people are.

Kara Swisher: Well, that's the point. I don't think any of this stops until someone does a perp walk.

Scott Galloway: Yeah, we keep saying that.

Kara Swisher: It's delay and obfuscation. I don't think it stops until there's a perp walk. That's the only thing these people are scared of. Alex Jones can go to hell, and I'm glad he lost. I hope Rudy Giuliani loses. It doesn't chill speech. It chills people who lie continually and in a defamatory way. They should be chilled, and they should be put in the freezer, and the door should be closed.

Scott Galloway: Thank you. I like it.

Kara Swisher: Another sad COVID statistic. Last Friday, the U.S. passed 700,000 COVID deaths. As we've been discussing and as Andy Slavitt discussed and as every legitimate scientist will highlight, the overwhelming majority of deaths this summer are from the unvaccinated. The CDC says unvaccinated Americans were 10 times more likely to be hospitalized and die from COVID than vaccinated Americans. About 56% of the U.S. is fully vaccinated. Meanwhile, in much of the world, the vaccination rate is below 10%. That's the case in more than 55 nations, including Iraq, Afghanistan, and much of sub-Saharan Africa. I also want to take a moment to correct something I said last time. I said that between 100 and 250 million doses of vaccine would expire in the U.S. That's actually a global number among wealthy nations that have an excess supply. In the U.S., it's about a third of that. That data was incorrect. That's the number that will be wasted globally. But still, we're blessed with this miracle product. This is the most important, the most impressive product in the last hundred years. We are blessed with a supply chain that can produce the best vaccines. We're not producing these mediocre vaccines like Sputnik or the one coming out of China, and we've decided not to take them.

Scott Galloway: Yeah. In any case, it's a ridiculous number of people who die when they don't have to, especially now. They don't have to die. They can be sick. People get sick from COVID after the vaccine, but they mostly don't die. I think it's very rare.

Kara Swisher: It's extraordinarily rare. So everybody should be taking it. Look, these numbers are going down again. But when the holidays come and when people go inside, they expect them to rise again. So take your vaccine.

Scott Galloway: Thank you. There you go. That's my end.

Kara Swisher: And then the big question is going to be, if Americans aren't going to take the vaccine, should we send it to nations that actually want it? I worry that the people listening—we're kind of preaching to the choir. I think the next question has to be, how do we reach people that are prone to getting their misinformation from different sources? That's the question.

Scott Galloway: Yeah.

Kara Swisher: Anyways, a very solemn day. 700,000 people. A very upsetting number. I remember when we talked about it going over 100,000. Should we talk about Ozy Media?

Scott Galloway: Yes, of course. Get on it. Come on.

Kara Swisher: Okay, let's talk about the Ozy Media story that's been making headlines.

Scott Galloway: Ben Smith.

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

Scott Galloway: Yeah. So the question is, what does this say about advertising and digital media that no one noticed the fraud? I'm going to give some thoughts here. I'd love to get your thoughts.

Kara Swisher: All right. Go ahead.

Scott Galloway: What people don't realize—and this is true of social media—social media is nicotine. It's addictive, but it's not the thing that gives you cancer. It's not tobacco. What people don't fully acknowledge is the advertising industrial complex. Don Draper is really the Satan here. When you're totally focused on an advertising business model, the objective becomes attention, whether it's spreading conspiracy theory or novelty versus truth, which is much more interesting. Or whether it's fraudulently claiming monthly active users. How many bullshit statistics has Facebook rolled out about video viewership? Or Twitter constantly saying, "Oh, no, we messed up. It's actually not that number of MAUs." It is estimated that now two-thirds of viewership metrics around many of these digital marketing platforms are basically bullshit. They're bots. Two-thirds of the numbers going into these metrics they report to advertisers are being generated not by humans but by bots. And the advertising model—

Kara Swisher: That was a little side note in one of the stories, what they were doing to make it look like these sites were better. Let me try and bring this back to big tech. There have been a lot of stories around concerns around Amazon and privacy. We talked about a robot called Astro going around your house, keeping it safe. It's like Astro from the Jetsons. I think it's weird. It'd be one thing if George and Judy Jetson had a hit on them from the cartel. I find it strange that anyone is that paranoid they have a robot roaming their house. But here's the thing, and we always criticize big tech. I actually don't think you need to be as worried about Amazon violating your privacy, because Amazon has the right incentives in place.

Scott Galloway: I don't know.

Kara Swisher: They're not trying to capture your attention in any way possible to sell your data to advertisers. They're trying to invest in the relationship between the end consumer. Netflix, which doesn't have an ad model, has a subscription model, is not weaponized by the GRU. I don't think Amazon is as great a threat around our privacy as people think. The threats around privacy come from an attention economy.

Scott Galloway: We'll have to discuss this more. They're using it for their own purposes. Who knows what they're going to do with it? I don't like anyone having this much information about me. It's very uncomfortable. Let's get back to Ozy.

Kara Swisher: Okay, sorry. I knew almost nothing about Ozy other than I got invited to a couple of Ozy parties.

Scott Galloway: Say more. Tell us about Ozy.

Kara Swisher: Well, it was interesting because they put an ad out that turned out to be a quote from one of its own executives saying he's the greatest interviewer ever. So of course I pay attention. I'm like, "No, that is me who is the greatest interviewer ever. It is I. It is I. I am the rightful heir to the Iron Throne."

Scott Galloway: Yes, exactly.

Kara Swisher: I think there's a lot here. Lorraine Powell Jobs' Emerson Collective was in here. A lot of big investors, a lot of big advertisers. This was supposed to sort of be—and if you read these stories, a lot of the people who worked there really were hoping there was a lot of social justice stuff here. There was a lot of diversity, trying to invest in businesses like this. So there's that issue. At the same time, there are lots of businesses like this. Having run one not unlike it, like Ozy, we were always like, "God, we're still small." We were never bragging. It was very difficult to get numbers up in terms of advertising. I never thought of cheating to do it, but it definitely is not an easy business. To do events, to do a magazine—we thought about doing a magazine, all kinds of things. We obviously moved into podcasts. But it's an almost exact business to what I was doing at Recode and before that at All Things D. I suppose there's an impulse to overestimate yourself and brag on yourself. But the lengths they went to is just astonishing. This fake executive and them pretending that it was anything but weird. They made up a YouTube executive, which turned out to be, I think, the COO, who then they said was having mental problems when they did it. But at the same time, others from Ozy on the call knew that's who it was. It was a fake person. What's interesting is it was YouTube that started investigating this and then referred it to the FBI, which was amazing. YouTube didn't want to be taken advantage of either. This story has layers and layers and layers of all kinds of things, but it comes down to it was a very small media company valued at too much money. They were trying to gloss it over with a very slick guy who ran it, who was very appealing. He was on MSNBC, worked at Goldman Sachs. This is Carlos Watson. He was faking it before he made it. It's kind of an old tale as old as time.

Scott Galloway: You can see how it sort of happens, because some people do fake it and then make it. If they fake it long enough and acquire enough cheap capital, they can pull the future forward by making these huge investments that other companies can't keep up with. But if you look at a firm like Axios, I think Axios is making investments and doing the hard work and building a nice brand slowly but surely. Whether it was—quite frankly, I think Vice suffers a little bit from this.

Kara Swisher: Yeah, same thing.

Scott Galloway: And that is, "We're a new type of media company and we're going to be big and we deserve a billion dollar valuation." Then they wake up and realize, media, when you're talking about people, generally speaking, is a very difficult business. Events are difficult. Curating, editing. It's kind of a slow grind. The reason why these firms over decades might become worth hundreds of millions or billions is it's just really hard and there's a lot of friction involved. Then you have this gestalt: get big fast, build, make aggressive big statements. To be fair, it's worked for some people. For some companies, it pays for the CEO to go, "We're going to have a million self-driving Teslas on the road." The problem is the example that's been held up. I quite frankly wonder, would Elizabeth Holmes still be on the cover of Forbes if she'd gotten another round done and then shown some progress with Edison or whatever it was called? We have raised a generation of entrepreneurs to believe that faking it is part of making it. Where does fake turn into fraud? We're starting to cross that line more and more.

Kara Swisher: Well, I could see that. I remember thinking when they were all bragging, I was like, "Huh, I run these businesses. I'm not reading anything from there." By the way, they had some very good journalists. That's the thing. Unfortunately, they lost their jobs. They had some good stories. But I remember when they were doing events, I was like, "Huh, I don't believe that." Just the way they were bragging on it, having run one for 20 years—I was always like, "Wow, how'd they get so fast?" And then you think, "What am I doing wrong?" Then you realize nothing, actually. They're just lying about it.

Scott Galloway: Yeah, they're using these—

Kara Swisher: I remember when they did events, I was like, "Mm-mm, mm-mm, mm-mm."

Scott Galloway: They got big names, though. I'll tell you that. This storytelling, I'll grant them. Storytelling and spin is important. What I don't get is that these people actually think that we aren't going to figure out that that guy isn't from YouTube. That we aren't going to figure out, "Oh, you don't actually have any consultants working for you. So your consulting business isn't a $50 million business. You're relabeling revenue." It strikes me that they think we're this stupid. Or maybe we are.

Kara Swisher: Are we? No. Because I tended to downplay success. Like one time when we were starting podcasting, everyone was like, "Kara, you can't make money in podcasting." I'm like, "Oh, yeah, no, it's real hard." We are making a lot of money, right? But I was always like, "No, you're right." Our events business, "Please don't get in the pool." We don't overstate our success.

Scott Galloway: But here's the thing. We live in a capitalist economy. America becomes more like itself every day. That true self is that to have money in America makes it a better and better America, and not to have money makes it a worse and worse America. The market—the pivot here in nomenclature and spin—is that the market used to reward under-promising and over-delivering. The market used to like CEOs and companies that would say, "We're going to do 40 cents next quarter," and they show up and they did 42. Now, the market likes over-promising. Even if you want to deliver, come up with new metrics and call it "community-based EBITDA" or change your metric to "monthly active Twitter users" versus monthly active users or something, and come up with bigger and bigger over-promising. I don't want to say it's the market's fault, but when investors have cash in hand and they like the story, the marketplace is just responding to what the market wants.

Kara Swisher: It's also PR. This guy did a lot of PR. By the way, I keep getting contacted by people who want to do profiles of you. I'm just not saying anything. Hello. They're just leaving.

Scott Galloway: Can you make it clear? You're not leaving.

Kara Swisher: Oh, yeah. That's right.

Scott Galloway: No, you're stuck with me.

Kara Swisher: Yeah, I know. I'm riding this out. I am riding this out. I'm Daniel Craig. I'm not leaving this franchise.

Scott Galloway: No, not at all. There's no way. Wheel me out.

Kara Swisher: I know, exactly. I'm Adam West from Batman. I don't want to leave. They didn't even call me for the Batman movie, said Adam West. They didn't even call me. Death before divorce. For the cat and the dog.

Scott Galloway: Let's get to the big story.

Kara Swisher: Big story gets us there. We know the name of the Facebook whistleblower. It's Frances Haugen. She was a product manager at Facebook working on election interference. I told you. On 60 Minutes, Haugen said that Facebook relaxed its standards on misinformation after the 2020 election, shortly before the January 6th insurrection. Let's play a clip.

[Clip plays] Frances Haugen: They told us, "We're dissolving civic integrity." They basically said, "Oh, good, we made it through the election. There weren't riots. We can get rid of civic integrity now." Fast forward a couple of months, we got the insurrection. [Clip ends]

Kara Swisher: Haugen has filed complaints with the SEC claiming that Facebook misled its investors. Clegg of Facebook sent an internal memo ahead of the 60 Minutes episode calling the claims misleading. "Misleading." He said it in British. Haugen is expected to testify before Congress today. So what's your take here?

Scott Galloway: What the living hell fuck is what you want me to say, right?

Kara Swisher: Right.

Scott Galloway: So she was—they dissolved her team. This is what they did. They had this civic integrity team, which a lot of people thought was great. She thought they dissolved it too quickly after the election, while Trump was still disputing the election. They shut that down. She's very well-spoken. She's very clear. She also doesn't seem crazy. I know it sounds—it's part of the attack. Or angry. She seems like, "Hey, I just want the world to be a better place." She's very reasonable. She says she's not in favor of breaking up Facebook. So it'll be interesting to see what happens. I think nothing's going to happen from this. I think it's going to be the same thing that happened on the last six things. What do you think, Scott?

Scott Galloway: I'm famous for predicting Facebook's ninth life. But I think this is big because she's Edward Snowden, but more attractive and more likable. She's the daughter of two professors from, I think, Iowa, who also ended up at Harvard Business School. She's obviously pro-tech, worked at Google. She does not come across as having an ax to grind here. Give me a minute here. We couldn't get a bunch of our children—our teenagers were dying in auto accidents because of drunk drivers. Then basically moms banded together to start this organization called Mothers Against Drunk Driving, MADD. It put pressure on Washington to withhold federal highway funds such that every state raised its legal drinking limit to 21, despite the alcohol lobby being very powerful. I think this may be big because the cohort here that is going to save us from Facebook is moms.

Kara Swisher: Yeah.

Scott Galloway: I think when mothers have heard about anorexia and depression being caused by Instagram and they read this research, they're like, "You messed with the wrong sheriff." I think there's going to be a group called MAMS—Mothers Against Mark and Sheryl—that is going to go after this mendacious organization called Facebook.

Kara Swisher: Did you just say "ma'am"? Moms. Moms. Moms against—I'm starting it now. Moms against Mark and Cheryl. Moms.

Scott Galloway: Okay. But I'm serious. I think moms—

Kara Swisher: Do I have to do it?

Scott Galloway: Yeah, okay. I will. I think parents, and specifically moms, are probably horrified by this content. I predicted this a few weeks ago. I think there is now the cloud cover to go after someone at Facebook with criminal charges. In addition, talking about incentives, the Whistleblower Act from the SEC now creates financial incentive for people to start dropping dimes. I think you're going to have half a dozen people. That's what's going to happen.

Kara Swisher: I know a lot of people in research, and they were horrified by Nick Clegg and what he was saying, throwing them under the bus. I have a lot of people I know there, and they do great work. They're very civic-minded people who do this work. So is she. She went there because she thought she could help, right? They're very disappointed. When they get thrown under the bus by this British guy, it's not good. What's interesting here is that she's being represented by the same people who represented a lot of Trump whistleblowers, which is interesting. But she's not raising the same amount of money, because anyone will contribute to Trump whistleblowers, but people are scared in Silicon Valley to contribute to anything about her or support her. Someone who I know very well, a pretty high-profile person who supported her online, said, "Have you noticed no one's saying anything about her?" She's worked at Google, at Pinterest, at Yelp, and at Facebook. Very interesting to me, the lack of noise from Silicon Valley on this. So we'll see if there are more people from internally—internal to Facebook or any of these tech companies—who start really tossing documents. Because everybody's got documents. That's what's going to matter. If that happens, yes, I think you're right.

Scott Galloway: The other thing, the second thing, is whether they can find anything in these documents that show that Mark Zuckerberg or Sheryl Sandberg lied to Congress. That is something that could be interesting. There's all sorts of—did they have disclosure requirements around some of this research to investors? That's an SEC violation. I'm telling you, Kara, somebody—and it might be a mid-level person. They might go after a mid-level person. The algebra disincentive here—the algebra of deterrence doesn't kick in until someone shows up on a perp walk. I think it's coming. I really do. I talked to Preet about this, and he said he doesn't see it.

Kara Swisher: Yeah, he did. A lot of people say they think it's just another—you can almost see what the story is. They're like, "Look, guys, we've been through this before. Thank you to Ms. Haugen for highlighting where we need to do better. We're doing the following things." You can almost hear what they're saying internally. I wonder if it's different this time.

Scott Galloway: I think they've pissed off moms. I think they've pissed off moms, Kara.

Kara Swisher: Yeah, well, we'll see. We'll see where it goes. First of all, if there are documents that are incriminating. Second of all, if people start to release them. And then if the board acts—and of course it won't. They've been licking Mark up and down for years. There's no one on this board that's going to move against Mark Zuckerberg. So don't expect that to happen. That would be where it would happen. I just want to put your email address out there in case anyone is looking to put out emails. Kara, what email can they reach you at?

Scott Galloway: Kara.Swisher at NYTimes.com is the best one. Kara.Swisher at NYTimes.com.

Kara Swisher: I would like to see Facebook do what the Democratic Party is doing to itself: eating their own young and going after each other. You can feel it happening at Facebook. There are a lot of good people at Facebook who've said, "Well, if Nick Clegg—okay, he's getting paid $50 million a year to ruin his reputation and lie, but I don't make enough money. And also, I do have a little bit more of a conscience." I think you're going to see a lot of this.

Scott Galloway: Yeah. There are more people than you think. This is a moment for sure. Let's see if Facebook wiggles out of it. I've heard some Wall Street people talk about it. They're like, "Yeah, we think helping teens is a great idea, but Facebook is making all this money. They could give three fucks." As long as they're making money, that's what they care about.

Kara Swisher: Anyway. All right. We need to get to our next big story.

Scott Galloway: Yes.

Kara Swisher: So let's go on a break. And when we come back, we'll talk about the Pandora Papers and chat with our friend of Pivot, Andrea Elliott.

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Kara Swisher: Okay, we're back with our second big story. We now know where some of the world's wealthiest tax dodgers stash their fortunes, thanks to a massive trove of leaked financial records known as the Pandora Papers.

Scott Galloway: By the way, I had ad-supported Pandora for a while, which outed me as the lamest person in the world.

Kara Swisher: The papers detail how wealthy elites use offshore accounts and trusts to avoid paying taxes. Among those named: the King of Jordan, the President of Kenya, and the Czech Prime Minister. And Scott Galloway.

Scott Galloway: No, I'm sorry. If I could, I would. I'm not disarming unilaterally. I engage in tax avoidance legally.

Kara Swisher: The documents also show that U.S. states with financial secrecy laws, including South Dakota and Nevada, have become popular places to hide money. This is next level hiding. You're going to South Dakota to hide money?

Scott Galloway: Yeah.

Kara Swisher: Okay. So the good news is only a few Americans appeared in here. Are we surprised there aren't more Americans? Kara, what do you think?

Kara Swisher: I don't know. Holy Christy Noem. That's all I have to say. I didn't know she was an international banker. That's the governor of South Dakota who's always acting like she's one of the gals. And of course, it turns out that was the most interesting part. I just think rich people find ways to hide their money. This was like the last one—I can't remember the name of it—where they revealed all these offshore accounts and trusts. Even here in this country, if you have some money, you get offered all kinds of ways to avoid taxes via trusts. You move money around and no one really owns it, and you put it away to different places. So I don't know if I'm surprised that there weren't more Americans. But I do think the U.S. has an obligation to let governments know if the head of Czechoslovakia has money in South Dakota. I feel like that's kind of a gimme.

Scott Galloway: It's an interesting story. There's a lot here. First off, nations including the United Kingdom basically have these very strong private property laws, which sounds great as a headline. But what it basically means is you can be a war criminal or hiding money. If you buy property in the UK, or even if you buy property in Florida, you can homestead it and nobody can come after it. Your bank accounts are private, or you can basically shelter or dodge taxes and no one can come for you. You're out of the reach of their local tax domain. Complexity is nothing but a tax on the poor, because it's rich people that can navigate these complex tax laws. But there are now so many—and in the real estate business, my God, these rollover options. You can depreciate your assets. There are some very basic, simple tax dodges. I've always thought the argument is the wrong argument around tax rates. Tax rates are important, but it's more than that. It's about the tax code. You asked the question to Elon Musk. He kept saying over and over on stage, "My tax rate is 53%." It's like, Elon, but you borrow against your holdings at 1% and you never actually sell stock, meaning you never pay that 53% tax rate. So of the $160 billion in wealth you've accreted, you've probably paid an effective tax rate of 2% or 3%. It's the tax code. It's not the tax rate.

Kara Swisher: Yep, yep, yep. What's interesting, you talked about real estate because a lot of this, if you read it, they were buying homes. The King of Jordan had bought two homes next to each other in Malibu, I think it was. And that's where they hide it. Now, a lot of the stuff, just like in the ProPublica stuff which the Internet guys were doing, or a lot of the really wealthy people who happen to be Internet guys, is all legal. That's the thing. This ability to put things like what Peter Thiel was doing in a Roth IRA, or just to not take salary and then borrow off of your stock. This is all legal. So that's the problem. And of course, Elon addressed it on stage saying he wasn't paying taxes, but he would. Who's to say? Maybe he has to sell it, but maybe there's a trick he can use to avoid taxes. Eventually, someone was telling me there's something he could do where he didn't have to pay 53%. But it's all legal. This is the thing. Even someone like me, my accountant offered me something on some money I was getting. And I was like, "That sounds sketchy." She's like, "It's totally legal." And I'm like, "Yeah, it sounds sketchy and I don't think I want to do it." But then you feel like a chump if you're not, you know what I mean? It's a kind of weird thing. A lot of people, it's like, do you want to disarm unilaterally?

Scott Galloway: Yeah. And the reality is, of course you don't. You want to be as tax efficient as possible because no one's going to stand up and clap for you when you have less wealth than the person next to you who decided to take advantage of that loophole. It has to be—you describe it—systemic. The other key component we have to decide as a society is the difference between us and Europe: we've decided we don't like dynasties. We believe in churn. Churn is a wonderful thing. Should you be able to build a dynasty, or when you pass on extreme wealth to your kids—and there's a lot of research showing that might not be the best thing for them? Do we want more churn? Do we want higher estate taxes so we can reinvest in the future generations of not only rich kids but kids who aren't rich? We need churn. We need people not only moving up the income ladder, but quite frankly, we need them moving down. A lot of this is about moving to a more inert society where we have this dynastic gestalt, creating pockets of wealth that are impenetrable. A lot of this comes down to what Biden's trying to limit. My estate attorney called me and said, "You should fund your estate with assets right now because the limit might come down." I had this conversation around—I've always said if I had what my kids have, I wouldn't have what I have.

Kara Swisher: A lot of rich people say that.

Scott Galloway: Are you doing your kids a favor creating that sort of asset base for them? Then you start thinking, "But it's my money. Do I just want to give it to the government?" We need massive tax reform. 23% of the GDP is always kind of government spending, which logically means our effective tax rate should be somewhere around 23%, which shouldn't be that onerous to get to. But everybody's got to pay, including the biggest payers.

Kara Swisher: I think tax policy is going to be a big topic. It also fuels a lot of the anger that someone's getting there.

Scott Galloway: 100%.

Kara Swisher: I mean, it's just these weird tricks. Especially when the U.S. doesn't follow international laws either, because a lot of this in this story, a lot of them were like the King of Jordan. And the U.S., as Evan, our producer, pointed out, has forced other countries to open up about Americans hiding wealth abroad. But successive administrations have refused to sign international agreements that would make it do the same. Listen, South Dakota, Kristi Noem shouldn't be doing this stuff. Shouldn't be just to attract finance to the state. It's bullshit.

Scott Galloway: And you know what cohort gets screwed the worst? The people who get screwed the worst in this current tax code are the rich, just not the super rich, or what I refer to as the workhorses. That is a doctor, a woman who's a dermatologist making $600,000 a year, and her husband who's a lawyer making $300,000 a year, so $900,000. Hard to feel sorry for them. They're paying a 53% tax rate. But because they're not super rich, they don't have access to the stuff. Granted, there's a lot of taxes on the poor and middle class through consumption taxes. But the group that really gets screwed, the group that pays over half their income to taxes, are people who are rich enough to make amazing livings and get to the highest tax rate, but they're not rich enough to engage in this sort of massive tax avoidance.

Kara Swisher: It's also incomprehensible. They were explaining it to me, my accountant. I was like, "I don't even understand what you're doing." No, I can't do something. I don't even understand. It was perplexing. I think one of the things that has to happen is these international agreements on taxes have got to be done.

Scott Galloway: It's happening. 100%.

Kara Swisher: All right. 100%. Capital is very fluid.

Scott Galloway: Yeah.

Kara Swisher: All right, let's bring in our friend of Pivot, Andrea Elliott, the Pulitzer Prize winning investigative reporter for The New York Times and the author of *Invisible Child: Poverty, Survival, and Hope in an American City*. Since 2013, Andrea has chronicled the life of Dasani Coates, a homeless child in Brooklyn, as her family navigated poverty, shelters, boarding schools, and more. She's written about Dasani's journey in her new book. Welcome, Andrea. Let's bust right into it. Tell us about how your project began.

Andrea Elliott: Yeah. So it all began on a sunny day in October 2012, when I was standing in front of a homeless shelter. I was there as a reporter for the New York Times, and I was looking for a way into what was a really big story, which was the city's homeless crisis. At that time—and this is a crisis that continues—there were more than 22,000 children in the city's shelter system, living with their families, their parents and their siblings. To give you a visual of how big a population that is, it would fill Madison Square Garden. So what I wanted to do was write about child poverty in America. I was very focused on New York City because that's where I live, and I felt that that's where I could most productively and meaningfully immerse in the lives of whoever it was I was going to follow. The first day that I remember really talking to Dasani—and in my notes, I see this—she introduced herself to me as "Dasani, like the water." She was 11 years old. She was really feisty, a typical New York kid. I think she also represents a lot of kids like her. She's a gifted and amazing girl, but she's quite representative of the problems that she was surviving at the time that I met her.

Kara Swisher: When the story came out about her, she got very well known and everyone started focusing on homeless issues in the New York mayoral campaign, et cetera. A lot of impact. So did anything change as a result? And now it's again in the news. Talk about the journey of Dasani and the topic today.

Andrea Elliott: In the aftermath of this series, there was a tremendous amount of attention paid to homeless children and their well-being in New York City. I think that even in the prior administration under Bloomberg, there were a lot of resources thrown at this problem. It's a bigger problem than any one solution can handle. It's not just about creating enough shelter or enough affordable housing. It's also about creating greater opportunities in the neighborhoods that the vast majority of New York's homeless come from, which are very much the neighborhoods that are in this book. Places like Brownsville, East New York, Bed-Stuy. These are places that people sort of imagine someone like Dasani escaping from, leaving, moving on from to something better. What I'd love to be able to do with this book is have people begin to rethink that narrative of the escape from poverty. That is the thing we always celebrate: the one kid who got out, versus the many other kids, the vast majority of them, just as willing, just as capable, many of them just as gifted—Dasani among them—who could not make it out by virtue of these huge problems that no child should be expected to be able to surmount.

Kara Swisher: So one thing I've learned in writing this book is that I went into this thinking I was writing about a homeless girl, and that was the label that was assigned to her plight. She then, over the course of these eight years—she or other members of her family, mostly her siblings—went from one system to another to another. She went from being homeless to being a foster kid, to her brother winding up in secure detention facilities and eventually at Rikers. That forces one to think beyond the labels and to try to understand the clear racial underpinnings of this girl's trajectory and the things that have held her back. Most recently, I think she would say that she is not escaping poverty per se. She remains with her mom in Brooklyn and her sister and her brother. She doesn't want to escape the neighborhood that to her feels like home, even though she has been in and out of homelessness. The street and her roots in the street, especially in Fort Greene, Brooklyn, where she goes back four generations, that is home. It's the people who are home. To her mind, it's not about escaping. It's about making her part of Brooklyn, her version of New York City life, work. She's been doing that on her own terms. She's had big setbacks and big triumphs. Her life is filled with ups and downs. But she did reach a milestone recently: she graduated high school. She was the first in her immediate family to do that. She just started at LaGuardia Community College. So in a sense, she is making great strides, but on her own terms, I would say.

Kara Swisher: But you're right about the idea of celebrating the individual. There have been so many stories about individual people who have broken through and left or just moved past what their history was. It's an American trope. It doesn't necessarily have to be racial, but in this case, what you're talking about—generational inability to move upward—was set in stone many years ago by the fact that they had to rent and not buy, that they couldn't accumulate wealth the way other families were able to at those moments in history. I know you're not a solutions reporter; you're just a reporter saying, "This is what it looks like." But when you look at the enormous amounts of money spent on these issues and the politicization of homelessness, are there any things that seem to work better than other things? Or not at all? You don't have to have an answer.

Andrea Elliott: One thing I would say that this reporting got me to do is to constantly question every policy as I saw it playing out in the lives of Dasani and her siblings and parents. The thing that worked best was when they were given help securing an apartment and help with rent. There were various city programs that did this and helped them move into these homes. They've had two situations like that, and both fell through eventually for different reasons. In one case, they were evicted. Eviction is the number one cause of homelessness among New York City families right now. We've seen the shelter population go down; it's hovering around 50,000 in the main shelter system. But the eviction moratorium will be lifted in January, and that will cause the numbers to go back up. I have another answer to your question, though, when you said "enormous amounts of money." The story of Dasani's last eight years also looks very closely at a system that disproportionately separates children from their parents who are from Black families and brown families, and that is the child protection system. The vast majority of cases in New York City that result in children being removed from their parents and put in foster care involve charges or allegations of neglect. It's really important to understand the difference: only about two percent are abuse charges—parents who are intentionally inflicting harm. Neglect is more about failure to provide: failure to provide adequate housing, adequate shelter. In Dasani's case, the final straw in October 2015 was that the house was falling apart. It was a Section 8 rental. There were many repairs that had gone neglected. At that point, Child Protection had already removed the mother from the home on the suspicion that she was using drugs, leaving the father overwhelmed with all these children. He tried in many ways to fix it. He called 3-1-1. He was at the welfare office constantly. As is so often the case with poor families, it's one small problem snowballing into something bigger, into something bigger, and pretty soon it's overwhelming. The smallest thing leads to disaster. So I look at what happened there. All eight children then went into the custody of the Administration for Children's Services in New York, and they went into foster care. They were all placed in foster homes that, if you do the math, on average for the year, these children wound up costing the system $400,000. They could have given that to the family. If you had just taken a fraction of that—and not even given it to the family, although I would argue that would have helped—but just use it to give them the supports they needed to stay together. A home health aid. There are programs like this, and there are some models in other parts of the country, but it's expensive. It requires a political willpower that may not be there. But the question you have to ask is: what is the cost of the alternative? We know that the way foster care impacts adult outcomes. We know there is a higher likelihood of things like teenage pregnancy, incarceration, unemployment, dropping out of high school. The cost to society is huge, but people don't really think about it that way. It's always sort of in the short term.

Kara Swisher: Well, they know how to split up families, don't they? They're good at that. I want to get a quick question. Your title says "Poverty, Survival, and Hope." What do you see as hopeful here? Is it the spending plan that supposedly is going to reduce child poverty by up to 60%? Where are you hopeful, Andrea?

Andrea Elliott: I think Dasani has tremendous hope for her life. I think this book is about the strength of family at the end of the day and the importance of family. That is her ultimate system of survival. There are all these other systems that have names suggesting help—public assistance, child welfare, criminal justice. These are systems that Dasani learned from a very young age that she had to navigate, that she had to manage in order to keep her most important and vital system intact, which was the system of her family. The hope is there. The hope is really a personal thing for this family. When it comes to policy prescriptions, my hope is that people read this book and can potentially get some kind of new window into seeing how these policies play out on the ground, and also perhaps challenge their own notions of what it means to be successful, what it means to be happy. Also, what you mean when you say someone like Chanel, her mother, is unemployed. She is unemployed by the definition of the formal labor market. But the poor, if you spend any time with them, poor folks work. They're working all the time. It just doesn't look like work. It may be bartering. Her stepfather Supreme is a barber. He might give a haircut in exchange for some food. There's constant, incredible amounts of work going into just a daily act of survival for a family like this. A lot to learn from them.

Kara Swisher: You've been working on this. You and I have talked about this for a long time. What kept you working as a reporter? You're a very successful investigative reporter. What kept your interest over this amount of time? And why did you feel it was important to take essentially 10 years to tell this story?

Andrea Elliott: I would keep going if I could. I think these are some of the most remarkable people, the most riveting and interesting people I've ever met. It's incredibly interesting to be around them. But the truth of the matter is that the longer I spent with them, the more time that passed, the less I felt I understood the story as I had originally understood it. New layers continued to reveal themselves. I felt called to stay the path and try my best to understand the deepest meaning of their poverty, of their homelessness, of the fact that the children were taken. What are the historical explanations for each of these plights? Because when you try to understand Dasani absent that history, you're doing a disservice to yourself. It became a huge education for me, and one that I feel incredibly grateful for. It flew by, to be honest.

Kara Swisher: That's a long time.

Andrea Elliott: It did.

Kara Swisher: Scott, last question.

Scott Galloway: I don't have a question. I just wanted to say, Andrea, thank you. My understanding is the article resulted in hundreds of children being moved from abysmal conditions, and that was directly attributed to your coverage and bringing some of these issues to light. So thank you and well done.

Andrea Elliott: Thank you.

Kara Swisher: The book is called *Invisible Child: Poverty, Survival, and Hope in an American City*. Andrea Elliott, thank you so much for coming on. You can read the original stories in the New York Times. It's still quite something, many, many years later. It's well worth a read, but also the book. Thank you so much for coming on.

Andrea Elliott: Thank you so much. Thank you.

Kara Swisher: All right, Scott, one more quick break. We'll be back for Wins and Fails.

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Kara Swisher: Okay, Scott, wins and fails?

Scott Galloway: I just have one win, Kara, and I'm very excited about this. The University of California announced that it's going to put in place a program to add 20,000 seats for students by 2030, which is the equivalent of a new campus, to help meet surging demand for UC education and college graduates to fill the state's growing need for highly skilled employees. I think this is wonderful. It speaks to this important notion that administrators and the boards of great public universities are recognizing that they're public servants, not luxury brands, and that exclusivity is not a good thing. It hits home for me: when I applied to UCLA, the acceptance rate was 74%. Now it's 14%. So they don't have the capacity to reach and find unremarkable kids, and I think that's what America is about. So I think this is wonderful.

Kara Swisher: This is all over the system?

Scott Galloway: This is all over the UC system. Across the entire UC system, they've committed to increasing freshman seats by 20,000 seats. Basically, they're going to add the equivalent of Harvard to their freshman entries at the University of California. I hope that it inspires a panic or a virus that breaks out amongst our great public universities that educate two-thirds of our kids. I don't like this narrative emerging that you don't need college and you shouldn't go to college. When someone tells you not to go to college, it's oftentimes someone with a Stanford degree hanging over their desk. And it's usually worked out pretty well for them. It's like when someone tells you to follow your passion, it means they're already rich. College is a pretty good plan B. I'm not saying it's for everybody.

Kara Swisher: I think you said that to me the other day. But go ahead.

Scott Galloway: I'm not saying it's for everybody. We need more on-ramps into the American dream for people who decide they don't want to go to college, or can't. But the University of California is a gift, and public universities are arguably the foundation of our income mobility. We have lost the script the last 30 years. My win is the University of California and the regents deciding to get the script back.

Kara Swisher: Noice. What's your fail?

Scott Galloway: That's it. I just want it to stand on its own. I was really inspired by this. I think it's wonderful. I'm going to get involved in this effort with my time, my treasure, and whatever talent I can muster for it. I want to commend the Regents of the University of California for continuing to be the greatest upward lubricant in mobility.

Kara Swisher: I think you need to work for the University of California, Scott Galloway.

Scott Galloway: I want to someday.

Kara Swisher: All right.

Scott Galloway: It changed my life, Kara. It's why I'm here with you.

Kara Swisher: Well, then you need to work for them. All right. My win was obviously Frances Haugen. Really, really tough to do. She stood up, like lots of people say. The fail is going to be if you fall for the kind of sliming that Facebook will start on this woman. They will say she wasn't a very good product manager. I've already heard it. "She was just an okay product manager," someone said to me. I was like, "Uh-huh, okay." How do you judge that? It's not going to work. They're not going to be able to discredit her. They're going to do it in that way. "She wasn't important. She was a whiner." That's how it's going to come out. When I heard that first one—"She was just an okay product manager"—that's what they're going to do. They're going to slime her that way. They can't attack her outright. They'll start to question how important she was, whether she was good at her job, if she really had an impact, or she was just a whiner. Believe none of it. Nobody's a perfect worker. Everyone has problems at work. That's how they will make you question. "She wasn't a star." That kind of stuff. So don't listen to that.

Scott Galloway: Don't listen. You're not buying it.

Kara Swisher: They did that with Susan Fowler. They did that to me with Susan Fowler. "Oh, she wasn't very good at her job, Kara." Whisper, whisper, whisper. It was just crap. All of it. Anyway. We'll take a listener question on our next show. Last week, we got one about libraries. I wonder what we'll talk about this week. If you have a question, submit it to nymag.com slash pivot. Good stuff. All right. That's our show. We're going to be back Friday for more. Today's show was produced by Lara Neyman, Evan Engel, and Taylor Griffin. Ernie Intertot engineered this episode. Make sure you're subscribed to the show on Apple Podcasts. Or if you're an Android user, check us out on Spotify or wherever you listen to podcasts. If you liked our show, please recommend it to a friend. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back later this week for another breakdown of all things tech and business. Are you under the impression that you're a good person? Are you under the impression you're a citizen that cares about our commonwealth? Do you work at Facebook? Kara.Swisher at NewYorkTimes.com. NYTimes.com. Oops.