Transcript:
Season 2, Episode
NOTE: This transcript is automatically generated and cleaned up by AI to make us look like we speak in complete sentences most of the time. It may not be verbatim and could contain mistakes that are different from the mistakes that we make on the podcast. Reader beware.
Kathryn: Hello and welcome to Optimist Economy. I’m Kathryn Anne Edwards, economist.
Robin: I am editor Robin Rauzi.
Kathryn: On this show, we believe the US economy can be better and we talk about how to get there one problem and solution at a time. The problem and solution we’re talking about today is the corporate income tax rate. First we’re going to do some announcements and other things, but more on the corporate income tax rate coming soon.
Robin: Announcements.
Kathryn: First announcement is that we have recorded our Q&A episode, but we always take questions from the optimists. So of course, optimisteconomy@gmail.com. We’ll do another Q&A episode soon enough, and we’ll always take questions.
Robin: You bet. I’ve got a folder of them in our email.
Kathryn: Okay. Next up is Retcon, which we might not have any of — knock on wood.
Robin: I’m sure we’ll have some once people hear the AI episode.
Kathryn: Yeah, that’ll keep coming. Let’s move into Terms and Conditions. Did you look anything up this week or have a term for this week?
Robin: I had a term that was actually a question from a listener — I think over the summer — and I’ve been holding onto it. The question was about the way that economists sometimes use the word “tax” in a way that seemed confusing to him. They’re not actually referring to a government tax, but to what would seem to be just a cost or an expense. Can you clarify why “tax” gets used in that way?
Kathryn: I think there’s an economic reason and then there’s a rhetorical reason. The context I hear this a lot is: “the US has a tax on childbirth.” We don’t have a tax on childbirth. A tax on childbirth would mean every woman in the labor and delivery room would have to pay some type of fee or levy after she gave birth.
Robin: And specifically to the government — that’s how normal humans think of taxes, as going to a local, state, or federal government.
Kathryn: Right. So it would be like some government tax agent comes in and collects money, or it’s recorded that you had a birth and you owe some state, local, or federal government money — and that is the tax on childbirth. We don’t have that. But we do have private health insurance with out-of-pocket costs for almost all labor and delivery. If you have to pay three to $5,000 out of pocket, even if you have a large group health plan, that is functionally a tax on childbirth — because it’s the same as the IRS agent in the room asking for $5,000. Instead, it’s someone from your health insurer. So we use the term to highlight that.
Robin: I guess I don’t understand how that is functionally the equivalent of that.
Kathryn: Because it looks like a tax even though it’s not one. Some people are paying it and some people aren’t.
Robin: Okay. Define “looking like a tax,” then.
Kathryn: Well, this is where the rhetorical element comes in — it’s a way to highlight an egregious cost. A cost that shouldn’t be there. Where like, I’m paying for a service for something like childbirth — that’s not a cost that we should be charging people for. Or you could think of it as a way to illustrate how destructive a cost can be, because we tend to think of taxes as quite destructive to and manipulative of behavior.
Robin: That’s what I was wondering — whether it had to do with the incentives and manipulation of behavior that we associate with taxes. But I don’t feel like when I hear it used, it’s always suggestive of that.
Kathryn: I think it has more of a rhetorical point than an economic one. It’s a way to express that there is an added cost that’s maybe not necessarily related to the price that you’re paying. But I think rhetorically it’s really helpful: would you tax childbirth? No, that’s ridiculous. But we make women pay three to five grand out of pocket. If you think a tax on childbirth would be ridiculous, then why do we have out-of-pocket costs that function the same way? I think rhetorically it can be really powerful.
Robin: Sofi is pointing out that she hears things like “the pink tax” — referring to the things that women have to buy that men don’t have to buy, that make it more expensive in our society to be a woman. And I think that maybe makes it clearer than a tax on a very specific narrow thing like labor and delivery.
Kathryn: For the record, I think labor and delivery is part of the pink tax. But yeah. Okay. I realize I was like, rhetorically it’s pretty good — but again, I am not an editor, famously not an editor. So that’s just me, an economist, being like, yeah, that’s a good word. Good word.
Robin: All right. What’s your Terms and Conditions term?
Kathryn: Capitalism. Well, capital slash capitalism. Because we’re talking about the corporate income tax rate today, I thought it would be helpful to do a little bit of capital backstory — what is capital, what is capitalism?
Robin: What is capitalism?
Kathryn: Yeah, well, this is the Batman quote of like, we were born in the dark. It’s what we all grew up with, and I think people kind of accept the system as they experience and live in it, but don’t necessarily know the definition of it. You need three basic ingredients for capitalism. The first thing you need is private property. You can have a system of private property that’s not capitalism — that would be like feudalism. So private property is the first thing you need. The second thing you need are markets where you can sell your wares or goods or services. That also existed before capitalism. People would be like, okay, I make shoes and I take them to a market and I sell the shoes that I make and I use that money to buy other things. You have a market economy that operates with private property, but that is still not capitalism. Capitalism is the introduction of firms who own their inputs — their capital goods, like the storefront, the tools, the manufacturing facility — and they employ people. The firm is really the necessary ingredient for capitalism, because firms can specialize in a good, they can specialize in the production of that good, meaning they make one thing and they also specialize in how workers are used to make that thing. So when we talk about the corporate income tax, we’re essentially saying we would like to tax capital — to tax the firm. But now we refer to these firms as corporations for the most part. So, whew. It’s already going to be a tough one. The short version is we want to tax those bastards a lot more.
Robin: Do we? Is that what we want?
Kathryn: I think there’s an argument to be made.
Robin: Oh, there’s always an argument to be made.
Kathryn: I get the sense sometimes from our listeners that we have a set of relatively conservative people who like hearing about the economy and find this an interesting way to hear about it. And then I get a distinct sense that some of our listener base is to the left of Lenin and is waiting for some type of communist or socialist revolution to burn capitalism to the ground. And I’m going to — this is not a defense of capitalism episode, but maybe a “consider capitalism before you throw the baby out with the bathwater” episode.
Robin: Consider capitalism. Okay, so we’re going to take a quick break and then we’ll be right back and we’re going to talk about corporate income tax and capitalism.
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Kathryn: All right. We’re back for a tight five on capitalism before I go back to my family vacation in New York. So. Taxes on capitalism. Should we have them?
Robin: Okay. Let’s talk a little bit about the context of this. We — meaning the United States, not you and me — changed the corporate tax rate in the Tax Cuts and Jobs Act of 2017. And a lot of those changes got made permanent, and some other changes were added in the One Big Beautiful Act.
Kathryn: The Tax Cuts and Jobs Act had two types of tax cuts. One for the corporate income tax rate, the other was for a set of household tax breaks. The corporate income tax rate cut was permanent. The household tax cuts expired — in fact, they expired this year, 2026. That is why the One Big Beautiful Bill was passed in 2025: it made all of the tax cuts that were temporary in that bill permanent. I can say that the Tax Cuts and Jobs Act was the single largest reduction in the corporate income tax rate in US history. The corporate income tax is quite old — it goes back to the teens — and it was a 40% reduction in the rate. The corporate income tax has a statutory rate: on paper, the tax on profits is X percent, set by Congress. But corporations also have a ton of deductions and write-offs and ways of reducing their taxes, so we have an effective rate — how much they are actually paying in taxes given their profits and what they report. The effective rate, even when the statutory rate was 35%, was still quite low. I wouldn’t want anyone to be under the illusion that we just made the tax code simpler by reducing the statutory rate so that we wouldn’t have quite so many deductions. We reduced the effective rate too.
Robin: I think just for listeners, we should be clear about a couple of terms that have already come up. One is “statutory,” meaning that is what’s written in the language of the law. The other is that corporate taxes are a tax on profit. Corporate profits are the amount of money left over after a company has taken in all the money from its customers and paid out all its expenses. The profits are what’s left over. So they only pay taxes on that — not on all the money they bring in, which would be their gross revenues.
Kathryn: So to give you the numbers: in 2017, the last year before the Tax Cuts and Jobs Act went into effect, the statutory corporate tax rate was 35%, but the effective tax rate was 17.2%. In 2018, the statutory corporate tax rate was 21%, and the effective rate fell to 8.8% — more than half. Corporations now have a lower effective tax rate than the average American household. If you were to add up all of the income earned by households in the United States and then all of the taxes paid, it averages around 14.5% — and it has been around 14.5% for a long time. That’s how much we pay in taxes.
I wanted to talk about the corporate tax rate for a couple of reasons, and I’m going to prime you with even more numbers in quick succession. There are, I think, two questions for the corporate income tax rate. One is: do we think it should be higher, and why or why not? That’s what I wanted to talk about in this episode. Then there’s the question of how you actually do it, which we don’t have time for here because it gets really complicated, especially with global corporate income tax rates and how effective corporations are at hiding taxes in low-tax countries.
Some people would hand-wave and say, oh, but we can’t because of global taxes — waving at the air as if it’s not possible to effectively tax corporations. No. I assure you it is. If we wanted to tax a company as profitable as Amazon with a higher corporate income tax rate, I promise you we could do it. When there’s a will, there’s a way when it comes to taxes. And I think one of the more effective rhetorical tools that very wealthy people, including corporations, have put forward over the last 15 years is that you can’t tax the wealthy even if you try — and maybe Europe tried and it didn’t go well, so you can’t tax them here. Not true. We don’t quit before we play the game. And I’d like a few at-bats when it comes to designing wealth taxes. Same thing applies to the corporate income tax rate. You’ve probably heard we can’t have it high, it’s too complicated, and it wouldn’t work anyway. I’m going to try and convince you of why the corporate tax rate can be higher, and then you’ll just have to trust me, and we’ll do a later episode on how we can get it higher. How’s that?
Robin: That sounds fine. So you obviously think it should be higher. A lot of the arguments about why it shouldn’t be are that the cost comes out in either higher prices to customers or lower wages to workers — that the money’s going to come from somewhere.
Kathryn: Yes. We would call this tax incidence. This has come up a ton with tariffs. If I have an import tariff on something I use in my firm’s production, I’m going to pass on the cost of that tariff to customers. So even though I pay the tax, customers actually bear the tax incidence. The first key thing to keep in mind is that the corporate income tax is a tax on profits, not a specific input. In theory, it’s the money left over at the end of the day.
Robin: Like a tariff is a tax on an input.
Kathryn: A tariff is a tax on an input or something that you sell. If I need a specific piece of machinery from China and now I have to pay a tax on it, but I can’t make any product without this widget — I will pay that tax, then I’ll pass it on in the form of a higher price. For corporate profits, it’s different, because I can still have efficiently produced goods, and the tax on them only comes at the end when I report my profit for the year. As for the wages argument — not much left in wages to come out of is all I’m going to say.
For decades, the argument about the corporate income tax rate has been that capital is mobile. If you have too high a tax on corporations in the US, they will pack up and move elsewhere — go to Ireland, go to Barbados, go somewhere else. So you have to keep the corporate income tax rate low in order to keep corporations here. When economists talk about the corporate income tax rate, that is almost entirely what they’re talking about: the mobility of capital.
The motivations behind the tax cut were obviously not framed as, “Hey, these large corporations are basically practicing extortion and told us if we don’t lower the tax rate they’ll leave, so we have to respond — apparently when you’re in Congress, you negotiate with terrorists.” They didn’t say that at all. What they said was: this is going to be good for the American worker. This is going to be good for the American family. We’re going to have more jobs here, and those jobs are going to pay more.
Robin: Thus the “jobs” part of the Jobs Act.
Kathryn: It was the jobs part of the Jobs Act — we’re going to cut corporate taxes, keep jobs here, and they’ll pay more. Well, the way a tax cut is absorbed is right away. In 2018, it was middling wage growth — wasn’t low, but it wasn’t high. A lot of companies said they would pay out bonuses to workers. They didn’t. The most generous estimate is that those bonuses amounted to less than 2% of the corporate tax cut. More importantly, 2018 was the single largest year in history for corporate stock buybacks.
Robin: Explain that. How does the tax cut lead to corporate stock buybacks?
Kathryn: Effectively, corporations got a much lower tax rate and had excess cash in 2018. What did they do with it? They spent it on corporate stock buybacks, which is where you invest in your own share price in order to make it higher.
Robin: Is that because as your corporation buys a bunch of its own stock, you’re driving the price up — or is it because there’s less stock on the market?
Kathryn: I think it’s both. So the intellectual argument was: you can’t tax corporations, they won’t stay in America, and if you give us a lower corporate tax rate, we will have more money to pay workers’ wages. What absolutely played out instead is that workers didn’t get anything and it was the largest year for corporate stock buybacks in US history — it wasn’t even close. When companies get money in the US, they do corporate stock buybacks. What they would say is that getting the value of their company higher allows them to make capital investments and expansions — that’s how they can issue debt, that’s how they’re valued, that affects what they can borrow and at what rate. Innovation and expansion works through a higher stock price. Certainly not working through workers.
Here’s the most succinct argument for why the corporate tax rate needs to go up: nobody, no locality in the country, is advised now that they should offer tax incentives to lure a company.
Robin: I feel like as a Californian, states all around the country are trying to steal California businesses with lower tax rates.
Kathryn: So Texas had a specific corporate tax rate meant to entice companies to move and relocate their headquarters there. What a set of researchers found when they looked at people who actually claimed that tax rate was that almost all of them were going to move anyway. The tax didn’t influence their decision — it just made it more lucrative for them. Think of a company like Exxon, which moved from California to Texas. They didn’t do that waiting for the Texas legislature to come up with some kind of package they approved of. They had had plans for years. They wanted to move to a cheaper cost of living, or whatever their reasoning was. The paper found that once companies decide to go, then they tell the location: we’ll come if you can get a business-friendly environment and make sure our taxes are lower — and it’s unemployment taxes, property taxes, not just state-level corporate income taxes.
Even the Mercatus Center, which is a very conservative economic think tank, says that using tax incentives to lure a company into your state or locality is throwing money away. The advisement now is: do not do this, because they will make you promise the moon and then mostly not deliver. A great example is Foxconn.
Robin: The big Chinese manufacturer of iPhones and other electronic devices.
Kathryn: Yes — they were going to make a Silicon Prairie in Wisconsin. They said: here’s the number of jobs we’re going to have, here’s how much they’re going to pay, we’re going to make this many billions in capital investments, and we need a friendly package. The governor goes to the State House, tells the legislature that if they approve this, they’re going to get all these jobs and it’s going to be good. The legislature approves the tax package, and then yeah — they don’t come.
Amazon HQ2 might be more familiar, and while definitely less egregious, it was similar. They promised 50,000 jobs averaging $100,000 with billions in capital investment. Nine years later they’ve got 8,000 jobs and have built two of their buildings, but not the second half of the capital investment. They just didn’t deliver as promised.
Robin: So these bids — are they specific to one company? It’s like a negotiation with Amazon specifically, not a change to the tax code for all companies.
Kathryn: I don’t even necessarily think Amazon acted in bad faith with HQ2. I think they make decisions that are irrespective of the corporate income tax rate — they’re making a business decision with its own motivations. Their business changed. And I think we have just passed this moment in US economic history — an incredible reduction in the corporate income tax rate. People are going to write in and tell me what a stupid economist I am, that I don’t know how economics works, that this is Econ 101, that I’m not a real economist, whatever you want to say — because I don’t think the corporate tax rate should be this low and I think it should be higher. And I understand perfectly that there is a risk that if you raised the corporate income tax rate, a company would leave. And in my mind I’m like: okay. Bye. If I raise the corporate income tax rate so you have to pay 20% or 30% and you pack up and go — good riddance. I would bet my life that you are a terrible employer, that you pay awful wages, and I bet you make a suspect product. But sure, go to that low-tax haven of Canada.
Robin: Well, it’s not like we didn’t have businesses in 2017.
Kathryn: No. And this goes back to why I wanted to talk about capitalism in Terms and Conditions — because I am a capitalist at heart. Truly. I do believe capitalism has done more for the eradication of poverty and destitution than almost anything else we could point to. It creates an incredible amount of wealth. It does not spread it around. Government can do that with really light-touch policies. But we are in a state where we have given too much deference. And if Amazon said, yeah, we’re going to pack up and leave North America — I would be like, yeah, sounds great. You would leave jobs behind, but we have an entrepreneurial capitalist society. Someone would replace you, because you didn’t exist 30 years ago. Same thing with Starbucks: if Starbucks said, if we unionize Starbucks will shut down — sounds great. People will still drink coffee.
I don’t champion people losing their jobs. I don’t like the idea of layoffs. But our economy will pick itself up from the pieces of a Starbucks-less America and move on. We live in the largest, most dynamic economy in the world. It would be hard — there would be people who genuinely suffer — but we can ease the suffering and help people invest in new things.
Robin: You’re not a job creator. Didn’t somebody say that to you?
Kathryn: Someone said that to me when I was testifying in front of Congress — in front of the Republican-led House Ways and Means Committee that was putting together the One Big Beautiful Bill. I was saying that we need to have an effective tax structure in the US, and this guy said: don’t you always notice how it’s the people who have never created a job in their life that are the ones telling us what to do? And you all — that was the closest I got to rage-crying during that hearing. When that guy said I wasn’t a job creator, I was like: I made my own job. And it is not the corporate income tax rate that is preventing me from expanding. It’s the lack of reliable childcare. I was so mad.
Robin: Sorry. I didn’t mean to trigger you with that memory.
Kathryn: I’m okay, but I do need to call my counselor after this. Can I ask one other question — how much are we talking about in terms of corporate taxes? Like how much money is actually at stake?
Robin: It’s a lot of money. So when you cut it in half, it’s a lot of tax dollars that we don’t have to do anything else with.
Kathryn: Okay, so how should we think about how much money is left on the table by having a much lower corporate income tax rate? It’s hard because companies are always growing and the economy is always growing. But you can look at the difference in tax collection from the corporate income tax expressed as a share of GDP. As a share of GDP, it used to hang at around 3.5 to 4% — thinking like the fifties and sixties — and now it’s around 1.8%. So if you just take that two-point difference in tax collection, that is $620 billion a year we don’t collect in corporate income taxes. Let’s do my favorite math. $620 billion a year — $20 billion is how much it would cost to have a universal paid family leave system. We’d still have $600 billion left over. A hundred of that you could put into a child tax credit that goes to every kid and is generous and basically eradicates child poverty. Another hundred you could spend on universal preschool and universal daycare. And then what the hell — as long as you’ve got the money — another hundred to have universal after-school and universal summer programs.
Robin: Honestly, universal Medicaid for all kids wouldn’t cost that much, because we insure most of them — at least half — on Medicaid anyway.
Kathryn: And they’re quite cheap. And we would still have one to $200 billion left over just to deal with the debt. Just from corporate income tax rates. So this is a lot of money to leave on the table for jobs, Robin. Jobs. They’re job creators, not like you and me — stupid women who don’t know what we’re talking about when it comes to big corporations.
I would feel so differently about this. I want to make some things very clear. I would feel incredibly different about the corporate income tax rate if we had universal paid sick days. If the minimum wage wasn’t $7.25. If 100% of people had paid family leave, or if everyone got bereavement leave, or if we were making more income. I would feel really, really different about the corporate income tax rate if they had ever proved that they spent it on workers.
Now, if you’re like, I don’t know, Kathryn, even after shrinkflation I still think I’m on big-corporation side — I want to explain why I think corporate profits are too high and labor income is too low.
I’m going to start technical and I promise I will get to a human place. We measure the size of the economy through gross domestic product. It has a sister statistic called gross domestic income, and you can use gross domestic income to understand how much money goes to corporations as profits as a share of the economy, and how much money goes to the wages, compensation, and non-wage benefits of workers.
This series starts in 1929. In 1929, corporate profits as a share of the economy were 8.9%. You would have had economists in the almost-century since tell you there’s no way we’d ever get that high again. The last four years, corporate profits as a share of the economy have been over 9%. The highest four years on record in almost a century of how much money corporations make in profit are the prior four. They have never been so profitable. They’re even more profitable now than they were just before the Great Depression wrecked the economy.
A similar measure — how much goes to workers as a share — has been falling for 60 years and is now just under 52%, which puts it on par with how much workers made during the Great Depression in the 1930s.
So corporate profits right now are higher than the peak of the stock bubble. Labor income right now is close to where it was during the early 1930s of the Great Depression. Something has to change. When I say corporations are making too much money and people aren’t making enough money — yes, I’m a liberal progressive economist who wants nice things, but I have a hundred years of data behind me when I say corporations are making too much money and workers are not making enough.
Robin: I feel like we have the same conversation in 15 different ways — people are not being paid enough.
Kathryn: I think some things are really complicated and they require an economist like me to explain. And some things are not that complicated. One has too much money, the other has too little. Like, government — you’ve got a job to do. It’s not that hard. We are out of balance. And a lot of the way there, but now we have to deal with incredible complications in how businesses are taxed so that they can reduce their tax rate.
Robin: What corporations can deduct, how they deduct them, how soon they deduct them, and whether they deduct those expenses over time. And we’ve made it way easier for people to lower their tax bill by claiming expenses immediately in year one.
Kathryn: And moving to a simpler tax rate is easy legally. You have a tax code that’s thousands of pages long and you replace it with one that’s much shorter. The problem is we have turned our tax system into a complex bonus and reward mechanism, and there’s almost no way to change the tax code without creating some kind of loser. This is how we’ve gotten to where we are: make taxes simpler, but not on my thing.
Robin: Everybody knows where the carrots are and where the sticks are.
Kathryn: And nobody wants to lose their carrot. Same with corporations. Much like our estate tax episode — there are still some very complicated questions — but like, Bezos Junior, I’m coming for you. And Bezos Senior, I’m coming for you too. Did I get people mad enough about how much profit corporations have relative to how much workers have, and all the nice things we could buy?
Robin: But you still — do you want to go back to your “capitalist at heart”?
Kathryn: Yes, I am a capitalist at heart because I don’t think this incredible economy — $31 trillion in size, employing 170 million people — should be held hostage by a corporation that wants lower taxes. I would bet on 170 million people. People who have access to a loan, to family money, who put it all together on a credit card and put their life on some dream business. I would put my money on them over Amazon any day.
I would always put my money on people building new businesses over old businesses staying in power because they’re able to use their threat and their size to get more money from the government and more protection. I also don’t think it’s good for the economy to have such concentrated wealth among businesses, because big businesses don’t innovate. Innovation comes from new businesses, not big businesses already in existence.
Robin: Big businesses just bully everybody around them. Witness Ticketmaster.
Kathryn: Yes. All right, well, eradicate Ticketmaster. We can still have concerts. It’s funny — we’re afraid to talk about the pain that comes from making a big corporation mad. But we’re okay with the pain that comes from staggering income inequality in perpetuity, or from not being able to afford childcare, or healthcare, or elder care as your parents are dying and you’re facing all these terrible decisions. All that pain’s okay. But if Bezos feels the squeeze and cuts jobs, we can’t allow that.
Robin: Well, nothing’s stopping Bezos from cutting jobs now. They’re going to cut 10,000 jobs in the next few months anyway.
Kathryn: Probably. Corporate income taxes don’t recession-proof the economy or create wages or income. You’re rewarding people who are already winners. I don’t like that. I don’t feel like that’s very American or capitalist.
Robin: And it’s certainly not getting us subsidized childcare.
Kathryn: No. Okay, take a quick break and we’ll be right back.
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Robin: Okay. We’re back with Executive Orders. Kathryn, do you have an executive order?
Kathryn: Come back to me.
Robin: Okay, I’m going to share an executive order from Valerie Wirth in Raleigh, North Carolina. She wants all commercial construction sites to have a sign that tells you what’s being built — whether she could be excited that she’s getting a new restaurant versus a boring bank. I’m also down with this. I’m very curious what’s going in that hole. This is similar to the “am I moving in or moving out?” sign on moving trucks.
Kathryn: Yeah, I want some idiot-proof version of this — like a little picture of what it’s going to be.
Robin: They do that sometimes here.
Kathryn: They do sometimes. I want more. My executive order: I am currently in the greatest city in the world, New York City, and it has some of the most incredible playgrounds my children have ever or will ever go to. We need a massive playground fund just to build playgrounds everywhere. Every airport needs one. Every library needs one. Most public spaces need one. I want a massive playground fund — and I’d be willing to take it from people who own a lot.
Robin: I was going to say, well, I think we’ve got two to $300 billion left.
Kathryn: Yeah. My executive order is: we need more playgrounds. They need to be built with art students. I’m thinking big-government liberal stuff from here to high heaven. I want some public-funded art student working on playgrounds all over the country, in every airport and train station.
Robin: And I love that this comes up because you basically were accusing these guys of being perverts.
Kathryn: I didn’t accuse them of being perverts. But if you go to a playground and there’s a man sitting by himself, it’s like, hey man — you don’t belong here. You don’t go to a children’s space and hang out. Anyway, they said at first they were like, hey, we’re not weird, we design playgrounds. They were actually really thrilled that I knew who they were. They were like, wow, you know us. I was like, yeah — I’ve been to your playground here, here, here, and here. They’re very good.
More playgrounds. Spiritual Sponsors.
Robin: All right. We end our show talking about our Spiritual Sponsors, which are the non-financial things that get us through the week. Kathryn, what’s your Spiritual Sponsor?
Kathryn: My Spiritual Sponsor is mutton bustin’.
Robin: What is this?
Kathryn: Okay. Imagine a rodeo where a cowboy gets on a bucking bronco horse and has like eight seconds to try and stay on. Now imagine instead of a man on a horse, it is a kindergartner on a sheep. This is mutton bustin’. They put these little kids on sheep — they wear helmets and have a pad on their chest — and basically they put the kid on, have them wrap their arms around the sheep and hold onto the wool as tightly as they can, and the sheep just runs from one side of the rodeo to the other. They’re in a pen that’s like 50 feet long and the sheep is trained to just run from one side to the other. You just see how long the little kid can stay on before falling off. They’ll feature it on the local news during the rodeo. It’s so precious. A lot of times the kids are really traumatized and crying, and other times they think it’s hilarious. But it’s just adorable.
So the sheep that I saw this year were Woolly Nelson, Meryl Sheep, Fleece Wood Mac, Lamborghini, and then — of course my favorite — the Toddler Tosser. The sheep are so mild and dumb. They just jog over and don’t do anything. They all know to stand in one group. So it ends up being like 20 sheep just watching, and the other ones run up being like, you had a kid on you — you doing any more? Anyway, mutton bustin’ is my Spiritual Sponsor. You can see videos of it online.
Robin: Excellent. My Spiritual Sponsor — before I knew you were going to talk about Jeff Bezos and Amazon so much — was that I just read that MacKenzie Scott, famously his ex-wife but also the most prolific philanthropist this country has ever seen, gave away $7.17 billion in charitable giving last year. Just so you know, the giving rate among the ultra-wealthy is generally 1.2% of their net worth. She funds college scholarships, programs that connect low-income communities with union jobs, and all sorts of really amazing things. Every time I read a story about what she’s done and who she’s funded, it’s totally inspiring.
Kathryn: Did you read about her process?
Robin: Yeah.
Kathryn: They do an incredible amount of research on their side. Then Scott gets in touch with the people they want to fund and is basically like, yeah, we like what you do — here’s $20 million. They don’t make them fill out applications for days or penny-pinch.
Robin: No — it’s an email and then a call. And I read recently about a historically Black college in Maryland where the person just kept throwing the email into junk until finally she sent it to the development team, who replied and called back saying, “They want to give us $20 million.” And she was like, what? She gets on the call ready to make this big pitch and they’re like, oh no, no, no — we already know all about you.
Kathryn: I appreciate philanthropy like that because a lot of philanthropy is formalized, labor-intensive begging. The quote from the Scott people was: we do all the hard work on our end so they don’t have to. And I was like, wow — that is not how most people who give operate.
Robin: No. It’s like, please spend a week on this application so we can give you $3,000.
Kathryn: Yeah. Not that you and I would know anything about that. Anyway, we’ve got to go. The Optimist Economy Podcast is edited by Sofi LaLonde. Our video production for social media is by Andy Robinson. Thank you very much. You can share video clips from the show on TikTok, Instagram, YouTube, or LinkedIn. You’re going to want to see the episodes from this show, since I’m not in my typical office — I’m in another location that has a glass wall behind me with people walking by or stopping right over my shoulder and talking throughout the episode.
Robin: If you’re on Substack, you can follow us there too. We have an Optimist Chat going where you can talk with fellow optimists. Optimist Economy is supported at this point solely by listeners like you — not by MacKenzie Scott. So if you have the means to contribute, you can do so at optimisteconomy.com. And we’ll also happily sell you a T-shirt, a hat, and — have I mentioned we have stickers?
Kathryn: Yes. I don’t know if you have, but we do. Thank you, optimists, and see you next week.